TSMC has begun asking its equipment suppliers whether they can build factory automation gear with motors that contain no rare-earth magnets, Reuters reported on October 22, citing people familiar with the matter.
The Taiwanese company is the world's largest contract chip manufacturer. It makes Nvidia's AI chips, along with chips for Apple, Broadcom, Qualcomm and a long list of automotive customers. Its highly automated fabs run on industrial machinery, and the electric motors in that machinery use permanent magnets made from rare-earth elements such as neodymium, dysprosium and terbium.
China holds the leverage here. The U.S. Geological Survey puts its share of global rare-earth mining at roughly 70%. The International Energy Agency says it controls around 90% of refining and about 95% of finished permanent magnets. In April 2025, Beijing put seven medium and heavy rare earths, and the magnets made from them, under export licensing that requires case-by-case approval. On October 9, 2025, it added five more rare earths, processing technology and equipment, and foreign-made products containing more than 0.1% Chinese-origin rare earths. That expansion was later suspended until November 10, 2026, and the suspension has now been extended by another 90 days.
A pause is not a repeal, which explains the outreach. Even with every other material in hand, a shortage of specialized motor components could complicate maintenance, repair or expansion of production equipment.
Motors without rare earths exist. Induction motors and switched-reluctance motors skip permanent magnets, and some permanent-magnet designs use ferrite instead. Each involves trade-offs in efficiency, size, power density, precision and control, and precision is the one a fab tool cares about most. So this looks less like a part swap and more like an engineering question.
The longer-term fix is slower. Taiwan's government is backing the Industrial Technology Research Institute to build a pilot line within three years that could meet about 50% of domestic rare-earth demand. In February 2026, the Trump administration announced plans for a $12 billion critical minerals stockpile. Both are multi-year projects, while a motor redesign may be the quicker lever, if suppliers can match the precision TSMC needs before the next extension runs out.