In a major escalation of its tech resource policy, China's Ministry of Commerce announced new export restrictions on rare earth materials, sharply tightening approval processes for exports linked to advanced semiconductors and artificial intelligence (AI). The move adds a critical new layer of scrutiny to the global supply chain for high-tech industries.
Under new rules released on October 9, companies seeking to export any product containing Chinese-origin rare earths—or manufactured using Chinese rare earth technology—must obtain a special export license. The regulation applies even if rare earths make up just 0.1% or more of the value of a foreign-manufactured product.
According to Announcement No. 61 of 2025, the Chinese government will now require case-by-case export reviews for a broad range of high-tech applications. These include logic chips at 14nm and below, memory chips with 256 layers or more, as well as associated manufacturing tools, testing equipment, and critical materials. AI systems with potential military applications will also face strict export scrutiny.
This is the first time China has explicitly linked rare earth export controls to its semiconductor and AI policies, signaling a dramatic policy convergence between strategic resources and high-tech national security concerns.
A strategic shift toward tech-centric export controls
Notably, the new measures extend beyond materials to encompass downstream technologies and end uses, marking a clear strategic shift in how Beijing wields its rare earth leverage. Export license applications for military end-users abroad or for companies already blacklisted under China's own export control regime will be denied in principle, including affiliates and subsidiaries with majority ownership.
Industry analysts say the measures mirror US sanctions frameworks, introducing a "denied party list" system into China's rare earth trade for the first time. This policy evolution tightly links rare earth exports to considerations around military use, technology leakage, and geopolitical alignment.
The implications are far-reaching. AI chips, advanced computing architectures, and rare earth-based magnetic materials used in high-performance electronics will now face longer lead times, more complex compliance checks, and a higher likelihood of denial.
Raising the stakes in the global tech conflict
The announcement is widely seen as a new phase in China's strategic response to escalating global tech tensions. Rare earth elements—critical for high-performance chips, EV motors, and AI acceleration hardware—are dominated by Chinese production, which accounts for over 60% of global supply.
By tightening control over even trace quantities of rare earths used in foreign-made technologies, China is signaling a willingness to weaponize its resource dominance in response to mounting US and allied tech restrictions.
Industry experts warn that the new rules could disrupt global supply chains in semiconductors, AI servers, and high-performance computing (HPC). For many manufacturers, this will translate into higher costs and a scramble to identify alternative material sources.
Taiwan and other global players face upstream risk
In Taiwan, home to some of the world's most advanced semiconductor foundries and memory chip makers, the new controls raise fresh concerns over upstream material risks. Industry sources say rare earth export delays or denials could impact advanced chip production processes, power components for manufacturing equipment, and magnetic materials critical to precision tools.
To mitigate risks, supply chains may need to accelerate efforts in rare earth recycling, diversify international sourcing, or invest in next-generation material alternatives. Several Taiwanese firms are already reviewing contingency plans, including cross-border procurement agreements and joint research into rare earth substitutes.
The new rules show a significant evolution in China's approach: moving beyond raw material control to include associated technologies, manufacturing tools, and ultimate end uses. With semiconductors and AI now explicitly covered under the national security umbrella, Beijing is formalizing a framework to prevent the outflow of strategic technology.
This expanded control regime marks a new chapter in the global tech rivalry. For the semiconductor and AI industries, it signals the beginning of a more fragmented, tightly regulated era of supply chain management—where access to key materials will be as politically fraught as the chips themselves.
Article edited by Jack Wu
