China's Rare Earth Export Restrictions Threaten Global Datacenter Supply Chains
China is set to review its rare-earth licensing rules in November, and shipments of yttrium and erbium—key for datacenter hardware—have already fallen about 75% this year.
IEEE officials caution that China’s upcoming review of rare-earth export licensing, due in November, may severely impact datacenter components that rely on yttrium and erbium. Export volumes of yttrium are down roughly 75% compared with the previous year, and both elements are now effectively sourced only from China, which dominates mining and processing. Beijing first placed yttrium under mandatory licensing in 2025 and later required licenses for all goods containing Chinese rare earths, a policy that was temporarily suspended after US-China trade talks.
The United States is responding with a $750 million defense investment in Brazilian magnet supplies and a $500 million DOE program to boost mineral processing and recycling, alongside a strategic reserve funded by the Export-Import Bank. These measures will take time, and the pending Chinese decision will test their effectiveness. Relations between Washington and Beijing remain tense, with an upcoming summit between President Trump and President Xi Jinping adding diplomatic urgency.
Why it matters
Datacenter reliability depends on rare earths that China currently controls, so policy changes could disrupt global cloud services.
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