Apple just spent $500 million to source a material that's critical for iPhones from the US

CNN

5 hours ago

Apple is investing $500 million in a deal with US rare earths company MP Materials as the iPhone maker faces pressure from President Donald Trump to produce its popular smartphones domestically.
As part of the partnership announced on Tuesday, Apple committed to buying rare earth magnets directly from MP Materials to help bolster its US supply chain. Apple will also collaborate with the company on a new recycling line in California, which will repurpose recycled rare earth materials to use in Apple products.
The move is part of a $500 billion investment Apple announced earlier this year to expand its US operations as the Trump administration pushes to onshore technology manufacturing and reduce reliance on China. Rare earths, which are critical for everything from smartphones to TVs and military jets, have been a key bargaining chip in trade talks between Washington and Beijing. That's because China controls nearly all rare earths processing.
'American innovation drives everything we do at Apple, and we're proud to deepen our investment in the US economy,' Apple CEO Tim Cook said in a press release. 'Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States.'
MP Materials' facility in Fort Worth, Texas, will create new magnet manufacturing lines specifically for Apple products. Shipments are expected to begin in 2027 and will eventually support 'hundreds of millions of Apple devices,' according to MP Materials. The materials will be delivered throughout the United States and around the world.
Apple says the expansion will create dozens of new jobs. Both companies will also provide training to develop a US workforce for magnet manufacturing.
China has a virtual monopoly on rare earth elements, which are critical components for everyday products from smartphones to wind turbines to LED lights and flat-screen TVs. They're also crucial for batteries in electric vehicles as well as MRI scanners and cancer treatments.
The name rare earths is also a bit of a misnomer. The materials are found throughout the Earth's crust but are difficult and costly to extract and process. China has the only equipment needed to process some of the various elements and currently controls 92% of the global output in the processing stage.
While the MP Materials deal could help Apple curry favor with Trump amid tariff threats, it also aligns with Apple's efforts to incorporate more recycled materials into its products – a plan already in place long before Trump took office.
The iPhone 16e, which launched earlier this year, includes 30 percent recycled content, for example. Apple says it uses recycled rare earths in its major products, including in magnets found in the latest iPhones, iPads, Apple Watches, MacBook and Mac models.
The Trump administration has been pushing for Apple and other tech giants to produce their products in the United States rather than rely on assembly facilities and supply chain operations largely located in China, India and Vietnam.
'I have long ago informed Tim Cook of Apple that I expect their iPhone's that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,' Trump posted on Truth Social in May. 'If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.'
Apple hasn't discussed plans to move iPhone manufacturing to the US, and doing so seems unlikely. That's because it would require the tech giant to upend how it builds its most lucrative product.
Critically, Apple and MP Manufacturing's collaboration involves developing the talent pool needed for magnet manufacturing. That's part of the reason why it's so challenging to move iPhone production to the United States – America lacks the highly specialized labor required to do so, experts have said.
'The expertise to make each of the components is something that has to be worked on for a long period of time,' David Marcotte, senior vice president at international market research company Kantar, previously told CNN.
Cook has also spoken about the labor gap in the past, describing the workforce in China as being a combination of 'craftsman' skills, 'sophisticated robotics' and 'the computer science world' when speaking at a Fortune Magazine event in 2017.
But the commitment to invest in US-sourced rare earths is likely to please Trump. The president has touted Apple's previous investment announcement as a victory in his efforts to boost American manufacturing.
Apple is just one of many tech giants that have expanded their American footprint over the past several months. Texas Instruments committed $60 billion to make semiconductors in the United States in June, and Taiwanese chipmaking giant TSMC invested $100 billion in US manufacturing in March. Leading AI chipmaker Nvidia also said it would build its supercomputers in the United States in April.
– CNN's Chris Isidore contributed to this report