So... here's my take on US / China tensions:
You have European monopolies like:
- $ASML (EUV)
- $SOI (Photonics-SOI)
- Zeiss SMT (ASML EUV supplier), Trumpf (ASML EUV laser supplier)
Japan has many near/complete monoplies like:
- TOK, JSR, ShinEstu, Fujifilm for EUV photoresist - 90-100% share
- coat/develop equiment with Tokyo Electron -90%+
- actinic EUV patterned mask inspection (Lasertec) -100% share
- EUV mask blanks (HOYA, AGC) ~93% share
- arf photoresist
- Nittobo T-Glass
- ABF film (Ajinomoto)
- lot of misc from specialty glassAGC, wafer thinning/grinding/dicing with Disco and others.
Then there's US allied countries like Taiwan eg. $TSM, Korean memory with $SKHY / Samsung.
US has EDA with Synopsys/Cadence, $LCRX / $KLA, $NVDA, and many downstream giants.
China has many chokepoints such as gallium, graphite, refined lithium, and others + benefits from cost mass production over many future supply chains (eg. robotics).
If I had to give my opinion on US / China supply chain wars:
- US is trying to achieve Western independence from China/Russia rare earths + materials supply, but took too long (should have been a priority last decade).
- China is trying to eliminate strategic chokepoint dependence and forcing US reliance on Chinese supply chains (as seen with Wf6)
It's a race on who achieves supply chain independence first to gain leverage over the other.
And fun thing is, AI acceleration kinda throws an unknown variable in terms of speeding up independence.
As well as open source efforts (eg. RISC-V), which China is heavily focusing on. So it's a weird paradox where US should theoretically support open source hardware development + open source AI, but it's also being exploited against them.
From a Chinese perspective, they're pressuring US supply chains by targeting Japan, which increases Western supply chain reliance on China.
And going down the list to eliminate competitor chokepoints internally by throwing subsidized spend into R&D. Or by acqusition as seen with China's acquisition of EU leaders like Ficontec.
America... they had all the cards initially, but I think they got too comfortable, and took too long to focus heavily on rare earths (recent funding is a good thing).
The earlier tariffs went the wrong way (socks, furniture, other exports), and pissed off allies in EU/Canada too.
Which could have been used for leverage for major chokepoints. But maybe they'll realize soon enough why allies are important.
Anyway, we'll see what happens, just my two cents about ongoing dynamics.
In an ideal world, everyone works together...
TLDR: Just some shower thoughts on how there's an unspoken race on who achieves supply chain independence first to gain leverage over the other.
Quoted context
These are the quoted author’s words.
China reportedly halts some rare earth shipments to US.
Not a new blanket ban, or any mention of specific rare earths.
But… if I had to guess, Japan is usually a decent indicator of what’s actively important since Japan:
- “sources virtually all of its dysprosium and terbium from China.”
- gallium, dysprosium, terbium and yttrium from China to Japan all stood at “zero” in June.
- Shin-Etsu Chemical has reportedly suspended acceptance of new orders for magnets containing dysprosium.
- Global magnet producer Proterial had received no export licenses for Chinese dysprosium as of last month
The Reuters piece mentioned yttrium, gallium, terbium, indium phosphide, and tungsten as historical examples (doesn’t say what’s being targeted now).
On a side note, $LYC.AX is becoming one of the most important alternatives, as Japan has locked up 75% of Lynas’s medium/heavy rare-earth output. (8 tons of dysprosium + terbium in Q1)
Something fun I also read is that Japan’s deep sea resource is enormous (est. at 16 million tons of rare earth rich mud, but commercialization is post-2028)
But in the meantime, China seem to be choking off feedstock that would materially affect Japan.
Since you’ve already seen the WF6 Japanese industry stressed from tungsten related halts.
And indium/others earlier this year that is used to make InP substrates from Sumitomo/JX.
But still gradually allowing exports directly eg. $AXTI -> $LITE to allow US/China trade to continue, kinda disrupting that from time to time, then using that as leverage.
It’s interesting since Japan has so many different monopolies like ABF, so we’ll see if they do anything back.
But if I had to give a prediction, it does look like the US has a countdown timer until China becomes self-sufficient on semiconductors.
TLDR:
- rare earth disruption to US
- China actively targeting Japan for upstream feedstock (which goes to Us supply chains), probably want to focus on that
- many many second/third order effects from disruptions
- we’ll see what US/Japan wants to do back, but supply chain wars are being fought upstream.
aleabitoreddit ↗