TSMC Seeks Rare-Earth-Free Factory Equipment to Avoid Production Disruptions

TSMC conducted a survey among its suppliers regarding the use of rare-earth-free motors in factory automation equipment, according to three people familiar with the matter cited by Reuters via Mining.com.au.

The move aims to reduce the risk of Chinese export licenses disrupting advanced chip production. The source noted that the effort is in an early stage and has not yet reached widespread implementation.

In February, Economy Minister Kung Ming-hsin said the government would support the Industrial Technology Research Institute (ITRI), a domestic research organisation, in developing rare-earth technologies, with plans to establish a pilot production line within three years that could meet an estimated 50% of the island's domestic demand, according to the source. ITRI said in a statement that it was working with the Department of Industrial Technology at Taiwan's Ministry of Economic Affairs to plan a rare-earth project.

These steps come as the semiconductor industry seeks to secure alternative supply chains for critical materials, as any disruption in rare earths could slow production and raise costs for global chipmakers.

What do these terms mean?

Rare Earths: A group of chemical elements used in manufacturing magnets, motors, and electronics, with global supplies concentrated in a limited number of countries.

Factory Automation: The use of machinery and motors that operate automatically instead of relying on human effort in production and transportation processes within the factory.

Export License: An approval issued by a government before allowing a good or material to be shipped outside the country, which can restrict or delay supplies.