Author(s): Shubham Rajendra Ekatpure
The semiconductor industry is highly dependent on rare earth elements (REEs) due to their unique properties that enhance the performance of semiconductor devices. REEs, including lanthanides, yttrium, and scandium, are essential in various processes, from producing powerful magnets to improving display technologies and gas sensing capabilities. However, the global supply of REEs is heavily concentrated in China, which accounts for over 90% of production. This concentration poses significant risks for the U.S. semiconductor industry, which relies on imports from China for critical materials. Despite efforts to diversify sources and develop domestic capabilities, the U.S. remains vulnerable due to a lack of processing infrastructure and environmental challenges. This paper explores the current state of the global REE supply chain, focusing on the U.S.’s dependency on foreign imports. Through scenario planning and strategic recommendations, the study offers insights into how the U.S. can strengthen its domestic supply chain and reduce its reliance on foreign REEs, thereby enhancing its competitiveness in the global semiconductor market.
The semiconductor industry, a cornerstone of modern technology, relies heavily on rare earth elements (REEs) due to their unique chemical and physical properties. These elements, including lanthanides, yttrium, and scandium, are critical in enhancing the performance of semiconductor devices through their roles in electrical conductivity, dielectric properties, and gas sensing capabilities. Neodymium, for instance, is essential in producing powerful magnets used in semiconductor manufacturing equipment, while dysprosium enhances the high-temperature performance of these magnets [1]. Similarly, europium is pivotal in manufacturing phosphors for display technologies in electronic devices [2].
In semiconductor manufacturing, REEs such as cerium oxide (CeO2) play a crucial role in chemical-mechanical planarization (CMP), which is essential for wafer polishing—a critical step in the fabrication process [3]. Additionally, rare earth oxides like lanthanum oxide (La2O3) and yttrium oxide (Y2O3) are explored for their high dielectric constants, making them suitable candidates for replacing traditional materials like silicon dioxide (SiO2) in metal-oxide-semiconductor field-effect transistors (MOSFETs) [4]. Emerging materials like yttrium monoxide (YO), with its tunable electrical conductivity and narrow band gap, are also being investigated for advanced semiconductor applications [5].
Despite their critical role, the global supply chain for REEs is heavily concentrated, with China accounting for more than 90% of global production. This concentration has raised significant concerns about supply chain vulnerabilities, particularly for the United States, which relies heavily on imported REEs for its semiconductor industry. The situation became particularly acute in 2010 when China imposed export restrictions on REEs, leading to a global supply shortage and a sharp increase in prices [6]. This event highlighted the risks associated with dependence on a single country for such critical materials and prompted the
U.S. government and industry stakeholders to explore alternative sources of REEs [1].
In response to these challenges, several countries, including the United States, have invested in alternative REE sources, such as mining projects in Australia, Brazil, and Russia. Recycling of REEs from end-of-life products has also gained traction as a potential solution to reduce dependence on primary sources [5]. However, despite these efforts, the U.S. remains heavily dependent on China for REEs, a situation further exacerbated by the lack of domestic processing capabilities. Even when REEs are mined outside of China, they often have to be shipped to China for processing, as it is the only country with the full infrastructure for refining these elements into usable materials [7].
The U.S. has significant rare earth deposits, but several challenges impede the development of a fully integrated domestic REE supply chain. The primary challenge is the lack of processing facilities, which limits the U.S.’s ability to convert raw REE ores into the refined materials needed for semiconductor manufacturing. Environmental and regulatory hurdles, particularly those related to the management of radioactive waste associated with REE mining and processing, further complicate efforts to expand domestic production [8].
As the demand for semiconductors continues to grow, driven by advancements in technologies such as 5G, artificial intelligence, and electric vehicles, the importance of securing a stable and sustainable supply of REEs becomes increasingly critical. The United States must address these supply chain vulnerabilities to maintain its competitiveness in the global semiconductor market. This paper aims to explore the current state of the global REE supply chain, with a particular focus on the United States’ position, and propose strategies for strengthening domestic capabilities and reducing dependence on foreign imports. Through a detailed analysis of global production trends, trade scenarios, and technological innovations, this study seeks to provide actionable insights for policymakers and industry leaders striving to enhance the resilience of the U.S. semiconductor supply chain.
