Apple’s plan to ramp up AirPods production could be delayed due to the ongoing coronavirus outbreak in China.
Demand for Apple’s popular AirPods, both the original version and the slightly more expensive second-generation model, have become an unexpected hit for the Cupertino company. Apple’s latest earnings report helped emphasize this as sales of the wireless headphones were a big component in the revised guidance that helped inspire a rally that drove the company’s market cap close to new records.
But waiting periods for the AirPods might seriously swell if Apple’s suppliers can’t produce the 45 million pairs that the company has ordered for the first half of the year, reads a new Nikkei report:
The US tech giant had ordered its suppliers to produce up to 45 million units in the first half of the year to keep up with surging demand for the wireless earphones.
Now, however, the current stock of AirPods is running low, with most of the finished products reserved for Apple’s own online and offline stores, the sources said. Currently, the standard AirPods are still in stock, according to Apple’s official online store, while there is a one-month waiting period for the premium AirPods Pro launched last September.
Three Apple suppliers charged with assembling Air Pods have at most two weeks of production materials left before they will need to order from other suppliers across China — many of which have halted production. Several of the three main suppliers are supposed to return to work on Monday, but their productivity levels might remain mired at below 50 percent of peak capacity:
Luxshare Precision Industry, also known as Luxshare-ICT, Goertek and Inventec, the three key manufacturers of the AirPods, have halted the majority of production since the Lunar New Year break began, two people familiar with the matter told Nikkei. The three companies now have at most two weeks’ worth of materials and components needed for AirPods assembly, and must wait for component makers across China to restart operations in order to receive fresh supplies, the people said.
“One of the big concerns is whether other parts suppliers in China can smoothly resume work to produce enough parts for final assembly,” said a person familiar with the situation. “We really have to wait and see how things play out next week. If the assemblers could not get enough supply of parts in two weeks, it will be a big problem.”
With this being said, AirPods Pro are still back-ordered by over a month, even directly from Apple.
In January, Apple CEO Tim was asked by analysts when the company would catch up to demand for the newest AirPods. “I just can’t predict when at this point,” Cook said. “We seem to be fairly substantially off there, and we’re working very hard to put in additional capacity.”