Semiconductor-related companies that use rare earth metals in their products could face headwinds as China cracks down on its exports, according to Evercore ISI. Ahead of a potential meeting between President Donald Trump and Chinese leader Xi Jinping, China tightened export controls on rare earths and related technologies. Foreign entities must now obtain a license in order to export any products that contain over 0.1% of domestically sourced elements. This led to Trump on Friday threatening to place a ” massive ” tariff increase on Chinese imports, sending stocks tumbling. However, he toned down his rhetoric on Sunday, saying in a Truth Social post that the situation with China will “be fine.” Evercore ISI highlighted a list of large-cap stocks involved in the semiconductor capital equipment space that could face potential headwinds from China’s new export controls, as shown below. “We believe that our large-cap SemiCap equipment companies like ASML , AMAT , LRCX and KLAC use permanent magnets that use rare earth metals in a number of applications in [semiconductor capital equipment] tools, for example in turbopumps which create vacuum required in etching,” wrote analyst Mark Lipacis. Use cases include techniques such as chemical vapor deposition, atomic layer deposition and physical vapor deposition. “They support ultra-clean, vibration-free vacuum environments essential for atomic-scale precision, especially in sub-10nm geometries,” Lipacis said. The analyst added that these permanent magnets use elements such as samarium-cobalt and neodymium-iron-boron molecules or yttrium, a rare earth metal used to prevent corrosion. All three of these elements are currently on China’s restricted rare-earth list. “It is not clear as to whether or to what extent inventories of these materials have been built, or whether alternative sources or raw materials could be procured, but the developments create additional risk for the SCE stocks, and we will monitor closely,” Lipacis wrote. On a more positive note, the analyst emphasized that these restrictions would not come into effect until Dec. 1, which is after the scheduled meeting between Trump and Xi on Oct. 31 and Nov. 1. This should give the two sides ample time for an amicable resolution, he said. The four names highlighted by Evercore were all up at least 4% in Monday trading. They’re also outperforming the S & P 500 this year. ASML and Applied Materials have gained 40% and 35% in 2025, respectively. Lam Research is up a whopping 90%, and KLA has jumped over 60%. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
