China has decided to curb its competitors in the semiconductor sector by banning the export of technologies used to extract and separate rare earths. The entire production chain of smartphones, screens, batteries and electric cars could be impacted.
The rivalry between the United States and China continues to escalate. The two powers continue to apply measures penalizing each other in a context where supply chains have still not returned to their pre-pandemic level.
The latest coup to date for China, which announced this Thursday that it was going to stop exporting several technologies allowing the extraction of rare earths, these raw materials essential for the production of many technological products such as batteries and chips. , LCD screens or even smartphones.
Technological war with the United States
As stated The gallery, this decision is part of a more global strategy to penalize its commercial partners in a sector as critical as technological development. China will therefore stop supplying other countries with “ rare earth extraction, processing and smelting technologies » after stopping the export of strategic metals last summer: gallium and germanium.
If the Chinese government cites reasons of “ national security » in a country which controls nearly 70% of the production of rare earths in the world, we suspect that the United States is primarily targeted by such regulations.
Last August, an executive order signed by Joe Biden greatly limited investments by American funds in China in the key sectors of quantum computing, semiconductors and artificial intelligence. According to Tim First, analyst at the CNAS think tank (via Economic Alternatives):
For the most advanced semiconductors, the United States (and its allies like the Netherlands and Japan) have near-monopolies at key stages of the value chain, because only a small number of companies have the technological know-how to build the incredibly complex equipment required by this industry, such as extreme ultraviolet lithography.
Well-kept secrets
By stopping technology exports, China will slow down the United States, but also Europe in their quest for independence in the supply of these means of production. In a press release published on December 12, Commerce Secretary Gina Raimondo declared (via The gallery):
Over the past several years, we have seen potential signs of worrying practices by China aimed at increasing semiconductor production by their companies and making it more difficult for U.S. companies to compete.
In a context where the energy transition will depend more on these supply chains, particularly for the production of electric vehicles and wind turbines, such technological secrecy is not to the taste of China’s trading partners.
If the United States remains the leader in the design of these chips, thanks to Nvidia, Intel, AMD and Qualcomm, the country does not yet have sufficient capacity to produce them entirely on its soil. But that could change as TSMC, the leading foundry in the semiconductor market, will gradually establish five factories in the United States.
Each of the two countries therefore wants to slow down technological transfer in its own way, to maintain a competitive advantage in a sector which will only experience growth while minimizing their interdependence. But collaterally, the entire production of our technologies could be impacted.