Since October 2025, China applies a "50% Rule" for export controls on rare earth elements: if more than 50% of a product's rare earth content originates from China, the export is subject to Chinese licensing requirements — even if the transaction occurs entirely outside China.
For semiconductor equipment manufacturers, precision instrument makers, and industrial technology companies, this creates an entirely new compliance obligation in supply chains previously considered "China-free."
Companies sourcing from Tier 2 or Tier 3 suppliers in Asia need to audit rare earth content at each stage.
The strategic response: Diversify rare earth sourcing where possible, build compliance documentation systems now, and map exposure before regulators ask. This is a material risk for European manufacturers with China-origin components in their global supply chains.