The price of yttrium – a silvery-looking transition metal – has embarked on a trajectory that was unthinkable until a few months ago, skyrocketing to levels that no one in the chip supply chain would have considered plausible. In the space of a year, yttrium oxide went from less than eight dollars a kilo to the current 126, a monstrous increase of 1,500% detected by Asian Metal Inc and echoed by Bloomberg. A leap that does not just represent a market dynamic: it reflects the increasingly evident weight of the political frictions between China and the United States, as well as the central role of rare earths in global technological competition.
China, which controls a large part of the world’s extraction and above all refining, has introduced restrictions on the export of various rare earths, including yttrium. These measures, accompanied by increasing duties and a constant tug-of-war with Washington, have triggered a supply crisis which today risks turning into a real short circuit for the entire semiconductor chain.
Tensions between the USA and China accentuate the yttrium crisis
The crucial point is that yttrium is not a simple commodity: it is one of the most transversal elements of modern industry. It is found in advanced medicine, in ceramic materials, in industrial lasers, in superconductors and, above all, in the more delicate processes with which chips are built. It is used for the deposition of thin films, for the polishing of wafers and for a series of treatments that make it possible to produce increasingly miniaturized components.
The shortage of yttrium has therefore opened a hole right at the most sensitive point of the global technological supply chain. Chip manufacturers, already under pressure after the memory crisis and overload of recent years, now have to deal with uncertainty over supplies of this strategic raw material.
The deterioration of the balance began in the spring, when Beijing introduced stringent controls on the export of rare earths. Washington responded by tightening its trade policy, imposing duties on numerous Chinese products and threatening tariffs of up to 100% on future categories, without ruling out a targeted software block. The retaliations alternated with a crescendo that led to US duties reaching 145% on inputs and a Chinese counter-response of 125% on some American goods.
The annual truce signed in recent weeks has slowed, but not stopped, the escalation. Significant restrictions remain in place, including China’s ban on yttrium exports to the United States. A huge problem, considering that China represents over 90% of American imports of rare earths according to data from the US Geological Survey.
The new industrial strategies to stem the yttrium crisis
The American response took shape on multiple fronts. MP Materials, the company that operates the Mountain Pass field in California – the only US site dedicated to rare earths – is accumulating inventories and working on expanding refining capacity. Washington, meanwhile, is considering using up to two billion dollars from the CHIPS Act to consolidate a domestic mineral supply chain that simply does not exist today.
Australia and Canada are also moving quickly, pushing local production and experimenting with alternative methods, such as recovering yttrium from mining waste. Industry leader Lynas Rare Earths is expanding its infrastructure between its Mount Weld mining site and its Malaysian facility, with the stated aim of increasing yttrium processing capacity in the coming years.
Despite signs of diplomatic dialogue between Beijing and Washington, the situation does not seem destined to normalize any time soon. The price of yttrium, still very high, has become the litmus test of a structural fragility that no superpower can afford to ignore. Rare earths are now not just a chapter in the economy: they are an instrument of power in the technological confrontation between the USA and China.
You might also be interested in:
