How Dependent Is the Electronic Component Supply Chain on Chinese Minerals? (A Z2Data Analysis)

Article Highlights:

• To date, China has restricted the export of 16 minerals in their raw and alloyed states.
• Utilizing Z2Data’s Compliance Manager tool—which has millions of Full Material Declarations (FMDs)—Z2Data analyzed a large sample of FMDs within the electronic components industry.
• Because it may be difficult to find alternate components and/or non-China-sourced minerals for electronic components, the potential risks associated with parts that use minerals restricted by China is quite high. 

Background on Chinese Export Restrictions

Over the past two years, China has been ramping up its export controls program. This is particularly true in the area of so-called “dual-use items,” which have both military and civilian uses, and in critical minerals, where the country dominates production. China uses these export controls primarily to retaliate against the sanctions, export controls, and tariffs the US has applied to China over the past several years. As such, many of these restrictions have directly targeted the US. The export from China to the U.S. of certain refined minerals with military applications, for example, dropped to zero in 2024. 

To date, China has restricted the export of 16 minerals in their raw and alloyed states. This includes the minerals in all forms, including but not limited to powders, bars, and ingots. It does not appear that finished products containing these goods are export-restricted, so companies could potentially export power supplies containing gallium, for example, but could not export gallium in its raw form.

The challenge with these restrictions is China’s prominence in mining and processing rare earth materials. For most of the minerals that have been restricted up to this point, China is easily the world’s largest producer. This means that finding alternate suppliers is extremely difficult. Further, it could take months, even years, to configure alternate supply chains for these minerals and ramp up production. 

For most of the minerals that have been restricted up to this point, China is easily the world’s largest producer.

In the case of one recently restricted mineral, dysprosium, China controls nearly 99% of global processing. The majority of this processing occurs in a single state-run facility in Wuxi, China. Because dysprosium is critical for heat resistance in magnets, it is commonly used in magnetic items which are expected to operate at high temperatures. The potential business disruptions caused by this ban are particularly worrisome.

The key question for companies looking to understand their potential exposure to these restrictions is simple: “Are my parts affected?” One great way to understand risk exposure is to look at which product lines commonly utilize the materials being restricted by China. By understanding which restricted minerals are used most often, organizations can get a strong sense of the minerals they may have to ultimately secure alternative sourcing for. 

Z2 Analysis of Affected Parts

Utilizing Z2Data’s Compliance Manager tool—which has millions of FMDs—Z2Data extracted a large sample of unique parts within the electronic components industry. From this data, we were able to check which parts contained the China-restricted minerals or associated compounds within them. Our insights are provided below. Note that Z2Data can conduct a similar analysis for your company’s parts if needed. 

Top-Level Insight:

Across the large sample of FMDs of electronics industry-focused FMDs that Z2Data evaluated, what follows is a breakdown of the percentage of those parts containing each China-restricted mineral:

**Dysprosium, Gadolinium, Lutetium, Scandium & Yttrium had no or limited data.

Top Product Lines Incorporating Restricted Minerals

Utilizing the same dataset of electronic part FMDs, Z2Data prepared an analysis of the product lines that have the highest proportion of parts that use China-restricted minerals in their formulations. 

**Limited Data available

*Limited Data Available in Product Line

 For eight other minerals that have been restricted by China, we found a negligible presence of the materials in our electronic component analysis. These materials are: 

• Samarium 
• Scandium 
• Tellurium 
• Terbium 
• Lutetium 
• Gadolinium 
• Yttrium 
• Dysprosium

Even though these eight minerals did not appear in our data analysis, that does not mean to suggest that they are not represented at all in the electronic component supply chain. While these minerals appeared in zero or very limited capacities in our sample dataset, Z2Data can help you screen the full breadth of your supply chain and can take the hassle out of collecting privately-held FMDs if needed. 

Product Lines With Multiple Dependencies

In this section, we evaluated individual parts with dependencies on multiple China-restricted minerals. As in the previous sections, we began with a dataset of a large sample of FMDs focused on the electronic component industry. Below is a summary of the top five product lines with the most dependencies on multiple restricted minerals. 

Due to their high exposure to China-restricted minerals, these product lines may warrant additional attention and supply chain risk management strategies, including alternative sourcing. 

Leverage Z2Data’s Tools to Gain Insight Into Your Supply Chain

While only a relatively modest number of electronic parts have exposure to China-restricted minerals, it's important to contextualize the extremity of this risk. Because it may be difficult to find alternate components and/or non-China-sourced minerals for these components, the potential risks associated with these parts is quite high. As a result, suppliers who are able to effectively map their supply chains and understand their exposure to China-sourced minerals will be capable of maximum agility and flexibility. On the other hand, companies that fail to invest the time to understand their supply chains will be leaving themselves highly vulnerable to future manufacturing disruptions. 

While only a relatively modest number of electronic parts have exposure to China-restricted minerals, it's important to contextualize the extremity of this risk.

The first step in identifying the potential impacts of Chinese export restrictions on your supply chain is understanding what minerals are actually in the parts your company uses. Utilizing Z2Data’s Compliance Manager tool, along with our internal database, which contains a large sample of FMDs, you can quickly pinpoint parts with exposure to Chinese restrictions. This is a critical starting point that can help you begin searching for alternate parts for your products, mitigating future risks and supply chain disruptions. 

After identifying critical minerals exposure, Z2Data users can then evaluate direct and sub-tier suppliers to glean powerful information about exposure to Chinese companies and raw material producers in supply chains.

With all of this information—along with the ability to efficiently search for alternative suppliers—users can reconfigure their supply chains to minimize Chinese export control exposure.