TSMC Weighs Rare-Earth-Free Motors Amid China's Export Controls, Moves to Diversify Supply Chain [Taiwan Chip News]

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Taiwan’s TSMC, the world’s largest foundry, is considering adopting rare-earth-free motors to reduce supply chain risks arising from China’s export restrictions on rare earths. As even key components used in semiconductor manufacturing equipment become targets for supply chain diversification, Taiwanese companies are accelerating the development and commercialization of alternative technologies.

According to Taiwan’s Economic Daily News, Reuters and other sources on October 31, TSMC recently asked suppliers whether rare-earth-free motors could be used in its factory automation equipment. The move is intended to prepare for possible disruptions to component procurement caused by China’s export restrictions on rare earths. TSMC is including components that use rare earths in its equipment supply chain risk management and assessing whether they can be replaced.

Taiwan's TSMC. Yonhap News Agency.

In April 2025, China imposed export controls on items related to seven rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. In October of the same year, it announced measures to further expand the controls to cover additional rare earths, as well as related equipment and technologies. The scope of the controls extended beyond rare-earth materials to include technologies related to permanent magnet manufacturing, increasing uncertainty across global supply chains.

China postponed until November 10, 2026, the implementation of some measures announced in October to expand the controls. However, existing export controls remain in place, increasing the need for companies to diversify their supply chains. Since rare earths are key materials for high-performance permanent magnets used in electric vehicles, robots and industrial automation equipment, the semiconductor industry is also closely monitoring their potential impact on the procurement of manufacturing equipment components. The International Energy Agency (IEA) warned that “defense and semiconductor supply chains could also be particularly affected if export licenses for components containing rare earth elements are delayed or denied.”

Adopting rare-earth-free motors requires more than simply replacing the magnets in existing motors. Their efficiency, torque, control performance and reliability must also meet the requirements of semiconductor manufacturing equipment.

In response, semiconductor component companies in Taiwan are drawing on their respective strengths in materials, motor design, and drive and control technologies to develop alternatives. As uncertainty over rare-earth supplies spills over into procurement challenges for semiconductor manufacturing equipment, companies are moving to secure related technologies and component supply chains ahead of time. China Steel is pursuing the development of alternative motors based on its materials technologies, including electrical steel sheets, while Fukuta is drawing on its motor design and manufacturing expertise. Shuo Yang is exploring ways to apply motor technologies that do not use rare-earth magnets, such as reluctance motors, in industrial equipment and cooling systems for AI data centers.

The Taiwanese government is also working to establish a domestic rare-earth supply chain. The Industrial Technology Research Institute (ITRI) currently operates a rare-earth pilot production line and, with government support, is moving forward with plans to build a separate demonstration production facility. The facility is targeted for completion by the end of 2028, with annual production of 500 tons of rare earths by the end of 2030. The Taiwanese government plans to use it to meet about 50% of the island’s domestic demand for rare earths.

Song Jiansheng, Taiwan Economic Daily News reporter / Translated by The Asia Business Daily

※This article is published under a strategic partnership between The Asia Business Daily and Taiwan Economic Daily News.

This content was produced with the assistance of AI translation services.