Apple’s plan to manufacture AirPods in India has hit a hurdle, with China’s curbs on rare earth materials exports disrupting the supply of critical components to Foxconn’s Telangana facility, sources told Moneycontrol. If the issue persists, it could undermine the competitiveness of the India plant and shift advantage to rival suppliers Luxshare and Goertek’s factories in Vietnam, they said.
The slowdown stems from a shortage of dysprosium — a key rare earth metal used in high-performance magnets essential for AirPods' compact speakers and haptic components. This follows China’s April decision to impose stricter export licensing on seven rare earths, including dysprosium and terbium.
The issue surfaced shortly after Foxconn repatriated over 300 Chinese engineers and technicians from its Indian facilities.
According to sources, the company flagged the supply disruption to the Telangana government as well as central ministries including Ministry of Electronics and Information Technology (MeitY), the Department for Promotion of Industry and Internal Trade (DPIIT) and Prime Minister's Office (PMO).
“The issue continues for the industry and Apple in India. Foxconn brought the supply issue to the notice of the Telangana government and to various ministries of the central government, including MeitY, DPIIT and PMO. The issue now hinges on diplomacy between the countries,” a source familiar with the matter told Moneycontrol.
Despite the setback, AirPods production has not halted completely. “Both Apple and Foxconn... the supply chain for the metal is a bit longer, but Apple and Foxconn [are] managing the situation now having anticipated the issue a few months back and made arrangements accordingly,” another source said.
The Economic Times earlier reported that Foxconn had approached the Telangana government for help with getting an End User Certificate (EUC) attested—a prerequisite for Chinese export approval. The EUC, which verifies the recipient and intended use of sensitive goods, was reportedly obtained from India’s Ministry of External Affairs and the Chinese embassy. However, approval from China’s government remains pending.
Sources indicated that Foxconn expects the approval by the end of this month, as the usual processing window has now increased from 30 to 45–50 days.
Neil Shah, Research Vice President at Counterpoint Research, told Moneycontrol that the episode highlights global dependence on China for rare earth supplies. “While the Foxconn unit is waiting for China’s approval for the rare metal, this points towards higher dependence of industry on China’s rare earth metals supply chain. China accounts for 95% of the world’s dysprosium production and [it's a] key component complementing other rare metal neodymium for enhancing AirPods’ premium audio driver performance,” Shah said.
Foxconn India unit is still a very small contributor to Apple’s AirPods global production, and the ongoing issue benefits China’s Luxshare and Goertek, which control the lion’s share of AirPods production, which was bound to lose share to Foxconn Interconnect Technology in India.
“At the same time, these players also have facilities in Vietnam, and it remains to be seen if Vietnam operations could benefit in short term. The question is how influential and creative Foxconn is to get the approvals and smooth out the supply chain,” Shah added.
Queries sent to Apple and Foxconn did not elicit a response.
China’s evolving restrictions are sparking concern across India’s electronics ecosystem. Industry bodies such as the Indian Cellular and Electronics Association (ICEA) and the Electronics Industries Association of India (ELCINA) have warned of supply chain disruptions, rising input costs, and the risk of downgrading product features if the restrictions persist.
ICEA has requested urgent consultations with government ministries, cautioning that these “carefully calibrated” curbs could undermine India’s competitiveness and derail its $32 billion export-driven electronics manufacturing ambitions under the PLI scheme.
Apple and Foxconn are among ICEA’s members, alongside Tata Electronics, Dixon, Lava, Bhagwati, and Flex.
In recent months, China has escalated pressure on India’s electronics sector by ordering select capital equipment firms to exit India and withdrawing Chinese-origin professionals from ongoing assignments at Indian and multinational firms.
As Moneycontrol previously reported, Apple is now activating contingency plans—including redeploying engineers from other countries—to mitigate the ongoing labour and supply chain disruptions affecting its partner Foxconn’s operations in India.
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