Taiwanese contract manufacturer Foxconn has won an order to make AirPods for Apple Inc and plans to build a factory in India to produce the wireless earphones, two people with direct knowledge of the matter told Reuters.

The deal will see Foxconn,the world’s largest contract electronics maker and assembler of around 70 per cent of all iPhones, become an AirPodsupplier for the first time and underlines efforts by the key Apple supplier to further diversify production away from China. AirPods are currently made by a range of Chinese suppliers.

One source said Foxconn will invest more than $200 million in the new India AirPod plant in the southern Indian state of Telangana. It wasn’t immediately clear how much the AirPod order would be worth.

The person, who requested anonymity as the matter was not public yet, said Foxconn officials had debated internally for months about whether to assemble AirPods due to relatively lower profit margins on making the device, but ultimately opted to go ahead with the deal to “reinforce engagement” with Apple.

“That way, we are more likely to get orders for their new products,” the person said. The decision to set up production in India was requested by Apple, according to the source.

Foxconn vies with Taiwanese rivals such as WistronCorp and Pegatron Corp to win more orders from Apple, the world’s most valuable company.

A subsidiary, Foxconn Interconnect Technology, plans to start 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, the person said.

Shares in the Foxconn unit jumped nearly 9 per cent after Reuters first reported the news, reversing an earlier loss of 2.2 per cent.