The AI supply chain begins underground — with 17 metallic elements whose unique magnetic, optical, and electronic properties make them indispensable for semiconductors, lasers, and high-performance magnets.

China mines roughly 70% of global rare earth supply and controls approximately 90% of the world's refining capacity. For heavy rare earths like dysprosium and terbium, China's share is near-total. This dominant position was built through four decades of sustained state investment beginning in the 1980s — a long-term strategic bet that proved prescient as global demand surged.

In October 2025, Beijing extended export controls beyond raw ores to processing equipment, magnet manufacturing, and recycling technologies. Western governments have responded with significant investment: a $10 billion U.S. strategic mineral reserve (Project Vault), a 15% government stake in MP Materials, and emergency stockpiling. However, analysts estimate three to seven years before non-Chinese capacity can meaningfully alter the current balance.