TSMC seeks to reduce rare earth reliance

TSMC, the world's largest semiconductor manufacturer, is working to reduce its dependence on rare earth elements, which China controls nearly exclusively. The company is investigating equipment that does not use these materials, according to Reuters.

Rare earth elements and China's dominance

Rare earth elements are a group of 17 metals that are difficult to extract and separate. China has taken a leading role in their extraction, refining, and magnet production. According to the International Energy Agency (IEA), in 2024, China accounted for about 60% of global rare earth extraction, as well as 91% of their refining and 94% of magnet production.

TSMC explores rare earth-free motors

TSMC has surveyed its suppliers about rare earth-free motors for the automation of its factories. The company currently uses magnets made from rare earth metals, but this initiative comes in response to recent restrictions imposed by China.

China imposes export restrictions

In April 2025, China introduced export licenses for seven heavy rare earths and magnets containing them in response to Donald Trump's tariffs. Each shipment requires approval from Chinese authorities, and delays can last several months. In October of the same year, Beijing approved more severe measures, but negotiations with Trump paused them until November 10, 2026.

Further restrictions could affect global markets

If China does not back down, five additional elements could be added to the list of restricted materials. Some products made outside China may need approval to be exported if they contain at least 0.1% of Chinese rare earths. Exportations related to advanced chip production will also be reviewed individually. According to the IEA, up to $6.5 trillion of global economic activity could be at risk if these restrictions are fully applied.

TSMC's efforts align with Taiwan's goals

TSMC's push for rare earth independence is part of a broader effort in Taiwan. The country supports the Industrial Technology Research Institute (ITRI), a public research organization, to develop its own rare earth technologies. The goal is to launch a pilot line that can cover about half of Taiwan's needs within three years.

Washington shows interest in Taiwan's efforts

TSMC's ambitions have drawn the attention of the United States. Washington is interested in Taiwan's progress toward developing its own rare earth technologies, which could reduce global reliance on China's supply chain.