Apple’s ambition to expand AirPods production in India through its partner Foxconn has encountered a critical supply chain disruption, stemming from China’s tightening grip on rare earth exports. The key material in question—dysprosium, used in high-performance magnets crucial for AirPods’ audio and haptic systems—has seen restricted flow, putting pressure on the supply lines to Foxconn’s Telangana facility. While production hasn’t come to a halt, insiders suggest Vietnam-based rivals Luxshare and Goertek may benefit if the issue persists.
Highlights:
AirPods production at Foxconn India impacted by China’s dysprosium export curbs.
Vietnam suppliers Luxshare and Goertek may gain competitive edge amid India disruption.
Foxconn flagged issue to MeitY, DPIIT, PMO; Chinese export approval still pending.
Rare earth supply bottlenecks raise broader concerns for India’s electronics exports.
Also Read : All Sectors End in Red as Nifty, Sensex Stay Flat; India VIX Down 3%, 25,250 Breakout Eyed
China’s Export Curbs Hit Critical Component Supply for Foxconn India
The disruption follows China’s April 2025 decision to impose stringent licensing requirements on seven rare earth metals, including dysprosium and terbium. These materials are essential for compact audio drivers and haptics inside AirPods. The supply constraints were flagged by Foxconn to both the Telangana government and central bodies such as the Ministry of Electronics and IT (MeitY), DPIIT, and the Prime Minister’s Office. The issue emerged shortly after Foxconn withdrew over 300 Chinese engineers from India operations, coinciding with growing regulatory tension between Beijing and New Delhi.
India’s Strategic Response Delayed by Bureaucratic Roadblocks
According to sources, Foxconn has already secured an End User Certificate (EUC) from India’s Ministry of External Affairs and the Chinese embassy—a mandatory requirement for China’s export clearance. However, final approval from Chinese authorities remains pending, extending the waiting period to 45–50 days, up from the typical 30. Meanwhile, Foxconn and Apple have reportedly activated buffer inventory plans to keep operations afloat, though the risk of supply bottlenecks looms.
Vietnam Operations Emerge as Near-Term Beneficiaries
The ongoing disruption could divert production gains to Vietnam, where Luxshare and Goertek—longtime AirPods suppliers—continue to operate with fewer restrictions. Neil Shah, VP at Counterpoint Research, emphasized China’s dominance in dysprosium output, noting that the country supplies over 95% of global demand. This heavy reliance on China’s rare earth supply is now emerging as a strategic vulnerability for India’s electronics ambitions.
Foxconn’s India unit remains a small contributor to Apple’s global AirPods output. However, had the rare earth issue not surfaced, the Indian facility was poised to increase share under Apple’s broader diversification strategy.
Indian Electronics Industry Warns of Broad Ripple Effects
Industry associations including ICEA and ELCINA have raised alarms about the potential long-term impact. In a letter to various ministries, ICEA warned that continued export restrictions from China could lead to rising component costs, feature downgrades, and missed export targets under India’s flagship PLI (Production Linked Incentive) scheme, which aims to hit $32 billion in electronics exports.
Both Apple and Foxconn are key members of ICEA, along with Tata Electronics, Lava, Dixon, and others. While contingency plans are being executed—including redeployment of engineers from non-Chinese markets—the outcome now hinges on how swiftly China clears the blocked shipments and whether diplomatic backchannels can resolve the standoff.
