China has tightened controls on exports of rare earths and related technologies, a move that widens Beijing’s licensing regime and introduces new risk for global semiconductor supply chains, including shipments from Taiwan Semiconductor Manufacturing Company (TSMC) to the United States.
China’s Ministry of Commerce said on Thursday, 9 October 2025, that technologies used to mine, separate, process, recycle and manufacture magnets from rare-earth elements now require government permission, citing national security. The announcement expands measures first trailed in April and took immediate effect.
Under the rules, licences will not be granted for overseas defence end-users, and applications connected to advanced semiconductors will be decided case by case. Officials said some transfers had supported foreign military use “directly or indirectly”, and that permission may not be granted. The measures also prohibit Chinese nationals and companies from assisting in rare-earth mining, processing, recycling or magnet production overseas without approval.
The scope is broad. Foreign manufacturers operating outside China but using Chinese machinery, components or know-how in rare-earth processes are told to seek permission, though enforcement mechanisms were not set out. Exporters whose products contain even trace amounts of Chinese-sourced rare earths are instructed to obtain clearances; holders of existing dual-use licences have been asked to present them proactively for inspection. Analysts noted that the package formalises and widens the licensing perimeter across the rare-earth value chain.
Implementation timelines vary across instruments. Reporting indicates that some additions—covering new elements and processing equipment—took effect immediately, with a further tranche of controls due to begin in early November and December for foreign manufacturers using Chinese rare-earth equipment or material.
Rare earths and permanent magnets are embedded across modern industry, from smartphones and electric vehicles to jet engines and radar systems. China controls about 70% of global rare-earth mining and an even larger share of separation, processing and magnet manufacturing, magnifying the reach of any licensing regime. Beijing has framed the move as consistent with international practice and driven by national-security concerns.
The semiconductor sector could face indirect effects. While most chips contain little or no rare earths, fabs rely on rare-earth compounds and derivatives in equipment and consumables (for example in chemical-mechanical planarisation slurries for wafer polishing, certain lithography steps, vacuum systems and high-performance magnets used in tools and robotics). Controls that reach into materials, sub-systems and magnet manufacture can therefore affect fabrication and maintenance even when finished chips have minimal rare-earth content.
TSMC fabricates leading-edge processors for major US firms. If Chinese-origin inputs or processes trigger new licensing obligations, US-bound shipments could face compliance checks or delays. Market attention is focused on whether the case-by-case regime will touch products associated with advanced logic and high-layer memory, where demand is strongest for AI workloads. Some technical reporting suggests semiconductor-linked applications—such as logic at 14nm and below and 256-layer NAND and above—may receive heightened scrutiny.
European and Japanese equipment suppliers could also be drawn in. ASML and Tokyo Electron depend on complex global networks for parts, maintenance and consumables. If the controls extend to magnet production, separation chemistry or other sub-systems, companies may encounter tighter scrutiny over components and service items that incorporate Chinese inputs. Dozens of pieces of equipment and materials used to mine and refine rare earths now fall within the regime.
Authorities in Taipei have said they expect limited direct impact on chipmaking, noting that the newly controlled elements differ from those commonly used in Taiwan’s semiconductor processes, and that many inputs are sourced from Europe, the US and Japan. Nonetheless, they cautioned that broader supply chains—such as electric vehicles and drones—could be affected and that conditions warrant monitoring.
The timing overlaps with a sensitive diplomatic calendar. The measures arrive amid tense US–China trade discussions and ahead of an expected meeting between President Donald Trump and President Xi Jinping on the margins of the APEC summit in South Korea. Beijing has defended the curbs as legitimate and security-driven in the face of US tariffs and controls; Washington has accused China of weaponising critical materials.
Policy papers and industry analyses characterise the new regime as the strictest to date on rare earths and permanent magnets, with an explicit national-security review across upstream technologies. They flag an extraterritorial dimension in which foreign producers using Chinese-origin rare earths or Chinese technology may require Chinese licences to export finished goods.
In the near term, the principal risks for US technology companies are administrative friction and schedule variability rather than absolute loss of supply. NVIDIA and AMD rely on TSMC for advanced GPUs and CPUs; Apple sources mobile SoCs from the foundry. Additional licensing steps could complicate delivery timetables and inventory planning during a period of strong AI demand. The overall impact will depend on implementation—how strictly licences are adjudicated for semiconductor-adjacent exports, whether exemptions or white-lists emerge, and the speed at which non-Chinese alternatives can be qualified.
If enforcement is expansive, fabs and toolmakers are likely to increase compliance resources, map exposure to Chinese-origin inputs in equipment and consumables, and accelerate dual-sourcing where feasible. For now, concentration in processing and magnet capacity means the risk profile for US-bound deliveries of advanced chips remains elevated.
