“AI-first infrastructure rollouts — particularly those involving GPUs, edge accelerators, and high-efficiency cooling — are directly in the crosshairs,” Gogia noted. “So are quantum computing R&D efforts and high-reliability storage systems where thermal and magnetic materials matter.”
China, responsible for 70% of global rare earth mining output and 87% of refined supply, poses a serious threat to enterprise IT hardware supply chains with these restrictions — especially for companies with AI-optimized server lines.
AI chip production under threat
The impact on semiconductor manufacturing comes at a critical time when enterprise demand for AI chips is soaring. Companies including Nvidia, AMD, Intel, and TSMC rely on rare earth elements during the manufacturing of advanced chips.
“We see the greatest exposure in private data center expansion projects, AI inferencing at the edge, and next-gen device manufacturing, including specialized industrial IoT and robotics,” noted Gogia.
Major cloud providers have been aggressively expanding their AI compute capacity, with substantial hardware refreshes planned for late 2025. These plans may now face delays or cost increases as chip manufacturers grapple with supply constraints.
Pricing pressures to be felt in 3-6 months
The immediate impact is expected to be limited as manufacturers work through existing inventory, but pricing pressure could emerge within 3-6 months, experts feel.
