China’s latest restrictions mark its first significant use of long-arm jurisdiction over foreign firms, specifically targeting the semiconductor sector and potentially disrupting the AI-driven demand for advanced chips. These export curbs on rare-earth minerals have escalated trade tensions, prompting fears of global supply chain disruptions. In response, the U.S. imposed new tariffs and software export controls on China, with President Donald Trump announcing a 100% tariff and restrictions on critical software.
The rare-earth limitations, the most focused move by Beijing so far, could delay shipments for companies like ASML Holding NV, the only global supplier of advanced chipmaking equipment, a source familiar with the matter revealed. A senior executive at a leading U.S. chipmaker noted that rising costs for rare earth-dependent magnets pose a major threat to the supply chain.
Another U.S. chip company is urgently reviewing products that contain Chinese rare earths and fears that new licensing requirements could stall operations. China’s new export rules apply even to materials with minimal rare-earth content and specifically target components used in chips and AI technologies with military relevance, making them the country’s strictest controls to date.
