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TSMC is seeking chipmaking equipment that doesn't contain Chinese rare-earth magnets — asks suppliers to provide alternative motors as export controls threaten fab operations China accounts for 95% of finished permanent magnets TSMC, the world's largest contract chip manufacturer, is seeking alternative machinery without rare-earth components to reduce its dependence on China-dominated materials and avoid disruptions to factory operations caused by the country's export controls. According to a Reuters report on October 22 citing people familiar with the matter, the Taiwanese company has begun approaching its equipment suppliers to explore whether they can provide factory automation equipment equipped with motors that don't require rare-earth materials. TSMC supplies the extremely powerful Nvidia chips that are facilitating the AI boom. It also manufactures chips for Apple, Broadcom, Qualcomm, and numerous other tech and automotive companies. The company operates enormous, highly automated semiconductor fabrication plants. These factories use industrial machinery that relies on electric motors with powerful permanent magnets made from rare-earth elements such as neodymium, dysprosium, and terbium. According to the U.S. Geological Survey (USGS), China accounts for roughly 70% of global rare earth mining. The International Energy Agency (IEA) says China also controls around 90% of refining and approximately 95% of the finished permanent magnets found in TSMC’s machines, giving Beijing a quasi-absolute monopoly over one of the most critical technology supply chains. In April 2025, the country placed seven medium and heavy rare earths and the magnets made from them under export controls, requiring exporters to seek case-by-case approval and export licenses, thereby choking shipments to manufacturers across the U.S., Europe, and Asia, including TSMC. China expanded the controls on October 9, 2025, to include five additional rare earths, processing technology and equipment, and even products manufactured outside the country that contain more than 0.1% Chinese-origin rare earths, or are made using Chinese processing technology. It later suspended the October expansion for one year, until November 10, 2026. This has now been extended for an additional 90 days. TSMC’s moves aim to reduce the risk that these controls will hinder production at its factories. Even with all other raw materials and machinery required to manufacture its chips, shortages of specialized motor components could complicate the maintenance, repair, or expansion of its production equipment. Several technological approaches allow motors to avoid rare earth magnets. Conventional induction motors, for example, generate torque using electromagnetic induction rather than permanent magnets. Switched-reluctance motors are another option, while some permanent-magnet motors can use ferrite magnets instead of rare-earth magnets. However, these technologies typically involve different trade-offs in efficiency, size, power density, precision, and control requirements. Meanwhile, the rest of the world is undertaking the painstaking, drawn-out task of building a rare-earth supply chain outside China. Taiwan is reportedly pursuing domestic rare-earth production capabilities in collaboration with the United States, with both countries confirming their intent to reduce reliance on Chinese rare-earth and critical-mineral supply chains. Taiwan's government is supporting the Industrial Technology Research Institute (ITRI) in establishing a pilot production line within three years that could supply about 50% of Taiwan's domestic rare-earth demand. Meanwhile, the U.S. is “working with Taiwan and other partners to develop alternative sources of supply, expand processing capacity and build more resilient supply chains,” according to the report. In February 2026, the Trump administration announced plans to create a $12 billion critical minerals stockpile to offset supply chain risks from China. Get Tom's Hardware's best news and in-depth reviews, straight to your inbox. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds. Etiido Uko is a news contributor for Tom's Hardware covering the latest updates in big tech and the PC industry. He is a mechanical engineer and senior technical writer with over nine years of experience in documentation and reporting. He is deeply passionate about all things engineering and technology, and is an expert in gadgets, manufacturing, robotics, automotive, and aerospace.
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