The trade war between the United States and China has taken a new turn that is hitting a crucial industry: the chip market.
Beijing recently imposed export controls on tungsten, a niche metal essential for making semiconductors, armor-piercing ammunition and engine parts, in a move that comes in retaliation against tariffs on Chinese goods imposed by the Trump administration.
Tungsten: A small metal with big impact
Lewis Black, CEO of tungsten producer Almonty, describes how shocked his customers are by the Chinese decision. “It’s a warning shot because we can’t do without this metal,” says Black. Tungsten is extremely dense and heat-resistant, which makes it indispensable for the production of modern technologies. The export restriction is a clear signal that China is prepared to use strategic raw materials as a weapon in the trade war.
The restrictions on tungsten exports are just one part of a broader economic conflict between the US and China, in which the semiconductor industry is playing an increasingly central role. Chips are the basis of modern technology and are used in smartphones, computers, electric cars and artificial intelligence.
China is heavily dependent on foreign chip technology, especially from the USA and Taiwan. At the same time, the country is investing billions in building up its own semiconductor industry in order to become more independent. Washington, on the other hand, is trying to cut off Chinese technology companies such as Huawei from access to advanced chip technology through sanctions and export bans.
The future is determined by chips
The demand for semiconductors will continue to rise in the coming decades. Artificial intelligence, autonomous vehicles, 5G networks and modern defense systems depend on increasingly powerful chips. The geopolitical battle for control of this technology will therefore not end anytime soon.
China has already shown that it is willing to use its position in the global supply chain as leverage. The US and Europe, for their part, are working on strategies to become less dependent on Chinese raw materials and production capacity. This includes investing in domestic chip production and closer cooperation with partners such as Taiwan and South Korea.
The current trade war is therefore much more than a dispute over tariffs or metals such as tungsten. It is a battle for technological supremacy – and thus for economic and geopolitical power in the 21st century.
