Chipmaker TSMC Scouts Rare-Earth-Free Motors as Yttrium Squeeze Bites
Published on 10/23/2026 at 18:21 | Editorial boerse-global.de
Taiwan Semiconductor Manufacturing Co. has begun asking suppliers whether factory automation equipment can run on motors built without rare earths, Reuters reported, as the world's largest contract chipmaker looks to blunt the risk of Chinese supply disruptions. The talks are at an early stage and no broad switchover has been agreed.
The move lays bare how far anxiety over rare earth availability now reaches. At the root of it is a deepening yttrium shortage that is weighing heavily on Japan. A Japanese industry ministry official told AFP that yttrium exports have stalled worldwide, with shipments to Japan declining and running late. Chinese customs data underline the scale of the drop: Japan took in just 4,000 kilograms of yttrium oxide in September, down from 51,000 kilograms a year earlier.
Beijing continues to justify its export controls on Japan as a means of preventing "remilitarisation" and nuclear ambitions, a stance Chinese foreign ministry spokeswoman Mao Ning set out on Wednesday, roughly two days ago.
Trading flows shift as Europe steps in
The pressure is reshaping trade routes across Asia and Europe. Chinese exports of rare earth permanent magnets to the EU rose 20.5 percent month on month in September to 2,454 tonnes, while deliveries to Japan tumbled by almost 20 percent amid the diplomatic standoff. The pattern suggests Beijing is wielding export policy as a political lever aimed squarely at Tokyo, with European buyers so far less exposed.
Should investors sell immediately? Or is it worth buying VanEck Seltene Erden ETF?
For the VanEck Rare Earth and Strategic Metals UCITS ETF, the developments spell fresh headwinds. The fund trades at 9.04 euros, down 0.8 percent on the day, having already shed 5.1 percent over the past seven days. Since the start of the year the ETF is 28 percent lower.
A fund still drawing assets
Even so, VanEck reported net assets of 917.1 million US dollars for the physically backed fund as of 20 October, with 86.8 million shares outstanding. The snapshot says nothing about longer-term inflows or outflows, but it shows the fund continues to command substantial investor interest in the asset class despite the price weakness.
That TSMC, an industrial heavyweight, is actively hunting for alternatives to rare-earth components highlights the nervousness running through the entire supply chain. It lands directly on the mining and processing companies bundled inside the ETF, whose business case rests on uninterrupted demand for exactly these raw materials. Should the search for rare-earth-free alternatives spread to other major customers, the structural demand base for the fund's holdings could weaken over time — though the current talks do not yet amount to a concrete step toward implementation.
Physical scarcity versus share prices
The picture for investors is a tangled one. Physical scarcity of yttrium argues for higher raw material prices, yet the share prices of the miners and processors held by the fund are sagging under broader market uncertainty and the prospect of demand shifting as industry pursues substitution. That gap between tight physical supply and sliding equities looks set to keep volatility in the sector elevated for now.
As long as China retains control over large parts of the yttrium and rare earth metal supply chains, buyers such as TSMC will keep working to reduce their dependence. Whether the early supplier talks in Taiwan actually lead to a switchover should become clearer over the coming months.
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