TSMC is looking at ways to reduce its reliance on rare earths in the motors used in its semiconductor fab automation equipment. On October 22, 2026, Reuters reported that TSMC has been asking suppliers whether motors that do not use rare earths could be adopted in its factory automation equipment. The aim is to prepare for the risk that China's export controls could disrupt component supplies, but the effort is still at an early stage. The move concerns not the materials used in chips themselves, but the equipment that keeps chip factories running reliably.
TSMC Weighs Reducing Rare-Earth Dependence in Factory Automation Equipment
Reuters spoke to three industry executives who had been briefed by TSMC on the plan. One of them said that concern over a possible cutoff of supplies from China prompted the review. Two others said that rare-earth-free equipment has not yet been deployed on a large scale. TSMC declined to comment, and the specific motor types, suppliers and timing of any adoption have not been disclosed.
Permanent magnets made with rare earths are widely used in the motors that drive industrial machinery. Highly automated semiconductor fabs are no exception, and Reuters notes that such motors are used to move a variety of components inside the factory. If the necessary parts could not be procured, production of chips for smartphones and AI could potentially be affected. However, the report does not say that TSMC's factories have already experienced parts shortages or production stoppages.
Chipmaking equipment requires ongoing maintenance and repair after installation, so a stable supply of replacement parts is essential. In connection with the Reuters report, Tom's Hardware has also pointed out that a shortage of specialized motor components could hinder not only maintenance and repair of existing equipment but also expansion of production capacity. In other words, a materials supply problem passes through motor makers and equipment makers and ultimately affects the operation of semiconductor fabs. TSMC's review of the materials in the motors themselves appears to be driven by a desire to reduce such procurement risks at the design stage.
Why China's Rare-Earth Export Controls Can Affect Chipmaking Equipment
On April 4, 2025, China's Ministry of Commerce and the General Administration of Customs announced Announcement No. 18, which places export licensing requirements on certain medium and heavy rare-earth-related items. The covered items include samarium-cobalt magnets as well as neodymium-iron-boron-based permanent magnet materials containing terbium and dysprosium. The magnets themselves and magnetic powders are also designated as controlled, and exports require government approval. This is not, however, a blanket ban on exports of all rare-earth products.
It is important to note that magnet materials subject to controls are treated differently from finished products that incorporate them. According to the Ministry of Commerce's official FAQ, products made by applying simple processing to magnets, and related components, fall within the scope of controls, while electronic components made through further processing, with motors given as an example, are outside the scope of Announcement No. 18. That, however, is an explanation of item classification under this announcement; it does not guarantee that exports of finished motors will always be permitted once other export controls are taken into account.
The key point is that even if finished products are not directly controlled, restrictions on the materials needed to make them can have indirect effects. For example, if a motor manufacturer cannot obtain the permanent magnets it needs, deliveries of finished motors and replacement parts could be delayed. For chipmakers, this means considering not only the equipment delivered to the factory but also the supply chain for the parts and materials that make up that equipment.
One way to address this risk is to keep procuring conventional magnets while obtaining export licenses. But if rare-earth-free motors can be adopted, dependence on controlled magnet materials can be reduced in the first place. The former is a procurement response aimed at maintaining existing equipment specifications, whereas the latter involves rethinking the design of the equipment itself. As a result, technical validation and confirmation of compatibility with the equipment matter more than simply switching suppliers.
China Accounts for 94% of Rare-Earth Magnet Production
When considering rare-earth supply risk, it is necessary to look not only at ore mining but also at the subsequent refining and magnet manufacturing. According to International Energy Agency (IEA) statistics, China's share of global production in 2024 reached 60% for mining of magnet rare earths, 91% for refining, and 94% for sintered permanent magnet manufacturing. The further along the process, the higher the dependence on China.
| Process / product | China's share of global production (2024) |
|---|---|
| Mining of magnet rare earths | 60% |
| Refining of magnet rare earths | 91% |
| Sintered permanent magnet manufacturing | 94% |
The source is the IEA's "Rare Earth Elements." Magnet rare earths here refer to neodymium, praseodymium, dysprosium and terbium. These figures show China's share of global production and do not indicate TSMC's own sourcing or its degree of dependence on China.
Mined rare earths are not used in motors as they are. The raw materials extracted from ore must be separated and refined, processed into metals or alloy powders, and then made into permanent magnets. Even if mining output increases in countries other than China, the concentration risk in parts supply remains if subsequent refining and magnet manufacturing still depend on China. The IEA also cites the lag in building refining facilities and magnet manufacturing capacity, compared with the expansion of mining capacity, as a factor hindering the diversification of supply sources.
The rare-earth-free motors TSMC is reportedly considering can be seen as a way of addressing this problem from the equipment user's side. Unlike developing new mines or building magnet factories outside China, the approach seeks to reduce dependence on the supply chain itself by changing to a design that does not require specific magnet materials. However, not every motor can easily be replaced, and the effect will depend on which equipment can actually adopt the new technology.
Rare-Earth-Free Motors Already Exist; Fit for Semiconductor Fabs Is the Challenge
Industrial motors that do not use rare-earth magnets are already in commercial use. One example is ABB's synchronous reluctance motor. In this design, the rotor, the rotating part, uses neither permanent magnets nor windings, and instead generates rotational force by exploiting a structure in which magnetic flux passes more easily in some directions than others. ABB envisions its use in pumps, fans, compressors and similar applications.
Thus, the technology to commercialize motors that do not depend on rare earths already exists. However, there is no information that ABB's synchronous reluctance motor is among those TSMC is considering, nor does it show that such a motor can be incorporated directly into semiconductor manufacturing equipment. The Reuters report does not make clear which type TSMC is investigating, and the alternatives and prospects for adoption remain uncertain.
In addition, when the motor type changes, so do characteristics such as efficiency, size and power density. Tom's Hardware points out that, beyond these differences, operating precision and control performance would also need to be examined. Because the required operation differs from one piece of equipment to another in a semiconductor fab, a replacement cannot be chosen on the sole condition that it does not use rare earths. The technical challenges and the validation required also differ between adopting such motors in new equipment and replacing motors in equipment that is already operating.
The focus going forward will be which equipment TSMC targets, what motor technology it intends to adopt, and whether that technology can meet performance requirements under actual operating conditions. At this stage, the specific type and timing of adoption have not been disclosed, and no broad rollout has been decided. Still, if the review progresses and performance and reliability are confirmed, chipmakers could reduce their dependence on rare-earth magnets from the equipment procurement stage. How far changes in the design of manufacturing equipment can mitigate the risks of a materials supply chain concentrated in China will be an important factor to watch.