Rocks vs. Chips.

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• tal@lemmy.today ⁨5⁩ ⁨days⁩ ago

  As the United States and China careen toward intensified economic decoupling and geopolitical rivalry, trends in the semiconductor and minerals sectors will define their strategic competition. Both great powers aim to consolidate competitive advantages by hampering the other’s technological development and hammering their trading partners. Both are doing so using increasingly damaging measures—but from opposite ends of tech supply chains. The American position remains strongest in advanced technologies, an edge that the Joe Biden administration sought to preserve and extend through an unprecedented series of export controls. China, meanwhile, is just beginning to implement a parallel export control regime that leverages its dominant market share in critical minerals as well as niche but strategic industries.

  Recent tit-for-tat actions mark a troubling new level of severity in this escalating struggle for technological advantage. On December 3, 2024, the People’s Republic of China (PRC) Ministry of Commerce (MOFCOM) imposed its first outright ban on the export of certain “dual-use” critical minerals to the United States. This export control went into force for germanium, gallium, superhard minerals like synthetic diamonds, and imposed additional licensing restrictions on graphite exports. In adopting this ambitious new measure, China was retaliating against U.S. semiconductor chip and manufacturing equipment export controls unveiled only the day prior. On February 4, 2025, in response to new U.S. tariffs on Chinese goods, MOFCOM announced restrictions on additional minerals including tungsten, tellurium, bismuth, indium, and products that include molybdenum. In initiating these outright bans, Beijing has aimed to mirror U.S. long-arm jurisdiction by, likewise, seeking to enforce its export controls extraterritorially in third countries, which could re-export the restricted goods to America.

  Juxtaposing “chips” and “rocks” reveals a basic asymmetry between each party’s points of strategic leverage. Beijing is building a dam upstream, threatening to choke off the flow of raw materials and intermediate goods required to produce certain advanced technologies—including semiconductor chips, high-capacity batteries, and a range of defense and aerospace products. Washington’s fortress is further downstream and depends heavily on guarding the intellectual property of American and allied firms employing the technical capabilities of a network of allies and industrial partners. This position has enabled U.S. government efforts to restrict Chinese entities’ access to the latest semiconductors and delay, but not halt, their development of cutting-edge artificial intelligence (AI) capabilities.

  My understanding from past reading is that China’s strength mostly isn’t in access to raw materials, but rather in processing of those raw materials. That is, China is not especially unique in terms of what’s in the ground, but rather in that it has large-scale industry to refine those materials. My guess based on past reading as to why processing has gone to China and without looking into individually-processed substances, is that their advantages lie in (1) low labor costs, (2) restricted environmental regulations, and perhaps (3) scale of domestic market and possibly (4) government subsidies.

  The first item, high labor costs, is inevitably going to be a US weak point, but we can find a poor-but-friendly country to trade with, probably one poorer than China is in 2025. It’s also possible to possibly partly make use of automation to partially mitigate that; I doubt that this will wholly offset this, though, or manufacturers would have done so.

  The second item, restricted environmental regulations, are also probably going to be hard. Maybe some US ones are going to be unnecessary, could be removed, but there are also probably going to be countries that would rather have the economic activity than reduced pollution, so, again, trade is an answer.

  The third item, scale of domestic market, is going to be hard to overcome in the longer term. China has a population over four times larger than the US, and even around 2100, after which point the US is projected to have grown and China will have dropped in size, is expected to be about double. China will tend to develop, converge on a per-capita wealth basis with the US. That’s probably going to involve international trade, and not just with one or two countries.

  The fourth item, government subsidies, are doable if the US wants to do it, though doing so will weaken other industries. Probably somewhat-easier for the US than China; the US has a larger GDP in 2025.

  It’s also important to note that one critical US advantage regarding chip manufacture is in extreme ultraviolet lithography. I understand that this is not something that the US commercialized or presently control, but rather the Dutch, in the form of ASML – the US government paid to develop the basic technology and a prototype, but the Dutch then finished the work to bring it to market. Something that the Trump administration might keep in mind insofar as it is concerned principally with competition with China and not so much with things that Europe cares about, like Russia; actively antagonizing the Netherlands probably isn’t a good idea.

