Rare Earths (CN)

Full briefing

Rare-earth elements (REEs) encompass 17 metals with unique magnetic, luminescent, and electrochemical properties. In the semiconductor equipment supply chain the most critical are neodymium (Nd) and dysprosium (Dy), which are alloyed into neodymium-iron-boron (NdFeB) permanent magnets. These magnets power the precision linear and rotary actuators that position wafers in lithography machines, etch chambers, CVD reactors, and metrology tools. A single EUV scanner contains hundreds of NdFeB magnet assemblies; tolerances are sub-nanometer, so magnet purity and homogeneity directly affect yield. Although rare earths are found worldwide — China's share of global mine production is roughly 60–70% — the critical constraint is in refining. Separating individual rare-earth oxides requires solvent-extraction chemistry that China has industrialized over decades. China's share of refined rare-earth output is approximately 85%, with the remainder split among the US (Mountain Pass), Australia (Lynas), and a handful of smaller producers. Nd-Dy alloy ingot production for magnet applications is even more concentrated, with China accounting for over 90% of globally available supply. In 2023 China introduced export licensing requirements for rare-earth extraction and separation technology, adding a layer of control on top of existing dominance in refined supply. The controls were widely interpreted as a counter-leverage measure in response to U.S. and allied semiconductor equipment restrictions. For equipment makers — ASML, TEL, Applied Materials, KLA, and Lam Research — the dependency on Chinese rare-earth refining is a strategic risk that has accelerated investment in alternative supply chains, including Australian rare-earth separation facilities and U.S. Department of Energy-funded magnet recycling programs.