Contemplates Using $2 Billion from CHIPS Act for Enhancing Domestic Critical Mineral Supply Chain - Intent to Lessen United States' Rare-Earth Dependence on China
The U.S. is facing a critical challenge in maintaining its chip-making industry, with the demand for chips and semiconductors accelerating worldwide. The need for these essential components is soaring, and current efforts may still be insufficient to meet this demand.
In response, the White House is considering various strategies to increase American production of critical minerals, a move aimed at reducing dependence on China, which currently dominates the supply of rare earths. One such strategy is to invest $2 billion from the CHIPS Act fund in domestic production and processing of rare earth elements.
This move is part of a broader effort to enhance American self-sufficiency in these critical materials. Rare earth minerals are indispensable to the electronics and defense industries. For instance, dysprosium is used in hard drives and electric vehicles, scandium in Wi-Fi modules, and germanium, gallium, and others in various applications.
The Trump administration has also expressed its interest in using existing funds allocated by the Biden administration for semiconductor investments, without requesting additional funding from Congress. Meanwhile, Elon Musk aims to deploy 50 million H100-equivalent AI GPUs in the next five years, further escalating the demand for these minerals.
The AI race between the U.S. and China is intensifying, with organizations ordering hundreds of thousands of GPUs. In response, Western Digital has launched a new recycling process that reclaims rare earth minerals from old hard disk drives, while Australia is scavenging rare earths from mining waste.
Canada is also planning to expand its mining industry, joining the global effort to secure a steady supply of critical minerals. However, to gain true independence in chip making, Washington must ensure access to these minerals locally or from allies that aren't threatened by its adversaries.
Over $8 billion of the $39 billion earmarked for chip manufacturing and R&D in the CHIPs Act remains unallocated. The White House's strategy to use these funds wisely is crucial in ensuring the U.S.'s position as a global leader in chip production and self-sufficiency in critical minerals.
