Taiwan sees no significant impact on chip sector from China rare earths curbs

[Daniel Nenni]

Here’s a breakdown of what’s known so far about Taiwan’s reaction to China’s expanded rare earth export curbs, and why they believe the semiconductor (chip) sector won’t be hit hard — plus what risks might remain. Happy to dive deeper if you want (e.g. by element, cost, or indirect supply-chain effects).

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What’s going on​

• China recently broadened its export controls on rare earth materials. It has added five new elements to its licensing/ban regime, and is increasing scrutiny for chip users. Reuters+2Tom's Hardware+2
• Taiwan’s Ministry of Economic Affairs / Economy Ministry responded that the rare earths included in the new controls are different from the ones used in Taiwan’s semiconductor processes. Reuters+2The Straits Times+2
• Also, Taiwan already sources most of its rare earth-related products (or derivatives) not from China but from Europe, the U.S., and Japan. Reuters+2Tom's Hardware+2

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Why Taiwan thinks the chip sector won’t be significantly affected​

From available statements:

1. Mismatch of materials
   The new restricted rare earth elements are those that aren’t used (or not used in critical amounts) in Taiwan’s chip manufacturing flow. So the elements that China is restricting don't overlap in an important way with what Taiwan fabs need. Reuters+1
2. Diversified supply already in place
   Taiwan has supply sources for the rare earth derivatives (or needed materials) in other countries — Europe, U.S., Japan — reducing dependency on China for the particular rare earths relevant to semiconductor fabs. Reuters+2Tom's Hardware+2
3. Current impact is minimal/indirect
   The government is watching for indirect effects—cost increases, supply-chain disruptions for related industries (EVs, drones, etc.)—but believes for now chip fabs are relatively shielded. Reuters+1

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What​

Even though Taiwan isn’t expecting serious damage right now, there are potential vulnerabilities:

• Indirect cost increases
  Even if the rare earths newly restricted aren’t directly used in chip manufacturing, components upstream or downstream (e.g. equipment, chemical inputs, magnet applications, etc.) might see price hikes. Over time, those increased input costs can filter into chip fab operations.
• Supply chain disruptions/timing delays
  Licenses, regulatory uncertainty, shipping delays … sometimes even when you have alternate sources, ramping up those alternate supply lines takes time. If China or other actors escalate restrictions, companies might face bottlenecks or shortages.
• Future changes in what materials are restricted
  The rare earth landscape is dynamic. China could in future restrict types used by chip fabs, or even tighten enforcement or licensing around “associated” derivatives, not just the raw elements. If Taiwan’s fabs depend on some raw or refined materials that aren’t currently restricted but might be in future, that’s a risk.
• Geopolitical risk / trade tension escalation
  The more supply chains are seen as vulnerable, the more likely there’ll be policy reactions in various countries. Trade wars, export controls from other sides, etc., could complicate things.

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Bottom line​

Taiwan is relatively confident: no significant immediate impact expected for its semiconductor sector from China’s latest rare earth export curbs. The reasoning: the specific rare earth elements being restricted aren’t those critical for Taiwan’s chip manufacturing, and Taiwan has alternate sourcing. But the situation isn’t static, so monitoring for indirect effects or future restrictions is important.

Recent Taiwan‑China rare earths/chip sector news


Reuters
Taiwan sees no significant impact on chip sector from China rare earths curbs
Today

 

[Fred Chen]

Since the non-Chinese supply of rare-earths is very much smaller, there can be the issue of volatility or sensitivity to disruption. But I've read that the price for lanthanum, which is commonly cited (e.g., US10424517) for NMOS HKMG work function tuning, isn't that expensive anyway, and the consumption relative to other materials is quite small.