Suppliers to U.S. aerospace and semiconductor companies are grappling with deepening rare earth shortages, with two already rejecting some customers, industry sources said, just weeks before President Donald Trump is set to meet China’s Xi Jinping at a summit in Beijing.
The shortages center on rare earths such as yttrium and scandium, niche members of the family of 17 elements, which play tiny but vital roles in defence technology, aerospace and semiconductors and are almost entirely produced in China.
While Beijing has allowed many rare earth exports to resume since it imposed restrictions in April, shipments of these materials still rarely make it to the U.S. despite the October detente with Washington, Chinese customs data show.
That easing of trade tensions, premised in part on China pausing its critical mineral export restrictions, will be on the table when Trump and Xi meet in Beijing in March.
Production Pressure
While low yttrium supplies have not hurt engine production, manufacturers remain concerned, said aerospace supply chain specialist Kevin Michaels.
“This is a watch item and a tangible example of how China is flexing its rare earth muscle,” said Michaels, managing director at U.S. consultant AeroDynamic Advisory.
Enginemakers are already struggling to meet demand for spare parts from airlines and higher production by planemakers Boeing BA.N and Airbus AIR.PA.
Scarce Scandium
In addition to yttrium, U.S. semiconductor makers are running low on scandium, putting production of next-generation 5G chips at risk, said Dylan Patel, founder and CEO of research firm SemiAnalysis.
With global production of only several tens of tons a year, scandium plays small but important parts in fuel cells, specialty aluminium aerospace alloys and advanced chip processing and packaging.
U.S. chipmakers have experienced delays in receiving new scandium export licenses from China in recent months and have reached out to Washington for help, said two industry sources.
Many of these firms had obtained scandium from third-country suppliers, another U.S. official said, but China requires license applicants to declare their end-users.
(With inputs from Reuters)
