U.S. Aviation Supply Chains Exposed: New Study Warns Rare Earth Dependence Threatens National Security

Highlights

• A 2026 study introduces the Aviation Supply Chain Sovereignty Index (ASCSI), revealing the U.S. aviation sector scores just 41/100 due to deep dependency on foreign-controlled supply chains, particularly China's 85-90% control of rare earth processing critical for aircraft production.
• China's 2025 export controls caused rare earth prices to surge up to 6x higher, creating immediate bottlenecks in production—with F-35 fighter jets alone requiring over 900 pounds of these materials for turbine coatings, avionics magnets, and navigation systems.
• The study proposes a Resilient Aviation Industrial Base Framework that could reduce single-source dependency by 47%, cut lead times in half, and generate $38 billion in efficiency gains by 2032 through reshoring, digital transformation, and allied partnerships.

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A new 2026 research paper (opens in a new tab) led by Immanial Yamarthi (opens in a new tab) of the Swiss School of Business and Management (SSBM Geneva), drawing on data from the Government Accountability Office (GAO), Aerospace Industries Association (AIA), and International Air Transport Association (IATA), delivers a stark warning: the U.S. aviation sector—responsible for over $1 trillion annually—is structurally vulnerable due to deep reliance on foreign-controlled supply chains, particularly rare earth materials processed in China. The study introduces a new measurement tool—the Aviation Supply Chain Sovereignty Index (ASCSI)—and finds the U.S. scores just 41 out of 100, signaling a system that works under normal conditions but risks breakdown under geopolitical stress.

Study Methods: Measuring Fragility in a Complex System

Yamarthi applies a multi-layered analytical framework combining government data, industry reports, and simulation modeling. The core innovation is the ASCSI, which evaluates five dimensions:

• geographic concentration
• supplier depth
• material criticality
• workforce sufficiency, and
• digital readiness

According to the table on page 5, the U.S. performs weakest in material criticality (33/100) and geographic concentration (38/100)—highlighting dependency on foreign sources for essential inputs.

The study also models future scenarios through 2032, testing how policy interventions could reshape outcomes.

Key Findings: Rare Earths Are the Hidden Achilles’ Heel

The most consequential finding: U.S. aviation is deeply dependent on rare earth elements—materials most readers rarely think about but which are embedded across modern aircraft systems.

• Fighter jets like the F-35 require over 900 pounds of rare earth materials
• Critical components include turbine coatings, avionics magnets, and navigation systems
• China controls roughly 85–90% of global rare earth processing

Following China’s 2025 export controls, prices for key elements such as dysprosium and terbium surged by up to six times outside China, creating immediate bottlenecks in avionics and engine production (page 6).

The study also identifies additional vulnerabilities:

• Heavy reliance on sole-source suppliers
• Semiconductor dependency on Asia
• Severe workforce shortages in skilled manufacturing

Implications: Great Powers Era 2.0 Has Arrived

For Rare Earth Exchanges™ readers, the implications are clear: this is not just an industrial issue—it is a geopolitical one. We are now firmly in Great Powers Era 2.0, where supply chains are instruments of national power. China’s dominance in rare earth processing is not accidental—it is the result of decades of industrial policy. And as this study confirms, that dominance now translates directly into leverage over Western aerospace and defense systems.

For companies, this means margins and production timelines are no longer controlled internally—they are shaped upstream by access to materials. For nation-states, it means sovereignty is no longer defined by borders, but by control of inputs and processing capacity.

What the Study Proposes

The paper outlines the Resilient Aviation Industrial Base (RAIB) Framework, built on three pillars:

1. Reshoring critical production, including rare earth processing
2. Digital transformation, using AI and digital twins across supply chains
3. Allied partnerships, including cooperation with countries like Australia and Canada

Simulation results suggest this approach could:

• Reduce single-source dependency by 47%
• Cut lead times in half
• Generate $38 billion in efficiency gains by 2032 (page 10)

Limitations and Open Questions

While compelling, the study relies partly on modeled projections rather than real-world implementation. Achieving reshoring at scale—especially in rare earth processing—faces major hurdles: permitting, environmental constraints, capital intensity, and workforce gaps. It also assumes allied cooperation will materialize smoothly—an optimistic view given rising global competition for the same resources.

REEx Reflection

This study does not introduce a new problem—it quantifies one that has long been ignored. The U.S. aviation sector remains world-leading, but structurally fragile. The message is simple: you cannot build advanced aircraft without controlling the materials that enable them.

In the Great Powers Era 2.0, supply chains are no longer just economic systems. They are strategic terrain. And right now, the United States is operating on ground it does not fully control.

Citation: Yamarthi, I. (2026). Strengthening Aviation Supply Chains: Reducing Critical Component Dependency in the United States. ResearchGate Preprint.