[REVISION HISTORY]

China rare earth export restrictions and global supply chain

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2026-10-25 14:05 UTC → 2026-11-05 13:44 UTC · added ~~removed~~

China’s dominance in the rare earth elements market continues to drive global supply chain shifts. As geopolitical tensions escalate, China has implemented export controls on materials like yttrium and erbium, impacting electronics, fiber-optic networks, and data center operations. The IEEE has warned of significant decreases in essential materials for IT equipment, noting that yttrium exports have dropped approximately 75 percent compared to 2025 levels. Recent data highlights the severity of these shortages. Japan’s yttrium oxide imports from China plummeted from 51,000 kilograms in September 2025 to approximately 4,000 kilograms in September 2026. ~~In response, the~~ Japanese ~~government has reportedly requested~~ officials and industry executives have warned that stockpiles are decreasing, and shortages could become acute by the end of 2026. This has created a massive price disparity: while yttrium oxide costs approximately $9 per kilogram inside China, the price outside China has reached $1,150 per kilogram. Tokyo is seeking assistance from the United States to exert pressure on Beijing to ease restrictions, noting that the U.S. defense industry also relies on Japanese-manufactured components ~~using this metal.~~ containing yttrium. A Chinese Foreign Ministry spokesperson stated that the country implements export controls in accordance with existing laws and regulations. Market reports indicate that while Western nations are investing in alternative supply chains, China maintains a quasi-monopoly. Prices for dysprosium and terbium are rising in Western ~~markets due to low Chinese exports and dwindling stockpiles,~~ markets, while germanium scarcity has driven prices outside of China to record highs. The European automotive industry remains highly vulnerable; China accounted for 91 percent of the world's production of refined rare earth elements used for magnets in 2024, and 94 percent for sintered permanent magnets. The SDCM warns that this dependency is a direct threat to manufacturing stability. To mitigate risks, ~~industry leaders are seeking alternatives.~~ TSMC has begun consulting with suppliers to transition toward equipment that does not rely on rare earth components, specifically targeting high-precision electric motors used in automated industrial machinery and robotic arms. While these discussions ~~regarding rare earth-free motors~~ are in preliminary stages, the move aims to protect advanced chip production from disruptions caused by Beijing’s licensing ~~requirements for materials and processing technologies.~~ requirements.

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