Rare Earth Curb To Affect Smartphone Makers, Price Hike Likely: Experts
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
As new restrictions on rare earth magnets imposed by China are starting to choke India's auto sector – heavily dependent on the import of the magnets – another sector which can be affected in the near future is smart phones. Smartphone makers might try to absorb the hit for a while, but if disruptions continue, it can lead to price hikes or even delays in new launches.
In smartphones, magnets made from Neodymium and Dysprosium are used in speakers and microphones, haptic motors, and camera modules for OIS, etc. China holds almost a monopoly in processing rare earth elements. These rare earth metals are specially used to make powerful small size magnets that are found in almost every smartphone's components like in speakers, vibration units and display systems. As China tightens exports citing national security reasons, it has effects across the world.
The problem: Price hike, delay in new launches
"For India, this could lead to delays in getting key components or paying more to source them. Right now the bigger impact is being felt by sectors like electric vehicles but smartphones may also face similar issues in the coming time," said Munish Vaid, vice president, Primus Partners.
Most Indian smartphone manufacturers depend on global supply chains which trace back to China. Therefore, even if India is not directly buying the raw material, any disruption at the source will affect the country.
"While some of the final assembly for these components happens in India, rare earth magnet assembly for OIS, haptics, etc., is done outside India. While the auto sector might face the immediate effect of shortages and supply chain disruptions. Smartphones, although using less volume per unit of these magnets, given the sheer volume of smartphones produced, could see fewer advanced features, supply chain disruptions, or increased costs if the issue persists," said Parv Sharma, Senior Analyst, Counterpoint Research.
China's curbs on rare earth exports threaten not only India but also global supply chains. With China controlling about 60 percent of global rare earth mining and over 90 percent of processing capacity, countries are likely to face bottlenecks, despite efforts on localizing production. If the situation drags on, the costs of smartphones are likely to go up.
"Smartphone makers usually plan ahead and have stock for a few months, but rare earth magnets are used in components like speakers and motors that are hard to replace on short notice. If Chinese exports slow down or prices rise, that added cost will eventually add up in the final product. It may not be huge at first, but for low-end smartphones, where margins are thin, these can either reduce margins for companies or consumers will have to bear the burden of price rise," explained Vaid.
How can India seek immediate relief
Indian OEMs and Tier-1 suppliers are likely to accelerate efforts to diversify rare earth sourcing from regions such as Australia, Africa, and Myanmar. In the short run, India should look at building reserves and sourcing from other friendly countries such as Vietnam, Malaysia, Russia or Brazil. These countries have rare earth deposits and are eager to reduce global dependence on China.
India already has some rare earth reserves of its own. "We need to ramp up local processing and manufacturing capabilities. The government's production-linked incentive (PLI) schemes could be expanded to support this space. Also, we should invest in recycling, old smartphones and electronics contain magnets that can be reused if we set up the right infrastructure. At the same time, our manufacturers and tech companies need to innovate," Vaid added.
"We expect a stronger push to develop domestic refining capabilities. The government may also ramp up exploration and extraction of rare earth reserves in Andhra Pradesh and Odisha to strengthen long-term self-reliance in critical materials," said Soumen Mandal, senior analyst, Counterpoint Research.
According to IDC, in the first quarter of 2025, India's smartphone shipments reached 32 million units. The number of phones made in India every year is big, hence, even a small increase in component prices can add up quickly. "With newer smartphones packing in more features, like better sound, stronger vibrations and advanced displays, the reliance on rare earths is increasing. The impact may not be as huge as in cars, but it is something that could affect both pricing and innovation down the line," Vaid explained.
There will be challenges in the near term to increase value addition in India — in the longer-run India will have to look for alternative sources — increase local production and recycle to de-risk from the global supply chain.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Federal Transportation Minister Freeland 'dismayed' about choice of Chinese shipyard
VICTORIA — Federal Transportation Minister Chrystia Freeland says she is "dismayed" that BC Ferries has contracted a Chinese state-owned shipyard to build four new vessels in the current geopolitical context that includes "unjustified" tariffs on Canada. Freeland says in a letter sent to provincial Transport Minister Mike Farnworth that she expects BC Ferries to inform her about all measures that it plans to take to "mitigate any security risks," including cybersecurity problems that might arise from the decision. BC Ferries announced earlier this month that it has contracted China Merchants Industry Weihai Shipyards to build four new major vessels following a five-year-long procurement process that did not include a Canadian bid. Freeland adds she is "surprised" that BC Ferries does not have a mandate for an "appropriate level" of Canadian content in the procurement given the value of the contract, although the dollar figure hasn't been made public. Farnworth says in a statement that the ministry is reviewing the letter, adding that he has spoken with Freeland about the need to bolster B.C.'s shipbuilding industry. BC Ferries says in a statement that the Chinese bid was "the strongest bid by a significant margin" and that security is a "top priority," adding that all sensitive systems will be sourced separately and independently certified before the vessels enter service. This report by The Canadian Press was first published June 20, 2025. Wolfgang Depner, The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
Here's Why Sony (SONY) Fell More Than Broader Market
