TSMC is seeking chipmaking equipment that doesn't contain Chinese rare-earth magnets

TSMC is asking equipment suppliers whether they can provide factory-automation machinery fitted with motors that do not depend on rare-earth materials. The goal is to reduce exposure to China’s dominant position in rare-earth mining, processing, and magnet production. This matters because TSMC’s highly automated fabs need specialized machinery to keep producing chips.

Many machines use electric motors with powerful permanent magnets containing elements such as neodymium, dysprosium, and terbium. TSMC is exploring replacements that avoid those materials. Suppliers would need to redesign or substitute the motor systems used in equipment operating inside its factories.

The request reflects a supply-chain precaution, not a reported production stoppage. Alternative motors can involve trade-offs in efficiency, size, power density, precision, or control. TSMC’s effort could reduce future vulnerability if China’s export controls make rare-earth motors or components harder to obtain.

Semiconductor factories use motors with rare-earth permanent magnets because those magnets can produce very strong magnetic fields. This helps motors deliver high power and torque in relatively compact packages. TSMC’s fabs contain enormous amounts of automated equipment, so motor performance affects how machinery moves, positions, and handles materials.

The article identifies neodymium, dysprosium, and terbium as rare-earth elements used in powerful permanent magnets. These magnets create a constant magnetic field inside the motor. The motor then converts electrical energy into controlled mechanical movement. That supports factory automation, where equipment must operate reliably and precisely.

The advantage comes with supply-chain risk. China accounts for about 95% of finished permanent magnets, according to the article’s cited IEA figure. If export controls restrict supplies, TSMC could face difficulties maintaining or expanding equipment. Other motor types exist, but they may sacrifice efficiency, size, power density, precision, or ease of control.

China’s control spans much of the rare-earth supply chain. The USGS figure cited in the article puts China at roughly 70% of global rare-earth mining. The IEA figures place China at around 90% of refining and approximately 95% of finished permanent-magnet production. These stages matter because mined material must be processed and turned into usable magnets.

The finished magnets are especially important to TSMC’s machinery. Industrial motors in its fabs use powerful permanent magnets made with rare-earth elements. Even if other equipment and materials remain available, a missing specialized motor or magnet could complicate maintenance, repairs, or expansion.

This concentration gives China major influence over supply. Export controls introduced in April 2025 required case-by-case approval and licenses for specified rare earths and magnets. TSMC is therefore seeking equipment alternatives while Taiwan, the United States, and other partners work to develop supply outside China.

If Chinese export controls restrict access to rare-earth motors or their components, TSMC may struggle to maintain, repair, or expand its highly automated fabs. The article does not report an immediate shutdown. Instead, it describes a risk: specialized motor parts could become unavailable while all other required materials and machinery remain in stock.

That bottleneck could delay repairs or leave equipment operating below capacity. It could also complicate the installation of new production tools. Because TSMC manufactures chips for Nvidia, Apple, Broadcom, Qualcomm, and automotive companies, interruptions could affect factories serving major technology and industrial customers.

TSMC is addressing the risk by asking suppliers about motors without rare-earth materials. Possible replacements include induction, switched-reluctance, or ferrite-magnet motors. Each option has trade-offs, so redesigning equipment may take time. Wider supply-chain efforts in Taiwan and the United States could eventually reduce the danger, but the article describes those efforts as still developing.

TSMC has several possible substitutes for motors built around rare-earth permanent magnets. The article names conventional induction motors, switched-reluctance motors, and some permanent-magnet motors using ferrite magnets. Each approach could reduce dependence on rare-earth materials controlled heavily by China.

Induction motors generate torque through electromagnetic induction rather than permanent magnets. Switched-reluctance motors create movement through magnetic attraction between energized coils and the motor’s iron structure. Ferrite-magnet motors retain permanent magnets but use a different material. These designs could be adapted for some factory-automation applications.

The alternatives are not simple drop-in replacements. The article says they can involve trade-offs in efficiency, size, power density, precision, and control requirements. Suppliers may need to redesign equipment and its controls. TSMC’s request is therefore an exploration of practical options that could make fab machinery more resilient if rare-earth exports remain restricted.

China’s October 2025 expansion covered more than materials and products made within its borders. It also included products manufactured outside China if they contained more than 0.1% Chinese-origin rare earths or were made using Chinese processing technology. That means equipment assembled elsewhere could still fall within the controls.

The mechanism is supply-chain connection. A foreign supplier might manufacture a motor in Europe, Taiwan, or another country, but use Chinese-origin rare-earth material or Chinese processing methods. Under the expanded rules described in the article, that connection can trigger export-control requirements. China can therefore influence products further along the global manufacturing chain.

The expansion was later suspended for one year, until November 10, 2026, and then extended for another 90 days, according to the article. Even with the suspension, the underlying exposure remains important for TSMC. Suppliers must examine not only where equipment is built, but also where its materials and processing technology originate.

Rare-earth elements are a group of metallic elements with useful magnetic, electrical, optical, and chemical properties. The article names neodymium, dysprosium, and terbium as materials used in powerful permanent magnets. Their importance comes from how strongly some of them can support compact, high-performance magnetic systems.

In electric motors, rare-earth materials help permanent magnets create strong magnetic fields. That can provide high power and power density in a small motor, which suits automated semiconductor equipment. Rare earths also appear across modern technology supply chains. Their specialized properties can support components used in electronics, chips, renewable-energy equipment, and other advanced systems, although the article focuses on motors.

Their importance creates vulnerability when supply is concentrated. China controls roughly 70% of mining, 90% of refining, and 95% of finished permanent magnets, according to the figures cited. The article describes efforts by Taiwan, the United States, and partners to build alternative supplies and processing capacity.