The People’s Republic of China is making a strategic move regarding rare earth element supply, imposing licensing requirements for companies exporting these elements. This decision poses a serious risk of a supply crisis for the US, which previously imposed heavy sanctions on China. China produces approximately 90 percent of global rare earth elements, and these elements are critical to modern technology.

China Makes Critical Decision

The new licensing system implemented by the Beijing government also restricts the export of products made from rare earths. This situation is particularly challenging for semiconductor giants such as TSMC, Intel, and Samsung, as rare earth elements play a vital role in key processes such as lithography and surface polishing used in semiconductor manufacturing.

China’s new regulations require these companies to obtain export licenses before selling them abroad. China previously initiated efforts to prevent the military use of rare earths mined on its territory. Now, it is reportedly targeting the US artificial intelligence sector directly. These restrictions are expected to take effect on November 8th.

This development will directly impact not only chip foundries but also chip designer companies like NVIDIA, AMD, and Apple. These companies rely heavily on TSMC’s advanced chips for their production.

Furthermore, China’s new policy is putting pressure on global suppliers of chip foundry equipment, such as ASML and Tokyo Electron. With this move, China is beginning to use its rare earths leverage against the US.