Apple is set to produce its AirPods wireless earphones in India for the first time, marking a significant step in the tech giant's ongoing effort to reduce reliance on China amid escalating geopolitical tensions. Foxconn, Apple's long-time assembly partner, will spearhead the initiative at a newly constructed factory near Hyderabad in Telangana state, with full-scale production expected to begin in the first quarter of 2025.
The move to India aligns with Apple's broader diversification strategy as it navigates rising tensions between the U.S. and China. The company has faced tariff threats and supply chain disruptions, leading it to explore alternative manufacturing bases in regions such as India and Vietnam. Foxconn has already commenced trial production at the Hyderabad facility, with operations set to ramp up following quality assurance checks.
India is poised to become a key player in Apple's global supply chain. The country currently produces about 14% of all iPhones, and officials have indicated plans to increase this share to 25% by 2028. Expanding AirPods production to India underscores Apple's confidence in the country's capabilities, bolstered by Prime Minister Narendra Modi's financial incentives for local manufacturing of high-tech products like wireless earphones and smartwatches.
Apple's shift to India is also driven by practical concerns. U.S. President-elect Donald Trump has reiterated his intention to impose substantial tariffs on Chinese imports, a move that could impact Apple's cost structure if it continues to rely heavily on China. By diversifying its supply chain, Apple aims to mitigate potential financial repercussions while strengthening ties with emerging markets.
Foxconn officials reportedly debated the profitability of assembling AirPods in India due to their relatively low margins but ultimately decided to proceed to maintain strong relations with Apple. The decision also reflects the increasing importance of India in the global tech ecosystem. India's exports of Apple products, including iPhones, jumped by nearly a third in the six months through September 2024, reaching $6 billion.
This is not Apple's first foray into Indian manufacturing. The company has been assembling iPhones in India since 2017, and earlier this year, it began producing enclosures for AirPods at a facility operated by supplier Jabil. Those components were then shipped to China and Vietnam for assembly. The transition to full assembly within India represents a natural progression and a deeper commitment to localizing production.
Despite its successes, Apple has encountered challenges in India. A factory fire in October 2024 temporarily disrupted operations, and regulatory hurdles, including antitrust accusations, have tested the company's resilience. Additionally, economic tensions between India and China have led to restrictions on Chinese firms establishing facilities in India, complicating certain aspects of supply chain management.
