Apple is about to start trial production of its popular AirPod wireless earphones in Vietnam as it accelerates plans to diversify beyond China, says this scoop in the Nikkei Asian Review. Goertek, one of Apple’s key contract manufacturers, will this summer begin testing at a factory in northern Vietnam.
The move to trial production, usually a precursor to mass production, comes as Apple explores sourcing 15 per cent to 30 per cent of its production outside China. Such a shift is being driven not only by US-China trade tensions. Manufacturing costs in China are also on the up.
This will mark the first production of the wireless earbuds — which came to market in 2016 — outside [of China], the world’s second-largest economy. They are Apple’s fastest growing product, racking up 35 million shipments last year against 20 million in 2017.
Apple has long sourced its traditional EarPods — connected to the iPhone with wires — in Vietnam. However, until now, AirPods have been made in China by suppliers Inventec, Luxshare-ICT, and GoerTek.
“It’s very likely that Apple will adopt the “China plus one” strategy when it comes to diversification efforts,” said Chiu Shih-fang, a supply chain analyst at Taiwan Institute of Economic Research. That meant the company would increase production in countries outside China without reducing Chinese volume significantly at the start… China’s low birthrate, rising labor costs, and the protracted trade tensions between Washington and Beijing have prompted Apple to review its reliance on Chinese factories, the Nikkei Asian Review first reported last month.
MacDailyNews Take: Better late than never on Apple’s diversification of production/assembly points in order to mitigate risk and, potentially, increase competition which would lower manufacturing costs.