Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest chip fabrication company, is looking for alternatives to rare-earth minerals used in its factory equipment as it seeks to reduce the risk of production disruptions caused by China’s export controls.
According to a Reuters report, TSMC has questioned equipment suppliers about using motors that do not rely on rare earth materials in factory automation systems. The initiative reflects growing concern across the semiconductor industry about dependence on China for materials essential to advanced manufacturing.
The discussions remain at an early stage, and TSMC has not broadly deployed rare earth-free equipment, according to sources who spoke to Reuters. The company declined to comment.
Rare earth magnets are used in electric motors that drive moving parts in industrial machinery. Such motors are important components of the highly automated production systems used by TSMC’s semiconductor fabrication plants.
China’s dominant position in rare earth mining, processing, and magnet production gives Beijing considerable leverage over the availability of these materials.
Export controls introduced last year require licenses for certain rare earth materials, magnets, and related processing technologies, creating uncertainty for manufacturers that depend on uninterrupted supplies.
This is not the first effort to reduce dependence on China for these materials. In June, Raymond F. Greene, the director of the American Institute in Taiwan, the closest thing Washington has to an embassy in Taipei, said the United States is working with Taiwan and other partners to develop alternative sources of supply, expand processing capacity, and build more resilient supply chains.
In February, Taiwan’s Economy Minister Kung Ming-hsin said that the government would give support to the Industrial Technology Research Institute (ITRI), a domestic research organization, to develop rare earth technologies. The plan is to establish a pilot production line within three years that could meet an estimated 50% of Taiwan’s domestic demand.
TSMC’s search for alternatives illustrates how geopolitical risks are increasingly influencing semiconductor manufacturing decisions beyond the selection of silicon substrates, fabrication processes and advanced packaging technologies.
TSMC’s early-stage discussions do not indicate an immediate production threat or a completed transition away from rare earth materials. Instead, they signal an effort to identify vulnerabilities before export restrictions or supply shortages affect manufacturing.
The outcome could influence how semiconductor equipment manufacturers design future factory-automation systems, particularly as governments and chipmakers seek alternatives to supply chains concentrated in China.
