TSMC seeks chipmaking equipment without Chinese rare-earth magnets

Why now?

TSMC, the world's largest contract chipmaker, is asking equipment suppliers whether the automation machinery in its fabs can be fitted with motors that do not rely on rare-earth materials. According to a Reuters report dated October 22, the goal is to reduce the risk that China's export controls disrupt production.

The scale of dependence

Industrial machines in chip fabs rely on 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 about 95% of the finished permanent magnets found in TSMC's machines.

Timeline of controls

In April 2025, China placed seven medium and heavy rare earths and the magnets made from them under export controls. On October 9, 2025, it expanded the scope to five additional rare earths, processing technology and equipment, and products made outside China that contain more than 0.1% Chinese-origin rare earths. The October expansion was later suspended for one year, until November 10, 2026, and that suspension has now been extended by another 90 days.

Alternatives and trade-offs

Several motor technologies avoid rare-earth magnets: conventional induction motors generate torque through electromagnetic induction, switched-reluctance motors are another option, and some permanent-magnet motors can use ferrite magnets instead. However, these approaches involve different trade-offs in efficiency, size, power density and precision.

Building a supply chain outside China

Taiwan is pursuing domestic rare-earth production in collaboration with the United States. The Taiwanese 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.