1,500% price increase on some rare earth elements squeezes chipmaking business — Yttrium surge caused by trade war between U.S. and China

The price of the rare earth element Yttrium has jumped through the roof, with a kilogram of the material currently sitting at $126 per kilogram. According to Bloomberg, this resource cost less than $8 at the end of 2024, meaning its price has increased by nearly 1, 500% in the past 12 months. This is an all-time high for Yttrium, with the trade war between the U.S. and China fueling the price hikes. This material is crucial for semiconductor manufacturing, where it’s used in various processes, including thin-film deposition and wafer polishing.

While there has already been some brewing rivalry between Washington, D.C., and Beijing, it came to a head in April when U.S. President Donald Trump imposed tariffs on all of the U.S.’s trading partners. This has led to an escalation between the East and the West, culminating in a 145% tariff on Chinese goods entering the United States and a reciprocal 125% import levy for American products landing on China’s shores.

The two parties eventually started trade negotiations, which resulted in the lifting of these threats. It seemed that progress was being made at the negotiating table, but China suddenly put strict export controls on rare-earth materials in early October. This move could gravely impact the global semiconductor supply chain, and Trump responded by threatening a 100% tariff on all Chinese goods and a far more devastating critical software ban. The two parties eventually realized that such a move would not do anyone good, so they agreed to a one-year tariff truce, resulting in China suspending its more recent rare-earth export control measures. However, the April ban on some rare earth exports to the U.S. remains, meaning supply remains tight.

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Because of this, Yttrium prices continue to creep higher, even as the U.S. and its allies seek alternative sources. At the moment, more than 90% of the rare earth metals that the U.S. needs are sourced from China, but it’s working on expanding its own domestic source from the Mountain Pass project in California. Trump is also considering allocating $2 billion in CHIPS Act funds to the critical minerals supply chain to help bolster its resiliency. Australia is also working on extracting more rare earths from its mining waste, while Canada is looking to open a new rare earths mine in its Critical Mineral Strategy Annual Report 2024.

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