Apple Looking To Diversify Its Manufacturing Base, Will Make Headphones In Vietnam

Apple Inc. AAPL is looking to shift the manufacturing of 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 ever 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.

Some of the headphones will still be built by contract manufacturers in China, but even shifting some of the manufacturing away from the country is an indication of Apple’s intention of diversifying 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 in order 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 session 0.58% higher at $313.14.