A recent report from the Semiconductor Industry Association (SIA) provides a detailed look at the U.S. semiconductor supply chain, revealing a nuanced picture of reliance on China. According to the data, China accounts for approximately 5% of the equipment and materials directly supplied to the American chip industry when measured by the country of manufacture. This figure suggests a relatively low direct dependency for finished manufacturing tools.

However, the report highlights a significant disparity when examining raw materials. China maintains a dominant position in the supply of specific rare earth elements essential for chipmaking, controlling over 90% of the market for these critical components. This concentration of control presents a strategic vulnerability for U.S. manufacturers who rely on these materials to produce advanced technology.

Furthermore, the SIA report notes that 95% of the nearly $27 billion spent annually by American chipmakers on manufacturing equipment and materials is sourced from companies headquartered in the U.S., Europe, and Japan. While this indicates a strong Western-aligned supply chain for finished equipment, the underlying reliance on Chinese-sourced rare earths suggests that the industry remains tethered to China at the foundational level of production. The report serves as a mapping tool for policymakers to understand where potential bottlenecks exist as the U.S. attempts to bolster its domestic semiconductor manufacturing capabilities.