China expert Paul Triolo recently discussed his concerns regarding global supply chain vulnerabilities, especially as they relate to key materials and components needed for manufacturing semiconductors.
Triolo serves as senior advisor on technology to the Think Tank at the Paulson Institute. He has experience in both the public and private sectors, according to the Paulson Institute website.
The U.S. is heavily reliant on China for materials such as rare earth minerals, and Triolo emphasized the need for policy that helps to strengthen the U.S.'s position in this sector in the long run.
"China is the world’s manufacturing center," Triolo told State Newswire. "Take Shanghai, for example; Chinese companies that are part of auto and parts manufacturing centers are critical to intermediate supply chains. There was an understanding of the need to diversify supply chains before, but the pandemic has made the policy world at least understand the ramifications of supply chain vulnerabilities. Getting semiconductor industry policy right should be a major focus of U.S. policymakers, starting of course with passage of the CHIPS Act funding bill and then establishing a new office and process for administering the funding, and working with allies to avoid a subsidy race."
The CHIPS for America Act is a bill that calls for semiconductor manufacturing and research. It was part of the Fiscal Year 2021 National Defense Authorization Act (NDAA), according to the Semiconductor Industry Association (SIA). The legislation acknowledges that the U.S. semiconductor industry will play a key role in the country's future.
The U.S. Senate passed its version of the bill last June, including $52 billion in investments in semiconductor-related provisions. The House of Representatives passed its version in February, also including $52 billion in investments. The House and Senate must reach an agreement on the legislation before it can be sent to Pres. Joe Biden's desk.
"House passage of CHIPS Act investments is a significant step toward strengthening America’s leadership in semiconductors, which are foundational to our economy, national security, and global leadership in the transformative technologies of now and the future," John Neuffer, SIA president and CEO, said in a February press release. "We urge leaders in the House and Senate to work together promptly on a bipartisan, bicameral competitiveness bill containing CHIPS Act investments that can be passed by both chambers and signed into law by the president. Getting this legislation across the finish line will help strengthen U.S. chip production and innovation for many years to come."
Triolo spoke further about his concerns.
"I think that material inputs such as rare earths and other critical minerals, used across these sectors, are going to be in even higher demand, sparking further geopolitical competition over supply chains and a desire for countries to source more of these materials domestically," he said. "For example, the pandemic disrupted the auto industry and demonstrated how interconnected all industries and supply chains are. This is a sector that the U.S. should pay attention to, by creating and funding incentives that are sustainable and built for the long term."
Pres. Donald Trump in the fall of 2020 declared that the United States' reliance on China for rare earth minerals constituted a national emergency. Shortly after that declaration, China expert Nate Picarsic spoke to Full Measure about his concerns that American dependence on China for these materials left the U.S. vulnerable. Picarsic noted that the United States needs rare earth materials to produce a wide range of goods, including some "that are critical for [the] U.S. aerospace and defense industry."
"Chinese sources discuss leveraging rare earth dominance against the U.S. for coercive ends," Emily de La Bruyère, co-founder of Horizon Advisory, said in an interview with Mining Technology. "Beijing would do so as, or within the context of, an escalatory measure in response to geopolitical dispute. More broadly, People’s Republic of China (PRC) sources frame rare earths dominance as a strategic input in today’s great power contest."
The U.S. Geological Survey reported that in 2019, $170 million worth of rare earth minerals was imported to the U.S., an increase of $10 million from 2018. China supplied 80% of those minerals.
Producing solar panels requires the use of rare earth minerals such as indium and gallium. A 2018 report from the IAEE Energy Forum noted that "the use of critical materials is not limited to solar, but also other forms of clean technologies like wind, vehicles, lighting and phosphors [...] Hybrid electric vehicle using NiMH batteries make use of rare earths such as cerium, lanthanum, neodymium, and praseodymium."
Triolo has a background in electrical engineering, which has helped in his work in Silicon Valley and Washington. He is an expert on China-related technology issues, including China's rise as a cyber power, artificial intelligence, global technology policy issues, and internet governance.
