Rare-Earth and Strategic Materials Supply Chain Risk

China's rare-earth export controls are hitting Japan hard—dysprosium imports down 82% in 1H26, yttrium down 74%. This directly threatens EV motor magnets and chipmaking equipment coatings. Prices surging, inventories draining. Japan scrambling to diversify, but alternatives insufficient. Also spilling into AI infrastructure via erbium. Additionally, supply chain bottlenecks for UxV and robots are intensifying—harmonic reducers, NdFeB magnets, and sensors face pricing spikes and long lead times, with Japan, Korea, Taiwan, and Mexico emerging as alternative sources. This is a critical systemic risk for EV production, semiconductor equipment, and automation hardware.