European defense contractor Saft is set to supply lithium-ion battery systems for the next generation of naval submarines, replacing decades-old lead-acid technology with EV-style packs that promise higher energy density, faster charging, and superior underwater endurance.
The Varta crisis has entered another severe phase after the German battery manufacturer lost the customer responsible for nearly all production at its specialized factory in Nördlingen.
Varta has not publicly identified that customer, but reports from German media and industry sources point to Apple. The iPhone maker is reportedly moving battery orders for a future AirPods generation to a lower-cost supplier in China.
The decision will lead Varta to stop producing rechargeable button cells in Nördlingen during fall 2026. Approximately 350 jobs will be eliminated across the factory and the company headquarters in nearby Ellwangen.
Describing the development as a complete corporate collapse would go too far. Varta continues operating other battery businesses and recently completed an extensive financial restructuring backed by Porsche. The loss of Apple, however, has destroyed the economic foundation of a production site created around one highly influential customer.
The Varta crisis illustrates how a large technology customer can transform a supplier and then leave it with capacity that cannot easily be reassigned.
Varta became an important producer of CoinPower lithium-ion cells, small rechargeable batteries designed for wireless earbuds and other compact devices. Teardowns of AirPods Pro models identified Varta cells inside the earbuds, although Apple does not publicly discuss most component suppliers by product.
Demand from premium wireless headphones helped Varta expand rapidly. In 2020, its Microbatteries and Solutions division generated approximately €508 million in revenue, representing growth of 49% from the previous year.
The company invested heavily in production as wireless earbuds became a mass-market category. Apple demand provided the volume needed to justify specialized lines, equipment and hiring in Germany.
That dependence became dangerous when AirPods production weakened and Apple began adding other battery suppliers. A factory developed for unusually large orders could not operate efficiently once those orders declined.
The customer now leaving Nördlingen had previously accounted for nearly the entire capacity of the site. Varta says it has gained other customers, but their combined demand is not sufficient to keep the specialized factory running.
The plant is therefore closing not because rechargeable button cells have disappeared, but because replacing one customer of Apple scale requires far more than several smaller contracts.
German reports indicate that price was the decisive factor behind the supplier change.
Varta battery quality was reportedly equal to or better than the competing product. The German manufacturer could not, however, match the cost offered for the next generation of cells from China.
Battery production in Germany faces higher labor, energy and operating expenses than many Asian manufacturing centers. Chinese suppliers also benefit from extensive domestic electronics supply chains, access to materials and production volumes spread across numerous customers.
Apple has enormous leverage when negotiating component contracts. AirPods ship in sufficient quantities for a small difference in the cost of each battery to produce substantial savings across an entire product cycle.
The company regularly qualifies multiple suppliers for components when technical requirements and available capacity permit. Competition can reduce prices, protect production against interruptions and prevent one manufacturer from gaining excessive influence over the supply chain.
For Varta, that process brought the opposite effect. The supplier expanded to serve Apple and then faced declining utilization as the customer divided orders among additional manufacturers.
The latest move appears more final. Varta expects the contract to expire at the end of October, removing the volume that kept Nördlingen economically viable.
The reported decision does not mean Apple is moving its complete production network toward China.
Apple has spent several years expanding device assembly and component production in India, Vietnam and other countries. AirPods manufacturing has grown in India, while Macs, iPads and wearables are assembled across a wider group of Asian locations.
The Varta case concerns a particular component for which a Chinese supplier reportedly offered a more competitive price. It shows that diversification away from one country can coexist with cost-driven sourcing from that same country.
Apple may reduce its dependence on Chinese final assembly while continuing to purchase Chinese batteries, displays, enclosures or electronic components when suppliers provide the required scale and pricing.
That balance creates a difficult environment for European manufacturers. Political interest in domestic technology production does not guarantee that major customers will accept higher component prices.
Premium engineering can protect a contract when it produces a measurable advantage in battery capacity, safety, dimensions or lifespan. Once competing suppliers reach comparable performance, procurement decisions become increasingly sensitive to cost.
The Varta crisis suggests that manufacturing location and supplier history carried less weight than the economics of the next AirPods battery.
Apple did not create every problem affecting Varta.
The company entered the current dispute after years of debt, costly investments, volatile customer orders, supply-chain problems and weaker demand in parts of its energy-storage business. A cyberattack in early 2024 also disrupted production and delayed financial reporting.
Varta warned that its earlier restructuring plan might fail after Apple reduced AirPods production. By mid-2024, the company had reached a point where it could no longer service its debt without another intervention.
A pre-insolvency restructuring reduced financial liabilities from approximately €485 million to €200 million. Porsche and majority shareholder Michael Tojner agreed to provide new capital, while creditors supplied additional financing.
Existing shareholders lost their investment as Varta was removed from the stock market. The process preserved the operating company but demonstrated how little financial room remained for another major disruption.
Varta reported a loss of €64.5 million for 2024. Although that was an improvement from the previous year, the business remained dependent on successful restructuring and stronger performance from its surviving divisions.
The Apple contract loss therefore did not independently bring down a healthy battery group. It struck a manufacturer that had already narrowly avoided insolvency.
Porsche participation gives Varta a future in automotive batteries, but it does not rescue the Nördlingen button-cell operation.
The automaker invested in the restructuring and took control of the V4Drive business, which develops high-performance cylindrical lithium-ion cells for hybrid and performance vehicles. Porsche gains greater access to battery technology while helping retain part of that expertise in Germany.
Varta also continues producing household batteries and energy-storage systems. Those businesses serve different customers and do not depend on the machinery used for tiny CoinPower cells.
Employees affected by the Nördlingen closure may be offered positions at other locations, although Varta has not indicated how many can realistically be transferred. The company and its works council are negotiating measures for the workers whose roles will disappear.
The shutdown leaves a modern production unit without enough demand only a few years after wireless earbuds were presented as one of Varta most promising growth markets.
Its remaining automotive operation now has the security of a strategic customer with a direct ownership interest. The microbattery division learned the cost of building a factory around a customer that never made the same commitment.
The post Varta Crisis Deepens After Apple Battery Defection appeared first on AppleMagazine.
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