Although Washington and Beijing agreed to a trade truce in October 2025, semiconductor manufacturers are still facing significant pressure from constrained rare-earth supplies.
According to recent reports, suppliers of rare-earth materials to chipmakers remain limited in inventory. Some have even declined new customers due to tight stock levels. The bottleneck appears particularly acute for U.S. companies attempting to secure export licenses from China for scandium, a key material used in 5G chips for smartphones and cellular base stations.
While much of the material is sourced through intermediaries, Beijing requires exporters to disclose end users before granting licenses. The restriction extends beyond scandium. Virtually all Chinese-origin rare earths used in producing logic chips at 14nm and below, or advanced memory chips with 256 layers or more, are subject to similar licensing controls.
China began tightening restrictions on critical minerals in December 2024. However, the most impactful measures came in April 2025, following new tariffs introduced by U.S. President Donald Trump. Notably, export controls have not been limited to raw materials alone. Processing technologies, equipment, and methods have also been restricted, making it more difficult for other countries to compensate for supply disruptions simply by acquiring tools or technical know-how.
Nearly a month after the truce, China issued its first batch of rare-earth export licenses. However, these approvals were granted to specific buyers rather than broadly across the industry, meaning access remains selective and uneven. As a result, some U.S. semiconductor firms have reportedly sought federal assistance, with one official suggesting that the semiconductor sector appears to be a deliberate target.
This issue is likely to feature prominently in upcoming high-level discussions between U.S. and Chinese leadership, as supply chain security in advanced technologies continues to sit at the center of geopolitical negotiations.
The rare-earth constraint underscores a broader reality: even with diplomatic pauses, structural supply chain leverage remains a powerful strategic instrument in the global semiconductor landscape.
