The global semiconductor industry is entering a new phase of instability as the United States and China reignite their tech trade war, threatening to disrupt the supply of materials critical to chipmaking.
China has tightened its control over rare-earth mineral exports, introducing sweeping rules that require government approval for any shipment containing even trace amounts of these materials. The move effectively gives Beijing veto power over global semiconductor production, since rare earths are indispensable for manufacturing advanced chips and the equipment used to produce them.
Washington’s response was swift. President Donald Trump announced a 100% tariff on Chinese goods and new export restrictions targeting U.S. chip-design software. The measures are meant to counter what Trump described as a “hostile act,” though analysts warn they could deepen the technological divide between the world’s two largest economies.
Industry leaders are now racing to assess exposure. Firms such as Intel, Samsung, and TSMC face potential delays as suppliers scramble to replace Chinese inputs. Prices for key rare-earth components, especially magnets used in lithography systems, have surged in recent days.
For ASML, the Dutch company whose lithography machines are vital to advanced chipmaking, even small disruptions could halt deliveries for weeks. Experts fear the ripple effects could slow the rollout of next-generation AI and computing hardware, which are already straining global production capacity.
“China has essentially taken the semiconductor world hostage,” said Gracelin Baskaran of the Center for Strategic and International Studies. With no domestic U.S. production of refined rare earths and European alternatives years away, the industry faces mounting costs, slower innovation, and prolonged supply bottlenecks, signaling a new and volatile stage in the global technology rivalry.