Bank for International Settlements Says Supply Risks Need Different Fixes

The Bank for International Settlements (BIS) Bulletin 139, Chokepoints in Global Supply Chains: Lessons From Rare Earths and Hard Disk Drives, distinguishes lasting supply dependence from temporary shocks and calls for different safeguards.

Published Oct. 26, the bulletin uses rare-earth processing and hard disk drive (HDD) production after Thailand’s 2011 floods to compare the two risks. Authors Ryan Niladri Banerjee, Michael Chui and Leonardo Gambacorta describe rare earths as a persistent dependence on concentrated processing capacity. The Thailand case illustrates how a temporary disruption can affect production and recovery.

For lasting dependencies, the bulletin points to building alternative capacity and developing substitute technologies. For temporary shocks, it identifies inventories, multiple suppliers and the ability to shift production among locations as ways to cushion the disruption.

The rare-earth figures cover neodymium, praseodymium, dysprosium and terbium. China accounted for 60% of global mined production and 91% of refined output of those four materials in 2024. It also accounted for 94% of global sintered permanent magnet production that year. The magnets are used in electric vehicles, wind turbines, industrial motors and AI data centers.

The figures cover more than mining, the focus of TokenPost’s earlier coverage of China’s share of rare-earth mine production. They also track refining and magnet manufacturing, where China’s shares were higher in 2024.

Western Digital shipped about 54 million hard drives from facilities in Thailand and Malaysia in the quarter ended July 1, 2011; about 60% came from its Thailand sites. After the floods, production resumed in one building in Bang Pa-in on Nov. 30, 2011. The building had been submerged since Oct. 15.

The restart came as supply remained constrained. Western Digital forecast industry shipments of about 120 million drives for the December quarter, compared with estimated demand of 170 million to 180 million. The company expected significant constraints to continue into the March quarter and beyond; the shipment and demand figures were forecasts and estimates, not final results.