Some of the key policies set in the draft 5-year plan included building a more robust “response mechanism” to enhance its supply chain security and enhancing its “competitive advantages in rare earths.” This is the biggest issue that China has encountered so far in its drive for technological superiority. The U.S. has been applying export controls to several critical technologies that the country needs, like Nvidia’s and AMD’s latest AI chips, as well as ASML’s photolithography machines, which chipmakers need to make the most advanced semiconductors. On the other hand, Beijing now requires export licenses for rare earth materials , making it harder for tech companies and semiconductor manufacturers to acquire these minerals that are crucial to making the highest-end chips.
Beyond supply chain issues, Beijing promises to prioritize research and development, with the 5-year plan calling to increase investment in domestic innovation by 7% or more annually. Although this might seem like an ambitious goal, it actually continues the target set during the previous 5-year plan, which is seemingly returning dividends for the country. More than that, it added that it will take “extraordinary measures” in several crucial areas, including semiconductors, industrial machinery, and advanced materials. It also mentioned a push on humanoid AI robots, focusing on integrating “the brain and cerebrum,” as well as the establishment of hundreds of vocational institutions to train Chinese citizens on strategic industries like artificial intelligence.
Chipmakers still suffering from rare earth shortages, says report
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/china-seeks-to-enhance-rare-earth-advantages-take-extraordinary-measures-to-achieve-semiconductor-breakthroughs-new-five-year-plan-marks-doubling-down-on-technological-self-reliance#main
- https://www.tomshardware.com
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Informational only. No financial advice. Do your own research.