Immigration and border control with Mexico have become the top issues of the US presidential campaign, but the China-US relationship is still a major concern on the minds of tech companies because of trade restrictions on both sides involving advanced chips used in AI as well as supplies of rare minerals and magnets needed for all types of electronics.
In his recent State of the Union address President Biden said the US wants “competition with China, but not conflict,” although tech CEOs seem to see the future relationship between the two countries possibly evolving far differently. If Taiwan were invaded by China, the production of advanced chips by TSMC there would stop in two months, Intel CEO Pat Gelsinger warned reporters Feb. 21 at an Intel Foundry event. TSMC makes chips for many companies, including powerful GPUs designed by Nvidia.
Meanwhile, Gelsinger has been the first to recognize that US trade sanctions on Chinese semiconductor production have restrained China’s production, by about a decade, behind the global semiconductor industry. But as with anything involving international trade, China’s treatment of Taiwan and other countries factors in the total foreign policy equation.
China has taken the view that continued US sanctions are unfair, and has responded. Last September, China curbed exports of gallium and germanium products and in December banned exports of technology for making rare-earth magnets. China traditionally has dominated in refining rare earth materials, while countries including the US lack enough refining facilities, partly because of the environmental impact. China provides more than 90% of the magnets used in the world, according to experts.
China’s December ban when compared alongside emerging means of increasing magnet and rare earth capacity—including through recycling-- have left some executives feeling less than optimistic about the future supply, but not beyond hope. “The skies are not black. They are gray but not black,” said Ahmad Ghahreman, the CEO and co-founder of Cyclic Materials, an early-stage company based in Toronto. He spoke recently with Fierce Electronics.
“I strongly believe the future is bright,” he added. “A lot of capacity ideas are being suggested.”
Cyclic makes two technologies—one to help remove magnets from discarded products and the other to covert magnets to raw materials used in fresh magnets. Magnets are needed in electric motors used in everything from making car windows move up and down to MRI machines and the hard disc drives. Recently, Cyclic announced a move to recycle wind turbine generators and MRI machines along with a list of other discarded products.
Arnold Magnetic Technologies, a maker of magnets used in aerospace and defense applications, has been studying the supply chain issues for magnets for years, with increase focus since 2016. Magnet supply “has long been identified as a serious threat and we are all in the industry committed to solve this,” said communications manager Mikayla Skolaski. “China wants to hold as much technology as they process rare earths. They want to make sure they control pricing.”
To help improve magnet supply, some companies are hopeful the focus by governments in the US and Canada on clean energy will expand the use of electric motors, putting pressure on measures to improve magnet production and the recycling of magnets for reuse. In December, US Senators Catherine Cortez Masto, D-Nev., and Markwayne Mullin, R-Okla., introduced the Rare Earth Magnet Production Tax Credit Act to provide a $20 per kilogram production tax credit for magnets made in the US, with $30 per kilogram for magnets made in the US with components produced, recycled or reclaimed domestically. (A rare earth magnet is made from rare earth alloys, compared to regular magnets made mostly from iron. The rare earth magnet is many times stronger than the standard magnet.)
Companion legislation (HR 2849) was introduced in April in the House by US Representatives Guy Reschenthaler, R-Penn., and Eric Swalwell, D-Calif. It sits before the House Committee on Ways and Means.
In December, James Litinsky, CEO of MP Materials, called the bipartisan legislation “a crucial step towards leveling the competitive playing field” to help catalyze private investment.