Apple AirPods India production faces setback as China tightens rare earth material supply

India Today

22-07-2025

Apple's plan to make AirPods in India has hit a speed bump, and it has to do with a key material that's mostly controlled by China. According to a report by Moneycontrol, the issue lies in the supply of dysprosium, a rare earth metal used in tiny magnets that help AirPods work the way they do. Foxconn, the company making these AirPods in India at its Telangana factory, has been struggling to get enough of this material. And it's not because of internal mismanagement. The problem is bigger, and it's political. China recently tightened export rules on dysprosium and other rare earth materials, and that's made things difficult for companies operating outside the country.advertisementWhat's making this situation more complicated is that it comes just after Foxconn moved more than 300 Chinese engineers out of its Indian facilities. So, the timing has made some people wonder whether this supply issue is a one-off hiccup or something more deliberate. Either way, it's got Foxconn concerned. As per Moneycontrol, the company has flagged the issue to the Telangana government and several central ministries, including the Ministry of Electronics and Information Technology (MeitY), the Department for Promotion of Industry and Internal Trade (DPIIT), and even the Prime Minister's Office (PMO). Everyone's aware now, but solving this might depend on how talks between India and China progress from here.With that said, despite the trouble, Apple's AirPods production in India hasn't stopped entirely. The report further mentions that both Apple and Foxconn had foreseen some of these problems months in advance and managed to build a buffer. So, for now, they're somehow able to keep going. There's also word that Foxconn is working with the Indian and Chinese governments to get something called an End User Certificate, which is required by China before it can allow the export of such sensitive materials.
Counterpoint Research's Neil Shah told Moneycontrol that the situation shows just how reliant the tech world still is on China for rare earth materials. And he's right. Dysprosium and other rare earth metals play a critical role in electronics. Without them, it's tough to maintain the same product quality.As of now, Foxconn's Indian unit contributes only a small share of Apple's global AirPods production. But it was seen as a key part of Apple's efforts to reduce its dependence on China. This supply roadblock gives an advantage to Apple's other partners, like Luxshare and Goertek, both of whom have production facilities in Vietnam.There's concern that this kind of disruption could hurt India's electronics manufacturing dreams in the long run, especially under the PLI scheme. If material shortages continue or worsen, it could affect pricing, timelines, and possibly even product features.- Ends