A new report says that suppliers delivering rare-earth materials to semiconductor manufacturers are facing limited supply, despite the U.S. And China agreeing to a truce on the escalating trade war between the two nations in October 2025. According to Reuters, U.S. Firms are having trouble securing export licenses from China for scandium, which is essential for making 5G chips found on smartphones and cellular base stations. Although most of this particular material is sourced through third-party suppliers, Beijing requires exporters to declare their end-users to acquire a license. In fact, it’s not just scandium that’s affected by this requirement, but nearly every Chinese-origin rare earth that can be used to manufacture logic chips at 14nm or smaller or memory chips with 256 layers or more.
Nearly a month after the truce between Washington and Beijing, China has issued its first batch of rare-earth export licenses. However, these are attached to specific buyers and not the general industry, meaning it can take time for some clients to gain access to these resources. Because of this, some U.S. Chip manufacturers have reached out to the federal government for assistance, with one U.S. Official telling Reuters, “Our thesis is that it is precisely the semi industry being targeted.” This will likely become one of the key issues that Trump and Xi will discuss as the latter is set to visit Beijing in late March and early April 2026.
The recent geopolitical events happening across the world have revealed the weakness of the U.S. Dependence on a single source for the majority of its rare earth needs. Because of this, the Trump administration is planning to build a strategic reserve for critical minerals, similar to the oil reserves that the U.S. Built in 1975 after the price shocks that were brought by the OPEC oil embargo from 1973 to 1974. It also founded the Pax Silica initiative designed to pivot the global semiconductor supply chain away from China, with India officially joining the effort this month. The Pentagon also announced a plan to use AI to set reference prices on rare earths as a way to counter supposed Chinese pricing manipulation.
This just shows how rare earths have taken center stage in global geopolitics, becoming a strategically important resource alongside oil. China had a headstart in extracting, processing, and refining these materials, meaning it has an edge on almost every other country on earth and provides nearly 61% of the global supply. This has got the U.S. And its allies, like Canada and Australia, scrambling to find and develop alternatives — but doing so will likely take several years, if not decades, before they catch up.
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