After a drop in sales, Apple cuts AirPods production by 25% to 30% – Report

Nikkie Asia reports that this year, Apple is cutting AirPods production by 25% to 30% due to a dip in wireless earphone sales. Sources say that low to mid-range wireless earphones from Samsung and Xiaomi have impacted AirPods sales.

Earlier this month, it was reported that Apple shipped 108.9 million AirPods and Beats headphones in 2020 which more than combined sales of Samsung, Xiaomi, Sony, and Edifier audio products. Dominating the global market with a 25.2% share, Apple headphones accessories saw up to 30% year-on-year growth in 2020. However, the intense competition has compelled the Cupertino tech giant to reduce its previous 110 million units forecast to 75 or 80 million units for 2021.

AirPods demand weakens in 2021 because of intense competition in the wireless earphones industry

Quoting data from analysts, Nikkie Asia writes that growing competition has shrunk Apple’s market share from 60% in 2018 and 47% in 2019 to 31% in 2020.

Liz Lee, an analyst with Counterpoint Research, told Nikkei Asia that her agency expects global shipments of true wireless headphones to grow 33% this year, to 310 million units. AirPod shipments will also grow, she said, but Apple “will lose market share, as the competition is intensifying in the global true wireless headphone market.”

And now Apple’s wireless earbuds are retailing for 1,498 yuan ($231), a 25% discount compared with its original price tag of 1,999 yuan on Chinese e-commerce platforms. And as sales fall short of Apple’s expectations, the company has “requested that suppliers build around 80 million to 90 million AirPods last year, said multiple sources with direct knowledge of the matter said. The unsold AirPods became inventory, they added.”

Furthermore, the report states that the introduction of similar products by rivals was the primary reason for lower sales.

Following the introduction of the first generation of AirPods, smartphone rivals including Samsung, Huawei and Xiaomi all launched similar devices. Smaller, unbranded electronics makers have also joined the fray with cheaper alternatives.

This report is corroborated by an earlier study which predicted that “despite a lead in 2020, Apple’s marketing share is expected to reduce in 2021, because of new products and stronger competition from companies like Xiaomi and Samsung”.

Apple is rumored to launch the low-cost AirPods 3 in Q3 2021 with no feature active noise cancellation and ear tips in the same AirPods Pro design with a smaller and wider case. Maybe, the next-generation wireless earphone will help the company regain its market share.