Apple plans to spend $500 million on rare earth magnets from MP Materials.

Earlier this month, the Department of Defense acquired a 15 percent stake in the Texas-based company for $400m, alongside a promise to buy its output for 10 years at double the current market price.

The unusual Pentagon investment comes after rare earth magnet exports were curbed by China during tariff disputes, putting US manufacturing at risk.

The neodymium magnets are critical for digital infrastructure and are also used by the US military for missiles, F-35 Lightning II fighter jets, drones, and nuclear submarines.

With the Apple deal, the iPhone maker will co-develop a rare earth recycling line in Mountain Pass, California, and develop novel magnet materials and processing to enhance magnet performance.

“American innovation drives everything we do at Apple, and we’re proud to deepen our investment in the US economy,” said Tim Cook, Apple’s CEO. “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. We couldn’t be more excited about the future of American manufacturing, and we will continue to invest in the ingenuity, creativity, and innovative spirit of the American people.”

The two companies have already worked together for the past five years, and the vast majority of the magnets Apple uses already come from recycled rare earth elements.

While Apple is primarily a consumer technology company, it develops its own servers and data centers, which will require neodymium magnets.

The company is building its own factory in Texas to make the servers needed to run Apple Intelligence, the tech giant’s AI service. The facility will be developed in partnership with Foxconn.