Rare earth elements (REEs) are crucial to the semiconductor industry due to their unique properties, such as enhancing electrical conductivity, dielectric properties, and gas sensing capabilities. The 17 REEs, including lanthanides, yttrium, and scandium, are used in various semiconductor processes. For example, neodymium is essential for the production of powerful magnets used in semiconductor manufacturing equipment, while dysprosium enhances the performance of these magnets at high temperatures [9]. Europium, another critical REE, is used in the manufacturing of phosphors that are vital for display technologies in electronic devices [10].
Cerium oxide (CeO2) is widely used in chemical-mechanical planarization (CMP) to polish wafers, a crucial step in semiconductor fabrication [3]. Additionally, rare earth oxides like lanthanum oxide (La2O3) and yttrium oxide (Y2O3) are explored for their high dielectric constants, making them suitable candidates for replacing SiO2 in MOSFETs and other semiconductor devices. Yttrium monoxide (YO), a divalent rare earth oxide, shows promise due to its tunable electrical conductivity and narrow band gap, making it suitable for advanced semiconductor applications [11].
The global supply chain for rare earth elements is characterized by a significant concentration of production in China, which accounts for more than 90% of global REE output. China’s dominance in the REE market has raised concerns about supply chain vulnerabilities, particularly in the United States, which relies heavily on imported REEs for its semiconductor industry. This reliance on a single country for such a critical supply has prompted the U.S. government and industry stakeholders to explore alternative sources of REEs [1].
The situation reached a critical point in 2010 when China imposed export restrictions on REEs, leading to a global supply shortage and a sharp increase in prices [6]. In response, several countries, including the United States, began investing in alternative REE sources, such as mining projects in Australia, Brazil, and Russia. Additionally, recycling of REEs from end-of-life products has gained traction as a potential solution to reduce dependence on primary sources [5].
However, despite these efforts, the U.S. remains heavily dependent on China for REEs. This dependency is further exacerbated by the lack of domestic processing capabilities. Even when REEs are mined outside of China, they often have to be shipped to China for processing, as it is the only country with the full infrastructure for refining these elements into usable materials [7].
The United States has significant rare earth deposits, but the country faces several challenges in developing a fully integrated REE supply chain. One of the primary challenges is the lack of processing facilities, which limits the ability of the U.S. to convert raw REE ores into the refined materials needed for semiconductor manufacturing. For example, the Mountain Pass mine in California, one of the largest REE deposits in the world, has faced numerous operational and financial difficulties. While the mine has restarted operations in recent years, the lack of domestic processing facilities means that the ore must be sent to China for refining [12].
Moreover, the environmental and regulatory challenges associated with REE mining and processing have slowed the development of domestic projects. The extraction and processing of REEs are associated with significant environmental impacts, including radioactive waste, which requires careful management [8]. These challenges have contributed to the U.S.’s reliance on imports, particularly from China.
In terms of specific semiconductor processes, various stages require different REEs. For instance, gallium nitride (GaN) and indium phosphide (InP) semiconductors, which are essential for high-speed and high-frequency applications, depend on rare earth elements like yttrium and europium for doping and enhancement [7]. Additionally, rare earth-doped metal oxide semiconductors, such as indium oxide (In2O3), have shown significant improvements in gas sensing performance, further highlighting the critical role of REEs in advanced semiconductor technologies [11].
In recent years, rare earth oxides like lanthanum (La2O3), gadolinium (Gd2O3), and lutetium (Lu2O3) have been explored for their applications in logic and memory semiconductors due
to their high permittivity and thermal stability. However, these materials present challenges in processing and stability due to their hygroscopic nature and tendency to form silicates. Innovations in deposition methods, such as atomic layer deposition (ALD) using alternative oxidants like O3, have improved the uniformity and performance of rare earth oxide layers, making them more viable for semiconductor applications [4].
