China’s Grip on Erbium and Yttrium Could Choke Data-Center Growth

There are 17 rare earth elements. While almost all of them have vital industrial uses, you could be forgiven for believing, based on news coverage, that there are only four that matter: neodymium, praseodymium, dysprosium, and terbium. To be sure, those are the essential ingredients in the powerful permanent-magnet motors that go into electric vehicles, heating and cooling systems, appliances, tools, fighter jets, bombs, and many other systems.

But the industrial and national-security importance of rare earth elements goes far beyond magnets. Among the 13 other rare earths are two—erbium and yttirum—whose importance is no less vital, and which are now facing a looming geopolitical deadline this November. Depending on how negotiations play out, the post-deadline framework could erode U.S.

National security—or redraw U.S.–China trade relations. Erbium is used in the amplifiers that boost optical signals in the fiber-optic cables that crisscross the planet. Yttrium is a key component of the thermal barrier coatings that protect turbine blades and other structures from blistering heat in jet engines and in the combustion turbines so in demand to power new data centers.

Yttrium is more broadly used than erbium; besides thermal barrier coatings, it is also used in white LED lights and displays, microwave filters, and solid-state lasers, among other applications. Also, “small quantities of yttrium feed into trillions of multilayer ceramic capacitors that keep our electronics world going, including AI data centers,” notes Thomas Kruemmer, a rare-earths consultant based in Singapore.

Erbium and yttrium, Kruemmer writes in an email, are good examples of how “tiny quantities of rare earths can have an outsized impact by enabling core functionality in their respective applications.” Taken together, all of these rare earths “literally affect almost anything we can switch on and off.” Chinese dominance of the markets for these two rare earths is essentially 100 percent. Take erbium: “There is no one that I’m aware of, outside of China, that makes erbium oxide on a commercial scale,” says Eric Bender, vice president of strategy and corporate development at Tronox, a mining, processing, and chemicals company headquartered in Stamford, Conn.

Erbium oxide is the molecular form that is typically produced by separation facilities and bought by industrial users of the element. For yttrium, too, industrialized economies are entirely dependent on China.

China mines 90 percent of the world’s yttrium, but it processes essentially all of the world’s mined ore into an industrially usable form, such as yttrium oxide. Yttrium coatings help turbine blades in generators and jet engines survive the heat.

Sergii Zhmurchak/iStock China’s Monopoly and the Yttrium-Erbium Supply Squeeze Twelve rare earth elements, including erbium and yttrium, are subject to global export restrictions instituted by China in April and October 2025. The restrictions for some of them, including erbium but not yttrium, were suspended for one year in November 2025.

Exports of yttrium, and a few other rare earths, have become erratic and sharply reduced. In March 2026, China approved a single, 60-tonne shipment of yttrium oxide to the United States, followed by a 10-tonne shipment in April.

But overall, shipments of yttrium to the U.S. Are down around 75 percent this year in comparison with 2025.

In November, China should either extend or remove the suspensions for some or all of the 12 rare earths currently under export controls. And yet there is little movement apparent on the part of U.S.

And European governments to cope with the possible cutoff of yttrium and erbium supplies. “Very few folks outside of China are talking yet about ‘How do we produce erbium, how do we produce yttrium?’” says Gareth Hatch, managing director of Strategic Minerals Advisory.

“We’re lagging behind the geopolitics, the realities, of the day.” The most important thermal barrier coating is yttria-stabilized zirconia. GE Vernova is one of the world’s largest manufacturers of turbines and a major user of the compound.

At an investor day meeting last December, GE Vernova’s CEO, Scott Strazik, said the company had enough yttrium to last into 2026, but did not specify how far into 2026. An emailed request for elaboration, sent to GE Vernova’s media organization, did not elicit a response by press time.