TSMC, the world’s largest contract chipmaker, is reportedly exploring alternatives to rare-earth components in its factory equipment to guard against the risk of China cutting off rare earth supplies. A spokesperson for China’s Taiwan Affairs Office said the report “distorts the facts and has ulterior motives”.
According to the Taiwan Affairs Office’s website, spokesperson Chen Binhua told a press conference on Wednesday (28 October) that China’s implementation of necessary export controls in accordance with its laws and regulations was intended to safeguard the stability and security of global production and supply chains for critical minerals. The measures were aimed at “regulating exports”, not “banning exports”, with the ultimate goal of ensuring the sustainable use of strategic resources and shared global development.
Said Chen, “What truly creates risks for the global semiconductor supply chain is precisely the relentless suppression of mainland high-tech companies and attempts to contain the mainland’s development.”
He stressed that China would work to strengthen cross-strait economic cooperation and deepen integrated development across the Taiwan Strait. “We welcome Taiwan’s business community to work with us towards these goals and actively participate in cross-strait exchanges and cooperation.”
Reuters reported last week, citing sources familiar with the matter, that TSMC had asked suppliers about the feasibility of using rare-earth-free motors in factory automation equipment, primarily out of concern that China could cut off supplies. The assessment was still at an early stage, and rare-earth-free equipment had yet to be deployed on a large scale.
The report said TSMC’s move was a response to calls from the US and Taiwan, whose officials had separately urged a reduction in reliance on China for its supply of rare earths and critical minerals.
Rare-earth magnets are commonly used in motors that drive various moving parts in industrial equipment, including machinery used in highly automated factories such as TSMC’s. A shortage of these specialised components could disrupt chip production, affecting customers in smartphones, artificial intelligence systems, data centres and defence supply chains.
China added some rare-earth minerals, magnets and processing technologies to its export control list last year, requiring companies to apply for export licences for these products.
Taiwan’s Minister of Economic Affairs Kung Ming-hsin said in February this year that the government would support the Industrial Technology Research Institute in developing rare-earth technologies. It plans to establish a pilot production line within three years, which is expected to meet about 50% of Taiwan’s demand.
US think-tank sources familiar with the discussions said US officials had shown keen interest in the institute’s work and had held talks with it on diversifying critical mineral supply chains.
