Apple (AAPL - Free Report) will use recycled rare earth elements in its Taptic Engine, a component that allows iPhones to mimic a button press despite being a flat pane of glass.
Per a Reuters report, Taptic Engine accounts for about one-quarter of the rare earth metals used in the manufacturing of an iPhone.
Notably, the company will currently source recycled materials from an outside supplier. However, Apple is opting for ways to use robots, already employed to recycle larger components, to recover rare earth metals from used iPhones for in-house use.
Per Apple’s Environmental Responsibility report 2019, after every 100,000 iPhones recycled with the help of robots like Liam and Daisy, it extracted 32kgs of rare earth elements like neodymium, praseodymium and dysprosium used in magnets for haptics technology, audio applications, and cameras.
Additionally, the company is exploring measures to improve traditional recycling machines, essentially used to extract small amounts of rare earth elements by shredding base materials from devices.
Notably, the new 10.2-inch iPad launched earlier this month is made of 100% recycled aluminium, following last year’s MacBook Air.
U.S.-China Trade War is a Concern
China is the dominant supplier of raw rare earth elements. Apple’s effort to use recyclable scarce earth minerals counters China’s implied restriction upon rare earth element sales to the United States amid ongoing U.S.-China trade war.
Per another Reuters report, between 2004 and 2017, China accounted for 80% of U.S. rare earth imports of the group of 17 chemical elements. These are used in consumer products from phones to electric car engines, and also military applications — including jet engines, satellites and lasers.
Additionally, China is becoming a tough market for Apple as China consumers are switching allegiance to local competitors, particularly after the Huawei ban by the U.S. government.
Per a Bloomberg report, a recent survey on China’s top brands suggested that Apple’s rank decreased to No.24, falling from No.11 a year ago.
Moreover, Apple continues to face intensifying competition from China’s local smartphone makers. Per Counterpoint report released last month, in second-quarter 2019, Huawei led the China smartphone market, with a record market share of 36%; followed by Vivo and Oppo, with 19% each; Xiaomi, with 9%; and Apple’s iPhone, with the lowest market share of 6%.
Apple’s Declining Brand Loyalty a Headwind for iPhone 11
The declining loyalty and brand value of Apple in China are concerning for upcoming iPhone 11. Earlier this month, the company unveiled the latest device priced at $699. The more advanced versions, iPhone 11 Pro and iPhone 11 Pro Max cost $999 and $1,099, respectively.
Moreover, slowing China economy and a sluggish smartphone market are headwinds for smartphone makers like Apple and Samsung (SSNLF - Free Report) .
Further, the absence of foldable and 5G-supported models, and the availability of other premium smartphones at affordable prices from China-based competitors pose a threat to the newly launched iPhone 11 series.
Google’s (GOOGL - Free Report) upcoming Pixel 4, owned by Alphabet, is also expected to rise competition in the maturing smartphone market due to its pricing and enhanced feature offering.
Apple currently has a Zacks Rank #3 (Hold).
Anixter International (AXE - Free Report) is a better-ranked stock in the broader technology sector and sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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