How the Struggle for Control of Critical Minerals is Reshaping the Semiconductor Supply Chain

Event: Control Is Becoming the New Commodity

In June 2026, a report from the U.S.-China Business Council indicated that despite ongoing trade negotiations, obtaining certain critical minerals from China is “nearly impossible,” and three-quarters of affected companies are actively seeking alternative sources. The same week, Japan's Shin-Etsu Chemical announced the construction of a new rare earth refinery in Japan, and the U.S. Congress proposed the Magnet Value Chain Support Act, aiming to encourage domestic magnet manufacturing through tax incentives. These events collectively point to a trend: control over critical minerals is replacing their commodity status, becoming a core tool of national industrial policy—and the semiconductor industry, as a major user of materials like tungsten and rare earths, is being profoundly impacted.

Background: The Shift from Commodity to Strategic Asset

For a long time, the semiconductor industry treated upstream materials as globally procurable commodities. However, since the 2020s, export controls, resource nationalism, and heightened awareness of supply chain risks have made the security of critical mineral supply a strategic concern for chipmakers.

• Tungsten: As an indispensable material in semiconductor manufacturing (used for CVD tungsten deposition, ion implanter components, precision parts in lithography machines, etc.), China controls approximately 80% of the global tungsten supply and refining capacity. Since 2025, China has continuously tightened export restrictions on tungsten-related products, causing a surge in U.S. tungsten scrap exports to Japan, while Chinese buyers are also actively stockpiling globally.
• Rare Earths: Elements like samarium and neodymium, used in permanent magnets, are key materials for stepper motors, precision bearings, and wafer transfer robotic arms. Shin-Etsu Chemical itself is a major silicon wafer producer, and its rare earth refining expansion directly serves the domestic semiconductor equipment supply chain.
• Cobalt: Export restrictions from the Democratic Republic of the Congo have led to shortages of cobalt raw materials, indirectly affecting cobalt consumables used in advanced packaging and electroplating materials.

Deep Analysis: Multi-Dimensional Impact on the Supply Chain

Dependence on Technology Roadmaps The semiconductor industry’s reliance on critical minerals is often underestimated. Tungsten’s irreplaceability in nano-scale interconnects makes it a necessary material for 2nm and below process nodes; rare earth magnets are central to the precision motion control in ASML’s high-NA EUV lithography machines. If supply chains are disrupted, advanced process R&D and mass production could face delays.

Supply Chain Effects - Upstream: China dominates the mining and refining of tungsten and rare earths, and diversified alternatives are hard to mature in the short term. Shin-Etsu’s rare earth refinery will take 3–5 years to begin production, and the capacity expansion supported by the U.S. Magnet Act will also require time. - Midstream: Wafer fabs and equipment makers face dual pressure. Equipment suppliers like Applied Materials and Lam Research need to secure supply of tungsten targets and rare earth magnets; TSMC and Samsung’s advanced packaging has ongoing demand for materials like cobalt. - Downstream: End-chip designers (e.g., NVIDIA, AMD) are beginning to incorporate material availability into their process node planning.

Competitive Landscape Shifts - Japan: Shin-Etsu’s move strengthens its competitiveness in both semiconductor materials and rare earth processing, potentially enabling local supply chains for equipment makers such as Tokyo Electron.### Changes in Competitive Landscape - Japan: Shin-Etsu Chemical's布局 strengthens its competitiveness in both semiconductor materials and rare earth processing, potentially driving equipment makers like Tokyo Electron to achieve localized supporting. - United States: The Magnets Act aims to rebuild a complete supply chain, but lacking experience in separation and magnet manufacturing, it will need to rely on allies in the short term. - China: Maintains bargaining power through export restrictions while accelerating self-reliance in downstream semiconductor equipment. - Europe: (Not discussed in detail in this article, but the EU's diversification rules can be mentioned for their impact on supply chain costs.)

Regional Impact - Taiwan, China: As a global wafer manufacturing hub, it is highly dependent on imported tungsten and rare earths, lacks local resources, and faces high supply risks. - South Korea: Samsung and SK Hynix, while advancing advanced processes, are increasing mineral cooperation with Australia and Africa. - Brazil: Seen by the US as a potential alternative source of rare earths, but mainly exports minerals and still needs to build refining capacity.

Investment Perspective The capital market has begun to reassess material-related companies. Shin-Etsu Chemical (4063.T) hit a new high in stock price due to its refinery plan; US magnet-related startups have gained venture capital attention. In the long run, companies with material substitution technologies (such as tungsten-free interconnects and rare-earth-free motors) may receive valuation premiums.

Long-term Outlook: Structural Changes in the Next 3-10 Years

• Within 3 years: Tight supply of tungsten and rare earths will accelerate recycling and substitution technologies. Carbon nanotube interconnects, memristors, etc., may reduce dependence on tungsten; synchronous reluctance motors or magnetless motors will see increased application in semiconductor equipment.
• Within 5 years: Processing capacity in Japan, the US, and the EU will come online gradually, but costs will be higher than China's; supply chain regionalization will increase chip manufacturing costs by 5-10%.
• Within 10 years: The battle for control of critical minerals may give rise to a mineral alliance similar to "OPEC", and the semiconductor industry needs to establish a closed-loop system from raw materials to design to recycling.

Conclusion Critical minerals are no longer backstage commodities but a new arena of competition in the semiconductor supply chain. Control rights, as a new type of commodity, require wafer fabs, equipment makers, and design companies to reassess supply chain resilience. Complete derisking is difficult to achieve, but manufacturing reshoring and material diversification will profoundly change the geographical distribution of the global semiconductor industry.

*This article is based on the Critical Minerals Report dated June 14, 2026, and related sources. All data come from publicly authoritative sources.*