India’s ambitious plan to become a global manufacturing hub for technology products has encountered a significant challenge: a critical shortage of rare-earth elements, which has disrupted production of Apple AirPods at the Foxconn assembly plant near Chennai.

Foxconn’s Tirupati facility, a key component of the company’s multi-billion-dollar investment in India, halted AirPods production temporarily after its supplier declared an inability to procure sufficient quantities of rare-earth materials—used in miniaturized high-performance magnets essential for audio devices. The shortage threatens timelines for local assembly, making India the only major Apple manufacturing base caught in this bottleneck.

Sources within the industry say the disruption began surfacing in late June. While raw material supply constraints are felt globally, Foxconn’s Indian unit lacked alternative sourcing from China or Southeast Asia, which have remained better stocked. As a result, testing, magnet assembly, and final unit certification came to a near standstill. Bulk production resumed only after Foxconn successfully arranged emergency imports via third-party vendors—though delays of two to three weeks are expected, and production volumes will be affected for the next quarter.

For India’s electronics ecosystem, the hiccup is significant. Local assembly of AirPods is a cornerstone of the government’s production-linked incentive (PLI) scheme for electronics manufacturing, designed to boost domestic value addition and reduce import dependence. The PLI program has succeeded in attracting several global device manufacturers, but also exposed vulnerabilities in the supply chain, especially for components needing strategic minerals and precision engineering.

Even before the rare-earths issue, India’s electronics supply chain faced challenges—from semiconductor scarcity to certification delays. The AirPods disruption underlines another emerging risk: limited sourcing flexibility for specialty magnets. Most rare-earth production remains concentrated in China, and global logistics for these materials are tightly controlled.

India’s policymakers are taking note. Industrial corridors and electronics exports have grown rapidly, but local manufacturing capacity for value-added components like rare-earth magnets remains limited. To address this, industry officials are exploring the development of a strategic reserve of critical minerals and encouraging investments in magnet manufacturing. At the same time, efforts are underway to cultivate linkages with Southeast Asia, domestically recycle scrap magnets, and integrate component-focused startups into the PLI framework.

Foxconn, for its part, has reassured stakeholders that the AirPods plant is intended for long-term operation. While short-term output may dip, production continuity has been restored. Apple, likewise, is said to be supportive, having allowed delayed shipments and recalibrated forecasts for upcoming quarters.

This disruption also serves as a wake-up call to other companies planning device assembly in India. Relying solely on imports for specialized components may leave domestic facilities exposed. The AirPods assembly pause reinforces the need for a more resilient supply chain strategy—one that blends global sourcing agility with local manufacturing capabilities.

Looking ahead, India’s ambition to grow into a manufacturing powerhouse will rest on diversifying access to critical materials and nurturing component ecosystems. The AirPods case may be a temporary setback, but it holds valuable lessons for India’s broader industrialization push: growth depends not just on finished-product assembly, but on securing and scaling the supply chains underlying them.

As PLI-era factories come online and global brands deepen manufacturing in India, ensuring uninterrupted access to critical inputs like rare-earth elements will be key. The AirPods hiccup may slow traction momentarily—but it is unlikely to derail the larger trajectory as India accelerates toward technology self-reliance.