Chokepoints in global supply chains: lessons from rare earths and hard disk drives

Ryan Banerjee, Michael Chui and Leonardo Gambacorta

No 139, BIS Bulletins from Bank for International Settlements

Abstract: Concentration and limited substitutability can turn the efficiency gains from global supply chains into vulnerabilities. However, the consequences of chokepoints depend on their underlying nature. The rare earths industry illustrates a persistent dependence on concentrated processing capacity. By contrast, flexibility and effective crisis management can speed up recovery from a temporary disruption, as seen in hard disk drive production after the 2011 Thailand floods. Resilience measures should match the vulnerability: alternative capacity and technologies can address persistent dependencies, while inventories, supplier redundancy and geographical flexibility can cushion temporary disruptions.

Pages: 8 pages
Date: 2026-10-26
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