Responding to Rare-Earth Supply Chain Risks: A Quick Guide for Manufacturers

Responding to Rare-Earth Supply Chain Risks: A Quick Checklist for Manufacturers

China’s potential to put export controls on rare-earth elements creates uncertainty for global electronics and server manufacturing supply chains. These materials — essential for magnets, displays, coatings, and semiconductors — are now subject to tighter licensing and export scrutiny.

For manufacturing teams, the best response is proactive: map dependencies, assess exposure, and build flexibility into sourcing and production.

Map rare-earth dependencies

Rare-earth materials often hide deep within the supply chain — in magnets, coatings, and specialty alloys. Start by identifying where they appear in your products and assemblies.

How to do it:

• Review your bill of materials (BOMs) for components containing magnets, phosphors, or thin-film coatings.
• Request material disclosures from suppliers for any parts containing rare-earths — especially holmium, erbium, thulium, europium, ytterbium, dysprosium, terbium, or yttrium.
• Use digital traceability or PLM tools to connect these materials to specific SKUs.
  
  

Checklist:
☐ BOMs reviewed for potential REE content
☐ Supplier disclosures collected and cataloged
☐ High-risk components tagged in sourcing or design database
☐ Traceability established between materials and finished products

Assess origin and exposure

Even if production happens outside China, your supply chain could still be subject to controls if it uses Chinese-origin materials or technology.

How to do it:

• Request certificates of origin and process documentation from suppliers.
• Identify any tier-2 or tier-3 suppliers sourcing REE materials from China.
• Evaluate whether Chinese manufacturing processes (e.g., magnet sintering or coating deposition) are being used.
• Document exposure levels in your supplier risk database.
  
  

Checklist:
☐ Certificates of origin verified for REE-related inputs
☐ Supplier sourcing maps updated with country-of-origin data
☐ High-risk suppliers flagged for alternate sourcing
☐ Exposure report shared with design and operations teams

Plan for delays

China’s export licensing system introduces new administrative bottlenecks — even when trade continues. Building time buffers into planning models helps reduce production risk.

How to do it:

• Adjust lead times for materials or assemblies containing controlled REEs.
• Add safety stock or buffer inventory for critical parts.
• Communicate with suppliers early about expected licensing timelines.
• Align design, procurement, and logistics teams on contingency plans.
  
  

Checklist:
☐ Updated lead-time assumptions in MRP or ERP systems
☐ Critical component stock buffers in place
☐ Supplier communication plan documented
☐ Cross-functional response plan reviewed and approved

Diversify sources and materials

Reducing dependency on any single country or material is the most effective long-term defense. This requires coordination between design, sourcing, and operations.

How to do it:

• Identify non-Chinese suppliers for REE-based components (magnets, coatings, phosphors).
• Explore alternative materials (for example, ferrite or aluminum-based magnets, phosphor substitutes).
• Evaluate the trade-offs between short-term cost and long-term resilience.
• Embed diversification goals into NPI and sourcing reviews.
  
  

Checklist:
☐ Alternate supplier list compiled and qualified
☐ Material substitution opportunities documented
☐ Diversification criteria added to sourcing KPIs
☐ Risk reduction progress reviewed quarterly

The bottom line

Rare-earth export controls have made material origin and traceability a business-critical capability. Manufacturers that connect design data to supply visibility will adapt the fastest, turning uncertainty into a competitive advantage.