TLDR
- Apple announces $500 million investment in MP Materials to secure rare earth supply chain for iPhone production
- MP Materials shares jump 10% to $52.37 in premarket trading following the announcement
- Investment supports Apple’s push to localize manufacturing and reduce dependence on Chinese suppliers
- Deal includes plans for Apple to purchase U.S.-made rare earth magnets from MP’s Texas facility
- Jim Cramer maintains bullish stance on Apple stock, calling online sales growth “staggering”
Apple announced a $500 million investment in rare earths producer MP Materials on Tuesday. The move represents a strategic effort to bring iPhone production closer to home.
The investment comes as Apple works to reduce its reliance on Chinese suppliers. China halted rare earths exports in March following trade tensions with President Trump.
MP Materials stock surged 10% to $52.37 in premarket trading after the announcement. The Las Vegas-based company already operates rare earth mining and processing facilities.
Rare earths are 17 metals used to make magnets that convert power into motion. These materials are essential for iPhone production and other electronic devices.
The deal includes plans for Apple to purchase U.S.-made rare earth magnets from MP’s Texas facility. This would be MP’s first supply agreement since securing financial backing from the U.S. Department of Defense.
MP Materials expects to begin commercial magnet production at its Texas facility by the end of 2025. The company already produces mined and processed rare earths at existing facilities.
Building New Facilities
The partnership includes construction of another factory in Texas for magnet production. A new recycling facility will be built in Mountain Pass, California, near MP’s existing mine.
Last week MP Materials signed a multibillion-dollar deal with the Department of Defense. The agreement aims to boost rare earth magnet output and reduce China’s market control.
The government deal includes a price floor for rare earths designed to encourage domestic investment. Low prices set in China have previously discouraged U.S. mining and processing investments.
Apple’s investment is part of its $500 billion commitment to U.S. manufacturing. The company has been working to bring more production stateside under the Trump administration’s policies.
Meanwhile, CNBC’s Jim Cramer remains bullish on Apple stock. He described the company’s online sales growth as “staggering” during recent commentary.
Analyst Confidence Remains Strong
Cramer noted that Apple’s online sales more than doubled between 2019 and 2021 during the pandemic. Sales declined in 2023 as pandemic effects ended but recovered last year.
The TV host pointed out that Apple has broken out from its recent price range on higher volume. Most investors haven’t recognized this technical breakout according to Cramer.
Cramer maintains his “own it, don’t trade it” position on Apple stock. He emphasized the company’s strong long-term track record and ability to overcome challenges.
Apple shares were down 1.20% in recent trading despite the positive news about the MP Materials investment.
The rare earths investment addresses supply chain vulnerabilities exposed during recent trade tensions. Apple’s move reflects broader corporate efforts to reduce dependence on Chinese suppliers.
MP Materials’ Defense Department agreement provides additional financial security for the company’s expansion plans. The price floor mechanism should help stabilize domestic rare earth production economics.
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