According to the report, the AirPods 3 will include a number of new features to compete with similar products from Samsung, Huawei, and Xiaomi.
Taiwanese company Inventec will reportedly be the major manufacturer of the new wireless earbud, assisted by Chinese manufacturer Luxshare Precision.
One of the big new features coming to the AirPods 3 is noise cancellation technology, which poses significant challenges when implemented on a product like AirPods due to the increased power consumption and more advanced assembly required.
Apple launched its second-generation AirPods last month, offering optional wireless charging and improved power efficiency.
Other major tech companies including Amazon are also readying products to compete with Apple's popular AirPods earbuds.