Taiwan's TSMC is exploring alternatives to rare-earth components in its factory equipment, aiming to reduce the risk that China's export controls could disrupt operations at plants that make the world's most advanced chips, Reuters reported on Thursday, citing three people familiar with the matter.

Source: Reuters

China last year put certain rare-earth materials, magnets and related processing technology under export controls, requiring licences. Rare-earth magnets are commonly used in the motors that power moving parts in industrial equipment, including the highly automated machinery inside TSMC's factories, Reuters said.

TSMC, the world's largest contract chipmaker, has surveyed suppliers on using rare-earth-free motors in factory-automation equipment, according to three industry executives briefed by the company on its plans. One of the people said the effort was driven by concerns about potential supply disruptions from China. A shortage of such specialised parts could disrupt chip production for customers in the smartphone, AI system, data centre and defence supply chains.

The discussions remain at an early stage and have not yet resulted in a broad rollout of rare-earth-free equipment, two of the people told Reuters. TSMC declined to comment on the report.

TSMC's efforts follow statements from the United States and Taiwan that they would begin looking for ways to reduce their reliance on Chinese rare-earth and critical-mineral supply chains. Separately, Taiwan's economy minister has announced government support for the Industrial Technology Research Institute's rare-earth technology development, targeting a pilot line within three years to meet 50% of domestic demand, according to Traders Union's summary of the reporting.

Source: Traders Union