There is a risk of significant losses
Study: Germany too dependent on raw material imports from Asia
April 9, 2024, 10:35 a.m
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Taiwan dominates the chip business, China the supply of raw materials for the production of batteries for electric cars. Without imports from Asia, little works for the German economy. A new study confirms the growing dependence. Experts warn that a change of course is urgently needed.
The auditing firm Deloitte warns of the German economy’s increasing dependence on imports of raw materials and semiconductors. In the past ten years, the share of imports, especially from Asia, has grown rapidly, according to a new study by the consulting company. Almost a quarter of all semiconductors come from Taiwan alone, which was hit by a severe earthquake at the end of March.
When it comes to batteries for electric cars, imports from China dominate. The People’s Republic is also the second most important supplier after Chile when it comes to lithium, the battery raw material. “It is high time to change course here,” said Jürgen Sandau, partner responsible for supply chains at Deloitte. “Otherwise the German economy could face significant write-downs and losses in the event of an escalating Taiwan conflict, for example.” There are always tensions between the island state and China because Beijing counts the island as part of China, even though an independent and democratically elected government has been in power in Taiwan for decades.
The German industry sources 62 percent of its semiconductors from just five Asian countries, according to the study. The largest share, 23 percent, comes from Taiwan, the headquarters of the world’s largest producer TSMC – and the trend is rising sharply. This was followed by Malaysia, China, the Philippines and Thailand, each with a share of eight to 13 percent. Germany has good conditions for setting up its own chip production, said Sandau. The Federal Republic sources around three quarters of its most important raw material, silicon, from Europe.
Norway is by far the most important supplier with 58 percent, followed by France with 15 percent. The delivery routes are short and the political risk in the countries of origin is low: “With regard to the development of semiconductor production in Germany, these are currently good conditions.” On the other hand, the global silicon market is dominated by China with a share of 57 percent.
China increases lithium supplies
The situation is completely different when it comes to lithium, the battery raw material. Here, Germany’s dependence on China is even greater than worldwide. While China only covers seven percent of lithium demand globally, the share in Germany is now 24 percent. Since 2013, when China only supplied one percent of the lithium imported into Germany, the proportion has multiplied.
With this rapid growth, China is on the verge of overtaking Chile as the most important supplier to German industrial companies, according to Deloitte. Chile is still ahead at 47 percent, but in 2013 the proportion was 76 percent. The South American country continued to account for 61 percent of lithium business worldwide.
China’s most important battery supplier
Sandau also recommends taking countermeasures here. “Germany could, for example, significantly increase its lithium imports from Argentina.” While the country is the second largest lithium exporter worldwide with a 17 percent market share, Germany only gets one percent of its needs from there. In addition, local deposits and increased imports from other European countries could reduce dependencies, Deloitte recommends.
China is already clearly ahead when it comes to lithium-ion batteries, in which the raw material is used. 41 percent of the batteries purchased came from the People’s Republic. In 2013, China’s share was only 27 percent. Almost half of the demand is already being met from Eastern Europe: 23 percent of the batteries come from Poland, 19 percent from Hungary and seven percent from the Czech Republic. Due to the increasing demand for lithium-ion batteries for electric cars, several battery factories are being built in Germany and more are being planned.