A method of manufacturing an axle tube housing for a differential assembly includes heating a localized area (108) of a one-piece tubular blank (102). A mandrel (116) is inserted within the tubular blank and the localized area (108) is then deformed to provide an increased wall thickness. A compression force is applied to the localized area of the one-piece tubular blank using a forging die (126) to form a spindle section, wherein the spindle section closely conforms to at least one of the forging die (126) and the mandrel (116). The remaining portion of the one-piece tubular blank is then cold reduced to form a carrier section.