The Chinese government likely aims to give itself a few days to reach an agreement with the U.S. and ease tensions. However, China’s response includes more than new tariffs: It also plans to suspend import licenses for products from six U.S. companies and tighten controls on exports of some rare earth elements.
This isn’t the first time Chinese President Xi Jinping has increased pressure on the U.S. and its allies by restricting the export of raw materials. On Dec. 21, 2023, the Chinese government limited exports of some rare earth processing technologies, aiming to protect its strategic interests amid rising tensions with the U.S. and its allies. In early December 2024, it banned the export of critical minerals to the U.S.
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The U.S. Will Run Out of Scandium and Dysprosium From China
Since December 2024, China has stopped exporting to the U.S. three chemical elements essential to the semiconductor industry—gallium, germanium, and antimony—as well as some extremely hard materials used in military applications. In response to the latest U.S. tariffs, the Chinese government has added scandium and dysprosium to its list of transition metals subject to export controls.
These chemical elements may be less well known than previously banned metals like gallium or germanium, but they’re equally important. China selected them knowing the deep impact the restrictions will have on the telecommunications and storage device manufacturing industries, which they directly affect, and on the broader global semiconductor supply chain.
Scandium is commonly used in radio frequency modules for smartphones, base stations and Wi-Fi modules. Dysprosium is used to manufacture read/write heads for hard drives and electric vehicles. China’s Ministry of Commerce has immediately banned the export of these metals to the U.S., so Chinese companies can no longer export products containing scandium, dysprosium, gadolinium, terbium, lutetium, samarium, and yttrium.
The Chinese government will likely grant export licenses for these critical minerals only under strict conditions. The ban applies not just to finished products but also to raw, metallic and compound forms of the minerals. U.S. companies including Broadcom, Qualcomm, Seagate, and Western Digital will likely feel the effects of these new bans. Taiwanese and South Korean companies such as TSMC and Samsung are also expected to face setbacks. Global geopolitical tensions show no signs of easing in the short term.
Image | SkyWater
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