Suppliers serving the United States aerospace and semiconductor industries are grappling with increasingly severe shortages of rare earth elements, a situation that has forced some companies to turn away clients. This development comes just weeks before a highly anticipated summit in Beijing between US President Donald Trump and Chinese President Xi Jinping, where trade relations and resource access are expected to be key topics of discussion. The scarcity primarily affects rare earth metals such as yttrium and scandium—elements that, while required in small quantities, are indispensable for advanced defense technologies, aerospace engineering, and semiconductor manufacturing.
These rare earth elements belong to a group of 17 metals that are critical in high-tech applications but are predominantly mined and processed in China. Although Beijing relaxed many export restrictions on these materials after imposing stringent controls in April, shipments to the US remain sporadic and insufficient. Chinese customs data reveal that despite the partial thaw in trade tensions following an October agreement, the flow of rare earths to American companies has not rebounded to previous levels. This ongoing bottleneck highlights the fragile nature of supply chains that rely heavily on Chinese production, underscoring the strategic importance of these materials in global technology sectors.
One of the most pressing concerns centers on yttrium, a rare earth element essential for producing protective coatings that prevent jet engines and turbines from overheating and melting under extreme conditions. Without these coatings, the functionality and safety of engines are compromised, potentially grounding aircraft and disrupting aerospace operations. Since the initial reports of yttrium shortages surfaced last November, prices have surged dramatically—rising by approximately 60%—and are now nearly 70 times higher than they were a year ago. This price spike has forced some manufacturers of these coatings to ration their supplies, prioritizing larger clients and even halting sales to smaller or offshore customers to conserve limited stocks.
Executives from two North American companies involved in producing yttrium-based coatings disclosed that they have had to temporarily suspend production due to the scarcity of raw materials. One company has even begun refusing orders from smaller customers to ensure that key engine manufacturers can maintain their operations. Additionally, another firm within the yttrium supply chain recently exhausted its inventory and ceased selling products containing yttrium oxide altogether. While these shortages have not yet caused direct disruptions in jet engine or semiconductor production, officials within the US government acknowledge that certain manufacturers are now facing tangible supply constraints for these critical minerals sourced from China.
Statistical data further illustrate the severity of the situation: China exported only 17 tons of yttrium products to the US in the eight months following the imposition of export controls last April, compared to 333 tons during the same period the previous year. This drastic reduction has heightened concerns about the reliability of supply chains that underpin vital industries. In response, the Trump administration has affirmed its commitment to securing access to essential minerals for all American businesses. Efforts include ongoing negotiations with China to ensure compliance with agreements made between the two presidents, as well as initiatives to develop alternative sources and supply chains to reduce dependency on Chinese exports.
Industry experts emphasize that while engine production has not yet been directly impacted by yttrium shortages, the situation remains precarious. Kevin Michaels, an aerospace supply chain specialist and managing director at AeroDynamic Advisory, describes the issue as a clear example of China leveraging its dominance over rare earth resources to exert economic influence. Engine manufacturers are already under pressure to meet growing demand for spare parts from airlines and increased production targets set by major aircraft makers such as Boeing and Airbus. Despite repeated requests, leading US engine producers including GE Aerospace, Pratt & Whitney, and Honeywell have declined to comment publicly on the supply challenges.
In addition to yttrium, scandium—a rare earth element critical to the semiconductor industry—is also in short supply. Scandium plays a vital role in the production of next-generation 5G chips, fuel cells, and specialized aerospace aluminum alloys. Dylan Patel, founder and CEO of research firm SemiAnalysis, highlights that scandium is integral to components used in virtually every 5G smartphone and base station. However, global production of scandium remains extremely limited, with only several tens of tons produced annually. US semiconductor manufacturers have reported delays in obtaining new export licenses for scandium from China in recent months, prompting them to seek assistance from the US government to mitigate the impact on their operations.
Many American chipmakers have traditionally sourced scandium through third-country suppliers, but recent Chinese export policies require license applicants to disclose their end-users, complicating procurement efforts. A US official suggested that the semiconductor sector may be a specific target of these export restrictions. The Semiconductor Industry Association has chosen not to comment on these developments. Patel further notes that the US currently lacks any domestic scandium production facilities and has no operational alternative sources outside of China, leaving stockpiles that may only last for a few months rather than years.
As the March summit between Presidents Trump and Xi approaches, the issue of rare earth element supply is expected to be a significant agenda item. The outcome of these discussions could have far-reaching implications for the US aerospace and semiconductor industries, which are critical to national security and technological advancement. Meanwhile, industry stakeholders continue to monitor the situation closely, aware that the balance of supply and demand for these scarce materials could shape the future of high-tech manufacturing and defense capabilities.
