Apple Inc. AAPL has been looking for a shift of its the manufacturing unit related to its over-ear AirPods Studio headphones away from China.
What Happened
Apple will now make its new Studio range of headphones in Vietnam. This is the first time that the Cupertino-based tech giant has produced an entirely new product in Vietnam, according to 9to5Mac, an Apple news website.
Goertek Inc., an acoustics components firm and Luxshare Precision Industry Co Ltd, an Apple supplier, will assemble the headphones in Vietnam. Shipments to Apple would commence in June or July, with product release planned for late summer or early fall. Mass production is slated to begin mid-2020.
Why It Matters
The underlying reason for the shift of manufacturing to Vietnam is said to be “political and trade tensions” between the United States and China, reported 9to5Mac.
Contract manufacturers will still build some of the headphones in China, but shifting some manufacturing away from the country is an indication of Apple’s intention to diversify its manufacturing base.
Apple’s operations executives suggested in 2015 that the company move at least one product’s manufacturing to Vietnam. This would have given Apple a chance to begin the years-long process of training workers and creating a new group of component providers outside of China.
Apple has plans to move almost a fifth of its production capacity from China to India to take advantage of the Indian government’s new production-linked incentives scheme.
Price Action
Apple shares traded 1.40% higher at $314.54 in the after-hours session on Tuesday. The shares had closed the regular meeting at 0.58% higher at $313.14.
In a race to end its dependence on China, Apple is reportedly shifting its upcoming line of over-ear headphones’ AirPods Studio’ production to Vietnam.
The Cupertino-based tech giant has been trying to reduce its dependence on Chinese manufacturing since the US administration went into a trade battle with China last year.
As per the report, Apple has connected with contract manufacturers Goertek and Luxshare to use factories in Vietnam to produce the headphones.
Shipments to Apple will reportedly begin in June or July, which could mean a release to customers sometime in late summer.
Reliable Apple analyst Ming-Chi Kuo has also said that AirPods Studio will enter mass production in mid-2020.
AirPods Studio may reportedly come with head and neck detection feature similar to the ear detection feature in the AirPods and AirPods Pro.
The AirPods real wireless earphones series have sensors that can detect when the earphones have been removed or put back, to play or pause music or videos on compatible devices automatically.
AirPods Studio will have similar sensors that will detect whether the headphones are on the head or the neck, presumably playing or pausing content when the headphones are worn on the head.
