Mass production of Apple’s unannounced AirPods 3 is now expected to begin during Q3 2021.
TF International Securities and Apple analyst Ming-Chi Kuo has released a new investors note, obtained by MacRumors, stating that production of the upgraded AirPods is likely set for later this year. Prior to the new report, Kuo was adamant that the AirPods 3 would be ready to launch in the first half of 2021.
However, given the newly refined timeline, if mass production is not scheduled until the third quarter of the year, the release of the AirPods 3 may not come until Q4 2021 at the very earliest.
It’s been rumoured that the AirPods 3 will feature a redesign, akin to the AirPods Pro to provide a more form-fitting aesthetic to the wireless earbuds. The newly designed AirPods are also expected to feature a shorter stem, active noise cancellation, and silicone ear tips.
In addition to setting expectations for the AirPods 3 production, Kuo states that AirPods shipments from Q1 2021 to Q3 2021 will likely decline 25 percent. This will result in roughly 55 million unit ships during that time. Kuo notes that should the demand for the AirPods 3 exceed expectations, Q4 shipments will remain flat at an estimated 23 million units. In total, it’s expected that overall AirPods shipments may decline to 78 million. For comparison, Apple shipped 90 million units in 2020.
Based on the report, it appears as though Kuo is hesitant to predict whether Apple will discontinue the AirPods 2 upon the release of the new iteration.
If AirPods 2 will go to end-of-life after AirPods 3’s mass production, we estimate AirPods 3, AirPods Pro, AirPods 2, and AirPods Max will account for about 40%, 28%, 31%, and 1% of total shipments, respectively, in 2021. If AirPods 2 will continue production after mass production of AirPods 3, we estimate AirPods 3, AirPods Pro, AirPods 2, and AirPods Max will account for about 32%, 28%, 39%, and 1% of total shipments in 2021, respectively.
When touching on the decline of AirPods shipments, Kuo states that a large attributing factor is competition. With many competitors offering similar products at a lower price, Apple must maintain market dominance. Although AirPods do provide unique user experiences, competitors can offset that with a more tangible price tag paired with their own user-friendly features. Kuo notes that health management features and hardware innovations must be focal points Apple leverages in order to maintain market dominance.