Apple has entered into a $500 million agreement with a US company specializing in rare earth magnets, crucial for the production of electronic devices, following China’s reduction in rare and essential material exports.

This support comes after MP Materials, which runs the only rare earth mine in the US, finalized a multi-billion dollar agreement with the US Department of Defense last week, making the Pentagon its largest shareholder. Both agreements aim to address supply chain vulnerabilities after China limited its rare earth exports earlier this year in response to Donald Trump’s sweeping tariffs.

The deal, revealed on Tuesday, guarantees Apple a consistent supply of rare earth magnets from China, the world’s leading producer. Analysts noted that the cost of bolstering US magnet production is minimal compared to the long-term risk of completely losing access to vital components for Apple.

“We are currently in an era where executives are willing to invest significantly for a dependable supply chain. They want to avoid interruptions,” remarked Greserin Bascaran, director of the Centre for Strategic and International Research’s Centre for Key Mineral Security Program.

Rare earth elements, a collection of 17 metals, are vital for creating powerful magnets, which are found in devices that vibrate mobile phones, as well as in weaponry, electric vehicles, and numerous other electronic products.

China imposed export limitations on rare earths in April in reaction to Trump’s tariffs. In June, the US and China reached an accord that settled many disputes over rare earths, but broader trade tensions still emphasize the need for non-Chinese supplies.

Under the agreement, Apple will prepay $20 million to MP for magnets due to start delivery in 2027. The duration of the transaction and the quantity of magnets involved were not disclosed by the company.

The agreement stipulates that magnets will be produced from recycled materials, aligning with Apple’s longstanding commitment to reducing dependence on mining. The magnets will be processed using operations in Fort Worth, MP, Texas, and recycled at Mountain Pass, MP, California.

“Rare earth materials are critical for developing advanced technologies, and this collaboration will enhance the availability of these essential materials in the United States,” stated Apple CEO Tim Cook in a statement.

Since the government announced its deal, MP Material’s stock price has nearly doubled. This is a notable turnaround from last year when CEO Jim Richinski expressed frustration over rare earth pricing that led to the merger with Australian competitors.

Bob O’Donnell, president of market research firm Technalysis Research, noted that Tuesday’s development is “entirely significant,” given Apple’s substantial requirement for rare earth magnets in its devices.

“Additionally, by prioritizing US-based suppliers, we will help position Apple more proactively within Washington,” he added.

Apple stated that this agreement forms part of a four-year, $500 million investment commitment towards the US, while facing threats from Trump regarding an iPhone not manufactured in the US. Nevertheless, many analysts argue creating an iPhone in the US is impractical, given labor costs and the existing smartphone supply chain.

While Apple did not specify which devices will utilize the magnets, MP mentioned that this deal will provide magnets for hundreds of millions of devices, significantly impacting Apple’s product lineup.

MP expects to start producing mined and processed rare earth materials and commercial magnet production at its Texas facility by the end of this year.