Published by Global Banking & Finance Review®
Posted on October 29, 2025
2 min readLast updated: January 21, 2026
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German industry faces worsening chip shortages due to rare earth trade restrictions, with 10.4% of companies reporting bottlenecks.
BERLIN (Reuters) -Shortages of materials for German manufacturers of electronic and optical products became more acute in October, driven by a tightening of global controls on rare earth components, the Ifo economic institute said on Wednesday.
Rare earths, essential for producing semiconductors, sensors and other advanced components, have become increasingly subject to trade restrictions, particularly from China, which dominates global supply.
Some 10.4% of companies in the sector in Germany reported supply bottlenecks in October, up from 7.0% in July and 3.8% in April, said the institute.
"The control mechanisms and trade restrictions for rare earths are taking their toll," said Klaus Wohlrabe, head of Ifo surveys. "If this trend continues and worsens it will also have a negative impact on economic growth."
In manufacturing as a whole, only 5.5% of companies reported supply problems, said Ifo.
Germany's industry has faced severe supply chain disruptions and European policymakers are trying to reduce dependence on critical raw materials by diversifying supply chains and boosting domestic production of rare earths but this takes time.
(Writing by Madeline Chambers, editing by Kirsti Knolle)
Rare earth components are a group of 17 chemical elements used in various high-tech applications, including electronics, renewable energy technologies, and military equipment.
Supply chain disruptions refer to interruptions in the flow of goods and services from suppliers to consumers, often caused by factors like natural disasters, trade restrictions, or economic shifts.
Economic growth is the increase in the production of goods and services in an economy over a certain period, typically measured by the rise in Gross Domestic Product (GDP).
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