Apple Airpods
Hollis Johnson/Business Insider
  • Apple is scaling back AirPods production by 25% to 30% because of declining sales.
  • Competitors have emerged over the years and have taken a bite out of Apple's market share.
  • Apple held 60% of the wireless earphones market in 2018 and just 31% in 2020.
  • See more stories on Insider's business page.

Apple is dialing back production of its AirPods as sales dip amid increasing competition in the wireless Bluetooth headphones market, according to a report from Nikkei Asia.

Production will be slashed by 25% to 30% specifically, sources told the publication, and Apple now plans to make between 75 million to 85 million AirPods units this year compared to the 110 million that was previously forecast.

Apple did not immediately respond to Insider's request for comment.

Apple launched its AirPods in 2016 with a $159 price tag and paved the way for the wireless Bluetooth earphone market. The product quickly became a ubiquitous addition to Apple enthusiasts' collection, and the company later released its AirPods Pro for $250 that are equipped with noise cancellation technology.

Samsung then debuted its Galaxy Buds for $130, a cheaper alternative, in 2019 and others have since emerged on the market.

The competition has infringed on Apple's market share. Apple remains the leader with its AirPods taking up 31% in 2020, according to data from Counterpoint Research, as Nikkei notes, but that's down from 60% in 2018.

Since the start of the pandemic, Apple has seen increased demand for its MacBooks and other items that improve the work-from-home experience. That demand has contributed to a global chip shortage as automakers, electronics companies, and other industry players vie for a finite amount of the silicon component.

Read more: Apple's reportedly delaying its next Macs and iPads thanks to a global parts shortage, and it's a bad sign for the tech industry

But as Nikkei notes, AirPods did not see that same increase in demand that MacBooks saw. Apple requested 80 million to 90 million of the wireless earphones to be built in 2020.

Apple is reporting its fiscal second-quarter earnings on Wednesday, a week after debuting a new lineup of colorful iMac computers and a new iPhone 12 color at its April event.

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