Apple Trials AirPods Production in Vietnam in Bid to Cut Reliance on China

Apple will begin trialing AirPods production in Vietnam as part of a strategy to diversify product manufacturing beyond China, according to a new report by Nikkei Asian Review.

China's GoerTek, one of Apple's key contract manufacturers, will this summer begin testing the resilience of its manufacturing processes for the newest generation of AirPods at its audio factory in northern Vietnam, two sources with knowledge of the plan said.

The trial run will mark the first time Apple's hugely popular wireless earbuds have been produced outside China. According to the report, Apple has asked component suppliers to support Goertek's efforts, despite initially only green-lighting very small volumes of AirPods.

Apple has traditionally sourced its wired EarPods in Vietnam, but AirPods have so far been made exclusively in China by the likes of Inventec, Luxshare-ICT, and GoerTek. The move is said to be a consequence of Apple seeking to source 15 to 30 percent of its output outside of China, where cost and manpower advantages are beginning to fade.

Thanks to the continuing success of AirPods, Apple now dominates nearly 70 percent of the truly wireless headphone market. With Samsung, Huawei, Sony and Google bringing their own truly wireless headphones to market, global shipments of all wireless earbuds are forecast to surge from 48 million pairs in 2018 to 129 million pairs by 2020, according to Counterpoint.

Apple plans to release third-generation AirPods with water resistance in late 2019, according to multiple rumors. The first two generations of AirPods do not have IP-rated water or dust resistance, despite standing up to water exposure well.

In March 2019, Apple launched its second-generation AirPods powered by an Apple-designed H1 chip, enabling hands-free "Hey Siri" functionality and up to 50 percent more talk time compared to the original AirPods. The second-generation AirPods feature the same outward design as the original.

In April, reputable analyst Ming-Chi Kuo said two new AirPods models will likely go into mass production between the fourth quarter of 2019 and the first quarter of 2020, with one of the new models featuring an "all-new form factor design" and a "higher price" than the second-generation AirPods, which start at $159.