U.S. rare earth supply worsens again! Some aerospace and chip companies were forced to limit production, and the price of yttrium soared 69 times in a year!

# Zhang Yaqi

Source: Wall Street Insights

The U.S. aerospace and semiconductor sectors are facing a severe rare earth shortage crisis. The price of **yttrium** has skyrocketed **69-fold** in a year, forcing aerospace coating companies to curtail production and implement rationing. A critical shortage of **scandium** threatens chip supply chains. While the White House has pledged to develop alternatives, heavy reliance on imports for key raw materials puts industrial production and high-end manufacturing at risk of supply chain disruptions.

The rare earth shortage plaguing U.S. aerospace and semiconductor supply chains continues to worsen. Two North American aerospace coating firms have been forced to suspend production temporarily, and key raw material inventories at some chipmakers are running critically low.

According to Reuters, the shortage is concentrated in two rare earth elements: **yttrium** and **scandium**. Since media first reported the yttrium shortage last November, its price has risen by 60% cumulatively and is now roughly **69 times higher** than a year ago. Executives at multiple North American coating companies say they have begun rationing yttrium, prioritizing supply to major clients and turning away some small-to-medium and overseas customers.

In the semiconductor sector, Dylan Patel, founder and CEO of research firm **SemiAnalysis**, told Reuters that scandium inventories at U.S. chipmakers are rapidly depleting, putting next‑generation 5G chip production at risk. He noted that the U.S. currently produces **zero domestic scandium**, and existing stockpiles are likely to last only months, not years.

A U.S. government official confirmed that some American manufacturers are already facing rare earth “shortages.” The White House stated that the Trump administration is committed to ensuring U.S. companies access to critical minerals and developing alternative supply chains when necessary.

## Yttrium Price Surge Forces Aerospace Coating Firms to Cut Output

Yttrium is a core raw material for manufacturing high‑temperature thermal barrier coatings, which protect aircraft engines and turbines from melting under extreme heat. Engines without regular coating maintenance cannot operate normally.

Executives at two North American companies that purchase yttrium for coating production told Reuters that supply shortages have forced them to suspend operations temporarily. One firm has begun turning away small‑to‑medium and overseas clients to preserve inventory for large customers, including specific engine manufacturers. Another company in the supply chain has recently exhausted its yttrium stock and halted sales of yttrium oxide‑containing products.

While the yttrium shortage has not yet directly impacted complete jet engine production, Kevin Michaels, managing director of aerospace supply chain consultancy **AeroDynamic Advisory**, warned the industry must remain vigilant. “This is a signal that warrants close monitoring,” he said. He added that engine manufacturers are already grappling with spare parts demand pressure from increased production at Boeing and Airbus.

## Semiconductor Supply Strained, 5G Chips at Risk of Disruption

Scandium, another critical rare earth facing supply constraints, is widely used in fuel cells, specialty aluminum alloys, and advanced chip packaging processes. Global annual scandium production is only a few dozen tons, with capacity highly concentrated.

Dylan Patel stated that major U.S. semiconductor manufacturers rely on scandium to produce chip components that go into “nearly every 5G smartphone and base station”.

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