Datacenters face direct hit from China rare earth curbs, as clock runs out on escalated licensing chokeoff

The looming decision by Chinese authorities to review its rare earth export controls could soon impact datacenters worldwide. The trade organization IEEE has highlighted the potential consequences, with shipments of critical materials such as yttrium and erbium already down by around 75% compared to the previous year. These rare earth elements are integral to IT equipment, including components for white LED lights, displays, microwave filters, solid-state lasers, and ceramic capacitors.

China holds a virtual monopoly over the production and processing of yttrium and erbium, which are only mined and refined within its borders. Beijing's ability to control the supply of these materials is further reinforced by the country's dominance in mining and refining stages. The US and its allies have been working on strategies to mitigate China's dominance, including investments in regional production sites and initiatives to build secure supply chains.

However, the effectiveness of these efforts will be tested in November when China decides whether to maintain or tighten its export controls on rare earth minerals.