As battle lines are drawn between China and the U.S. in its burgeoning trade war, China has one big advantage working in its favor. The country is a primary source of “rare earths” used by manufacturers around the world — including Apple.
This category of 17 elements is used in multiple iPhone components. These include cameras, speakers, taptic engines, and receiver components. It’s yet another way Apple could be hurt by a trade war.
China is the world’s leading supplier of these rare earths. It accounts for an estimated 95% of the worldwide output of these vital minerals. As demand has increased, Chinese exports of these minerals ramped up 91.7% between 2014 and 2018.
Apple’s anti-mining efforts
Apple has tried to move away from mining minerals in recent years. However, as The Street points out, “unlike some other materials, rare earth are used in such small amounts that recycled forms aren’t widely available.” This means that they still need to be mined. The article continues that:
“Apple has a disassembly robot that can recover components that contain rare earth metals — but cannot extract the minerals itself. The technology simply isn’t there yet, Apple wrote in its latest environmental report. It appears that for now, Apple is a long ways off from ending its dependence on fresh rare earth metals.”
It’s difficult to work out exactly what this means for Apple. A lot depends on whether additional tariffs are put in place, or certain exports are even banned altogether. This is just the latest example of how the trade war affects Apple, however.
Other casualties could include increased iPhone prices due to new tariffs, and falling demand for iPhones in the country. Apple stock has been hit by some of these concerns. Things have the potential to get worse from here, too. Some analysts have suggested the China conflict could take a big chunk out of Apple’s earnings.