Sony (SONY) closed at $24.75 in the latest trading session, marking a -4.37% move from the prior day. This move lagged the S&P 500's daily loss of 0.22%. On the other hand, the Dow registered a gain of 0.08%, and the technology-centric Nasdaq decreased by 0.51%. The electronics and media company's shares have seen an increase of 2.17% over the last month, surpassing the Consumer Discretionary sector's loss of 0.1% and the S&P 500's gain of 0.45%. The investment community will be closely monitoring the performance of Sony in its forthcoming earnings report. On that day, Sony is projected to report earnings of $0.23 per share, which would represent a year-over-year decline of 4.17%. For the full year, the Zacks Consensus Estimates project earnings of $1.16 per share and a revenue of $79.87 billion, demonstrating changes of -5.69% and -6.09%, respectively, from the preceding year. It is also important to note the recent changes to analyst estimates for Sony. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook. Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system. The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 2.31% lower. Sony is currently a Zacks Rank #5 (Strong Sell). With respect to valuation, Sony is currently being traded at a Forward P/E ratio of 22.26. This signifies a discount in comparison to the average Forward P/E of 33.66 for its industry. Meanwhile, SONY's PEG ratio is currently 12.44. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. SONY's industry had an average PEG ratio of 12.44 as of yesterday's close. The Audio Video Production industry is part of the Consumer Discretionary sector. With its current Zacks Industry Rank of 193, this industry ranks in the bottom 22% of all industries, numbering over 250. The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sony Corporation (SONY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
an hour ago
- Yahoo
Why India's Budding EV Sector Has Opened Its Doors To China
For decades, China has driven the lion's share of oil demand growth thanks to its remarkable economic boom and large population. However, China is now losing its prominence in global oil markets due to a dramatic slowdown in its economy coupled with the country's ongoing electric vehicle revolution. Last year, nearly half of all new cars sold in China were electric vehicles, including both battery-electric and plug-in hybrid electric vehicles. Indeed, China's rapid adoption of EVs, as well as rapid growth of high-speed rail and natural gas trucks, is displacing traditional fossil fuel demand, with the International Energy Agency (IEA) predicting that China's oil demand will peak as early as 2027. Ironically, the country that is taking over China's mantle in world oil markets is also aspiring to follow in its EV footsteps: India. Unlike China, India's EV sector is still at its infancy, with electric vehicles accounting for just 2.5% of all cars sold in the country in 2024. However, India has big EV ambitions, with the Indian government having set a target for EVs to make up 30% of total passenger vehicle sales by 2030. To accomplish this, India's EV sector is forging close ties with Chinese EV manufacturers at a time when Washington has been keeping Chinese EV giants at bay. India is relying on Chinese EV tech to bridge the gap until the domestic sector is ready to compete on the global stage. Industry analysts note that without access to Chinese technologies—including batteries, drivetrain components, and EV software—India would likely face slower product rollouts, limited model variety, and higher costs during its growth phase. This marks a clear pivot from just a few years ago, when India restricted the operations of firms like BYD and banned popular Chinese apps such as TikTok and Shein after deadly clashes at the New Delhi appears to be taking a more calculated stance. In March, the government reduced tariffs on over 35 EV components, many of which are imported from China, making it easier for automakers to source critical parts. A few weeks later, India's Ministry of Heavy Industries unveiled a new EV policy slashing import duties on fully built EVs from 110% to 15%, provided manufacturers invest and set up local production. This dual-pronged approach aims to attract international players while building out domestic supply chains. Experts view these shifts as pragmatic. Leading Indian EV makers—such as Tata Motors, Ola Electric, and Mahindra & Mahindra—continue to depend on Chinese vendors for components like battery cells, power control units, and electric motors, even though assembly is carried out in India. 'The aim is to build a resilient domestic ecosystem, not to isolate it, unlike the more aggressive decoupling seen in the U.S. with China,' said Shubham Munde, senior analyst at intelligence firm Market Research Future. Yet this growing alignment between Indian and Chinese EV sectors is creating both opportunity and competition. MG Motor—a joint venture between India's JSW Group and China's state-owned automaker SAIC—has managed to double its market share over the past year, putting pressure on homegrown giants like Tata Motors. Its model, the MG Windsor, is now India's top-selling electric car, highlighting how joint ventures are gaining traction. At the same time, India's EV landscape remains deeply fragmented. According to Bernstein Research, just four legacy automakers dominate 80% of the electric mobility market, leaving over 150 EV startups struggling to establish a foothold in an increasingly competitive space. Government policy appears to be playing an outsized role in the EV trajectories of different countries. In its 2025 Electric Vehicles Outlook, Bloomberg New Energy Finance (BNEF) cut both its near-term and long-term passenger EV adoption outlook in the United States for the first time ever, citing key policy changes including rollback of national fuel-economy targets as well as the removal of supportive elements of the Inflation Reduction Act (IRA) by the Trump administration. In contrast, S&P Global Mobility has forecast strong growth for India's nascent EV sector, projecting that production of battery-electric passenger vehicles will increase by 140% year-over-year in 2025 to roughly 301,400 units. That would represent about 6% of the estimated 5.16 million passenger vehicles expected to be built in India that year. Still, the road to India's 2030 goal may be steep. According to S&P, India would need to boost EV adoption by approximately 380 basis points annually to reach 30% market share—nearly double the current growth rate of around 200 basis points per year since 2021. Compounding the challenge is the lack of a unified long-term roadmap and the pending expiration of several state-level EV incentive programs. By Alex Kimani for More Top Reads From this article on Fehler beim Abrufen der Daten Melden Sie sich an, um Ihr Portfolio aufzurufen. Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten
