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Earlier this week, China placed export restrictions on gallium and germanium – key components of semiconductor, defense and solar technologies.  The unspecified restrictions are set to take effect on August 1, 2023.

Beijing’s move is considered a “show of force ahead of economic talks between two rivals that increasingly set trade rules to achieve technological dominance,” according to the Wall Street Journal, and is part of a larger global trend of nations resorting to export restrictions on critical materials, which have grown more than five-fold over the last decade and have recently ratcheted upwards between the U.S. and China.

As Alastair Neill, board member of the Critical Minerals Institute, told the Wall Street Journal:

“If you don’t send high-end chips to China, China will respond by not sending you the high-performance elements you need for those chips.” 

Whether or not the U.S. will act in time to secure reliable supply of the critical minerals needed for chip manufacturing and other hi-tech industries, is not, as ARPN’s Daniel McGroarty said in 2020 “a question of science or engineering or who boasts the best single atomic layer deposition techniques.”  According to McGroarty, “it’s a question of political will.  And if the ultimate goal is to reshore American control over our economic destiny and national security, the answer is due right now.”

As followers of ARPN well know, China is no stranger to playing politics with its critical minerals leverage, and ARPN has been tracking the weaponization of trade in the semiconductor segment in the context of the Tech Wards between the United States and China since 2020.

The following is a 2020 piece by McGroarty originally published by The Economic Standard. 

Red Tape Helps China, Hurts Critical U.S. Super-Conductor Chip Manufacturing
By Daniel McGroarty
Re-posted from The Economic Standard

Let the Great Re-Shoring begin:  One of the many ways the COVID pandemic will change the behavior of nations is coming into view, with profound implications for the globalization of trade, and where we make what we buy.  With China controlling the chokepoint on medical devices from ventilators and N-95 masks to all manner of prescription drugs, the U.S. is waking up to the dangers of supply chains outside of our control.

Hence the cheering at this month’s announcement that Taiwan Semiconductor, specialty chip supplier to Apple and many other tech giants, will build a next-gen semiconductor factory in Arizona to manufacture their new 5nm — 5-nanometer — chips.  Construction is slated to begin next year, creating 1,600 jobs at a total investment of $12 billion.  Reports indicate that the U.S. Departments of State and Commerce are involved, meaning the move is part of the post-pandemic “de-coupling” from China.

For Taiwan Semi, the new Arizona plant is another link in its evolving U.S. supply chain, joining the company’s fabrication factory in Washington state and design centers in California and Texas.

High-Speed Computing’s Next New Thing

5nm is the next new thing in high-speed computing.  As experts with the Institute of Electrical and Electronics Engineers explain, for all of the dizzying increases in computing power, not much has changed since the invention of the semiconductor:  “the metal oxide semiconductor field-effect transistor, or MOSFET—the kind of transistor used in microprocessors—has included the same basic structures since its invention in 1959.”  What’s changing now is the engineering of the basic gating structure that channels the flow of electrons across the chip.  On the 5nm platform, “Electrons can move more than 10 times as fast in some of these semiconductors, allowing transistors made from these materials to switch faster. More important, because the electrons move faster, you can operate the device at a lower voltage, which leads to higher energy efficiency and less heat generation.”

Secret Sauce

Little wonder 5nm chips have captured the interest not only of Apple and the tech sector, but the Pentagon as well.

What gives 5nm its secret sauce?  Like gastronomes blending obscure spices, 5nm’s designers looking to push the limits of Moore’s Law have turned to a broader swath of the Periodic Table of Elements to expand their computing palate.  Starting with the familiar silicon substrate “wafer,” 5nm layers in exotic elements like silicon germanium for its super-lattice, adding dielectric hafnium-dioxide and gallium arsenide laced with indium – with a side-look at gallium antimonide as a potential substitute.

And that’s where things get difficult, at least if we’re rooting for the U.S. to become the world’s epicenter of 5-nanometer chip production:  The U.S. produces precisely zero of three of these elements — indium and gallium and arsenic – leaving us 100% import-dependent, while we’re 84% import-dependent for antimony, and more than 50% for germanium.  Data for hafnium, among the rarest of the elements, is notoriously harder to come by, with production guesstimated at a scant 70 tons per year.

