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Published : 26 Feb 2026, 04:55 PM
Suppliers to US aerospace and semiconductor firms face worsening rare earth shortages, with two turning away some clients, industry insiders said, weeks before US President Donald Trump is expected to meet his Chinese counterpart Xi Jinping for a summit in Beijing.
The shortages centre on rare earths such as yttrium and scandium, niche members of the family of 17 elements, which play tiny but vital roles in defence technology, aerospace and semiconductors and are almost entirely produced in China.
While Beijing has allowed many rare earth exports to resume since it imposed restrictions in April, shipments of these materials still rarely make it to the US despite the October détente with Washington, Chinese customs data show.
That easing of trade tensions, premised in part on China pausing its critical mineral export restrictions, will be on the table when Trump and Xi meet in Beijing in March.
A key pain point is yttrium, used in coatings that keep engines and turbines from melting at high temperatures. Without regular application of these coatings, engines cannot be used.
Since Reuters first reported about yttrium shortages in November, prices have jumped 60 percent and are now about 69 times as high as a year ago. Some coatings manufacturers are also now starting to ration material, according to company executives and traders.
Executives at two North American firms that buy yttrium to make coatings told Reuters they have needed to temporarily pause production due to shortages. One is also now turning away smaller and offshore customers in order to conserve supply for larger clients, which include certain engine makers.
Another firm in the coating supply chain recently ran out of material and stopped selling products containing yttrium oxide, according to a source with direct knowledge of the matter.
While shortages of yttrium and scandium have not weighed on production of jet engines or chips yet, a US government official told Reuters some US manufacturers now face "shortages" of certain rare earths from China.
China exported 17 tonnes of yttrium products to the US in the eight months after controls were introduced last April versus 333 tonnes in the eight months before the measures.
A White House official said the Trump administration is committed to ensuring access to critical minerals for all US businesses.
"This includes negotiating with China and monitoring compliance with President Trump’s agreement with President Xi, as well as developing alternative supply chains as warranted."
Reuters spoke with two US government officials, 14 company executives and staff, traders and analysts across aerospace and semiconductors. All of them spoke to Reuters on condition of anonymity except the analysts named in the story. The North American executives did not want to be named discussing internal production challenges in public.
China's Ministry of Commerce did not respond to questions.
PRODUCTION PRESSURE
While low yttrium supplies have not hurt engine production, manufacturers remain concerned, said aerospace supply chain specialist Kevin Michaels.
"This is a watch item and a tangible example of how China is flexing its rare earth muscle," said Michaels, managing director at US consultant AeroDynamic Advisory.
Enginemakers are already struggling to meet demand for spare parts from airlines and higher production by planemakers Boeing and Airbus.
US aircraft engine makers GE Aerospace Pratt & Whitney and Honeywell declined to comment.
SCARCE SCANDIUM
In addition to yttrium, US semiconductor makers are running low on scandium, putting production of next-generation 5G chips at risk, said Dylan Patel, founder and CEO of research firm SemiAnalysis.
With global production of only several tens of tonnes a year, scandium plays small but important parts in fuel cells, speciality aluminium aerospace alloys and advanced chip processing and packaging.
Major US semiconductor manufacturers all rely on scandium for making chip components that "go into essentially every 5G smartphone and base station", Patel said.
US chipmakers have experienced delays in receiving new scandium export licences from China in recent months and have reached out to Washington for help, said two industry sources.
Many of these firms had obtained scandium from third-country suppliers, another US official said, but China requires licence applicants to declare their end-users.
"Our thesis is that it is precisely the semiconductor industry being targeted," the US official said.
The US Semiconductor Industry Association declined to comment.
"The US currently has zero domestic scandium production and no operational alternative sources outside China," Patel said, adding that stockpiles are likely in months rather than years.
