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With the development of surface mount technology, especially for optical and optoelectronic devices, solders having improved mechanical properties are required for application that demand high reliability and dimensional stability. Using composite solders, by the addition of reinforcement particles to a conventional solder alloy, is an attractive potential method to enhance the mechanical properties. Recently, we developed a new process to fabricate composite lead free solders. 3%, 5%, and 10% weigh percentage of Y2O3 rare earth oxides were milled with RMA flux and then Sn-3Ag-0.5Cu powders were added, to form a new solder paste. The microstructures of the new composite solders are investigated and it is proved that with this new process, the reinforcement particles disperse in the solder quite finely and the addition of 3% and 5% rare earth oxides increases the shear strength of the solder joints dramatically, while 10% addition decreased the strength. At the same time, the addition does no harm to the wetting properties.