Imposing strict approvals on materials with trace rare earths, China is alarming chipmakers and threatening AI hardware production worldwide.
China’s new rules would bind foreign firms to seek permission for transporting any material that contains even the slightest amount of Chinese rare earths. This is the most targeted move to restrict supplies of rare earth materials.
Businesses around the global semiconductor supply chain are preparing themselves for the turmoil from this trade war. Additionally, the US responded with more tariffs and limitations on software sales to Asian nations.
The rare earth restrictions may lead to long delays in shipments for ASML Holding NV. This is the only manufacturer in the world that builds most advanced semiconductors.
A senior executive at a leading US chipmaker said the company is still evaluating the full impact of China’s new regulations, but warned that the most immediate threat comes from rising prices of rare earth based magnets essential to semiconductor manufacturing. Speaking on condition of anonymity due to the sensitivity of ongoing operations, the official noted that even minor supply disruptions could trigger broader production delays.
Another US chip industry insider said their firm is urgently auditing its supply network to determine which components contain Chinese rare earths, fearing that Beijing’s new licensing rules could halt shipments without warning. Analysts say China’s policy marks its first major bid to extend regulatory power beyond its borders, targeting foreign tech companies as geopolitical tensions escalate over semiconductor supremacy.
The move risks slowing production of high-performance chips that power artificial intelligence systems, prompting firms across the global tech supply chain to brace for prolonged uncertainty.
