China’s rare earth curbs threaten smartphone, TV, and audio supply chains; thousands of jobs at risk

While smartphones use a smaller volume of these magnets per unit, the sheer production scale means any disruption could have an outsized impact.

India’s smartphone, TV, and audio device manufacturers are staring at potential supply chain disruptions, rising input costs, and compromises in features if China’s export restrictions on rare earth materials continue for an extended period, according to industry executives and analysts who spoke to Moneycontrol.

The curbs are already taking a toll on India’s booming hearables and wearables segment, forcing many companies to shift to importing fully assembled speaker modules from China. The Electronics Industries Association of India (ELCINA) has cautioned that over 5,000–6,000 direct jobs and nearly 15,000 indirect jobs, mainly in Noida and southern India, are at risk in the speaker and audio component manufacturing sector.

In April, China imposed strict export licensing requirements on seven rare earth elements, including terbium and dysprosium—two metals vital for producing neodymium-iron-boron (NdFeB) magnets. These high-performance magnets are a cornerstone of modern consumer electronics, enabling compact, powerful components like speakers, microphones, haptic motors, and camera modules. Their exceptional magnetic strength supports the slim, space-saving designs found in today’s TVs, TWS earbuds, and other advanced audio-visual devices.

While smartphones use a smaller volume of these magnets per unit, the sheer production scale means any disruption could have an outsized impact. Experts warn of near-term challenges in local value addition and emphasise the need for India to develop alternative sources, boost domestic manufacturing, and expand recycling to reduce dependence on a geopolitically sensitive supply chain.

“In smartphones, magnets are needed in speakers and microphones, haptics motors, and camera modules for OIS, etc. While some of the final assembly for these components happens in India, rare earth magnets assembly for OIS, haptics, and others are done outside India. Smartphones, although using less volume per unit of these magnets, given the sheer volume of smartphones produced, could see fewer advanced features, supply chain disruptions, or increased costs if the issue persists,” said Tarun Pathak, Research Director at Counterpoint Research.

Pathak added that increasing value addition in India will be challenging in the short term. In the longer term, India must look for alternative sourcing, increase local production, and ramp up recycling to de-risk from global supply shocks.

In a white paper presented to the government, the Electronics Industries Association of India (ELCINA) warned that the inability to procure NdFeB magnets could halt speaker manufacturing lines in Noida, Chennai, and Pune. It noted that some manufacturers may resort to importing finished speakers, reversing gains made under the Make in India initiative. The white paper also highlighted that shipments of magnets—and even finished products with embedded magnets—are being held up at Chinese ports, pending end-use declarations, disrupting production timelines for domestic TV and audio brands.

The China curbs are hitting India's fast-growing hearables and wearables sector hard and the device makers are switching to import fully assembled speaker modules from China. Elcina said over 5,000-6,000 direct jobs and 15,000 indirect jobs are at risk in speaker and audio component manufacturing especially in Noida and South India.

Exploring Alternatives

While the impact on TV manufacturing may be relatively contained, manufacturers are working closely with suppliers to secure adequate stock ahead of the upcoming season. In parallel, many are exploring alternative solutions. Many TV manufacturers have also started shifting to ferrite magnets, a more readily available alternative, though with noticeable performance trade-offs.

Experts and industry executives noted that higher-quality materials like rare earth magnets are essential to meet design and performance expectations as TVs become slimmer and more advanced. A persistent supply crunch could directly impact product quality and timelines.

“China's recent restrictions on rare earth magnet exports are expected to impact the global electronics industry. These magnets are critical in television manufacturing, particularly for speakers, due to their superior performance and compact size. As the country remains heavily reliant on imports for these components, this presents a clear challenge,” said Arjun Bajaj, Director of TV maker Videotex.

“...based on supplier guidance, we are actively exploring alternative solutions such as ferrite magnets, which offer reasonable performance trade-offs. While the disruption is significant, it underscores the importance of long-term strategies to localise and diversify our component sourcing,” Bajaj added.

Homegrown electronics maker Super Plastronics Pvt Ltd (SPPL), which manufactures TVs for brands like JVC, Thomson, Kodak, Blaupunkt, and Westinghouse, echoed similar concerns.

“The rare earth magnet is needed in the next-gen box speaker, which offers relatively better sound quality in a smaller space. There is an issue at the moment, but makers have enough inventory of the magnets, and the problem can be adjusted for now. We aren’t expecting any price rise,” Avneet Singh Marwah, CEO of SPPL, told Moneycontrol.

A senior executive at a top domestic contract manufacturer that produces Bluetooth earbuds and neckbands for global brands, including Chinese companies, said the initial disruption has now eased after vendors secured export licences.

“We aren’t looking at any big disruption currently. It is streamlined for now, but India needs to find a long-term solution to this problem as it could cripple the local industry. It is an important component, and China could disrupt the industry not just in India but globally,” the executive said, requesting anonymity.

Diversifying Sourcing

In the near term, Indian brands and tier-1 suppliers are expected to diversify rare earth sourcing from Australia, Africa, and Myanmar. Longer-term strategies will need to include domestic processing and refining.

The government is also planning to implement a scheme to boost domestic production of rare earth minerals and magnets, aiming to reduce reliance on China. The Economic Times reported on June 20 that India is finalising a Rs 3,500-5,000 crore scheme to ramp up local production of rare earth minerals and the magnets made from them. Since April, China has limited its exports of rare earth materials. This move has caused difficulties for automakers and tech manufacturers around the world. Industries in the US, Europe, and India are facing shortages of essential magnets.

“We expect a stronger push to develop domestic refining capabilities in the long run. The Indian government may also ramp up exploration and extraction of rare earth reserves in Andhra Pradesh and Odisha to strengthen long-term self-reliance in critical materials," Pathak said.