Data centers face direct supply chain disruption from China’s rare earth export curbs, with an escalated licensing regime set for review in November.
The Institute of Electrical and Electronics Engineers (IEEE) is warning that China’s export controls on rare earth minerals are beginning to impact datacenters, with shipments of certain key materials down by 75 percent and Beijing scheduled to review its policies this November.
Focusing on two specific elements—erbium and yttrium—the IEEE’s official publication, *IEEE Spectrum*, highlights their critical role in IT equipment components. Yttrium exports have fallen by approximately 75 percent this year compared to 2025 levels. It was among seven medium and heavy rare earth elements placed under mandatory licensing during China’s initial wave of restrictions in 2025. Yttrium is essential for white LED lighting and displays, microwave filters, solid-state lasers, and ceramic capacitors found in nearly all electronic devices. Erbium, meanwhile, is used in amplifier circuits that boost optical signals across fiber-optic networks.
China initially enacted restrictions on the overseas sale of rare earth minerals last April, as previously reported by *The Register*. These measures were introduced as retaliation against the Trump administration’s haphazard trade tariffs. Beijing subsequently escalated the policy later that year with stricter regulations requiring companies to obtain licenses before shipping any goods containing Chinese-sourced rare earths abroad. This framework mirrors U.S. export controls, such as those restricting the sale of ASML chipmaking equipment to China.
A second wave of measures—which would have expanded export controls to five additional elements, including erbium—was suspended in November 2025 for 12 months following U.S.-China trade negotiations. When that suspension expires this November, Beijing will determine whether to lift the enhanced restrictions or reinstate them, potentially extending licensing requirements to most or all rare earth minerals under its control.
According to the International Energy Agency (IEA), rare earth supply chains remain among the least geographically diversified of all critical minerals. In 2024, China accounted for roughly 60 percent of global mining output for minerals used in magnets, with its dominance even more pronounced in separation and refining, where it represented approximately 91 percent of worldwide production. However, for the yttrium and erbium utilized in IT hardware, *IEEE Spectrum* notes that China remains the effective sole source. The country mines 90 percent of the world’s yttrium, processes all mined ore into industrially viable forms such as yttrium oxide, and supplies 100 percent of global erbium oxide.
Washington has implemented several measures to mitigate China’s near-monopoly over these vital materials. Recently, the U.S. Department of Defense announced a $750 million investment to secure rare earth supplies for magnets from a production facility in central Brazil. Concurrently, the Department of Energy allocated $500 million to seven selected initiatives aimed at expanding critical mineral processing, battery manufacturing, and recycling capabilities. Additionally, in February 2026, the United States signed agreements with representatives from 54 nations at the Critical Minerals Ministerial meeting, alongside broader commitments to develop secure and resilient supply chains. Also that month, President Trump launched Project Vault, a supply chain security program creating an American Strategic Critical Minerals Reserve, backed by up to $10 billion in funding from the Export-Import Bank of the United States.
Nevertheless, many of these initiatives will require significant time to yield results, leaving China’s upcoming policy decision as a critical stress test should Beijing opt for a harder line. U.S.-China relations remain strained over trade and other geopolitical factors, making next month’s anticipated summit between President Trump and President Xi Jinping a pivotal moment with substantial implications for global technology infrastructure.