Yttrium monoxide (YO), a divalent rare earth oxide, has also been synthesized as an epitaxial thin film, demonstrating unique electronic and magnetic properties that make it a promising material for future semiconductor devices. Its tunable electrical conductivity and narrow band gap, combined with strong spin- orbit coupling, offer new possibilities for advanced electronic applications [11].
In recent years, the United States has made concerted efforts to reduce its dependence on foreign REE supplies. For example, the U.S. Department of Defense has funded several projects aimed at establishing a domestic supply chain for critical REEs. Additionally, several companies are working to restore the full supply chain within the U.S., including processing and refining capabilities.
Recycling has also emerged as a viable strategy for securing REE supplies. The recycling of REEs from electronic waste, such as discarded smartphones, computers, and electric vehicle batteries, offers a sustainable way to recover these critical materials. However, the recycling process is complex and costly, and the infrastructure for large-scale REE recycling is still in its infancy in the U.S. [13]. Research efforts have also focused on recovering REEs from waste materials, such as polishing powder waste, which contains high concentrations of REEs like CeO2 and La2O3 [5].
Outside of the United States, other countries have also recognized the importance of securing their own REE supplies. Australia, for instance, has become a significant player in the REE market with its Lynas Corporation, which operates one of the few large- scale REE mines outside of China. The European Union has also prioritized the development of REE supply chains, focusing on both mining and recycling initiatives [14].
Countries like Japan have made significant investments in REE recycling technologies. Japanese companies, including Hitachi and Mitsubishi, have developed processes to extract REEs from end-of-life products, helping to mitigate the risks associated with supply chain disruptions [15].
Despite the progress made in diversifying REE supply chains, several research gaps remain. For instance, more research is needed on the environmental impacts of REE recycling and the development of more efficient and cost-effective recycling technologies. Additionally, further studies are required to assess the feasibility of developing new REE deposits in the U.S. and other countries, particularly in regions with stringent environmental regulations [5]. Research on the recovery of REEs from secondary sources, such as waste and recycling streams, continues to be a promising area for reducing supply chain vulnerabilities [7].
The future of the semiconductor industry will depend on the ability to secure a stable and sustainable supply of REEs. As demand for semiconductors continues to grow, driven by emerging technologies such as 5G, artificial intelligence, and electric vehicles, the importance of REEs in the global supply chain will only increase [16].
The methodology begins with a comprehensive review of the global supply chain for rare earth elements (REEs), focusing on key producing countries such as China, Australia, and the United States. China’s dominance in the REE market, contributing over 90% of the global output, necessitates an in-depth analysis of its production capacity, export policies, and the impact of trade restrictions on global markets. This analysis will include data collection from industry reports, government publications, and academic research to map out the distribution of REE resources and their production trends [3].
The study will employ a mixed-methods approach, combining qualitative data from expert interviews with quantitative data from trade statistics and market reports. The goal is to understand the global distribution of REE resources, the dynamics of supply and demand, and the role of geopolitical factors in shaping the REE market [1].
The next step involves identifying specific REEs that are scarce or unavailable within the United States. This will be achieved by analyzing U.S. Geological Survey (USGS) reports, which detail domestic reserves and production capabilities of various REEs. By comparing this data with global production figures, the study will highlight the elements that the U.S. lacks, such as heavy rare earth elements (HREEs) like dysprosium, terbium, and yttrium [12].
Additionally, the study will investigate the U.S.’s dependency on imports for these critical elements, particularly from China and other leading producers. This section will also explore the potential for domestic mining and recycling initiatives to mitigate these shortages [8].
To address the U.S.’s reliance on foreign REEs, the methodology will involve scenario planning for trade with countries rich in these elements. The study will model different trade scenarios, including bilateral agreements, strategic partnerships, and supply chain diversification efforts. Countries like Australia, which has significant REE reserves, and Japan, which has advanced REE recycling technologies, will be considered as potential trade partners [5].
This section will use economic modeling techniques to assess the feasibility and impact of different trade strategies. The models will consider factors such as tariffs, trade restrictions, and geopolitical risks. The goal is to identify the most viable trade options for securing a stable supply of REEs for the U.S. semiconductor industry [17].
