Apple magnets deal signals new era of tech supply chain politics

$500m magnets deal highlights growing trade tensions and strategic resource competition

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The agreement, worth $500 million (approx. €430 million), will see Apple buy rare earths from MP Materials. Image: Dotdash Meredith

News broke this week that Apple has inked a deal to source rare earth magnets it uses in its manufacturing processes from an American mining company. The agreement, worth $500 million (approx. €430 million), will see Apple buy rare earths from MP Materials, which operates the only rare earth mine in the US.

In part the deal appears to have been signed to mollify US president Donald Trump, who has previously singled out Apple saying it should produce iPhones domestically.

However, it is also a response to China announcing export restrictions on rare earth materials, itself made in response to Trump’s tariff threats on Chinese goods.

Echoes of the tit-for-tat trade war are being felt globally, and not just in tariff-inspired spending dips or inflation. Notably, the European Commission has pointed out that China holds a “quasi-monopoly on the export of critical raw materials, rare earth elements and permanent magnets.”

Rare earths “are used in industry, such as the automotive and defence industries, but also in wind turbines, headphones, and MRI machines,” it said, noting that China’s restrictions have already impacted these industries.

Underscoring the strategic importance of the materials, a fortnight ago the Pentagon became the largest shareholder in MP Materials in a move that has not been universally welcomed by the mining industry.

Both the Apple deal and the US state intervention in the mine suggest we are in something of a new era. Heretofore, materials tend to have been simply purchased on the open market and US subvention of industry has tended to occur through tax breaks and generous contracts rather than outright purchasing a share of critical businesses.

Whatever one makes of the moves, and the geopolitics that inform them, they are at least an interesting recognition of the hard reality that underpins all modern technology: if the last 20 years were the era of the Internet, where apps and web sites were the ne plus ultra of ‘tech’, today we are faced with the hard material reality. Think of it as receiving the bill.

It isn’t just about minerals, either. Tech companies are after something even more fundamental: energy.

The artificial intelligence (AI) boom has seen emissions balloon, thrusting power generation and use – not to mention water – into the centre of political debate.

Responding to this, the tech giants are reported to interested in deploying their own nuclear reactors to generate power for their operations. More immediately, deals for power generated by more traditional means – including by Google – are already being signed.

An increasing focus on securing material resources may appear to be unrelated to the escalating demand for energy, particularly in the burgeoning AI sector, but there is a connection. The computational intensity of AI models, from training to inference, requires vast amounts of electricity. This unprecedented energy appetite is not only a significant contributor to carbon emissions, challenging global climate goals, but also places immense strain on existing power grids.

Consequently, the strategic maneuvering seen in the rare earth market could well be dwarfed by an even more intense scramble for reliable and sustainable energy sources, with nations and corporations alike seeking to secure the power necessary to fuel their technological ambitions.

The implications for energy policy and infrastructure are profound. Governments are now compelled to prioritise investments in energy and grid technology, not just for environmental reasons, but as a matter of national economic and technological security.

The era of purely digital solutions is giving way to one where physical infrastructure, supply chain resilience, and resource security determine competitive advantage. The companies that succeed in this new landscape will need to master not just code, but the complex web of materials, energy, and geopolitics that makes modern technology possible, making the public interest in what they do stronger than ever.

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