"Rare Earth Desert" Worsens! Some US Aerospace and Semiconductor Suppliers Are Already "Unable to Accept Orders"

According to industry insiders speaking to the media, suppliers of American aerospace and semiconductor companies are currently facing an increasingly severe shortage of rare earth elements, with at least two suppliers beginning to refuse some customer orders.

The shortage is mainly concentrated in yttrium and scandium. These are niche metals within the 17 rare earth elements family but play a crucial role in defense technology, aerospace, and semiconductors, and are almost entirely produced in China.

One key pain point is yttrium — it is used in coatings to prevent engines and turbines from melting at high temperatures. Without regular application of these coatings, engines cannot operate.

Since November last year, yttrium prices have risen approximately 60% in the international market, currently about 69 times higher than a year ago. According to some executives and traders from U.S. companies, some coating manufacturers have now started rationing materials.

Executives from two North American companies that purchase yttrium for coating production said they had to temporarily halt production due to yttrium shortages.

One company has canceled orders from smaller and overseas clients to reserve supplies for major customers, including certain engine manufacturers; another company in the coating supply chain has recently exhausted its raw materials and stopped selling products containing yttrium oxide.

Aerospace supply chain expert Kevin Michaels stated that although yttrium shortages have not yet impacted engine production, manufacturers remain concerned. Currently, U.S. engine manufacturers are working to meet airlines’ spare parts demands and the higher production needs of Boeing and Airbus.

Dylan Patel, founder and CEO of research firm SemiAnalysis, said that besides yttrium, scandium needed by U.S. semiconductor manufacturers is also nearing depletion, posing risks to the production of next-generation 5G chips.

Global scandium annual production is only a few dozen tons. Although seemingly insignificant, it plays an extremely important role in fuel cells, specialized aluminum aerospace alloys, and advanced chip processing and packaging.

Patel pointed out that major U.S. semiconductor manufacturers rely on scandium to produce chip components, which are “essential for nearly every 5G smartphone and base station.” “Currently, the U.S. domestic scandium production is zero, and there are no operational alternative sources outside China. Existing inventories are likely only sufficient for a few months, not years.”

(Source: Caixin)