AirPods Production in India Faces Setback as China Restricts Rare Earth Metal Exports: Report

Apple commenced the production of AirPods in India for the first time earlier this year. However, it now faces a setback after China restricted exports of rare-Earth metals in April. Some of those metals are deemed as key components during the manufacturing process. According to a report, the supply disruption has hit the Foxconn Interconnect Technology (FIT) factory in Telangana. However, the situation is reportedly being managed and the production of AirPods has not hit a complete roadblock.

AirPods Production in India

Citing sources familiar with the matter, MoneyControl reported that Foxconn's Telangana facility is facing a shortage of dysprosium — a rare earth metal which is a crucial component in the high-performance magnets used within the earbuds. It, along with neodymium, are used to manufacture the audio drivers that produce sound in the AirPods.

Notably, China is a major exporter of both of these rare-Earth metals and that is why the recent restrictions on exports, which were announced in April, have put Apple's plans of producing AirPods in India in jeopardy.

“The issue continues for the industry and Apple in India”, an anonymous source told the publication in a statement.

Foxconn, Apple's largest contract manufacturer in the country, has reportedly flagged the disruption of the dysprosium supply to the Telangana government, Ministry of Electronics and Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPIIT) and Prime Minister's Office (PMO). As per the report, the solution now depends on the diplomacy strategies both nations employ.

However, despite the supply disruption snag, the production of AirPods at the Foxconn facility has not come to a complete halt. While the supply chain has become a bit stretched, both Apple and Foxconn reportedly anticipated the situation a few months in advance and “made arrangements accordingly”.

The shortage of rare-Earth metals joins ongoing labour issues in India. Recently, Foxconn ousted more than 300 Chinese nationality engineers and technicians from its facilities in India, impacting the Cupertino-based tech giant's plans of India expansion. Following their repatriation, most of the staff which remains comprises Taiwanese support personnel.

This, coupled with the rare-Earth metal shortage, could reportedly benefit China's manufacturing and exports market. As per the report, Foxconn's loss in India could become a gain for Luxshare and Goertek — two companies which manufacture AirPods for Apple in China.