| | | Ann Caoin Shanghai
Published: 7:35pm, 10 Oct 2025
China’s latest export controls on rare earths are expected to have a direct impact on the global semiconductor supply chain, complicating the production of AI and memory chips from major US and South Korean suppliers, according to analysts.
On Thursday, China’s Ministry of Commerce imposed a raft of new export controls on rare earth materials critical for the chip manufacturing process. It imposed restrictions on the export of technologies related to rare earth production, such as mining, smelting and separation, magnetic material manufacturing, as well as the use and recycling of rare earth secondary resources.
The latest rules require “case-by-case approval” on exports of rare earths for the design and production of advanced semiconductors, including logic chips with process nodes of 14 nanometre or below and memory chips with 256 layers or more, as well as related equipment and materials for these semiconductors.
The latest measures, regarded by analysts as a “major upgrade” of Beijing’s rare earth export control regime, were seen as a move to strengthen China’s leverage ahead of crucial negotiations with the US.
In April, Beijing placed export controls on seven critical minerals. Subsequently, Chinese exports of rare earth magnets slowed as tensions rose over the following months, sparking alarm among Western manufacturers.
“It is the first time for [rare earth] export control policies to mention semiconductors,” China Merchants Securities, a state-backed brokerage firm, wrote in a research note on Friday, adding that Beijing’s latest action represented “a new level of regulatory intensity”.
“Rare earth elements are crucial raw materials for light sources, optical components and precision motion control systems,” it said. “They are used in etching machines, lithography machines and testing machines. Once these export controls take effect, they will significantly restrict overseas semiconductor production expansion.”
China is the world’s leading producer of rare earth elements. The country accounts for about 70 per cent of global rare earth mining and 90 per cent of global processing capacity.
Compared with the April policy, which mainly targeted raw materials for rare earths, the latest measures “go straight to the factories” by blacklisting all core consumables, targets, magnetic materials and process algorithms used in manufacturing the advanced chips, said Gao Chengyuan, president and CEO of Chinese consultancy TY Marketing.
Products that fall within the range specified by China’s commerce ministry included Apple’s self-developed A18 Pro chip, Nvidia’s H100 AI processor and Samsung Electronics’ ninth-generation V-NAND memory chips, Gao said. He pointed out that production of these chips was likely to be delayed by one to two quarters.
Chip manufacturing plants in Japan, South Korea and Taiwan are expected to bear the brunt of the impact, said Lu Kelin, founder of consultancy Lukedao Tech.
Leading global foundry Taiwan Semiconductor Manufacturing Company relied on China’s consumable materials for 30 per cent of its production capacity for chips at 7 nm and below, while Samsung recently placed an order for sputtering target materials from China for its 300-layer V-NAND, Lu said, adding that these companies might need to “rebuild their supply chain”.
None of the affected companies have publicly commented on the impact of Beijing’s latest move.
Meanwhile, Chinese companies were trying to downplay the impact of the new policies after a plunge in industrial material-related stocks on the mainland market on Friday.
However, Wuxi Lead Intelligent, a Chinese manufacturer of so-called intelligent equipment for Li-ion batteries and automotive production, said the latest controls would have a “relatively small” impact on its business, as its overseas sales were not directly restricted by the new rules, according to Chinese media reports on Friday.
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