Industry sources indicate that suppliers to US aerospace and semiconductor companies are confronting increasingly severe shortages of rare earth elements, with at least two suppliers having already declined orders from some clients.
The shortages are primarily concentrated on rare earth elements such as yttrium and scandium. These two are niche categories among the 17 rare earth elements. Although used in small quantities, they play a critical role in defense technology, aerospace, and semiconductor sectors, with global supply almost entirely dependent on China.
Yttrium is one of the core pain points. It is used to produce heat-resistant coatings that prevent engines and turbines from melting under high temperatures. Without regular application of such coatings, engines cannot function properly.
Since initial reports of yttrium shortages emerged in November of last year, its price has surged by 60% and is now approximately 69 times higher than a year ago. According to corporate executives and traders, some coating manufacturers have begun rationing the raw material.
Two North American companies that purchase yttrium for coating production have reported that they have had to temporarily halt production due to supply constraints. One of them is currently refusing orders from smaller and overseas clients to ensure supply for major customers, including certain engine manufacturers.
A knowledgeable source revealed that another company in the coating supply chain recently exhausted its raw material stocks and has stopped selling products containing yttrium oxide.
Although the shortages of yttrium and scandium have not yet impacted the production of jet engines or chips, a US government official confirmed that some American manufacturers are currently facing rare earth shortages.
Production Pressure
Aerospace supply chain expert Kevin Michaels stated that while the yttrium shortage has not yet affected engine production, manufacturers remain concerned. Michaels, Managing Director of US consulting firm AeroDynamic Advisory, said, "This is an issue that warrants close attention."
Engine manufacturers are already striving to meet spare part demand from airlines, as well as increased production requirements from Boeing and Airbus.
US aerospace engine manufacturers General Aerospace, Pratt & Whitney (a subsidiary of Raytheon Technologies), and Honeywell all declined to comment.
Scarce Scandium
In addition to yttrium, US semiconductor manufacturers are facing critically low scandium inventories. Dylan Patel, Founder and CEO of research firm SemiAnalysis, warned that this jeopardizes the production of next-generation 5G chips.
Global annual production of scandium is only several tens of tons. Although used in minimal amounts, it plays a vital role in fuel cells, specialty aluminum alloys for aerospace, and the processing and packaging of advanced chips.
Patel noted that major US semiconductor manufacturers rely on scandium to produce chip components that are "used in nearly every 5G smartphone and base station."
The US Semiconductor Industry Association declined to comment.
Patel stated, "The US currently has zero domestic scandium production." He added that existing inventories might only last for months, not years.
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