Suppliers to U.S. aerospace and semiconductor firms are facing increasingly severe shortages of rare earth elements, even weeks before Donald Trump is scheduled to meet Xi Jinping in Beijing, according to industry insiders. The pinch centers on niche but vital elements such as yttrium and scandium, essential for defense technology, jet engine coatings, and next-generation semiconductors, which are overwhelmingly produced in China.
Although China eased export restrictions following the October trade detente with the U.S., shipments of these critical materials to American manufacturers remain limited, Chinese customs data indicate. The gap is most pronounced for yttrium, which is used in high-temperature coatings that prevent engines and turbines from melting. Without these coatings, engines cannot operate safely, prompting some U.S. producers to pause or ration production to prioritize key clients. Since November, yttrium prices have surged roughly 60%, reaching levels nearly 70 times higher than a year ago.
Executives at two North American firms revealed they have temporarily halted production due to the shortages, with one firm turning away smaller and offshore clients to conserve supply for larger engine makers. Another supplier reported running out of yttrium oxide entirely, halting the sale of affected products. While these shortages have not yet disrupted jet engine or chip production, U.S. officials confirm that certain manufacturers are now facing real scarcity of key rare earths from China. Export volumes illustrate the scale of the issue: 17 tons of yttrium products reached the U.S. in the eight months after April’s controls, compared with 333 tons in the same period before restrictions.
Semiconductor companies are also increasingly concerned about dwindling scandium supplies, which are critical for advanced chip processing and packaging for 5G technology. With global production limited to a few tens of tons annually, scandium shortages could delay components used in smartphones, base stations, and specialty aerospace alloys. U.S. chipmakers have experienced delays obtaining new Chinese export licenses, and some have sought Washington’s intervention. Analysts warn that the U.S. currently has no domestic scandium production and no operational alternatives outside China, leaving stockpiles that could last only months.
Industry specialists caution that these shortages are a stark illustration of China’s leverage over critical materials and a growing vulnerability for U.S. aerospace and semiconductor supply chains. As demand for jet engines and advanced chips rises, manufacturers face mounting pressure to secure rare earths in the absence of reliable alternative sources, while policy negotiations at the upcoming U.S.-China summit could have significant implications for global supply and prices.
