The world's slide supply chain is falling out of China's rare earth curbs

Businesses across the global semiconductor supply chain are weakening themselves due to disruption of an increasing trade war, after China imposed on the mineral export of rare earth, and the US replied with additional tariffs and restrictions on software sales to the Asian country. China’s restrictions, the most targeted move that still limits the stock of rare earth materials, represent the first major effort of Beijing to exert long-arm jurisdiction over foreign enterprises to target the semiconductor industry, threatening to stop the slides driving the AI ​​boom. They asked US President Donald Trump to announce on Friday that he would impose an extra 100% tariff on China and carry out ‘any critical software’. The rare Earth rand stones can lead to delays in the week-long in the shipping for Asml Holding NV, the only manufacturer in the world of machines that make the most advanced semiconductors, a person familiar with the company said. A senior manager at a major US chip business said the firm still assesses potential consequences. But the clearest risk facing the business now is an increase in the prices of rare earth -dependent magnets that are critical to the chip’s supply chain, this person said and asked not to be identified. An official at another US Chip business said the business is identifying which of its products rarely contains rare earth from China and is concerned that the country’s licenses requirement will stop its supply chain. It is not clear what software products from the US can be hit by Trump’s latest proposed export ban. In July, the administration lifted the export license requirements for Chip design software sales, rules introduced in May as part of a series of measures responding to Beijing’s earlier limits to the shipment of essential rare earth. The new rules of China require overseas firms to get approval for the shipment of any material that contains even trace quantities Chinese rare earth – and explicitly call out parts used to make certain computer chips and promote AI research with military applications. “These are the most stringent export controls used by China,” says Gracelin Baskaran, a critical mineral-focused director at the Center for Strategic and International Studies. “It is very clear that they have the sticks and leverage, not only US firms, but companies worldwide.” Disc machines, such as those provided by ASML and Applied Materials Inc. sold is especially dependent on rare earth because it contains exceptionally precise lasers, magnets and other equipment that use these elements. ASML is preparing for disruptions, especially as a result of a clause that requires foreign firms to seek the approval of China for the re -export of products containing its rare earth, said the person who is familiar with ASML, who asked not to be identified, discussed private matters and noted that asml Dutch and US allies are for alternatives. The company declined to comment. “Within the semiconductor value chain, China’s new export controls are likely to have the most impact on the chipmakers who use rare earth-based chemicals during the manufacturing process and tools that integrate rare Earth magnets into their equipment,” said Jacob Feldgoise, senior data analyst at the Georgetown University’s Center for Security and Rising Technology. Some people have questioned how long the restrictions will last, and consider it potential attitude before a trip to Asia that Trump planned, which is expected to include a meeting with Chinese President Xi Jinping later this month. It is unclear how China would even detect rare earth at such discrete levels to enforce the rules. But the move of China has increased the tensions with the US instead. Trump’s announced rates will increase import duty on many Chinese goods to 130% from next month. It would only be lower than the 145% level imposed earlier this year, before both countries dropped the charges in a ceasefire to promote trade conversations. On Friday, Trump also threatened to completely call off his meeting with XI and describe the new rare earth controls as a ‘hostile’ action. “I’ve always felt they were waiting, and now, as usual, I’m proven right! There is no way China should be allowed to ‘imprison the world’, ‘Trump said in a post about Truth Social. This is not the first time that rare earth has ended up in the middle of US China trade wars. After Trump drew rates on Chinese imports earlier this year, the government of China replied by cutting off mineral exports to US businesses. Officials from both sides agreed to a ceasefire in the spring, including Trump lowered the duties and XI officials agreed to resume the flow of the minerals. The world’s largest chipmakers, including Intel Corp., Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., rely on ASML to produce semiconductors. Samsung and Intel declined to comment. TSMC did not respond to a request for comment. An official of the White House said the government and appropriate agencies assessed any impact of the new rules, which were announced without notice and in an apparent effort to exercise control over the world’s technology provision chains. The US House Select Committee on China brought the Asian nation to the relocation and described the restrictions as “an economic declaration of war against the US.” The chairman of the committee, John Moolenaar, a Republican, said in a statement on Thursday that China “fired a loaded gun on the US economy.” Germany, the largest economy of Europe, has already put in place measures to diversify its supply of raw materials, and its economic ministry on Friday called a ‘big concern’. The government said it was in close contact with the affected companies and the European commission to respond. Taiwan mainly relies on Europe, the US and Japan for rare earth supplies. “We need further assessment before deciding on the impact” on the chip industry, the country’s Ministry of Economic Affairs said in a statement. “We will continue to monitor the indirect impact of fluctuations in the price of raw materials and adjustments of the supply chain.” With the help of Joe Deaux, Mackenzie Hawkins, Josh Xiao, Josh Wingrove, Kamil Kowalcze, Michael Nienaber, Petra Sorge, Yuki Furukawa and Christina Kyriasoglou. © 2025 Bloomberg MP This article was generated from an automatic news agency feed without edits to text.