Ming-Chi Kuo: Third-Generation AirPods Mass Production Won’t Begin Until Q3 2021

Ming-Chi Kuo: Third-Generation AirPods Mass Production Won’t Begin Until Q3 2021

There have been numerous rumors about Apple’s upcoming third-generation AirPods, including alleged renders of the new totally wireless earbuds, and now we have an idea of when they might hit store shelves.

Mass production of Apple’s third-generation AirPods will begin in the third quarter of 2021, says an investors note from well-connected industry analyst Ming-Chi Kuo, which was shared by MacRumors. That means the AirPods 3 would not ship until later in the year, likely in time for the 2021 holiday shopping season. Other rumors have suggested that the third-gen AirPods are ready to ship.

Kuo expects ‌AirPods‌ shipments from the first quarter of 2021 to the third quarter of 2021 to decline by about 25 percent year over year to 55 million units. Should demand for the ‌AirPods‌ 3 be better than expected, fourth quarter ‌AirPods‌ shipments will remain flat year over year at 23 million units. Overall ‌AirPods‌ shipments across 2021 are expected to decline to 78 million units, down from 90 million in 2020.

Kuo says that the AirPods Max have offered “limited help” to ‌AirPods‌ shipments, with an annual shipment of about one million units.

Kuo doesn’t know for sure whether Apple’s current AirPods 2 earbuds will still be produced once AirPods 3 mass production goes into full swing. Kuo says Apple is faced with a dilemma, if they continue producing the AirPods 2 and sell them at a lower price it could affect third-generation AirPods demand, however, the lack of a lower-priced AirPods option could have a negative effect on overall AirPods sales.

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.

Kuo says a drop in AirPods shipments is due to increased competition, as there are a number of low-priced true wireless earbud options now available. While AirPods offer quick device pairing and fast device switching capabilities, Kuo says competitors are gradually improving their user experiences while offering lower prices.

Kuo believes Apple will need to offer hardware innovations to maintain differentiate its earbuds from those of competitors. Kuo suggests Apple could offer health management functionality and more to improve AirPods shipments in the future.