Apple Strikes $500 Million Deal With MP Materials To Reduce China Reliance On Critical Magnets
Apple Inc. (NASDAQ:AAPL) has signed a $500 million deal with MP Materials (NYSE:MP), a Pentagon-backed company, to secure a supply of rare earth magnets. This agreement is a strategic step to ensure a consistent supply of critical components and reduce reliance on China.
What Happened: This deal, announced on Tuesday, is one of the first U.S. supply agreements signed by a tech company following China’s export restrictions earlier this year, reported Reuters.
“Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States,” said Apple CEO Tim Cook.
The deal includes a $200 million prepayment from Apple and will support production at MP's upcoming facility in Fort Worth, Texas, using recycled materials from its site in Mountain Pass, California.
Apple did not disclose which products would use the magnets, but MP said the supply would support hundreds of millions of devices.
The agreement is part of Apple's larger $500 billion, four-year investment commitment to the U.S. economy. Analysts said Apple saw the expense of supporting U.S. magnet production as minor compared to the long-term risk of potentially losing access to these critical components altogether.
Why It Matters: The deal between Apple and MP Materials comes at a time when the global supply chain for rare earth materials is under strain.
China, the largest producer of rare earths, halted exports in March following a trade dispute with the U.S. This move led to increased demand for non-Chinese supply, prompting companies like Apple to seek alternative sources.
Earlier this month, economist Craig Shapiro warned that the U.S. faces a serious supply chain risk due to its dependence on China for rare earth magnets—essential for EVs, AI, and defense technologies. However, he believed the issue is fixable with a relatively modest investment of $1–2 billion.
His proposed strategy includes accelerating domestic projects using the Defense Production Act, building magnet plants, forming global alliances, and stockpiling materials.
Shapiro emphasized speed and access over ideology, advising investors to focus on scarcity and consider stocks like MP Materials, Lynas, and other rare earth and strategic metals plays.
Price Action: Apple shares rose 0.23% to close at $209.11 on Tuesday, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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