In response to rising demand for one of its hottest products, Apple is increasing its business in China, despite the U.S.-China trade war.
Recent reports suggest that Apple has asked two Chinese manufacturers to increase production of AirPods to meet demand over the holiday period. As a result, the stock prices of both Chinese manufacturers have risen.
According to a recent Nikkei Asian Review report, the threat of tariffs has not deterred Apple from increasing production of its wireless earbud series, AirPods. Anticipating a boom during the holiday period, it is reported that Apple has asked its suppliers in China to double shipments.
Luxshare Precision, a Chinese designer and manufacturer, is expected to increase monthly production of AirPods Pro to 2 million units per month. In addition, it is believed that Apple have asked Goertek, a Chinese acoustic components company, to boost production at its factories in Vietnam to help Apple reduce the cost of purchasing parts.
In the wake of this story breaking, the stocks of both Chinese suppliers rose, with Luxshare Precision experiencing a 3.84% increase.
Despite the ongoing trade war between China and the United States, it appears that Apple is still comfortable strengthening its cooperation with Chinese companies.
The AirPods Pro, Apple’s latest generation of wireless headphones, were released at the end of October for US$249 on its official website (see Apple released AirPods Pro in the early morning). Due to strong demand, expected delivery times can be up to one month.
An AirPods production facility in China.
Apple is gradually adapting to the slowdown of demand for the iPhone in a saturated smartphone market. This has resulted in wearable devices such as AirPods and the Apple Watch becoming important growth drivers for Apple, with the AirPods series becoming Apple’s fastest-growing product line.
Luxshare Precision was founded in 2004 by Grace Wang, a former production line worker at Foxconn. Luxshare Precision entered the Apple supply chain in 2012 and became one of Apple’s parts suppliers. Since 2017, Luxshare Precision has started manufacturing AirPods and this year has won orders for the assembly of Apple Watch. Apple CEO Tim Cook has praised Luxshare Precision’s success as the realization of Apple’s “China Dream”.
In the previous quarter, sales of Apple’s iPhone fell from $36.8 billion to $33.4 billion, when compared to the same period last year. In comparison, Apple’s wearables and smart home products have generated $6.5 billion in revenue, a 54% increase year-on-year.
— Elaine Lin is Editor-in-chief of ESM China (a sister publication of EE Times)