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China has recently launched a new wave of export controls targeting the global high-tech industry, focusing on imposing strict restrictions on rare earth materials such as Scandium and Dysprosium, further expanding its influence over the radio frequency (RF) and storage equipment markets. This marks the third round of export restrictions following those on materials like Gallium, Germanium, and Tungsten. External sources believe this is a response to the 54% tariffs imposed by the Trump administration on Chinese-made products and the 34% import tax levied on all US-produced goods.
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Scandium and Dysprosium Become Central to Control, Impacting TSMC, Qualcomm, and Other Major Players
China’s Ministry of Commerce announced that, effective immediately, all exports of products containing rare earth elements such as Scandium (Sc), Dysprosium (Dy), Gadolinium (Gd), Terbium (Tb), Lutetium (Lu), Samarium (Sm), and Yttrium (Y) must apply for export permits from the Chinese Ministry of Commerce and provide detailed information on the final use and customer details.
This policy will directly impact major technology companies that rely on these materials, such as Broadcom, GlobalFoundries, Qualcomm, TSMC, Samsung, Seagate, and Western Digital.
Review of the Three-Stage Restriction Policy: From Semiconductor Materials to Rare Earth Core
First Round: Key Semiconductor Elements (December 2024)
In December 2024, China first imposed restrictions on specific export materials, directly targeting two materials indispensable to semiconductor manufacturing processes: Gallium (Ga) and Germanium (Ge), as well as other strategic metals like Antimony (Sb). These materials are widely used in optoelectronic components, high-frequency electronic devices, solar energy, and infrared sensors.
Second Round: Expanding to Other Advanced Manufacturing Metals (February 2025)
Several months later, China expanded the list of restrictions, adding elements closely related to semiconductor manufacturing, heat dissipation, and high-end packaging, including Tungsten (W), Indium (In), Molybdenum (Mo), Bismuth (Bi), and Tellurium (Te). This wave of measures clearly targeted vulnerabilities in the Western chip manufacturing supply chain that heavily relied on Chinese material sources.
Third Round: Targeting Rare Earth Materials Such as Scandium and Dysprosium (April 2025)
By April, China further restricted the export of products containing rare earth elements such as Scandium, Dysprosium, Gadolinium, Terbium, Samarium, Lutetium, and Yttrium, requiring exporters to apply for permits and provide explanations of the final customer and intended use.
This policy is no longer solely targeting semiconductor materials but rather key raw materials covering high-end applications such as radio frequency filters, electric motors, MRAM, hard drives, and radiation shielding equipment.
Scandium Drives High-Efficiency Filters: 5G and Wi-Fi 7 Bear the Brunt
Scandium is a crucial material in modern radio frequency applications, especially in the application of Scandium Aluminum Nitride (ScAlN). Doping with 10% to 40% Scandium can significantly enhance piezoelectric performance and electromechanical coupling coefficients. This makes it a core material for producing high-performance Bulk Acoustic Wave (BAW) and Surface Acoustic Wave (SAW) filters, widely used in 5G smartphones, Wi-Fi 6/7 modules, and base stations. Although each wafer requires only a few grams of Scandium, its criticality means that supply disruptions can create severe bottlenecks in the industry chain.
Dysprosium Spans Storage Devices and Electric Vehicles: Higher Risk of Supply Disruption
Unlike Scandium, Dysprosium has a broader range of applications. It is an additive element in the powerful permanent magnet material Neodymium Iron Boron (NdFeB), enhancing the coercivity of magnets at high temperatures, and is widely used in voice coil motors (VCM) for hard disk drives and electric vehicle motors. Additionally, in Magnetoresistive Random-Access Memory (MRAM), Dysprosium helps stabilize magnetic structures and is commonly found in radiation shielding materials for space and nuclear energy fields. These uses imply that once the supply of Dysprosium is limited, it will have a profound impact on the electric vehicle, storage, aerospace, and military industries.
Strategic Thinking Behind Rare Earth Controls
In fact, this is not the first time China has used rare earth export controls as a policy tool. The earlier first and second rounds of restrictions already covered several materials closely related to semiconductors, including Gallium, Germanium, Tungsten, and Indium. These measures have been widely interpreted as a response to the high tariffs imposed by the US on Chinese products, highlighting China’s attempt to strengthen its dominant position in the “vertically integrated stack” of the global technology supply chain.
A Chance for Global Supply Chain Rebalancing?
Although China controls most of the world’s rare earth production capacity and monopolizes the market by subsidizing and lowering costs, its export restrictions also create opportunities for other countries and companies to transform and invest. As supply risks increase, companies may turn to potential alternative suppliers in Australia, Canada, Africa, and other regions, and even re-evaluate the feasibility of local refining and material research and development. In the medium to long term, China’s move may instead accelerate the diversification and de-Sinicization of the global rare earth supply chain.
Reference
- China Makes Another Move! Imposes Third Round of Rare Earth Export Restrictions, Impacting the Global Semiconductor Supply Chain
- China’s rare earth export restrictions threaten global chipmaking supply chains
- Ministry of Commerce of China -https://www.mofcom.gov.cn/zwgk/zcfb/art/2025/art_9c2108ccaf754f22a34abab2fedaa944.html
(Source of the first image: istockphoto.com)
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