TSMC explores rare-earth-free factory motors to counter China export controls
Taiwan's TSMC, the world's largest contract chipmaker, is in early talks with suppliers to use rare-earth-free motors in factory equipment, aiming to reduce vulnerability to Chinese export controls on rare-earth materials, three sources said. The move follows US and Taiwanese government efforts to d
Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, is exploring alternatives to rare-earth components in factory equipment, three people familiar with the matter have said. The effort aims to reduce the risk that Chinese export controls could disrupt operations at plants making the most advanced chips.
Rare-earth magnets are commonly used in motors powering moving parts in industrial equipment, including machinery in highly automated factories such as those operated by TSMC, the sources said. A shortage of such specialised parts could disrupt chip production for customers in smartphone, artificial intelligence, data centre and defence supply chains.
China last year placed certain rare-earth materials, magnets and related processing technology under export controls requiring licences, after tightening its grip on the supply chain. TSMC has surveyed suppliers on using rare-earth-free motors in factory automation equipment, according to three industry executives briefed on the plans. One of the people said the effort was driven by concerns about potential supply disruptions from China.
The discussions remain at an early stage and have not yet resulted in a broad rollout of rare-earth-free equipment, according to two of the people. TSMC declined to comment.
TSMC's efforts follow statements from the United States and Taiwan that they would begin looking for ways to reduce reliance on Chinese rare-earth and critical-mineral supply chains. In June, Raymond F. Greene, director of the American Institute in Taiwan, said Washington is working with Taipei and other partners to develop alternative supply sources, expand processing capacity and build more resilient supply chains.
Taiwan's Economy Minister Kung Ming-hsin said in February that the government would support the Industrial Technology Research Institute (ITRI) in developing rare-earth technologies, with plans for a pilot production line within three years that could meet an estimated 50 per cent of the island's domestic demand. US officials have shown particular interest in ITRI's work and have engaged the institute in talks about diversifying critical-mineral supply chains, according to a person at a US-based think tank familiar with the discussions. The US State Department did not respond to a request for comment.