Key points
- TSMC requests factory automation machinery that excludes rare-earth components to reduce reliance on China-dominated supply chains.
- China controls roughly 95 percent of finished permanent magnets, prompting TSMC to seek alternatives after new export restrictions.
- Beijing expanded controls in October 2025 to cover additional rare earths and processing tech, then suspended the expansion for one year.
TSMC is asking its equipment suppliers to provide factory machinery that does not use rare-earth magnets, aiming to reduce dependence on materials dominated by China. This move seeks to prevent disruptions to chip production caused by Beijing’s export controls on critical minerals and permanent magnets.
How it unfolded
- In April 2025, China placed seven medium and heavy rare earths and their magnets under export controls, requiring case-by-case approval for shipments.
- On October 9, 2025, Beijing expanded those controls to include five additional rare earths, processing technology, and products made with Chinese tech.
- China later suspended the October expansion for one year, until November 10, 2026, and subsequently extended that suspension by an additional 90 days.
- According to a Reuters report on October 22, TSMC began approaching suppliers to explore automation equipment with motors that do not require rare-earth materials.
Who is affected
TSMC manufactures chips for major technology companies including Nvidia, Apple, Broadcom, and Qualcomm. These chips are essential for the artificial intelligence boom and various automotive and consumer electronics. The company operates highly automated semiconductor fabrication plants that rely on industrial machinery. These machines use electric motors with powerful permanent magnets made from rare-earth elements such as neodymium, dysprosium, and terbium.
What happens next
The U.S. Geological Survey states that China accounts for roughly 70 percent of global rare earth mining. The International Energy Agency reports that China controls around 90 percent of refining and approximately 95 percent of the finished permanent magnets used in TSMC’s machines. TSMC’s efforts to source alternative machinery aim to reduce the risk that these export controls will hinder production at its factories.
The background in plain language
Teams usually assess supply chain resilience by identifying single points of failure in critical components. For hardware manufacturers, this means checking whether essential parts like motors depend on materials controlled by a single geopolitical entity. Organizations should evaluate if their equipment relies on permanent magnets or rare-earth elements that could be subject to export restrictions. Diversifying suppliers or redesigning components to use alternative materials can mitigate the risk of production halts caused by sudden trade policy changes or material shortages.
What to do and how to stay safe: TSMC
- Review current equipment maintenance plans to identify dependencies on rare-earth components in motors or sensors.
- Monitor official trade announcements for changes in export controls affecting critical minerals and processing technologies.
- Engage with equipment vendors to inquire about alternative designs that do not rely on restricted materials.
- Update risk assessments to include geopolitical factors that could disrupt the supply of essential manufacturing inputs.
Step-by-step guide: Mobile Device Security for Small Business: Control Without Cost
General security guidance from the Circuit Observer newsroom. It is not confirmed advice from the organisations named in this story.
Frequently asked questions
Why is TSMC looking for new equipment?
TSMC seeks to reduce its dependence on China-dominated rare-earth materials and avoid disruptions from export controls.
What materials are involved in these controls?
The controls involve rare-earth elements such as neodymium, dysprosium, and terbium, which are used in permanent magnets.
Has China lifted the export controls?
China suspended the October 2025 expansion of controls for one year, until November 2026, and extended that suspension by 90 days.