So if the U.S. is not producing these 5nm materials, where do these essential ingredients come from?

China is the global leader or top U.S. supplier for all six.

Supply Chain Starts With Supply

It’s a harsh reminder that the first word in supply chain is “supply.”  And given that Beijing is not too happy about Taiwan Semi joining the 5nm U.S. supply chain team – after Apple, banned-in-America Huawei is Taiwan Semiconductor’s biggest customer — it may not be a good idea to source key semi-conductor materials from China.  We’ve already seen Beijing threaten to cut off rare earth supplies to the U.S. as part of their trade war strategy.  Do we need to multiply U.S. vulnerability across another half-dozen metals and minerals essential to next generation high-speed computing?

It doesn’t have to be that way:  The U.S. has “known resources” of all six, and already includes them on the U.S. Government Critical Minerals List.  Are the U.S. sources economic?  Not if U.S. laws governing resource development policy make it a decade long odyssey to bring new resource projects into production.  All the tax breaks in Arizona won’t help Taiwan Semiconductor if U.S. policy fails to take seriously America’s critical mineral dependency on China.

What can the U.S. Government do to bridge this resource gap and encourage American production?  Here’s a place to begin:  Decades ago, Congress gave the president authority to invoke the emergency powers of the Defense Production Act (DPA) – which President Trump has done during the COVID pandemic, and did last summer to address the United States’ rare earths dependency.  If it’s dangerous for the U.S. to be 100% import-dependent for rare earths when the leading global producer is China, why not extend the same DPA designation to the other seven metals and minerals – not just the indium, gallium and arsenic we need for 5nm chips, but graphite, tantalum, fluorspar and manganese – where U.S. dependence is also 100% and China dominates global supply?

There’s no question that Taiwan Semi’s engineering team has the expertise to make its next-gen chip a reality. The question concerns the stuff their dreams are made on.  Will the U.S. act in time to secure reliable supply of 5nm materials, or will mineral and metal availability become the new “single point of failure” – subject to some future cut-off ordered by Beijing or disrupted by the return of COVID 2.0 — that will render the new Arizona chip investment inoperative?

That’s not a question of science or engineering or who boasts the best single atomic layer deposition techniques.  It’s a question of political will.  And if the ultimate goal is to reshore American control over our economic destiny and national security, the answer is due right now.

As nations all across the globe scramble to secure critical mineral supply chains against the backdrop of surging demand in the context of the green energy transition and rising geopolitical tensions, India is stepping up its critical mineral resource policy game.

This week, the Indian Ministry of Mines released a comprehensive Critical Minerals List, consisting of 30 metals and minerals deemed critical for India’s ambition for cleaner technologies in electronics, telecommunications, transport and defense, according to the government.

The list comprises the group of 17 rare earth elements (REEs) and six platinum group metals (PGMs) as complexes. It also encompasses four of what ARPN has dubbed the “battery criticals” lithium, cobalt, graphite and nickel (India’s list does not include manganese which rounds out the five battery criticals), as well as antimony, beryllium, bismuth, gallium, germanium, hafnium, indium, molybdenum, niobium, phosphorous, potash, rhenium, silicon, strontium, tantalum, tellurium, tin, titanium, tungsten, vanadium, zirconium, selenium, and cadmium.

Lastly, the list also includes copper, a mainstay metal and key component of the green energy transition which the United States has thus far failed to add to its own list of critical minerals in spite of numerous pushes for its addition.

According to Indian web news hub Rediff.com, the government plans to encourage public and private investment in exploration, mining and processing to secure the country’s critical mineral supply chains, and will seek to “facilitate the adoption of advanced technologies and international collaborations to enhance efficiency and environmental sustainability in the extraction and processing of critical minerals.”

One of the first such international collaborations was just made official during a state visit of India’s Prime Minister Narenda Modi to Washington, D.C. last week, where Modi and U.S. President Joe Biden announced the country’s joining of the Minerals Security Partnership alongside several bilateral and defense deals.

The MSP is a partnership between the United States, Canada, the United Kingdom, France, Germany, Japan, South Korea and several other countries convened in June 2022 as an initiative to bolster supply chains while aiming “to ensure that critical minerals are produced, processed, and recycled in a manner that supports countries in realizing the full economic development potential of their mineral resources.”

