Rare earth supply constraints tighten as new export controls pass

As artificial intelligence continues to reshape the technology landscape, pressure is mounting across the semiconductor supply chain. While much attention has been focused on advanced chips and memory, access to the raw materials needed to manufacture these parts has become an equally important concern. Governments are increasingly using export controls on critical minerals to strengthen domestic industries, creating new sourcing challenges for global consumers.  

Meanwhile, AI and hyperscale cloud providers continue to deploy larger AI clusters, increasing enterprise SSD consumption. Memory suppliers are investing millions of dollars in new fab capacity to support these efforts. Still, it takes time to ramp up production, let alone construct these multi-acre buildings. With memory suppliers expecting sustained AI-driven growth over the next year, availability of critical memory components is likely to remain tight despite efforts to bring new facilities online as fast as possible.  

Rare earth restrictions tighten material supply

China’s dominance in the rare earth supply chain gives it enormous leverage when setting trade policy. When exports are restricted, and alternatives remain as scarce as they are, the entire semiconductor industry feels the effect. According to Nikkei, ongoing export controls are now putting pressure on Japan’s chipmaking sector by making it more challenging to obtain key inputs.  

In the first half of 2026, Japan’s dysprosium imports reportedly fell 82% compared to the same frame in 2024. What’s more, imports were recorded at zero in four months, with only March and April seeing dysprosium coming in.  

The story is the same for yttrium, which saw its imports drop 74% in the first half of this year compared to 2024. Though Japanese buyers are attempting to source yttrium from a dozen other countries outside China, the volume flowing through these secondary channels is insufficient.  

Both rare earth metals are crucial to semiconductor manufacturing equipment. Dysprosium is used in advanced capacitors and high-performance magnets inside photolithography tools and EV motors. Yttrium oxide is needed to coat components exposed to plasma and high temperatures inside the chipmaking tools.  

Interestingly, China’s control over rare earth exports hasn’t been exerted evenly. While Japan’s imports fell nearly 44% year-over-year as of June, imports in the Netherlands increased by 121%, according to reports from Yonhap News and China Daily. The Netherlands’ importance in the chip manufacturing equipment sphere likely explains why Beijing is more willing to collaborate compared to the stance it’s taken with other trade partners.  

According to several reports, Japan’s chip sector hasn’t yet faced major production disruptions due to rare earth material shortages. With fewer exports coming in and no near-term relief in sight, Japanese companies are forced to pull from their reserve stockpiles to keep production moving.  

However, the risk of this critical bottleneck tightening remains high as those safety inventories are rapidly shrinking. If China’s restrictions persist beyond the end of the year, past which most firms haven’t secured export licenses, production delays and product shortages are likely.  

Rare earth material shortages are a situation to monitor closely in the coming months, as they could contribute to higher manufacturing costs and longer lead times across the industry. Equipment makers facing tighter access to dysprosium and yttrium may need to pass along higher input costs if they can obtain inventory at all. Despite ongoing efforts, qualifying alternative supply sources for rare earths doesn't happen quickly.

For semiconductor buyers, upstream influences like access to rare earth inputs are rapidly becoming crucial variables to track alongside component pricing and foundry capacity trends.  

AI drives enterprise SSDs to nearly half of NAND shipments

As the AI boom continues, enterprise SSDs made up 48% of global NAND flash shipments in Q2 2026, according to Counterpoint Research, nearly double the 26% share of a year earlier. Even as supply has tightened, industry revenue increased fivefold over the same period.  

According to the report, Samsung retained its lead in shipments with a 25% share of the market, through the gap between it and SK Hynix, currently a 22% share, has narrowed substantially over the past two years. Kioxia and YMTC, both with roughly 14%, came next, though the latter’s revenue was markedly lower since its portfolio is still slanted toward consumer products.  

The movement can largely be traced back to how AI workloads have changed in recent years. As model deployment moves from training to inference, storage needs have changed also. Inference tasks must hold massive caches and datasets at high speed with low power consumption and latency, which is precisely what enterprise SSDs are built for.  

As such, hyperscalers and AI server customers have become the biggest buyers in the NAND market. Experts believe cumulative AI infrastructure spending will reach approximately $5.5 trillion through 2030. With that kind of money on the table, manufacturers at all levels of the semiconductor supply chain are reallocating supply accordingly.  

The shift hasn’t been victimless, however. With enterprise SSDs expected to absorb half of all NAND bits by the end of the year, consumer supply has tightened considerably. Prices have also been pushed to record highs despite consumer device sales volumes remaining relatively flat.  

As both tight AI-related component availability and shortages of the upstream materials required to make them have demonstrated, resilience in today’s semiconductor industry is no longer achievable with one strategy.  

It requires coordination monitoring across fab capacity trends, upstream materials access, and downstream market demand that’s evolving at the speed of AI investment. Sourceability helps customers navigate this complexity by pairing our global network of supplier relationships with end-to-end solutions that improve supply continuity while reducing lead time risk.