90% rare earth refining in China's hands, US humanoid robots face hardware bottleneck in mass production

Author: Serenity

Translation: Deep Tide TechFlow

Deep Tide Overview: All discussions about the robot revolution focus on AI and software, but this tweet points out a more fundamental structural risk: China controls 70% of rare earth mining, 85-90% of refining and separation capacity, and over 90% of rare earth magnet manufacturing. The joints and actuators of humanoid robots like Optimus rely entirely on Chinese or Japanese suppliers, with the U.S. only retaining the “brain.” Using a detailed materials list and Morgan Stanley’s demand forecasts, the author quantifies the impact of this vulnerability on the era of one billion humanoid robots and the strain on rare earth reserves.

Full Text:

The U.S. is losing the race against China in humanoid robots and robotics.

Software and AI are only half the battle.

China holds a “shutdown button” over the U.S. robotics hardware supply chain because the U.S. cannot produce the materials needed for humanoid robots at scale at reasonable costs.

Once China presses this “shutdown button,” the entire U.S. robot development will slow down—because China dominates the “body” (actuators, gearboxes, metallurgy) and raw materials needed to build humanoid robots.

Therefore, U.S. robotics companies have signed contracts with Chinese manufacturers to source all humanoid robot parts, enabling assembly of products like Optimus at sufficiently low costs. However, they aim to keep the “brain” in the U.S.

Looking at all top robotics drive/motion component suppliers, none are American:

Leaderdrive (China): Harmonic drives

Harmonic Drive (Japan): Harmonic drives

Nabtesco (Japan): RV gearboxes

Sanhua Intelligent (China): Linear actuator assemblies

Shuanghuan Transmission (China): RV gearboxes/gears

Inovance Technology (China): Servo systems/ball screws

The core reason behind this is:

China currently controls nearly 70% of global rare earth mining, and more critically, holds 85-90% of global refining and separation capacity, as well as over 90% of rare earth magnet manufacturing.

The biggest threat is: China’s export controls pose a structural ceiling for U.S. robotics projects.

Beijing has already demonstrated willingness to weaponize this monopoly; Japan has experienced similar situations.

To break dependency on the robotics and Optimus supply chain and ensure the robotics revolution can continue domestically, Western capital needs to flow into companies rebuilding the rare earth ecosystem, covering:

• Upstream mining

• Midstream separation/metallization

• Downstream magnet manufacturing

By 2050, if the global humanoid robot count reaches 1 billion—based on Morgan Stanley’s baseline scenario—it will require about 400,000 tons of neodymium, 80,000 tons of dysprosium, and 16,000 tons of terbium. This amounts to consuming 15% of the known global neodymium reserves, 25% of dysprosium, and 30% of terbium, creating a significant demand shock.

In short: China controls the U.S. robotics hardware supply chain.

Now is the critical moment for the U.S. to invest in securing its supply chains to win the robotics race.

The key is rare earths, which are essential for competitively priced humanoid hardware production.

The U.S. government should focus on these areas:

1. Magnet metals (used in frameless torque motors)

Neodymium (Nd) and Praseodymium (Pr): core components of NdFeB magnets

Dysprosium (Dy) and Terbium (Tb): rare earth elements alloyed into magnets

Samarium (Sm) and Cobalt (Co): used in SmCo magnets

Boron (B) and Iron (Fe): critical stabilizing minerals, about 1% of NdFeB magnet weight

2. Structural metallurgy (for harmonic gearboxes and planetary roller screws)

Titanium (Ti), Vanadium (V), and Molybdenum (Mo): gear and screw threads in harmonic drives and planetary screws

Niobium (Nb), Chromium (Cr), Nickel (Ni), and Manganese (Mn): microalloying elements added to structural steels to improve toughness, prevent corrosion, and significantly reduce robot joint weight

Cerium (Ce) and Lanthanum (La): prevent premature failure of robot gears

3. Computing power, perception, and power sources (brain, eyes, batteries)

Gallium (Ga) and Germanium (Ge): indispensable for advanced semiconductors, LiDAR systems, and high-frequency communication chips

Lithium (Li), Graphite ©, and Copper: approximately 2 kg of lithium, 3 kg of graphite, and up to 6.5 kg of copper are needed per full-sized humanoid robot

Key Company List:

To ensure the above capabilities, the most important U.S. companies include:

1. Magnet metals (Nd, Pr, Dy, Tb, Sm, Gd):

$UUUU, $MP, $ALOY, $USAR, $LYSDY (Lynas Rare Earths), $NEO (Toronto Stock Exchange), $ILU, $ARU (Australian Securities Exchange)

2. Structural metallurgy (Nb, V, Ti, Be):

$ATI, $CRS, $FCX, $NB, $MTRN, $LGO

3. Computing power, perception, and power sources (Ga, Ge, graphite, battery metals):

$BMM, $VNP, $TECK, $ALB, $EAF, $ALTM, $SYR, $FCX, $AW1 (Australian Securities Exchange)

For example, humanoid robot joints require a permanent magnet motor that depends on the neodymium supply chain:

1. Neo Performance Materials (Toronto Stock Exchange: NEO)

2. $MP

3. $UUUU — processing monazite ore into NdPr oxide

The U.S. government should systematically review each segment of the robot supply chain’s bill of materials (BOM) and heavily invest to ensure raw material processing capacity.

Currently, the manufacturing of humanoid robot drive systems and the global infrastructure for producing these components are highly concentrated in China.

The U.S. is highly vulnerable in the physical robot supply chain; securing domestic metal and midstream processing capacity is crucial to compete with China.

Today, the U.S. must ramp up investments in critical material supply chains to maintain long-term dominance in the robotics industry.