On Thursday, October 22, according to three sources familiar with the matter cited by Reuters, Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip maker, is seeking alternative solutions for rare earth components in its factory equipment. This move aims to mitigate the risks of disruption to TSMC’s global factory operations that may arise from Beijing’s export control measures.
In 2025, the Chinese Communist Party included some rare earth materials, magnets, and related processing technologies in its export control list, requiring exports to obtain permission.
Rare earth magnets are commonly used in electric motors that drive components of industrial equipment, crucial for highly automated factories like TSMC’s. A shortage of these specialized components could disrupt chip production, affecting industries such as smartphones, artificial intelligence systems, data centers, and defense supply chains.
According to three industry executives familiar with TSMC’s plans, the company has been inquiring with suppliers about the feasibility of using rare earth-free motors in its factory automation equipment.
One executive stated that this is a precautionary measure taken in anticipation of potential disruptions in rare earth supplies from Beijing. The other two executives noted that discussions are still in the early stages and widespread adoption of rare earth-free equipment has not yet been realized.
TSMC has not immediately responded to Reuters’ request for comment.
The Taiwanese government had previously indicated its intent to reduce reliance on China’s rare earth and critical mineral supply chains. TSMC’s actions reflect a response to this initiative.
In June, Raymond F. Greene, Director of the American Institute in Taiwan (AIT), mentioned that the U.S. is collaborating with Taiwan and other partners to develop alternative supply sources, expand processing capabilities, and build more resilient supply chains.
Taiwan’s Minister of Economic Affairs, Ming-Hsin Kung, stated in February that they will support the Industrial Technology Research Institute (ITRI) in developing rare earth technologies and plan to establish a pilot production line within three years, expected to meet around 50% of Taiwan’s domestic demand.
An American think tank expert familiar with the discussions revealed that U.S. officials have shown keen interest in ITRI’s project and have engaged in consultations with the research institute regarding diversification of critical mineral supply chains. The U.S. State Department has not commented on this matter yet.
ITRI stated in a press release that they are collaborating with the Industrial Development Bureau of the Ministry of Economic Affairs in Taiwan to plan a rare earth project. The statement did not provide further details.