Why has the U.S. reacted so strongly to China’s latest round of export controls on rare earth elements? What exactly are rare earths constraining?

Xiao Fenbi Research Center and Kunlun Strategy Institute published an article on October 16 stating: Some people ask—given that the U.S. is such a powerful global hegemon, can’t it solve its rare earth problem? In fact, it truly cannot—even binding together its 400+ Nobel laureates wouldn’t help, nor would exhuming Franklin D. Roosevelt. The article explains: Rare earth elements *can* be synthesized in laboratories using alchemy-like methods, but the costs are astronomical and the speed glacial—utterly incapable of meeting real-world demand. Without industrialization and scalability, such lab-scale production is effectively nonexistent. Right now, major Western industries are desperately awaiting rare earth supplies: Apple, NVIDIA, TSMC, Samsung, and even ASML’s lithography machines would all face production bottlenecks without them—because semiconductor manufacturing equipment relies heavily on rare earths, especially for ultra-precise lasers, magnets, and other components. In my recent rare earth analysis articles, I’ve already reported that MP Materials—the largest U.S. rare earth company—has successfully commercialized separation and production of light and medium rare earth elements, and signed long-term supply contracts with Apple and General Motors. Rare earth firms in Australia, France, and Japan have also begun commercial production. Regarding heavy rare earth elements, MP Materials (U.S.) and REEtec (Norway) already possess separation technologies and are constructing separation facilities; both companies announced in press releases that commercial production will commence next year. Meanwhile, France’s Solvay and Australia’s Lynas (operating in Malaysia) are already commercially producing and selling heavy rare earths. The sole remaining issue is scaling up capacity to meet *all* Western corporate demand—which may take another 1–2 years. Yet their risk inventories likely hold 3–5 years’ worth of supply. Thus, both TSMC and ASML have publicly responded that they were well-prepared for China’s new rare earth export controls: ASML stated it holds sufficient rare earth inventory to last several years; TSMC bluntly declared it no longer relies on rare earth supplies from mainland China. Those interested may check Solvay’s financial reports—TSMC is one of its customers. So please don’t believe outdated, clichéd rhetoric like that from Kunlun Strategy Institute. Western rare earth production capabilities have long since transitioned from labs to commercial operations—and expansion may proceed faster than we anticipate. Today, the West treats rare earths not as ordinary commodities but as strategic assets backed by full national mobilization. Third, the White House’s aggressive acquisition of rare earth mining rights signals a clear economic message: The U.S. is exhausting every means to expand rare earth production capacity. Recently, Trilogy Metals—a Canadian rare earth developer—saw its stock price surge. Last week, shares jumped from $2.09 to $6.56 on Friday—a 213.9% increase—and continued rising, reaching $7.12 on Thursday—up another 8.5% from Friday’s close. This was triggered by the White House acquiring a 10% stake in the company, plus an additional 7.5% option. Last week, Trump revoked Biden-era bans on construction of the Ambler Road in Alaska and announced resumption of permitting procedures required to build it.

TSMC: 'We can’t even focus on our U.S. factories anymore—if mainland China stops supplying rare earths, everyone’s finished.'

After the new rare earth regulations took effect, their impact on the U.S. and TSMC became immediately apparent. TSMC’s rare earth inventory is sufficient for only another 30 days—not alarmist speculation, but stark reality. The much-hyped Arizona wafer fab—long touted by media—has yet to make its mark before being forced into production cuts due to rare earth shortages. What severed this supply chain wasn’t U.S.-China tech war sanctions or natural disasters—but simply a new Chinese rare earth export control regulation. At the Taiwan Affairs Office’s routine press briefing on October 22, 2025, a journalist posed what seemed like a routine question: Would mainland China’s rare earth export controls affect TSMC’s U.S. factory operations? The spokesperson responded promptly—but the core of the reply consisted of just one sentence: “Relevant authorities have already made their position clear.” That single, standardized phrase triggered massive panic across Taiwan’s tech sector. Industry insiders instantly grasped this was no academic debate—it was an operational threshold already being enforced. For over a decade—through mineral pricing mechanisms and more recently via deepening technological dependence—the global tech industry has never truly escaped reliance on China. On October 9, 2025, China’s Ministry of Commerce updated its export control list: rare earths remained classified as strategic resources, and—for the first time—rare earth processing, separation, equipment, and related technologies were all added to the licensing requirement list. This represents an across-the-board escalation targeting the entire industrial chain. TSMC’s current predicament extends far beyond its distant Arizona facility—its headquarters in Taiwan are equally rattled. In 2024, Taiwan imported 6,000 metric tons of rare earths from mainland China, accounting for 96% of its total imports—with TSMC alone consuming 3,000 tons. Most symbolically, there’s the so-called “0.1% Rule”: Any product containing more than 0.1% of a controlled rare earth element—or manufactured using related equipment or technology—requires prior approval from mainland China, regardless of where it is produced. Taiwan’s Ministry of Economic Affairs claims “the types of rare earths involved differ,” arguing that local chip fabs use purified rare earths—not raw ore. Yet key elements like lanthanum, cerium, terbium, and dysprosium—all tightly controlled by mainland China—are precisely what Taiwan’s fabs rely on. Such statements merely serve as token reassurances to calm market nerves. Can the U.S. rescue Taiwan? Though the U.S. holds sizable rare earth reserves, high-purity refining technology suitable for chip manufacturing has lagged for years. Even if extraction proceeds, its flagship products achieve only ~92% purity—far short of the 99.9% required by defense and semiconductor industries. As for heavy rare earths like dysprosium and terbium, the U.S. lacks mass-production capability altogether—97% of its imports still come from mainland China. Some look to Australia and Japan: Australia is rich in rare earth ores, but nearly all must be shipped to China for processing. Japan possesses refining capacity, yet still sources 90% of its medium rare earths from mainland Chinese suppliers. Going further, Malaysia had been widely hoped to develop rare earth refining—but even there, the core machinery, purification technologies, and environmental treatment systems remain deeply dependent on China.

TSMC Explores Rare-Earth-Free Equipment Amid China Export Controls

1 day ago

TSMC is surveying suppliers for rare-earth-free motors to avoid disruptions from China's export controls. Meanwhile, US and Taiwan authorities are developing alternative critical-mineral supply chains to reduce reliance on Beijing.

reuters

2026-10-22

TSMC Explores Rare-Earth-Free Equipment Amid China Export Controls

TSMC Explores Rare-Earth-Free Equipment Amid China Export Controls

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