Will the U.S. and China determine the outcome in 2031? Kuang Cheng-liang, a former legislator of the Democratic Progressive Party (DPP), stated that the United States published a strategic white paper in 2022, positioning 2022 to 2031 as a critical decade, with the outcome determined by 2031. Therefore, the U.S. must absolutely suppress China in semiconductors; otherwise, China will surpass the U.S., causing significant anxiety for the U.S. However, Kuang also pointed out that China knows its technological ace is rare earth elements. By controlling these resources, China can accelerate the arrival of shortages, leaving the U.S. unable to produce many items, such as electric vehicles, wind power motors, and military industries.

How much pain will the rare earth shortage caused by China's control bring to the U.S.? Kuang analyzed that an F-35 fighter jet requires 900 kilograms of rare earth materials, so after the control measures take effect, there will be immediate shortages. If China wants to engage in technological sanctions with the U.S., rare earth elements correspond to semiconductors. What if no trade occurs? But if the U.S. trades semiconductors for rare earth elements, it will lose its technological leverage for future suppression of China since the U.S. does not have many technologies that are more than five years ahead of China. Thus, both the Democratic and Republican establishment factions believe it necessary to suppress China, which is the consensus of the "deep state."

How should one view the competition between the U.S. and China in the semiconductor and rare earth sectors? This is a complex core strategic competition where the outcome is not a simple zero-sum game but depends on the speed of technological breakthroughs, supply chain resilience, international cooperation, and strategic patience.

In the semiconductor sector, this is the competition between American technological blockade and Chinese self-emancipation. The U.S. holds a dominant position in semiconductor design tools (EDA), high-end chips (such as GPUs), and manufacturing equipment (such as EUV lithography machines). Through export controls, the U.S. attempts to lock China’s chip industry into mature processes (above 28nm). For instance, it restricts ASML from exporting EUV lithography machines to China and pressures Applied Materials and KLA to cease supplying equipment for processes below 14nm.

Meanwhile, China’s self-breakthroughs and capacity expansion have achieved certain results. Through policy support and market demand, China has made significant progress in mature processes. For example, regarding equipment self-sufficiency rates, it is expected to reach 30%-50% by 2025. Equipment for 28nm processes has been mass-produced, with a yield rate exceeding 95% for 14nm processes, and 7nm processes are entering trial production stages. In terms of lithography machine progress, Shanghai Microelectronics' EUV prototype machine, using LDP technology, plans to mass-produce 3nm chips by 2026. Although internal ASML personnel note that commercialization still requires time, China has already achieved equivalent 7nm performance through DUV multiple exposure technology.

From a market perspective, U.S. bans have instead stimulated a 300% surge in orders for Chinese GPU manufacturers, while Intel laid off 10,000 people due to losing the Chinese market.

Regarding rare earths, this is the competition between China's resource monopoly and the U.S.'s supply chain reconstruction.

China holds absolute advantages, controlling over 70% of global rare earth processing capacities, with over 80% of medium and heavy rare earths (such as dysprosium and terbium), and mastering core technologies like rare earth cascade extraction. Through export controls, China directly impacts the U.S. defense and new energy industries: F-35 production lines halt due to rare earth shortages, and 87% of the U.S. military's 153 main combat equipment rely on China's processing.

The U.S. is attempting to rebuild the rare earth supply chain through diversification efforts and struggles, collaborating with allies (such as Saudi Arabia and Australia) to reconstruct the rare earth supply chain, but facing multiple challenges. These include technical dependence on China, as MP Materials, the only U.S. rare earth mine, still needs to ship ore to China for processing, and the U.S. domestic separation technology remains at a 20th-century level.

From a time cycle perspective, developing mines to industrial production takes 5-10 years, while China prevents technology outflow through anti-smuggling campaigns and upgrading customs inspection technologies.

From a cost perspective, although Lynas Corporation in Australia achieved a breakthrough in heavy rare earth separation technology, its factory in Malaysia, due to environmental controversies and cost pressures, operates at a capacity of only 1,500 tons per year, far below China's levels.

The reconstruction of semiconductor and rare earth supply chains typically takes 5-10 years. For instance, China plans to achieve a 50% self-sufficiency rate in semiconductor equipment by 2025, and may complete breakthroughs in advanced processes by 2031; the U.S. rare earth supply chain diversification is expected to initially take shape around 2030.

Moore's Law in semiconductors is nearing physical limits, with research and development costs for processes below 3nm skyrocketing. China might bypass through new technologies like Chiplets and quantum computing.

Global new energy vehicle and quantum communication industries will see a demand explosion for rare earths around 2030. If China maintains its monopoly on medium and heavy rare earths, it will hold greater pricing power.

Thus, this competition is also about strategic endurance. China needs to achieve full autonomy in the semiconductor supply chain while dealing with "small yard high walls" style blockades.

The U.S. needs to establish a reliable rare earth supply chain during the same period and maintain a semiconductor technology lead. If neither side achieves their goals, they may turn to negotiations or partial compromises.

If China achieves mass production of EUV lithography machines and 3nm chips before 2030, the U.S. technological blockade will fail. Conversely, if the U.S. consolidates its advantages through emerging fields like AI chips, China may remain in a long-term catch-up position.

If the U.S. breaks through medium and heavy rare earth separation technologies and establishes scaled production capacities, China's resource advantage will weaken. However, China can still dominate global pricing through rare earth futures and reserve systems. China's comprehensive industrial chain control and technological barriers are difficult to surpass in the short term.

The essence of technological competition is a marathon rather than a 100-meter sprint. For instance, ASML spent 27 years developing EUV lithography machines, and China's semiconductor autonomy cannot be achieved overnight. Similarly, rebuilding the U.S. rare earth supply chain requires a longer cycle. Therefore, the long-term nature of Sino-U.S. technological competition will present a complex situation of "you in me, me in you." For us, we must avoid blind optimism and instead build resilience through continuous investment and international cooperation.

In the end, the key to victory does not lie at a specific point in 2031 but in who can establish sustainable advantages in technological autonomy, supply chain security, and international rulemaking.

Source: https://www.toutiao.com/article/1833105955416067/

Disclaimer: The article solely represents the author's views.