China's Rare Earth Export Curbs Threaten Taiwan Supply Chains

Beijing on October 9 introduced strict export controls requiring licenses for any product containing more than 0.1% Chinese-origin rare earths by value, and extended oversight to semiconductors, AI-related components and defense technologies.

That value-based origin rule creates acute indirect exposure for Taiwan. Although the island imports little raw ore directly from China, many Japanese and Southeast Asian suppliers that feed Taiwan’s semiconductor fabs and high-tech manufacturers rely on Chinese-refined feedstock for magnets, polishing powders and catalytic materials. Licensing delays or constrained flows from those intermediaries could rapidly create bottlenecks for chip fabs, EV component makers and precision optics producers.

China’s refining dominance—about 70% of global mining and roughly 90% of processing, according to USGS figures—underpins the leverage. The new threshold and licensing requirement appear in Ministry of Commerce notices, but enforcement intensity is uncertain; Beijing may use implementation selectively as geopolitical leverage.

Taiwan and partners are accelerating diversification efforts, including magnet recycling and supply deals with non‑Chinese producers. The practical takeaway for industry and investors: traceability and origin verification have become operational imperatives for supply resilience, not just compliance exercises.