TSMC seeks factory motors without rare earths, Reuters reports

TSMC, the world’s largest contract chip manufacturer, has approached equipment suppliers about factory automation machinery with motors that do not require rare-earth materials. Tom’s Hardware relayed the October 22 Reuters report, which cited people familiar with the matter. The Taiwanese company’s effort aims to reduce production risks from China’s export controls.

The approaches follow China’s April 2025 decision to place seven medium and heavy rare-earth elements, and magnets made from them, under export controls. Exporters must obtain case-by-case approval and export licences, Tom’s Hardware reports.

Why the magnets matter

TSMC’s highly automated chip factories use machinery driven by electric motors with powerful permanent magnets. Those magnets contain rare-earth elements such as neodymium, dysprosium and terbium. Citing the International Energy Agency, Tom’s Hardware reports that China controls approximately 95% of the finished permanent magnets used in TSMC’s machines.

The risk extends beyond the materials used to make chips. Tom’s Hardware explains that shortages of specialized motor components could complicate equipment maintenance, repairs or expansion, even if the other machinery and raw materials needed for chip production are available.

Alternative motors involve trade-offs

Motors can operate without rare-earth magnets. Conventional induction motors, for example, use electromagnetic induction to generate turning force rather than relying on permanent magnets. Some permanent-magnet motors can instead use ferrite magnets, which do not require rare-earth materials.

Tom’s Hardware notes that alternative motor technologies involve different trade-offs in efficiency, size, power relative to size, precision and control requirements. Avoiding rare earths therefore does not make one design universally better for factory machinery.