Mapping US chip supply chain: China accounts for far more than it appears, report says

The Semiconductor Industry Association (SIA) report reveals that China's influence in the US chip supply chain extends far beyond its 5% share of equipment and materials based on country of manufacture. With over 90% control over crucial rare earths, China's impact is even more pronounced when measured by country of origin. While 95% of the $27 billion annual expenditure by American chipmakers on manufacturing equipment and materials comes from US, European, and Japanese companies, this drops to 68% when considering country of origin. Suppliers frequently rely on production chains outside their own country, according to the SIA.

China's share of production sites has risen from 1% to 5%, while Southeast Asia's share has increased from less than 1% to 10%. These figures encompass equipment and materials directly purchased by the US chip industry, but do not account for raw materials and components sourced further upstream, where China holds additional sway.

China controls 95% of global gallium supply and 85% of tungsten supply. Gallium is used in compound semiconductors, and tungsten can be refined into chemicals used to deposit thin films during chip production. China also holds about 95% of neodymium and praseodymium supplies, and roughly the same share of terbium. These rare earths are essential for high-performance magnets in motors, robots, and precision systems within chipmaking equipment.

The SIA warns that these vulnerabilities in the upstream global supply chains compound risks to the US semiconductor ecosystem. Beijing has imposed export license requirements on specific gallium products, certain tungsten products, and products related to seven medium and heavy rare-earth elements. These controls were initially announced last October but were suspended until November 10, 2026. The earlier licensing requirements remain in effect.

Following Chinese President Xi Jinping's recent visit to the US, the White House stated that the two nations continue to address concerns over rare earths and other critical mineral shortages, aiming to restore shipments. Despite these measures, American companies still faced shortages of critical minerals earlier this year, according to the South China Morning Post.

The SIA recommends stockpiling priority inputs and developing alternative supplies with allies, warning that building sufficient capacity for some materials could take a decade or more, followed by three to four years to qualify new suppliers and materials for chip production.