Rare earths shortage hits Foxconn unit; Apple AirPods production in India faces hurdles

Time of India

3 days ago

Production of Apple AirPods has been hampered at Foxconn's Telangana plant due to shortage of dysprosium, a direct result of China's clampdown on the export of rare earth metals, said people aware of the matter.The Foxconn Interconnect Technology (FIT) factory is located at Kongara Kalan, about 45 km from Hyderabad. FIT, listed on the Hong Kong Stock Exchange, is a core subsidiary of Hon Hai Technology Group (Foxconn), Taiwanese multinational electronics contract manufacturer.The Apple vendor said production hasn't been disrupted. It had begun making AirPods at the India plant in April last year, as part of Apple's broader strategy to diversify manufacturing from China.The earbuds contain neodymium and dysprosium, among other rare earth metals. Neodymium, used as a magnet, is mined in China and elsewhere.Foxconn brought the supply issue to the notice of the Telangana government, said one of the people cited.The Telangana government, in turn, raised the matter with the Department for Promotion of Industry and Internal Trade (DPIIT), said the person. 'Foxconn has sought the state government's help to get the end user certificate (EUC) certified and attested by central ministries,' the person said.The EUC verifies the recipient and intended use of goods, especially those with a potential for misuse or diversion.'Foxconn got the end user certificate from the ministry of external affairs and the Chinese embassy, as part of the process,' said another person. 'After that, Foxconn's supplier submitted it for approval (of dysprosium exports) to the Chinese government. But it is still pending, and the (Chinese) government has not given approval yet. Once that is done, the supplier will export the rare earth metal.'Apple didn't respond to queries. Foxconn said it 'has no comment on the issue,' adding, 'There is no disruption to production.'In India, Apple counts Foxconn and Tata Electronics as its major suppliers. Foxconn is Apple's biggest contract maker globally.'There was indeed some slowdown in production at the Foxconn AirPods plant, but it seems to have improved now,' said another industry official. 'The supply chain for the metal is a bit longer, but the company is managing the situation now.''The Foxconn logistics team is expecting approval by the end of this month,' said the second person quoted earlier. 'The stipulated time frame from the date of application for approval is 45-50 days. Foxconn is working with whatever rare earth metals and dysprosium are already available with them to extend the product cycle before they get the additional material.'Seven categories of medium and heavy rare earths — samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items — were placed on an export control list by China early in April in retaliation to US President Donald Trump's tariff threats.ET reported on July 18 that the India Cellular and Electronics Association (ICEA) lobby group had informed the government that the curbs were leading to delays and inflating costs. Apple and Foxconn are among ICEA's members.It was reported earlier this month that Foxconn had recalled over 300 Chinese engineers, reportedly at the behest of Beijing, from its Indian iPhone manufacturing plants. Experts said at that time that while Chinese engineers can possibly be replaced by Taiwanese professionals, the bigger concern was machinery and metals. Curbs on those make it harder to sustain operations, they had said.China issued its first rare earth mining and smelting quotas for the year on July 18, according to Reuters. The quotas are closely monitored as a barometer of the global supply of rare earths, a group of 17 elements used in electric vehicles, wind turbines, robots and missiles, the news agency said. China is the world's largest producer of the minerals.'The ministry of commerce said they've heard the same (complaints) from automotive manufacturers and have alerted the Indian embassy in Beijing to find out how to tackle this issue and sort it out,' said the first person cited earlier.Apart from electronics, dysprosium is used in laser targeting systems and military communications. It also enhances the temperature resistance of neodymium magnets. The input is also critical for maintaining equipment performance in extreme conditions.