As the rest of the world aims to decouple its critical mineral supply chains from China, which has long dominated most of the critical minerals sector across all links of the supply chain, India is looking to harness its geopolitical wealth to become a “global hub for critical mineral production and reinforce its position as a major player in the global economy.”

In keeping with that objective, India’s recent moves have global implications.

At the beginning of this year, a New York Times piece called on G20 leaders gathering in Davos, Switzerland, to “pivot to the new reality provoked by the Covid-19 pandemic, the war in Ukraine, the growth of extreme inequalities and aggressive Russian and Chinese autocracies.” 

In the critical mineral realm, these recent events served as a catalyst for a new “Great Game,” which the geopolitics of mineral resource supply had triggered and which gained momentum with the adoption of the Paris agreement in 2015.

India’s recent critical mineral moves are highly relevant in the context of this new “Great Game,” particularly as relations between India and China are strained by an ongoing border conflict and growing regional rivalry, both of which are shaping South Asia’s security landscape and strategic environment.

With India having overtaken China as the world’s most populous country and set to become the third-largest economy in the coming years, India’s recent moves could be seen as a direct challenge by Beijing.

As Frédéric Grere and Manisha Reuter outline for the European Council on Foreign Relations, “New Delhi still exerts a dominant role in South Asia and, specifically, the Indian Ocean, but as China consolidates its position in the region, its attitude towards India has become more assertive. India remains resolute about preventing Chinese hegemony in Asia, repeatedly stressing that a multipolar world starts with a multipolar Asia, and seeking partnerships with a variety of countries, including the US and the EU. Beijing is concerned about India’s growing military ties with the US and tends to consider India’s intentions through the lens of its own rivalry with the US.”

The new Great Game may have just gotten Greater.

As ARPN outlined earlier this week, the European Union has dropped its response to the United States’ Inflation Reduction Act passed last summer: the just-dropped Critical Raw Materials Act (CRMA) paired with sister legislation, the Net Zero Industry Act (NZIA), which aims to support investment in manufacturing capacity in ‘net zero emissions’ technologies in Europe. The CRMA not only seeks to streamline [...]

 Semiconductors have become indispensable components for a broad range of electronic devices. They are not only “the material basis for integrated circuits that are essential to modern day life” – the “‘DNA’ of technology” which has “transformed essentially all segments of the economy,” they are also essential to national security, where they enable the “development and fielding of advanced weapons systems and [...]

by Daniel McGroarty The Critical Mineral space in the U.S. experienced a dramatic development this week, largely overlooked beyond specialty reporting in the defense and energy media:  With his February 27, 2023 Presidential Determination, President Biden once more invoked Title III of the Defense Production Act (DPA) to strengthen critical mineral supply chains – and in doing [...]

The global push towards net zero carbon marches on, and with sales of EVs continuing to soar even as prices rise, analysts suggest that the “world could be nearing a critical electric vehicle sales tipping point, when volatile adoption trends are overtaken by mainstream demand.”  With skyrocketing demand, the mineral intensity of the green energy transition [...]

Recent media coverage might have you believe critical mineral policy only revolves around the “battery criticals”lithium, graphite, nickel, cobalt and manganese, and maybe the frequently referenced, though still somewhat obscure rare earths.  However, as followers of ARPN well know, this is far from the truth. The New South Wales Department of Planning and environment has taken a [...]

Your mind may not immediately jump to semiconductors when you think about national security, but “a steady source of uninterrupted, trusted chips is necessary for the security of the nation – supporting the readiness of the U.S. military and protecting critical infrastructure like the electric grid,” writes Zachary A. Collier, Ph.D., an assistant professor of management at Radford University and a visiting scholar [...]

It’s not exactly news to followers of ARPN that the global green energy transition will require vast amounts of critical minerals, however, against the backdrop of the raised geopolitical stakes in light of Russia’s war on Ukraine and rising resource nationalism in the southern hemisphere, new figures released by Belgium’s KU Leuven University underscore the [...]

They say desperate times call for desperate measures, and if you needed any more indications that the state of supply chain security has reached crisis level, consider headlines like this one:  “Tech firms rip apart NEW washing machines so they can harvest their computer parts in a bid to beat the global microchip shortage”. The news [...]