Foxconn, a Taiwanese contract manufacturer, has won an order to manufacture Apple Inc’s AirPods and plans to build a factory in India to produce the wireless earphones.

Foxconn, the world’s largest contract electronics manufacturer and assembler of approximately 70% of all iPhones, will become an AirPod supplier for the first time, highlighting the company’s efforts to diversify production away from China. AirPods are currently manufactured by a number of Chinese companies.

According to one source, Foxconn will invest more than $200 million in the new India AirPod plant in Telangana, a southern Indian state. The value of the AirPod order was not immediately clear.

Foxconn officials debated whether to assemble AirPods for months due to the device’s relatively lower profit margins, but ultimately decided to go ahead with the deal to “reinforce engagement” with Apple.

Apple requested the decision to establish production in India.

To win more orders from Apple, the world’s most valuable company, Foxconn competes with Taiwanese rivals such as Wistron Corp and Pegatron Corp. Foxconn Interconnect Technology Ltd, a subsidiary, plans to begin construction of a manufacturing facility in Telangana in the second half of this year and begin production by the end of 2024 at the earliest.

Apple and its key suppliers have shifted production away from China, where strict COVID-19 restrictions disrupted Foxconn’s largest iPhone factory last year. They are also attempting to avoid the potential economic impact of rising Sino-US trade tensions.

Foxconn announced on Wednesday that it would increase its investment outside of China in order to meet customer demand and reduce its reliance on China for production. It was unclear whether Foxconn’s production plans would affect current AirPod suppliers, such as Luxshare Precision Industry.

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