Taiwan’s economy ministry has stated that the country’s semiconductor industry will remain largely unaffected by China’s newly expanded rare earth export controls.
This announcement comes in the wake of China’s decision to impose stricter regulations on rare earth exports, which has raised concerns globally about potential disruptions in various industries.
No Effect On Semiconductor Industry
Taiwan’s economy ministry announced on Sunday that China’s recent expansion of rare earth export controls is unlikely to affect its semiconductor industry, according to a Reuters report.
The new restrictions, imposed on Thursday, include five additional elements and increased scrutiny for chip users as China tightens its grip on the sector before talks between Presidents Donald Trump and Xi Jinping.
Taiwan's Reliance On U.S., EU And Japan
The ministry clarified that the rare earths covered by China’s expanded ban differ from those required for Taiwan’s semiconductor processes. As a result, no significant impact on chip manufacturing is anticipated. Taiwan relies on Europe, the United States, and Japan for most of its rare earth needs, the ministry added.
Taiwan is home to Taiwan Semiconductor Manufacturing Company (NYSE:TSM), the world’s largest contract chipmaker, which produces a majority of advanced chips crucial for AI applications.
However, the ministry noted that China’s latest controls might affect global supply chains for products like electric vehicles and drones, necessitating close monitoring.
China Justifies Export Curbs
Earlier on Sunday, China justified its export curbs, citing concerns over the military applications of these metals amid “frequent military conflict.”
The global tech industry is closely watching China’s rare earth export restrictions, which have already impacted several sectors. Chinese tech giants like Alibaba Group Holding Ltd. (NYSE:BABA) and Baidu Inc. (NASDAQ:BIDU) have seen stock declines amid these geopolitical tensions.
The new rules require foreign manufacturers using Chinese materials to obtain licenses, indicating a shift towards separate global supply chains.
Additionally, rare earth stocks have rallied as China, which supplies over 90% of the world’s processed rare earths, tightens its grip. The move has sparked concerns about supply chain disruptions, especially for industries reliant on these critical materials.
USA Rare Earth Inc. (NASDAQ:USAR) has experienced a surge in stock value, reflecting investor confidence in the U.S. bolstering domestic production of critical minerals.
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