China has tightened its export controls on rare earth metals used in chipmaking, requiring exporters to provide detailed reports on how the restricted materials are used throughout the supply chain. Effective from October 1, 2024, this policy aims to enhance control over access to these vital resources, impacting foreign tech companies, particularly in the semiconductor and defense sectors, that rely heavily on these materials.

The restrictions now include antimony, essential for semiconductors and military equipment, and broader controls over minerals like gallium and germanium. China has also designated rare earth mining and refining information as state secrets, sentencing two managers to prison for leaking industry data.

In an effort to further consolidate its control over rare earth materials, China has acquired foreign-owned refineries, such as Neo Performance Materials' sale of an 86% stake to state-linked Shenghe Resources. This move strengthens China's dominance in the global market for materials like dysprosium, used in advanced capacitors, with China producing 99.9% of the world's supply.

Despite international attempts to diversify the supply chain, challenges such as cost, regulatory hurdles, and long setup times remain significant. China's technological edge in refining processes and the role of Chinese universities in training specialists contribute to its global leadership in rare earth production. Western companies, like Solvay and MP Materials, are working to establish alternative sources but face stiff competition from China's advanced production systems.