US Aerospace and Chipmakers Struggle with Rare Earth Element Shortages Despite Trade Agreement

US aerospace and semiconductor companies are increasingly confronted with deteriorating shortages of rare earth elements, specifically yttrium and scandium. These shortages pose a serious risk to the production of engines and 5G chips, even as there has been a thaw in trade tensions with China.

The supply challenges particularly involve rare earth elements critical for defence systems, jet engines, and advanced semiconductor fabrication, most of which are predominantly sourced from China.

Although China has reopened many rare earth exports following the imposition of export controls in April, shipments of vital materials to the US continue to be severely restricted.

Data from Chinese customs reveal that only 17 tons of yttrium products made their way to the United States during the eight months post-controls, a dramatic decrease compared to 333 tons exported during the same period the previous year.

This matter is expected to be a significant point of discussion when US President Donald Trump meets with Chinese President Xi Jinping in Beijing next month, as Washington seeks dependable access to critical minerals.

Yttrium, utilized in heat-resistant coatings that safeguard engines and turbines from melting under extreme conditions, has become a significant concern among manufacturers. The prices for this element have surged by 60% since November, and they are currently approximately 69 times higher than a year prior. Some companies are now rationing their supplies as a result.

In light of these developments, executives from two North American coating firms have reported that they have temporarily suspended production due to the ongoing shortages. One of these companies has begun prioritizing large engine manufacturers by refusing smaller clients and foreign orders to protect their limited supplies.

Another supplier in the chain has completely depleted its yttrium oxide reserves and stopped selling associated products.

While the production of engines and chips has not yet faced immediate disruptions, US officials admit that several manufacturers are struggling to source specific rare earth materials from China.

Furthermore, the availability of scandium is also becoming increasingly scarce. This element plays a vital, albeit small, part in aerospace alloys, fuel cells, and advanced semiconductor processing, including components integral to 5G smartphones and telecommunications base stations.

Industry experts have cautioned that US semiconductor firms are encountering delays in obtaining new export licenses for scandium from China. With no domestic production in place and limited alternative supplies available globally, companies might find themselves relying on inventories that could last only a few months.

One official from the White House indicated that the administration is dedicated to ensuring access to these vital minerals through negotiations with China and by expanding alternative supply chains.

Experts specializing in aerospace supply chains view the current scenario as a strategic pressure point. Kevin Michaels, managing director at AeroDynamic Advisory, described the situation as a critical indicator of China's influence over rare earth elements.

With global production of scandium limited to just a few dozen tons annually—and aerospace manufacturers struggling to meet the soaring demand for aircraft and spare parts—industry leaders express concerns that extended supply shortages could eventually disrupt jet engine manufacturing and advanced semiconductor production.