Suppliers to U.S. aerospace and semiconductor companies face worsening shortages of critical rare earth elements. Two suppliers have started rejecting customers. Production lines are pausing. The minerals at the centre of the crisis? Yttrium and scandium.
These materials sound niche. They are. But they’re also vital to jet engines, 5G chips and defence technology. And right now, supply is running dry.
China Controls the Supply
China dominates global production of both yttrium and scandium. The country imposed rare earth export restrictions in April. Shipments to the U.S. dropped sharply. Despite an October diplomatic detente between Washington and Beijing, the flow remains limited.
Chinese customs data shows exports have not meaningfully recovered. Chinese authorities now require export licence applicants to declare end users. Some U.S. officials believe this directly targets the semiconductor sector.
“Our thesis is that it is precisely the semi industry being targeted.”
– U.S. official
Yttrium Shortages Pause Production
Two North American companies producing high-temperature coatings have temporarily halted production. They can’t secure enough yttrium. These coatings are essential for turbines and jet engines. Without them, aerospace manufacturing slows.
One coating manufacturer is actively rejecting smaller buyers. The goal? Preserve inventory for major clients. Engine makers are already struggling to meet demand for spare parts from airlines. Higher production schedules at Boeing and Airbus add pressure.
Yttrium prices tell the story. Prices have surged 60%. They now stand nearly 70 times higher than a year ago. Suppliers are rationing materials and reducing operating rates.
“This is a watch item and a tangible example of how China is flexing its rare earth muscle.”
– Kevin Michaels, managing director at AeroDynamic Advisory
Scandium Threatens 5G Chip Production
The scandium shortage poses different risks. Major U.S. chipmakers rely on scandium for components in nearly every 5G smartphone and base station. chip production is at stake.
The United States currently has zero domestic scandium production. There are no fully operational alternative sources outside China. Global scandium output is measured in only a few dozen tons per year.
U.S. chip manufacturers face delays in acquiring new Chinese scandium export licenses. Even when chipmakers obtain scandium from third-country suppliers, China requires licence applicants to declare their end-users.
“The US currently has zero domestic scandium production and no operational alternative sources outside China.”
– Dylan Patel, CEO and founder of SemiAnalysis
Industry estimates suggest existing scandium stockpiles could last months, not years. Patel puts it plainly: “Existing reserves will likely last for months, rather than years.”
Strategic and National Security
Yttrium and scandium are niche members of the 17-element rare earth family. But their role in defence technology, aerospace and semiconductors gives China strategic disproportionate to market size.
The shortages create tangible national security concerns for the U.S. Supply chain vulnerabilities in critical minerals essential to technological competitiveness are now exposed.
A White House official confirmed the administration is monitoring the situation closely:
“This includes negotiating with China and monitoring compliance with President Trump’s agreement with President Xi, as well as developing alternative supply chains as warranted.”
– White House official
March Summit in Focus
President Donald Trump is scheduled to meet Chinese President Xi Jinping at a high-stakes summit in Beijing in March. The easing of trade friction and China’s export limits on critical minerals will be a central topic.
Information gathered from conversations with 14 corporate staff and executives, traders, analysts and two U.S. government officials confirms the rare earth supply issue will feature prominently in discussions.
Industry Response and Partnerships
Some companies are taking action. Traxys North America has partnered with Phoenix Tailings to boost rare earth metals supply and distribution. But these initiatives take time to scale.
At least two companies have started turning away customers due to severe shortages. Suppliers are suspending orders for certain clients. Production rates are dropping. Recovery timelines remain uncertain.
What This Means for Freight
Rare earth shortages ripple through supply chains. Aerospace manufacturers need parts. Chip producers need materials. Logistics providers need visibility into constrained supply routes and changing trade flows.
As alternative supply chains develop, freight forwarders with global reach and flexible routing will be better positioned to support clients navigating mineral shortages and geopolitical friction.
Complex routing matters. Multi-carrier options matter. Speed to quote matters. When supply chains tighten, freight providers who can move fast win.
- Two North American coating manufacturers have paused production due to yttrium shortages
- Yttrium prices surged 60% and now stand nearly 70 times higher than a year ago
- The U.S. has zero domestic scandium production and no operational alternatives outside China
- China shipped only 17 tons of yttrium to the U.S. in eight months post-April controls, down from 333 tons
- The shortages will be discussed at the March Trump-Xi summit in Beijing
The rare earth squeeze deepens. Supply chains adapt. Freight providers who understand the shifting landscape will be ready.
