Erbium and Yttrium Expose China's Hidden Leverage Over AI Data Centers

Highlights

• China processes essentially all commercial yttrium and has no known commercial-scale erbium-oxide competitor outside its borders.
• The U.S. was 100% import-reliant on yttrium in 2024, with 93% sourced from China, creating dangerous value-to-volume asymmetry in critical tech supply chains.
• Erbium-doped fiber amplifiers power terrestrial, subsea, and satellite optical networks, extending China's leverage deep into global communications infrastructure.
• Yttrium's April 2025 export controls remain active while erbium restrictions were suspended until November 10, splitting the risk timeline for Western planners.
• REEx estimates China controls up to 98% of heavy rare earth separation capacity, making processing—not geology—the true chokepoint.

The next rare-earth shortage may hit fiber networks and data-center power before another magnet factory. IEEE Spectrum warns that China's near-total processing dominance over erbium and yttrium creates overlooked vulnerabilities: erbium enables long-distance optical amplification, while yttrium is essential to turbine thermal-barrier coatings and advanced electronics. China processes essentially all commercially available yttrium, while a recent IEEE entry (opens in a new tab) (Glenn Zorpette) found no known commercial-scale erbium-oxide producer outside China.

REEx Insight: The Heavies Are Bigger Than Magnets

Rare Earth Exchanges® has repeatedly warned that focusing rare-earth security on NdPr magnets understates China's leverage. Our Where Are the Heavies? analysis found the West's problem is not deposits but qualified separated material: there remains no broad, defense-ready U.S. heavy-rare-earth supply base.

Our Rare Earth Separation Is the Real Chokepoint analysis goes deeper. REEx estimates China controls up to 98% of heavy-rare-earth separation capacity. Separating chemically similar heavies can require hundreds of mixer-settler stages, specialized reagents, and operating expertise accumulated over decades.

Yttrium demonstrates what REEx calls functional scarcity. Our dedicated yttrium analysis found the U.S. was 100% import-reliant in 2024, with 93% sourced from China. Small quantities support turbine coatings, semiconductor equipment, lasers, and electronics worth orders of magnitude more than the underlying material.

This creates a dangerous value-to-volume asymmetry: Beijing does not need to interrupt millions of tonnes of commodities to disrupt trillion-dollar technology ecosystems. Control a tiny but irreplaceable input and leverage propagates downstream.

REEx has also traced the yttrium chain through southern Chinese and Myanmar-linked feedstocks into a refining and export-licensing system centered around Ganzhou. China increasingly controls both the chemistry and the paperwork. While China state-backed entities keep a clear distance, at least one industry insider we know of has shared that they have found the links. But we do not have the evidence.

Erbium extends the vulnerability into communications. Erbium-doped fiber amplifiers regenerate signals across terrestrial and subsea fiber networks—and increasingly support optical satellite communications.

November Is Not the Whole Clock

One nuance matters. Yttrium's April 2025 export controls remain operative; they were not part of the November suspension. Erbium is among the later-controlled materials whose restrictions were suspended until November 10.

The historical irony is difficult to miss: the supplied IEEE archive shows the publication warning of China's rare-earth bottleneck back in 2009.

Seventeen years later, the West built extraordinary AI infrastructure—but still depends on China for obscure elements helping that infrastructure communicate and stay powered. The scarcity isn't geological. It is industrial—and China sits at the gate.