Rare Earth Shortage Hits Apple AirPods Production in India

• Material bottleneck: Rare earth shortages disrupt AirPods production in India
• Global dependency: India lacks domestic refining capacity, relies on imports
• Policy push needed: Industry seeks faster action on critical mineral strategy

Apple's plans to ramp up AirPods production in India have reached a breaking point when it comes to a lack of rare earth elements. Foxconn, Apple’s main supplier that produces its devices in the country, has reportedly been unable to procure the critical raw materials needed to produce essential components for goods, including speakers, microphones, and vibration modules.

Rare earths, or more accurately group of 17 metallic elements that include the likes of neodymium and dysprosium, are essential to all modern electronics and hardware manufacturing. Despite India's emergence as an electronics assembly hub over the near term, trade flows are highly fragmented - reliant on imports of raw materials with China controlling over 85% of supply.

Foxconn's operations in Tamil Nadu, which recently expanded operations to bolster Apple's supply chain shift, have been affected by delays in raw materials procurement because disruptions in trade flows  combined with tightening Chinese export restrictions. According to industry executives, while manufacturing overall is still in effect – enough rare earths exist for partial slowdowns on manufacturing key rare earths, specifically neodymium and dysprosium.

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The disruption demonstrates the precariousness of India's electronics manufacturing ecosystem in relation to raw material security. Even while India is trying to present itself as a global center under the "Make in India" and Production Linked Incentive (PLI) programmes, strategic inputs such as rare earths remain a serious liability.

India has some domestic rare earth reserves, notably in Odisha and Kerala, but there is no large-scale rare earth refining or processing capability. India is attempting to advance rare earth mining and critical mineral partnerships with countries such as Australia and the US but these processes are still in their initial phases.

Reportedly Foxconn, along with Indian and global electronics industry bodies, has previously asked the government to facilitate rare earth imports and construction of refining capacity. The slowdown is also expected to impact production forecasts for AirPods units intended for both domestic and export markets in the coming quarters.