Apple bets $500 million on the only rare earth supplier in the U.S., strengthening its domestic supply chain layout

As the geopolitical game over rare earths heats up, Apple increases investment in the domestic supply chain.

On Tuesday local time, media reports citing informed sources stated that Apple plans to invest $500 million in MP Materials, the only operating rare earth mining company in the United States. This significant investment will mark strong support from the American tech giant for the domestic critical mineral supply chain.

According to reports, the agreement includes Apple's plan to purchase U.S.-made rare earth magnets from MP Materials' plant in Texas. This investment is seen as an important achievement of the current Trump administration's strategy to strengthen domestic supply chains.

MP Materials' stock price surged by 12% in pre-market trading after the news broke, following a 48% increase in the company's stock price last week, reaching a three-year high. This upward trend began after the U.S. Department of Defense announced a $400 million equity investment in the company.

Apple Increases Investment in Domestic Rare Earth Supply Chain

Reports indicate that under the terms of the agreement, Apple and MP Materials will collaborate to build a new recycling facility in Mountain Pass, California, which will reprocess materials from old electronic products for future Apple products.

The two parties also plan to build a new factory in Fort Worth, Texas, to produce magnets for Apple products and other global electronic devices. This vertically integrated supply chain layout aims to reduce dependence on overseas suppliers.

A senior White House official stated, "This is a huge victory for the president, who foresightedly prioritized this issue. Apple should receive a lot of credit; it benefits the nation, benefits American workers, and will prove to be good business."

Defense Department Investment Drives Stock Price Surge

Just days before Apple's investment plan was revealed, the U.S. Department of Defense announced a $400 million investment in MP Materials, acquiring a 15% stake in the company. The Department of Defense also committed to purchasing the company's products at twice the current market price, with a procurement period of 10 years.

MP Materials referred to this government investment as a "transformative public-private partnership" and stated that this investment initiates efforts to "accelerate the construction of an end-to-end U.S. rare earth magnet supply chain and reduce foreign dependence."

Rare earth elements are crucial for manufacturing powerful magnets, which are widely used in defense technologies such as missile guidance, satellite communications, and stealth coatings, as well as in civilian technologies like electric vehicles, wind turbines, and smartphones.

MP Materials' Mountain Pass mine was once the world's largest rare earth producer in the 1970s and 80s but declined under intense market competition. The mine ceased operations in 2002, and its parent company Molycorp filed for bankruptcy in 2015