China’s rare earth metal export curbs may soon begin hitting production of Apple AirPods in India. China has stepped up restrictions on exports of rare earths and various industry sectors have raised the alarm on the possible impact of the unavailability of these important components.AirPods components include rare earth elements such as neodymium and dysprosium. Neodymium, which is utilised for its magnetic properties, is available from multiple sources including China.According to an ET report, manufacturing of Apple AirPods faces challenges at Foxconn’s Telangana facility due to the limited availability of dysprosium.The company maintains that production continues unaffected as of now. The facility started the AirPods manufacturing in April 2023, aligning with Apple’s initiative to expand manufacturing beyond China.The FIT (Foxconn Interconnect Technology) manufacturing unit is situated at Kongara Kalan, approximately 45 km away from Hyderabad.Also Read | Donald Trump warns Apple about ‘Make in India’, will Tim Cook-led iPhone maker listen?FIT, which trades on the Hong Kong Stock Exchange, is a principal subsidiary of the Taiwanese electronics manufacturing giant Hon Hai Technology Group (Foxconn).
Foxconn’s Course of Action
Sources told the financial daily that Foxconn has raised the issue of supply shortages with Telangana government officials.
AirPods Production in India
The Telangana government has in turn escalated the issue to the DPIIT, sources said. “Foxconn has sought the state government’s help to get the end user certificate (EUC) certified and attested by central ministries,” the source told ET.An EUC basically is a documentation that aims to confirm who the final recipient of the product will be what will the product be used for. This is particularly needed by China for items that are perceived to be susceptible to misappropriation or alternative usage.“Foxconn obtained the end user certificate from the ministry of external affairs and the Chinese embassy, as part of the process,” another source revealed. “Subsequently, Foxconn’s supplier submitted it for approval (of dysprosium exports) to the Chinese government. However, approval remains pending from the (Chinese) government. The supplier will proceed with rare earth metal export once approved.”In the Indian market, Apple’s primary suppliers include Foxconn and Tata Electronics. Globally, Foxconn is Apple’s largest contract manufacturer.Also Read | Why Apple won’t find it easy to move iPhone production from India to US
Impact of China’s Rare Earth Export Curbs
China has imposed export restrictions on seven categories of medium and heavy rare earth elements — samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items — in early April as a countermeasure to US President Donald Trump’s tariff threats.On July 18, the India Cellular and Electronics Association (ICEA), whose members include Apple and Foxconn, notified the government about delays and increased costs resulting from these restrictions.“Production at the Foxconn AirPods facility experienced a temporary reduction, but conditions have since stabilised,” an industry representative was quoted as saying. “Despite extended metal procurement timelines, the organisation has the situation under control.”“The logistics division at Foxconn anticipates receiving authorisation by month’s end,” according to the second source mentioned previously. “The standard processing duration from application submission to approval spans 45-50 days. Foxconn continues operations with their existing stock of rare earth metals and dysprosium to sustain production until additional supplies arrive.”Earlier this month, reports emerged that Foxconn had withdrawn more than 300 Chinese engineers from its Indian iPhone production facilities, allegedly following Beijing’s instructions. While industry experts suggested that Taiwanese professionals could potentially replace Chinese engineers, they emphasised that the primary concern lay with access to machinery and metals, as restrictions on these resources could significantly impact operational sustainability.
