TSMC, the world’s largest contract chip maker, is quietly reshaping one of the most fragile parts of its supply chain: the rare-earth magnets buried inside fab equipment.
The company has started talking to tool vendors about factory automation equipment that uses motors without rare-earth materials like neodymium, dysprosium, and terbium, according to people cited by Reuters. These permanent magnets sit in the drives, robots, and motion systems that keep TSMC’s highly automated fabs running.
Why rare earths are a problem
Per the USGS and IEA:
- China produces ~70% of mined rare earths
- Controls ~90% of refining
- And ~95% of finished permanent magnets
Beijing has placed several medium and heavy rare earths – and the magnets made from them – under export controls, requiring case‑by‑case licenses. Later rule expansions even tried to cover products made outside China if they contain more than 0.1% Chinese-origin rare earths or use Chinese processing tech.
For a foundry like TSMC, that means a political decision in Beijing could delay maintenance, repair, or capacity expansion, even if all other parts and materials are available.
Motor technologies without rare earths
TSMC and its suppliers are looking at alternatives such as:
- Induction motors – generate torque via electromagnetic induction, no permanent magnets
- Switched-reluctance motors – magnet-free rotors with electronic commutation
- Ferrite-magnet PM motors – use cheaper ferrite instead of rare-earth magnets
Each comes with trade-offs in efficiency, size, power density, precision, and control complexity, but they greatly reduce exposure to Chinese magnet supply.
Building a non-Chinese rare-earth chain
Taiwan, backed by its government and ITRI, aims to build a pilot line within three years that could cover about 50% of domestic rare-earth demand. The U.S. is working with Taiwan and others to develop alternative mining and processing capacity and has announced plans for a $12 billion critical minerals stockpile to buffer against Chinese supply shocks.
For hardware engineers and embedded developers, this shift could gradually influence the motor technologies available in industrial automation, robotics, and high-end manufacturing tools.
Source: Tom's Hardware
