Taiwan sees no significant impact on chip sector from China rare earths curbs

China dramatically expands its rare earths export controls, adding five new elements and extra scrutiny for chip users

A worker waters the site of a rare earth metals mine at Nancheng county, Jiangxi province Jan 16, 2011. REUTERS

No significant impact is expected on Taiwan's semiconductor industry from China's new curbs on rare earths as they differ from the metals needed for the chip sector, the island's economy ministry said on Sunday.

China dramatically expanded its rare earths export controls on Thursday, adding five new elements and extra scrutiny for chip users as Beijing tightens control over the sector ahead of talks between Presidents Donald Trump and Xi Jinping.

Taiwan's economy ministry said in a statement about China's new rules that the rare-earth elements covered by the expanded ban differ from the rare-earth items required in Taiwan's semiconductor processes, so no significant impact on chip manufacturing is expected at this time.

Domestically needed products or derivatives containing rare earths are mainly sourced from Europe, the United States, and Japan, it added.

Taiwan is home to the world's largest contract chipmaker TSMC, opens a new tab, the producer of the vast majority of advanced chips that are a key component of artificial intelligence applications.

However, the ministry added that China's latest expansion of controls could affect global supply chains for products such as electric vehicles and drones, adding the impact will need to be closely watched.

Earlier on Sunday, China defended its curbs on exports of rare earth elements and equipment, saying they were motivated by concern about these metals' military applications at a time of "frequent military conflict".

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