TLDRs;
- Taiwan says China’s new rare earth export curbs won’t affect chipmaking due to diversified sourcing.
- China’s export list targets heavy rare earths tied to defense, not semiconductors.
- EV and drone industries may face shortages due to magnet material restrictions.
- Analysts warn global reliance on Chinese refining remains a long-term vulnerability.
Taiwan’s Ministry of Economic Affairs has sought to calm concerns that China’s latest expansion of rare earth export controls will disrupt the global semiconductor supply chain.
The ministry said the newly restricted elements are not crucial to Taiwan’s chip manufacturing process, asserting that the island’s heavy reliance on imports from Europe, the U.S., and Japan shields its tech sector from potential shortages.
China recently announced additional export restrictions covering five rare earth elements and introduced tighter end-use verification measures targeting chip users. The move sparked fears of ripple effects across key technology supply chains, as China accounts for nearly 90% of global rare earth refining capacity.
However, Taiwan’s economy ministry clarified that the rare earths affected by Beijing’s new controls differ from those used in semiconductor fabrication.
“Taiwan’s chip industry primarily sources materials from stable and diversified supply networks, and the current measures do not pose immediate risks to production,” the ministry said in a statement.
Chipmaking Supply Lines Stay Resilient
Taiwan remains a global semiconductor powerhouse, with the Taiwan Semiconductor Manufacturing Company (TSMC) producing a majority of the world’s advanced chips. According to the ministry, TSMC and other leading foundries have confirmed that their sourcing of essential rare earths, such as lanthanum, cerium, and yttrium, does not rely heavily on China.
“While China dominates refining of certain heavy rare earths, those specific materials are not central to our chipmaking,” said a senior official from Taiwan’s Industrial Development Bureau.
The ministry also emphasized that Taiwanese firms maintain strategic reserves and alternative suppliers, reducing exposure to geopolitical risk.
Nonetheless, experts caution that indirect vulnerabilities remain. China’s rare earth refining monopoly, especially in neodymium-iron-boron (NdFeB) magnets used in industrial robotics, EV motors, and some chipmaking equipment, could indirectly pressure sectors adjacent to semiconductors.
EV and Drone Sectors Could Face Strain
While Taiwan’s chipmakers appear insulated for now, the economy ministry acknowledged that other high-tech industries could feel the effects. Electric vehicle (EV) and drone manufacturers depend more heavily on rare earth magnets, particularly those using dysprosium and terbium, elements included in Beijing’s latest controls.
China justified the export restrictions on grounds of national security, saying the elements involved have “potential military applications.” These materials are critical in high-temperature magnets used in defense systems, drones, and EV motors.
Western markets are already racing to secure alternative supplies. Recycling initiatives in the U.S. and Europe, such as HyProMag USA’s upcoming Texas facility and the EU’s LIFE INSPIREE project, aim to reclaim thousands of tonnes of rare earth magnets annually by 2030. Such developments could reduce dependence on China and stabilize prices, though scaling up remains a long-term challenge.
Global Dependence on Chinese Refining Persists
Despite efforts to diversify, analysts warn that Beijing’s dominance remains entrenched. China still controls roughly 85–90% of refined rare earth oxides and magnet production, according to industry data. Even when Taiwan sources raw materials from the West, refining and separation processes often trace back to China.
This interdependency underscores how global industries, especially clean energy and defense, remain tethered to Beijing’s policy decisions. For now, Taiwan’s semiconductor industry appears well-positioned, but prolonged or expanded controls could eventually tighten supply conditions.
The Taiwanese government said it will “continue to monitor developments closely” and engage with international partners to ensure stable sourcing of critical materials.
