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Another Wrinkle in the EV Race – To Address Semiconductor Shortage, Let’s Begin at the Beginning

Over the past few weeks, we dove into the materials challenges associated with the accelerating EV revolution, outlining that while general awareness of immense mineral intensity of the green energy transition is growing, misconceptions in terms of how to address the challenge persist, with too many still subscribing to the notion that we can recycle, substitute and “friend-shore” our way out of the conundrum.

Meanwhile, remarks by U.S. Commerce Secretary Gina Raimondo made in late November point to another wrinkle in the U.S. push to catch up in and ultimately win the EV race.  Commenting in the context of a push to shore up support for the congressional “Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act,” legislation aimed at taking on China, Sec. Raimondo told the Detroit Economic Club, a nonprofit business group, that automakers ambitious EV plans are threatened by the ongoing semiconductor shortage.

“As companies like Ford and GM compete to grab a foothold in the electric vehicle market, we know that innovation in the American battery market will be stifled if we aren’t also investing in domestic semiconductor innovation at the same time,” she said.

Sec. Raimondo had also told Detroit News before the Detroit Economic Club event that the Biden Administration’s plans for 50% of all vehicle sales to be electric by 2030 depends U.S investment in semiconductor production, stating that “[i]f we’re serious about restoring American leadership in the global economy, we have to start by rebuilding our semiconductor industry so we can meet the demands of this moment.”

As followers of ARPN know, supply chains for these highly specialized high-tech components are extremely complex, and, as outlined in the White House 100-Day Supply Chain Report, require “hundreds of essential inputs, many of which are raw materials, chemicals and gases. These materials have their own complex supply chains, and likely contain hidden choke points that could disrupt production.”

In light of these complexities, while it’s great to see the Biden Administration focused on the issue, the same caveats that apply for critical mineral resource supply chains apply with regards to semiconductors.

As ARPN’s Daniel McGroarty pointed out last year against the backdrop of excitement over the recent announcement of Arizona as the site for Taiwan Semiconductor’s new next-gen semiconductor factory to manufacture their new 5-nanometer (5nm) chips: “the first word in supply chain is ‘supply.’”

And while the Biden Administration plans to “bolster its partnership with the private sector in domestic semiconductor manufacturing and R&D,” and “strengthen engagement with allies and partners to promote fair semiconductor chip allocations, increase production, and promote increased investment,” stakeholders must begin at the beginning – the sourcing of the metals and minerals that go into the manufacture of semiconductors, like Gallium and Indium — and incorporate strategies to promote the domestic development of these materials into their overall approach.

Thankfully, the U.S. is not only in the fortunate position to have known resources for both Gallium and Indium (in Texas and Alaska, respectively), both metals can also be “unlocked” in the “co-product” development of their Gateway Metals Aluminum (for Gallium) and Zinc and Tin (Indium) — another reason stakeholders should focus more on the inter-relationship between Gateway Metals and the critical co-products they unlock.