Daily newspaper: Apple sharply cuts a product that is produced in large quantities in Vietnam

Apple is cutting its AirPods wireless earbuds production plan from 25% to 30% this year as increased competition reduces sales of the US tech giant’s fastest-growing product line, the The source told Nikkei Asia.

Apple is currently expected to produce between 75 million and 85 million units by 2021. The previous production forecast was 110 million units. The downward adjustment plan shows that demand is weakening for the AirPods. Shipments of this item have grown at double digits since its launch in 2016.

” The most significant drop in orders was in Q2 through early Q3,” said one of the people familiar with the matter. “The AirPods’ store inventory and inventory are currently high … and demand is high. demand was not as strong as expected . ”

Data from research firm Counterpoint Research shows that Apple shipped about 72.8 million AirPods last year, dominating the wireless headphones market with 31% market share.

But despite its lead, sales have not been as good as Apple’s expectations – the company asked suppliers to make between 80 million and 90 million units of AirPods last year, many sources know. direct on this said issue. They added that unsold AirPods became inventory.

The AirPods were one of the few Apple devices that didn’t see a significant increase in sales late last year, as more users turned to cheaper wireless earbuds. In contrast, the MacBook and iPad lines are in strong demand, as Covid-19 pushes people to work from home.

Apple has played a key role in developing the wireless headset market. After the advent of the first generation of AirPods, competitors like Samsung, Huawei and Xiaomi all launched similar devices. Smaller, unbranded manufacturers of electronics also got into the fray.

According to data from Counterpoint, competition has reduced Apple’s market share, from 60% in 2018 and 47% in 2019 to 31% last year, according to data from Counterpoint.

Apple did not respond to Nikkei’s request for comment.

Liz Lee, an analyst at Counterpoint Research, told Nikkei Asia that they expect true wireless headphone shipments globally to grow 33% this year to 310 million units. AirPods shipments will also grow, she said, but Apple ” will lose market share because of increasing competition in the global wireless headset market “.

AirPods are one of the earliest products that Apple diversified from China to Vietnam. Luxshare and GoerTek – the two main Apple manufacturers in China – have expanded production capacity in Vietnam since 2019, leveraging the supply chain built by Samsung in the country. Unlike all previous Apple products, AirPods Pro and AirPods Max were mass produced in Vietnam for the first time, not in China, Nikkei said.

The explosion of AirPods products has been a blessing for these two Chinese assemblers. GoerTek’s revenue increased more than 64% and net profit doubled last year, while Luxshare’s revenue increased 48% and net profit increased more than 50% in the same period.