Taiwan's TSMC, the world's largest contract chipmaker, is searching for equipment that uses alternative components in order to reduce its reliance on Chinese rare earths, according to reports.
Reuters reported on the 22nd, citing sources, that TSMC is exploring substitutes for rare earth components used in its production equipment to reduce the risk that Chinese export controls pose to the operation of its chip plants. According to Reuters, TSMC has asked suppliers whether motors used in factory automation equipment could be switched to products that do not contain rare earths.
The discussions remain at an early stage, however, and have not progressed to the point of adopting rare-earth-free equipment on a large scale, the report said. Reuters said TSMC's move shows how vulnerable the global semiconductor industry is to China's rare earth export controls.
Rare earth magnets are used in motors that drive the moving parts of industrial equipment. If supplies of the magnets, a key specialty component, were cut off, production of chips used in smartphones and artificial intelligence systems could also be disrupted. China last year introduced export controls on some rare earth materials, magnets and related processing technologies, requiring export licenses, in response to U.S. controls on chips and software.
The United States and Taiwan, meanwhile, are working to build alternative supply chains to reduce their dependence on Chinese rare earths and critical minerals. Kung Ming-hsin, Taiwan's minister of economic affairs, announced in February that the government would support rare earth technology development at Taiwan's Industrial Technology Research Institute (ITRI). The goal is to build a pilot production line within three years that would meet about 50% of domestic rare earth demand.
An official at a U.S. think tank said American government officials have shown interest in ITRI's research and have discussed ways to diversify critical mineral supply chains. ITRI said it is working with the Industrial Development Administration under Taiwan's Ministry of Economic Affairs to pursue rare earth projects, but did not disclose details.