Apple asks little known Chinese supplier to double AirPods Pro production

by Alan Friedman / Nov 27, 2019, 5:32 PM

Apple asks little known Chinese supplier to double AirPods Pro production

Less than a week ago, we told you that led by stronger demand than expected for Apple's AirPods Pro, shipments of the "earable" will double this year to 60 million units. That includes shipments of the first-generation AirPods, the second-generation AirPods that were introduced last March, and the new AirPods Pro launched last month. The "Pro" version of Apple's wireless Bluetooth earbuds offers active-noise cancellation when you want to shut out the outside world, and a Transparency mode when you need to hear what's going on around you.

Besides sporting a new design, the AirPods Pro also offers three different sized tips to help keep them in users' ears. Adaptive EQ tunes music to each listener's ear and the Pro version of the AirPods also offers IPX4 protection from sweat and water. Keep in mind that they cannot be submerged in water. And you'll be able to hear Siri read your messages while dictating responses immediately through the virtual assistant, and have them sent. The AirPod Pro is also more expensive at $249 although it does come with a wireless charging case. That compares to $199 for the second-generation Air Pods with a wireless charging case, and $159 for the second-gen AirPods with a standard carrying case.

The AirPods could eventually sell 200 million units a year says one analyst

With demand for the AirPods Pro surging, Japan's Nikkei news agency reports that the company is asking Luxshare-ICT to double production of the accessory from 1 million units a month to two million. These units are assembled by the contract manufacturer at its facility in China. Apple is also ordering another Chinese contract manufacturer, Goertek, to increase production of the cheaper AirPods at its factory in Vietnam. The AirPods happen to be Apple's fastest-growing product line and combined with the category-leading Apple Watch, the company's wearables division saw revenue jump 54% on an annual basis during the fiscal fourth quarter.

Luxshare produces the AirPods Pro in two factories located in China. Since these units are imported into the states from China, they are subject to the tariffs imposed on such products by U.S. President Donald Trump. These tariffs are essentially an import tax that U.S. companies and consumers pay. Starting on December 15th, smartphones from China, including the iPhone, will be subject to the tariffs. However, exactly one week ago today the president suggested that he might exempt Apple from paying the tariffs on its products imported from China. Currently, that includes the AirPods originating from China, the Apple Watch, and more.

The AirPods Pro in their wireless charging case

Luxshare is not as well known as some of Apple's other higher-profile contract manufacturers like Foxconn. But considering that Apple usually doesn't trust an expensive new high-end product like the AirPods Pro to a smaller Chinese company to assemble, one source said, "That means this supplier really is able to meet Apple's critical demands for quality and efficiency." Speaking of Foxconn, Luxshare was started by a former assembly line worker who was once employed by the company, Grace Wong. Now, Wong heads up a company that not only counts Apple as a customer but also does work for Huawei, Oppo, Vivo, and even Tesla. The company first did business with Apple back in 2012 as a component supplier and started assembling the original AirPods in 2017.

GF Securities analyst Jeff Pu says that he expects Apple to ship a whopping 80 million AirPods next year. That would be a 33% hike from the 60 million units expected to be delivered by Apple this year. Pu says that eventually, the AirPods could out ship the iPhone. "In the future, it (AirPods) could well sell at the level of the iPhone, with some 200 million units a year," the analyst said. Meanwhile, Wedbush analyst Daniel Ives predicts that consumers might find it hard to find the AirPods in stock during the holiday shopping season.

Apple asks little known Chinese supplier to double AirPods Pro production

The AirPods could eventually sell 200 million units a year says one analyst

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