The rare earth shortage impacting the U.S. aerospace and semiconductor supply chains is worsening. Two North American aerospace coating companies have been forced to temporarily halt production, while several chip manufacturers are facing critically low inventories of key raw materials.

The shortage is primarily concentrated on the rare earth elements yttrium and scandium. Since media first reported the yttrium shortage in November of last year, its price has increased by 60% and is now approximately 69 times higher than it was one year ago. Executives from multiple North American coating firms stated that their companies have begun rationing yttrium supplies, prioritizing major clients, with some small and medium-sized enterprises, along with overseas customers, already being denied service.

In the semiconductor sector, Dylan Patel, founder and CEO of the research firm SemiAnalysis, indicated that U.S. chipmakers' scandium stocks are depleting rapidly, posing a risk to the production of next-generation 5G chips. He noted that the U.S. currently has no domestic scandium production, and existing inventories may only last for months, not years.

A U.S. government official confirmed that some American manufacturers are now experiencing a rare earth "shortage." The White House stated that the administration is committed to ensuring U.S. businesses have access to critical minerals and to developing alternative supply chains when necessary.

**Soaring Yttrium Prices Force Aerospace Coating Production Cuts**

Yttrium is a core material for manufacturing high-temperature thermal barrier coatings, which are essential for protecting aircraft engines and turbines from melting under extreme heat. Engines cannot function properly without regular coating maintenance.

According to reports, executives from two North American companies that purchase yttrium for coating production revealed that the supply shortage has forced them to temporarily suspend operations. One company has begun refusing small, medium-sized, and international clients to preserve inventory for major customers, including specific engine manufacturers. Another firm in the supply chain has recently exhausted its yttrium stocks and halted sales of products containing yttrium oxide.

Although the yttrium shortage has not yet directly impacted the production of complete jet engines, Kevin Michaels, Managing Director of aerospace supply chain advisory AeroDynamic Advisory, emphasized the need for high vigilance. "This is a signal that warrants close attention," he said, adding that engine manufacturers are already managing pressure from increased spare part demand linked to production hikes at Boeing and Airbus.

**Semiconductor Supply Alarm: 5G Chip Production at Risk**

Scandium is another critical rare earth facing supply constraints. It 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 being highly concentrated.

Dylan Patel stated that major U.S. semiconductor manufacturers rely on scandium to produce chip components that are used in "nearly every 5G smartphone and base station."