China tightens rare-earth export controls amid Nexperia disruption

China’s new rare-earth rules and a 30–37% price spike are forcing manufacturers to rethink sourcing now.

China’s latest expansion of rare-earth export controls signals a continued tightening of geopolitics on the global semiconductor supply chain. The move coincides with mounting tensions between Beijing and the West, as reports emerge that Nexperia’s China unit has instructed local employees to disregard instructions from its Dutch headquarters. Simultaneously, the U.S. administration announced its intention to implement an extra 100% tariff on China in response to the rare-earth rules.

As export reviews lengthen and concentrate prices surge, procurement leaders must pivot toward diversified sourcing, transparent supply visibility, and partnerships that can absorb volatility across an increasingly fragmented market. However, as allies weigh in, the landscape is becoming more prone to unavailability risk that will take significant proactive planning to manage.

China expands rare-earth export controls

On October 9, China expanded its rare earth export controls in a move that promises to reshape electronics sourcing strategies worldwide. The updated rules introduce stricter licensing requirements and broaden the scope of case-by-case export reviews to include not only rare earth inputs, but also products derived from them.  

Analysts note that this is the first time China has specifically targeted materials destined for use in semiconductors or artificial intelligence applications in its export rules.  

Notably, the restrictions also carry extraterritorial weight. Any item produced outside of China using ≥0.1% Chinese-origin rare earths will now require an export license.  

Shortly after the announcement, Baogang Group and Northern Rare Earth, China’s two biggest players in the industry, announced price hikes for Q4. Both firms will raise concentrate prices by a steep 37%. Other suppliers have warned of similar or even larger increases, signaling a coordinated tightening of the market.

Since bottoming in late 2024, rare earth concentrate prices have climbed steady. Industry figures show a greater than 50% cumulative increase in the months since. That’s bad news for electronics manufacturers reliant on rare earths to produce semiconductor wafers, specialty alloys, and permanent magnet motors.  

Chipmakers are now on alert for the downstream fallout of China’s rare earth crackdown. Higher material costs will certainly impact short-term profit margins for electronic component manufacturers. Meanwhile, constrained availability and longer lead times for tools and components will cloud the long-term production forecast.  

With no clear timeline for regulatory relaxation and tensions between China and the West escalating, supply chain risk is a growing priority. To mitigate exposure, procurement leaders should consider leaning on distribution partners with global reach and multi-region sourcing agility.  

Sourceability’s franchise lines and global supplier network are well-positioned to support customers in identifying non-China sources or alternate components with lower risk profiles. Proactive supply audits through our Datalynq market intelligence tool can also help pinpoint rare-earth vulnerabilities in your BOM so you can act before bottlenecks affect your production schedules.

Nexperia’s China unit tells workers to ignore commands

In another sign of unraveling operational cohesion between China and the West, Nexperia’s China unit has told local employees they may disregard directives from the company’s Dutch headquarters. The internal memo, reported by Financial Times, instructed staff to “operate and make decisions independently as a Chinese enterprise,” even if contrary instructions arriving via official channels like Microsoft Outlook or Teams.

The escalation comes amid intensifying scrutiny of Chinese ownership in critical tech infrastructure. Nexperia, owned by China’s Wingtech, has long operated as a Dutch-headquartered chipmaker despite more than 80% of its final products being processed in China. The China unit’s latest directive now threatens to fragment the company’s global governance structure at a time when stability is hard to come by in the industry.  

Nexperia Netherlands condemned the memo, calling it “false” and “misleading,” while reaffirming its commitment to a unified global structure. Still, financial data and corporate filings show that Wingtech indeed retains majority control of Nexperia. For now, there’s little indication Beijing will or has an incentive to de-escalate.  

Outside Nexperia’s walls, the supply chain fallout is already manifesting. Automotive manufacturers, many of which rely on Nexperia’s components for systems operating everything from airbags to windows and door locks, are dusting off their COVID-era contingency plans. European automakers, in particular, face a renewed threat of delays if internal misalignment leads to compliance issues or operational slowdowns at Chinese sites.

The risk isn’t limited to Nexperia. This episode highlights growing supplier-side uncertainty across China-based fabs and packaging facilities. Even with secured single-supplier contracts, lead times for critical automotive ICs, tool parts, and specialized alloys could stretch if management autonomy becomes a political question.  

Procurement leaders should respond accordingly. Sourceability’s 60+ franchise and direct partnerships can provide access to alternative suppliers that are less exposed to volatility. When supply continuity is mission-critical, we can also help bridge the gap with temporary inventory to safeguard production while finalizing longer-term sourcing shifts.