Amid the Chinese government’s restrictions on rare earths, Apple Inc’s Telangana factory has turned to Japan to procure the rare earth magnets needed for manufacturing their wireless earbuds. The facility here, which is run by Foxconn and is responsible for assembling its AirPods had to shut down for two weeks till June end due to the shortage of the magnets needed for production.
Government sources told Business Standard that this quick action by Apple Inc has helped them to restart production of AirPods at their Kongara Kalan factory from the beginning of July. In order to ensure continuity in production, the company told the government that they are looking at other sources to procure the magnets, which also include Uzbekistan.
Currently, the AirPods are only for exports, mainly to the US and Europe.
Additionally the company has also informed the government that this move could increase the cost of producing the AirPods in India as compared to China. Sources further stated that this could thereby make them globally uncompetitive, especially because the focus is on exports
Queries sent by BS to Apple and Foxconn remain unanswered till press time.
The company was forced to close the factory for two weeks after facing serious supply issues for magnets in June. As a part of Apple’s broader strategy to diversify manufacturing from China, the contract manufacturer for Apple, Foxconn, began making AirPods at the India plant in April last year.
These earbuds manufactured by Apple contain neodymium and dysprosium, among other rare earth metals. Used to make permanent magnets, these heavy rare earth elements are produced in China and some other parts of the world.
Foxconn and Tata Electronics are Apple’s major suppliers in India and the former is also Apple’s biggest contract maker globally.
As China tightens it export restriction, Indian companies across several industries like electric vehicles (EVs), drones, etc. have been suffering major blows as they have not been receiving one of their key elements production – rare earth magnets, since April.
Foxconn Interconnect Technology, a subsidiary of Foxconn, has invested $500 million in the plant and more than 5,000 workers are manufacturing AirPods there, only for the export market. The factory is further expected to hire over 15,000 workers in its full capacity. During the plant closure, the workers were asked to stay home.
Around a year ago, Apple faced challenges with the Chinese government sitting on applications to import machinery for making iPhones in India. The matter exacerbated this year when the Chinese Customs indefinitely held machines that are required to be retrofitted on the assembly lines for manufacturing the upcoming iPhone 17.
However, the biggest blow came recently when the Chinese government instructed Foxconn to withdraw over 300 Chinese engineers and technicians from its Indian factories.
Earlier this year, China placed seven categories of medium and heavy rare earths on the export control list in response to US President Donald Trump’s tariff threats. These elements include samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items.
