China's Rare Earth Grip Slows Apple AirPods Production in India

China's strategic restrictions on the export of heavy rare-earth metals, imposed in April, are sending ripples across global supply chains, with tangible impacts now being felt in India's burgeoning electronics manufacturing sector. Production of Apple's popular AirPods at a Foxconn facility in Telangana has been directly affected by a shortage of these critical materials, a development that underscores the vulnerabilities inherent in the global technology hardware industry and poses a significant challenge to India's "Make in India" ambitions. The disruption highlights the intricate dependencies at play as companies like Apple seek to diversify their manufacturing bases away from China, only to find themselves still tethered to its dominance over essential raw materials.

The core of the issue lies in China's decision to place seven categories of medium and heavy rare earth elements—including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—under stringent export controls.[1][2][3] These measures, which require special export licenses, were implemented as a countermeasure to US tariff policies.[2][4][5] For Apple's AirPods production in India, the specific bottleneck is a shortage of dysprosium.[6][7][1] This element, along with neodymium, is a crucial component in the high-performance magnets used in the audio drivers of the earbuds, which are responsible for producing sound.[7][8] Foxconn Interconnect Technology (FIT), the subsidiary operating the assembly plant near Hyderabad, began manufacturing AirPods in India in April 2024 as part of Apple's larger strategy to de-risk its supply chain.[6][9] However, the reliance on China for dysprosium, of which it produces an estimated 95% of the world's supply, has quickly exposed the fragility of this diversification effort.[1]

The production slowdown at the Foxconn plant has prompted immediate action from the company, which has alerted both the Telangana state government and central government bodies, including the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Electronics and Information Technology (MeitY).[6][7][2] The primary hold-up is reportedly the wait for an End User Certificate (EUC) to be approved by Chinese authorities, a process that can take 45 to 50 days under normal circumstances.[1][2] While Foxconn has officially stated that production continues using existing inventory and has not been fully disrupted, industry insiders confirm a temporary slowdown has occurred.[6][1][3] The company is managing the situation with its current stock but anticipates needing fresh supplies by the end of the month to maintain production levels.[2][3] The situation has become a diplomatic issue, with the Indian government reportedly coordinating efforts to expedite the certification process.[1]

This incident serves as a stark warning for the broader Indian electronics and automotive industries.[1][10] Industry bodies like the India Cellular and Electronics Association (ICEA), which counts Apple and Foxconn as members, have warned the government that the export curbs are leading to delays and increased costs across the sector.[2] India's manufacturing ambitions are heavily reliant on imported components, particularly from China.[10] For instance, an overwhelming 93% of the permanent magnets imported by India, many of which contain rare earth elements, come from China.[10] This dependency makes sectors crucial to the "Make in India" initiative, such as consumer electronics, electric vehicles, and defense, highly susceptible to China's trade policies.[10][11][12] The current crisis has intensified calls for India to develop its own domestic capabilities in mining and, more importantly, refining rare earth elements.[1][10] While India possesses significant rare earth reserves, estimated at 6.9 million metric tonnes, it lacks the commercial-scale refining and magnet manufacturing capacity to be self-sufficient.[10]

In conclusion, the disruption to AirPods production in India is a clear manifestation of China's strategic leverage over the global high-technology landscape. While Apple and its partners like Foxconn have made significant strides in diversifying assembly operations, this episode reveals that the supply chain's foundations remain deeply rooted in China's control over critical minerals. The immediate challenge for Foxconn and Apple is to navigate the bureaucratic hurdles and secure the necessary dysprosium shipments to stabilize production. For the Indian government and the broader technology industry, this is a critical wake-up call. It underscores the urgent need to move beyond assembly and invest substantially in the upstream and midstream segments of the supply chain, particularly in the complex processing of rare earth elements. Without a resilient domestic source of these vital materials, India's ambitions to become a global electronics manufacturing hub will remain vulnerable to geopolitical pressures and supply chain weaponization. The future of "Make in India" may well depend on breaking this chokehold.[11]