Apple has signed a $500-million deal with Pentagon-backed MP Materials for a supply of rare earth magnets, one of the first US tech companies to ink an agreement that aims to centralize its supply chain inside the country.
MP shares jumped 26% on Tuesday afternoon trading to a record high, while Apple's stock gained 1%.
The deal, announced on Tuesday, is part of a broader push by Apple to bring iPhone production to the United States amid a push from the Trump administration to produce fewer electronics in China - also marking corporate America's growing alignment with US industrial policy.
MP last week agreed to a multibillion-dollar deal with the US Department of Defense that will see the Pentagon become MP's largest shareholder and financial backstop.
Neither the precise length of the deal nor the specific volumes of magnets to be supplied was provided, although the agreement does call for magnets produced from recycled material, in keeping with Apple's long-standing goal of ending its reliance on the mining industry.
Rare earths are a group of 17 metals used to make magnets that turn power into motion, including the devices that make cellphones vibrate. They are also used to make weapons, electric vehicles, and many other electronics.
China halted rare earths exports in March following a trade spat with US President Donald Trump that showed some signs of easing late last month, even as broader tensions underscored demand for non-Chinese supply.
As part of the agreement, Apple will pre-pay Las Vegas-based MP Materials $200 million for a supply of magnets slated to begin in 2027.
The magnets will be produced at MP's Fort Worth, Texas, facility using magnets recycled at MP's Mountain Pass, California, mining complex, the companies said.
"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," Apple CEO Tim Cook said in a statement.
Bob O'Donnell, president at market research firm TECHnalysis Research, said Tuesday's move "makes complete sense" given that Apple requires significant amounts of rare earth magnets for its devices.
"Plus, by focusing on a US-based supplier, it does help position Apple more positively in Washington," he said.
Apple, which said the deal is part of its $500-billion four-year investment commitment to the US, has faced threats from Trump over iPhones not made in the US. But many analysts have said making the iPhone in the US is not possible, given labor costs and the existing smartphone supply chain.
Apple, which sold about 232 million iPhones last year, according to data from IDC, did not disclose which devices in which it will use the magnets.
MP said the deal will supply magnets for hundreds of millions of devices, which would constitute a significant share of any of Apple’s product lines, which also include wearable devices such as watches and earbuds.
MP already produces mined and processed rare earths and has said it expects to start commercial magnet production in its Texas facility by the end of this year.
Last week's deal with the US government includes a price floor for rare earths designed to spur investment in domestic mines and processing plants, which has been lagging partly due to low prices set in China.
