Core Insights - China's new licensing requirements for rare earth metal exports are creating uncertainty in the semiconductor industry, particularly affecting chip equipment manufacturers [1][2] - Major companies like Applied Materials, Lam Research, and KLA Corp are identified as particularly vulnerable to supply chain disruptions and cost inflation due to their reliance on rare earth materials [2][4] Group 1: Applied Materials Inc (AMAT) - Applied Materials is heavily reliant on rare earths for its semiconductor capital equipment, particularly for maintaining ultra-clean vacuum environments [3] - The company could face delays in tool shipments or increased costs if sourcing becomes constrained due to China's export licensing regime [4] - Despite a 35% increase in stock year-to-date, potential supply chain risks may dampen investor enthusiasm moving into 2026 [4] Group 2: Lam Research Corp (LRCX) - Lam Research has seen a 90% surge in stock in 2025, but its dependence on rare earths for etching and deposition tools poses a risk [5] - The company’s production timelines could be affected by disruptions in rare earth supply, as China controls over 90% of global rare earth processing capacity [6] - Even minor supply chain issues could lead to significant volatility in LRCX shares, which are already priced for perfection [7] Group 3: KLA Corp (KLAC) - KLA's metrology and inspection systems require rare-earth-based magnets for precision, making it vulnerable to China's export restrictions [8] - The stock has increased over 60% this year, but reliance on rare earth-dependent components could complicate future product rollouts [9] - The timing of China's restrictions adds unpredictability, and investors may need to reassess valuations if supply chain risks materialize [9]