Mapping US chip supply chain: China accounts for far more than it appears, report says
China accounts for about 5 per cent of the equipment and materials directly supplied to the US chip industry when measured by country of manufacture, but its grip on certain rare earths needed for chipmaking is over 90 per cent, according to the Semiconductor Industry Association (SIA). While 95 per cent of the nearly US$27 billion annual spending by American chipmakers on manufacturing equipment…
China's influence within the US chip supply chain extends beyond its 5% share of equipment and materials directly sourced by country of manufacture, according to a report from the Semiconductor Industry Association (SIA). In terms of rare earth elements vital for chip manufacturing, China holds over 90% control, with 95% for neodymium and praseodymium, and roughly the same for terbium.
These elements are integral to high-performance magnets utilized in chipmaking equipment. While 95% of the $27 billion annual expenditure by American chipmakers on manufacturing materials originates from US-based, European, and Japanese firms, that proportion diminishes to 68% when measured by the origin of the equipment. Consequently, China's footprint within the supply chain expands from approximately 1% by supplier headquarters to 5% by production site, and Southeast Asia's share increases from under 1% to 10%.
The report highlights that China's control extends beyond the US suppliers to include 95% of global gallium and 85% of tungsten supplies. These elements, along with rare earths, play pivotal roles in semiconductor production. Beijing has implemented export license restrictions on specific gallium products, certain tungsten products, and those related to seven medium and heavy rare-earth elements, with additional controls announced in October, although suspended until November 2026.
Despite recent discussions between the US and China regarding critical mineral shortages and the potential resumption of shipments following President Xi Jinping's visit to the US, American firms continue to grapple with shortages of critical minerals even as some restrictions have been eased. The SIA advocates for stockpiling essential inputs and fostering alternative supply chains with allies, warning that the establishment of new supplier capacities may require a decade or more, followed by three to four years to validate these new suppliers and materials for chip production.
Written by urgent.news from SCMP Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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