New Rare Earth Export Controls Can Disrupt Medical Device Supply Chains

China’s decision to expand export controls on 12 rare earth metals, which are critical for the manufacturing of magnetic resonance imaging (MRI) scanners, X-ray systems, and laser surgery devices, poses new risks for global medical device supply chains. With China dominating rare earth refinement, the tightened restrictions could disrupt production, delay innovation, and slow market growth for high-tech medical equipment worldwide, says GlobalData, a leading data and analytics company.

Reportedly, China is responsible for over half of rare earth metal extraction and nearly all rare earth metal refinement. The country has announced additional export controls in response to US restrictions on chipmaking equipment in China over fears that advanced chips could be used in military applications.

The new export controls tighten existing restrictions on seven rare earth metals including gadolinium, dysprosium, and yttrium. In addition, the new restrictions add five new metals to this list, including holmium, thulium, and europium.

David Beauchamp, medical analyst at GlobalData, said, “Medical device manufacturing is highly vulnerable to any change in the rare earth metal supply chain. Due to China’s effective monopoly on rare earth refinement, sources outside of China will not be able to address the increased demand if China decides to further restrict exports of these elements.”

The most vulnerable sectors include MRI machines and X-ray diagnostics; however, any medical device that utilizes computer chips could also face manufacturing pitfalls. New operations to extract and refine these metals could take several years to begin production and would have to overcome the decades-long lead China has in the industry.

According to the GlobalData market analyzer, over $9 billion worth of medical devices reliant on these rare earth metals were sold worldwide in 2024. By 2036, this market is estimated to reach over $15 billion. Due to these markets being so reliant on Chinese metals, it is possible that the export controls will cause the market to grow at a slower rate or contract, depending on the severity of the controls and if any additional restrictions are put into place.

Beauchamp concludes, “There is a great deal of uncertainty for medical device manufacturers as the trade war between China and the U.S. continues. As China is currently the leading producer of rare earth metals, medical device manufacturers will continue to rely on China for the components needed for cutting-edge medical technology. As the uncertainty surrounding the relationship between the U.S. and China continues, it remains to be seen what will be required of medical device companies to adapt.”