Vietnamese Production Could Give Apple AirPods Pro an Edge During Chinese Coronavirus Outbreak
Production of Apple AirPods Pro may not be as hard hit as other technology by the spread of coronavirus after Apple started turning to factories in Vietnam last year. The shift, mentioned in a Wall Street Journal editorial this week, suggests the earbuds won’t face the same squeeze on manufacturing as other devices built by Apple and its fellow tech giants in China.
Coronavirus and Tariffs
Apple, Google, and most major American tech companies build some or all of their creations in Chinese factories. As the coronavirus has spread in China, many of those factories have scaled back their production schedules, voluntarily or when ordered by the government, because of public health concerns. The products that are built then face similar problems in shipping to the U.S. as every part of the supply chain tries to cope with the virus and limit its spread. The predictable consequence is that companies can send fewer devices to the U.S. for sale.
Last year, Apple started the process of moving AirPods Pro manufacturing to two Vietnamese factories owned by some of its Chinese contract manufacturers. The reason had nothing to do with the then-unknown coronavirus; it was because of new tariffs imposed on importing goods made in China to the U.S. The list of products including headphones, so switching where AirPods Pro earbuds were built was logical. AirPod construction is also easier to move than iPhones or other Apple products because they have far fewer components, including the many tiny screws. Airpods are put together with industrial glue.
According to a CNBC report, Google and Microsoft are also looking to shift production out of China. Microsoft is hoping to build computers in Vietnam, while Google is expected to turn to Vietnam for manufacturing the Pixel 4a smartphone and Thailand for its smart speakers. Any change in where complex technology is constructed takes time, however, which is why the starting the process last year gives AirPods Pro an edge.
Apple has said its goal is to produce four million AirPods Pro a month. That’s 48 million a year, suggesting Apple is very optimistic that there are lots of people willing to pay $250 for the premium version of its wireless earbuds. The non-premium version of the AirPods are leaders in the market, but Apple may see the AirPods Pro as poised to take their place despite the price point. For now, the Pro version seems to be still aimed at those willing to pay more for Apple’s best tech.
Apple faces an increasingly crowded hearables market. High-end hearables like Jabra and Microsoft’s Surface Earbuds are priced similarly to the AirPods Pro but lack some of Apple’s unique features. Most of the frenzy is happening at the moderate and entry-level scale, with Amazon’s $129 Echo Buds, Samsung’s new $149 Galaxy Buds+, and Google’s prematurely announced $149 Pixel Buds. None of that will matter, though, if they can’t get built and sold.