  Rare earth elements (REE) have been a focal point in China’s evolving critical minerals policy. As early as 1992, China’s paramount leader, Deng Xiaoping, declared, “the Middle East has oil; China has rare earths.

  The US has very little active production, last I looked, but does have inactive production, and Congress was looking at subsidies to remedy that fact.

  en.wikipedia.org/…/Mountain_Pass_Rare_Earth_Mine

  As of 2022, work is ongoing to restore processing capabilities for domestic light rare-earth elements (LREEs) and work has been funded by the United States Department of Defense to restore processing capabilities for heavy rare-earth metals (HREEs) to alleviate supply chain risk. [4]

  I also seem to vaguely recall that Canada and Australia have rare earth reserves…they just haven’t done extraction, as it hasn’t made financial sense.

  yahoo.com/…/canadas-rare-earth-rush-frontier-2000…

  As Canada rapidly develops its LNG production and export capabilities and expands its oil industry, the North American country may also be looking to boost its reputation as a rare earth elements producer. Canada has produced rare earth elements (REE) for several decades and is thought to have extensive untapped reserves. It has supported other countries in the development of their REE industries and is now looking to expand its domestic mining activities to help achieve net-zero goals and develop a regional supply chain.

  Canada’s 2024 Critical Mineral Strategy Annual Report outlines plans to mine for over 30 critical minerals, with a focus on lithium, graphite, nickel, cobalt, copper, and REE. The U.S. government has repeatedly stated concerns about the growing dependence on China for critical minerals and REE, as well as other energy sources and products, as it looks to develop more regional supply chains. The expansion of Canada’s mining industry could help it provide a stable domestic supply of REE as well as support the development of a North American supply chain. James Edmondson, the research director at IDTechEx, said “It is believed Canada has very large quantities of these materials, even if they have not yet begun processing them in significant quantities.”

  That’s maybe a short-term issue, but probably not long-term.

  Graphite, essential for lithium-ion batteries, represents a critical vulnerability for the United States, which is in the midst of a $70 billion domestic manufacturing boom in the battery sector

  Graphite’s just carbon; basically, very high grade coal. Surely it’s manufactured via refinement of readily-available stuff like coal? The US has, IIRC, something like 40% of global reserves of anthracite (the next grade down below graphite) within its borders, which is considerably ahead of China, not to mention substantial lower-grade stuff. Also, unless one needs enormous amounts, which I assume is not the case for lithium-ion batteries. Any fossil fuel power plant, including crude oil or natural gas, is also going to have as an input something containing carbon, and given energy, that can be reduced to carbon. I cannot imagine that this represents any kind of a long-term constraint for the US.

  kagis

  This sounds like graphite is indeed obtained by processing coke.

  And that is derived from coal.

  en.wikipedia.org/wiki/Coke_(fuel)

  Coke is a grey, hard, and porous coal-based fuel with a high carbon content. It is made by heating coal or petroleum in the absence of air.

  Ah, yeah, they mention the Netherlands:

  For China, U.S. export controls on advanced semiconductors and chip-making equipment have created a chokepoint for China’s technological ambitions—but with notable examples of innovative workarounds beginning to materialize. These restrictions, reinforced by alliances with Japan, the Netherlands, and South Korea, have sought to block access to key tools like extreme ultraviolet (EUV) lithography machines, which are required to produce high-performance graphic processing units (GPUs), leaving Chinese firms struggling to compete at advanced nodes.

  And make the same prediction that I made above, that if the Trump administration truly wants to restrict international trade on a serious and continued basis, rather than conduct political theater to score domestic points, that’s going to make life a lot harder for competing with China:

  [continued in child]

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  • tal@lemmy.today ⁨5⁩ ⁨days⁩ ago

    [continued from parent]

    Under these conditions, the U.S. will need to accelerate domestic and allied mining efforts while tightening enforcement on chip exports through global cooperation. This will be a challenging task given mounting international resistance to the Trump administration’s potential trade policies

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