Rare earths play a crucial role in the production of powerful magnets, which are vital for military hardware, electric vehicles, and renewable energy sources. Meanwhile, chips, also known as semiconductors, form the backbone of modern electronics. Both rare earths and chips are considered strategic assets, essential for national security, economic competitiveness, and maintaining technological leadership.
The current standoff between the United States and China over these technologies was ignited in May 2019 when the US imposed a ban on firms engaging in business with Chinese tech giants such as Huawei. In retaliation, China emphasized its dominance in rare earths, marking the onset of an escalating tech war, particularly noticeable during Trump’s second term.
China dominates the global supply of rare earths and has threatened to restrict exports, particularly in response to US tariffs. This situation poses significant challenges for US manufacturers who rely on these materials for various applications, including electric vehicles and guided missiles.
In an effort to counter China's rare earth supremacy, the Pentagon has allocated over $400 million since 2020 to create a domestic rare earth supply chain. However, this investment is relatively small compared to China's billion-dollar commitments in rare earths and semiconductor fabrication.
Despite facing heavy sanctions from the US, Huawei is channeling billions into research and development. The company is working on a 3-nanometer chip aimed at rivaling advanced US processors, although it acknowledges that its current chip technology still trails behind US advancements.
Should clean energy subsidies be rolled back, the US could see a drastic reduction in battery production, potentially by as much as 75% by 2030. This would increase reliance on Chinese supplies for both commercial and military technologies, exacerbating vulnerabilities.
Asymmetric warfare teaches that nations may exploit weaknesses rather than match strengths. In this context, China is honing in on rare earths and cost-effective innovations, such as drones, to counterbalance US dominance in high-end semiconductor technologies.
The dependence on critical minerals and chips for drones, electric vehicles, missiles, and satellites highlights the potential vulnerabilities nations face. A shortage or over-reliance on adversarial powers could leave a country exposed in future military or technological confrontations.
Ultimately, the US may jeopardize its position in future technological conflicts if it allows ideology or politics to impede investment in critical mineral supply chains. Neglecting investments in rare earths, batteries, and solar technologies could render the nation strategically vulnerable.
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