U.S. Rare Earth Supply Deteriorates Further! Some Aerospace and Chip Production Forced to Cut Output, Yttrium Price Surges 69 Times in a Year!

The United States’ aerospace and semiconductor supply chains are facing worsening rare earth shortages. Two North American aerospace coating companies have been forced to temporarily halt production, and inventories of key raw materials for some chip manufacturers are also running low.

According to Reuters, the current shortage is concentrated in two rare earth elements: yttrium and scandium. Since the first report of yttrium shortages in November last year, yttrium prices have increased by a total of 60%, currently about 69 times higher than a year ago. Several North American coating company executives have stated that they have begun rationing yttrium supplies and prioritizing large customers, with some small and overseas clients being denied service.

In the semiconductor sector, Dylan Patel, founder and CEO of research firm SemiAnalysis, told Reuters that scandium inventories at U.S. chip manufacturers are rapidly depleting, risking the production of next-generation 5G chips. He pointed out that the U.S. currently produces no scandium domestically, and existing inventories are likely only sufficient for a few months, not years.

A U.S. government official confirmed that some American manufacturers are currently facing a “rare earth” shortage. The White House stated that the Trump administration is committed to ensuring U.S. companies have access to critical minerals and, when necessary, developing alternative supply chains.

Yttrium prices surge, aerospace coating companies forced to limit production

Yttrium is a core raw material for manufacturing high-temperature thermal barrier coatings, which protect aircraft engines and turbines from melting at extreme temperatures. Engines without regular coating maintenance cannot operate properly.

According to Reuters, executives from two North American companies that purchase yttrium for coating production revealed that supply shortages have forced them to temporarily suspend production; one company has begun refusing small and overseas customers to prioritize inventory for large clients, including specific engine manufacturers. Another company in the supply chain recently exhausted its yttrium stock and has stopped selling products containing yttrium oxide.

Although the yttrium shortage has not yet directly impacted the overall production of jet engines, Kevin Michaels, executive director of U.S. aerospace supply chain consultancy AeroDynamic Advisory, warned that the industry should remain highly alert. “This is a signal worth close attention,” he said. He also noted that engine manufacturers are currently coping with increased spare parts demand driven by capacity upgrades from Boeing and Airbus.

Semiconductor supply crisis, 5G chips at risk of disruption

Scandium is another critical rare earth element with supply constraints, widely used in fuel cells, specialized aluminum alloys, and advanced chip packaging processes. Global scandium production is only a few dozen tons per year, with capacity highly concentrated.

Dylan Patel stated that major U.S. semiconductor manufacturers rely on scandium to produce “almost every component in 5G smartphones and base stations.”

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