TAIPEI (Taiwan News) — TSMC is exploring factory motors that do not require rare-earth magnets to reduce supply risks from China’s export restrictions, Reuters reported Thursday.
The chipmaker has asked suppliers about motors that can operate without rare-earth magnets in its automated factories. Three industry executives familiar with the discussions said the company was considering alternatives, but no large-scale changes have been made yet.
Rare earths are metals used to make powerful magnets found in many industrial machines. These magnets are used in motors that power automated equipment, including machinery found in semiconductor factories, per the International Energy Agency.
TSMC relies on automated equipment to produce advanced semiconductors. A shortage of specialized motors or replacement parts could disrupt chip production for customers in the smartphone, artificial intelligence, data center, and defense industries.
In 2025, China introduced export controls on certain rare-earth materials and related technologies. The restrictions require government approval for affected exports and have raised concerns about higher costs and supply disruptions for manufacturers.
Taiwan could face indirect supply disruptions because many rare-earth materials reach manufacturers through the US, Europe, and Japan. Hsu Tsun-tzu (徐遵慈), a researcher at the Chung-Hua Institution for Economic Research, said China’s export restrictions could raise costs and create uncertainty for the country’s businesses, per CTEE.
Taiwan and the US have also stepped up cooperation to secure alternative supplies of critical minerals. The two sides endorsed a US-led initiative in January to strengthen supply chains for advanced technologies, including semiconductors and artificial intelligence.
Taipei is developing its own rare-earth processing technology to reduce dependence on imports. Economy Minister Kung Ming-hsin (龔明鑫) said that the government planned to establish a pilot production line within three years that could meet about half of domestic demand, per CNA.
The country is also working on technology to recover rare earths from industrial and electronic waste. A government-backed research institute said it plans to begin transferring recycling technology to private companies this year, focusing on producing high-purity materials for industrial use.
The government is looking overseas for additional rare-earth supplies. Officials visited mining sites in Australia in May and planned an eight-day trip to the US in late October to meet mining companies and government officials.
Taiwan has also identified Canada as a potential source of rare-earth materials. The economics ministry aims to meet 50% of domestic rare-earth demand through local supply and processing by 2030.
Finding alternative sources remains difficult because China dominates the global rare-earth industry. The International Energy Agency said China accounted for 91% of global refined production of rare earths used in magnets and 94% of powerful permanent magnet production in 2024.