The study will also quantify the extent of the U.S.’s dependency on other countries for REEs, focusing on critical dependencies in the semiconductor manufacturing sector. This will involve a detailed analysis of import data, production capacities, and supply chain vulnerabilities. The study will examine how these dependencies impact the U.S.’s ability to produce semiconductors and compete globally [7].
Moreover, the methodology will explore the role of international collaborations and alliances in mitigating these dependencies. This will include a review of existing agreements and partnerships, as well as potential opportunities for new collaborations [4].
Finally, the study will offer strategic recommendations for positioning the U.S. as a leader in semiconductor manufacturing. The approach will be to recommend trade and economic policies, approach on imports and exports and relations with countries with REE.
The recommendations will be based on the findings from the previous sections, as well as insights from industry experts and policymakers. The study will advocate for a multi-faceted approach that includes boosting domestic production, investing in recycling technologies, and forging strategic trade partnerships [13].
Data collection will involve a combination of primary and secondary sources. Primary data will be gathered through interviews with industry experts, policymakers, and stakeholders in the REE supply chain. Secondary data will be sourced from government reports, academic journals, industry publications, and market analysis reports [2].
Quantitative data will be analyzed using statistical and econometric methods, while qualitative data will be examined through content analysis. The study will use software tools such as R and Python for data analysis, and scenario planning will be conducted using specialized economic modeling software.
This methodology outlines a comprehensive approach to studying the global supply chain of rare earth elements, with a specific focus on the U.S.’s position in the semiconductor industry. By combining data-driven analysis with strategic scenario planning, the study aims to provide actionable insights for policymakers and industry leaders seeking to enhance the U.S.’s competitiveness in semiconductor manufacturing.
The methodology outlined in this study offers several insights into securing a stable and sustainable supply of rare earth elements (REEs) for semiconductor manufacturing in the United States. Through a comprehensive review of the global supply chain, the study confirms that China continues to dominate REE production, accounting for over 90% of global output. This reliance on a single country for critical materials highlights the vulnerability of the U.S. semiconductor industry, especially given the geopolitical risks associated with trade restrictions and export controls.
The identification of specific REEs that are scarce or unavailable within the United States, such as dysprosium, terbium, and yttrium, further underscores the need for alternative sources. The U.S. Geological Survey (USGS) data reveals that while the U.S. has significant REE deposits, the lack of domestic processing facilities limits the country’s ability to leverage these resources. This dependency on foreign imports, particularly from China, creates a bottleneck in the U.S. semiconductor supply chain.
Scenario planning for trade with REE-rich countries demonstrates the potential benefits of diversifying supply sources. Strategic partnerships with countries like Australia and Japan, which have significant REE reserves and advanced recycling technologies, could reduce the U.S.’s reliance on Chinese imports. Economic modeling suggests that bilateral agreements and supply chain diversification efforts would enhance the security of REE supplies, mitigating the risks associated with single-source dependency.
The study also quantifies the extent of the U.S.’s dependency on other countries for REEs, focusing on critical dependencies in the semiconductor manufacturing sector. The analysis shows that these dependencies impact the U.S.’s ability to produce semiconductors at scale, ultimately affecting its competitiveness in the global market.
The United States stands to benefit significantly from the methodology proposed in this study. By adopting a multi-faceted approach that includes boosting domestic production, investing in recycling technologies, and forging strategic trade partnerships, the U.S. can reduce its reliance on foreign REEs and strengthen its position in the semiconductor industry.
The strategic recommendations provided in this study offer a roadmap for the U.S. to become a leader in semiconductor manufacturing. This includes addressing the environmental and regulatory challenges associated with REE mining and processing, as well as fostering international collaborations to secure stable supplies of critical materials.
Ultimately, the U.S.’s ability to secure a stable supply of REEs will be crucial for maintaining its technological edge in the semiconductor industry. As demand for semiconductors continues to grow, driven by advancements in 5G, artificial intelligence, and electric vehicles, the importance of a resilient and sustainable REE supply chain cannot be overstated. The implementation of the strategies outlined in this study will ensure that the U.S. remains competitive in the global semiconductor market while reducing its vulnerability to external supply chain disruptions.
