Here’s what’s on our plate today:

• 🧭 Main story: How China’s rare‑earth squeeze forced the U.S. to relax AI-chip export limits.

• 🗳️ Quick poll: Could rare-earth leverage become the next AI superweapon?

• 📰 Quick Bits, No Fluff: Today’s sharp news hits—all tied to our theme.

• 💡 3 Things Worth Trying: Tools to explore rare‑earth & AI transparency.

• 💭 Thursday Trivia: Quiz to round out your thinking.

Let’s dive in. No floaties needed.

The Laboratory

How China’s minerals undermined U.S. AI controls

The contemporary world is a product of decades of geopolitical negotiations and the global exchange of knowledge and trade. Technological advancements result from miners extracting minerals, engineers developing these minerals into chips, and researchers perfecting complex neural networks. This process rests on a delicate balance of cooperation between different countries and organisations coming together to share resources that can go on to create world-changing technologies like artificial intelligence.

However, maintaining international balance often involves overcoming continuous challenges and, occasionally, relying on threats of disruption. A fine example of how delicate this balance can be, and how no one nation holds the monopoly over advancements in technology, was seen when the U.S. eased off on export controls, allowing Nvidia to resume sales of its H20 artificial intelligence chip to China. This easing off was not due to a change in the U.S. policy of trying to slow down China’s progress in AI development, but came as a response to China restricting the export of rare earth elements (REE).

Why rare earth elements matter

Rare Earth Elements, sometimes called rare earths, are a group of 17  elements, used in products from lasers and military equipment to magnets found in electric vehicles, wind turbines, and consumer electronics such as iPhones. These elements are also crucial components of semiconductors and data centers that are the backbone of AI advancements.  These materials support everything from data storage to processors running complex learning systems.

Their importance is summed up brilliantly by  Thomas Kruemmer, Director of Ginger International Trade and Investment, who said, "Everything you can switch on or off likely runs on rare earths." For example, neodymium is used to make the powerful magnets used in loudspeakers, computer hard drives, EV motors, and jet engines.

Yttrium and europium are used to manufacture television and computer screens because of the way they display colours, and are also crucial to the production of medical technology like laser surgery and MRI scans, as well as defence technology.

China’s control over rare earth elements

In April 2025, China suspended almost all exports of seven kinds of rare earth elements, as well as very powerful magnets made from three of them. To the layman, this may not seem to be a big problem, but cutting off access to REEs could hamper innovations in AI, GenAI, robotics, space exploration, clean energy technology, and rocketry.

REEs are not exactly rare. They are all over the world, though seldom in large enough ore deposits to be mined efficiently. They are called “rare” because they are very difficult to separate from one another. Realising the importance of these metals early on, China developed advanced extraction and processing capabilities. In a visit to Inner Mongolia in 1992, the late Chinese leader Deng Xiaoping, who oversaw China's economic reform, famously said: "The Middle East has oil and China has rare earths".

Through the decades, China prioritised the development of its rare earth mining and processing capabilities through a series of strategic government policies and investments. The result, the country dominates the global supply of these elements. According to the International Energy Agency (IEA), China accounts for about 61% of rare earth production and 92% of its processing. The U.S. is especially reliant on China for its supply of REEs. According to the BBC, between 2020 and 2023, the US relied on China for 70% of its imports of all rare earth compounds and metals.

When China implemented export restrictions on rare earths, global automakers were the first to sound the alarm. According to Al Jazeera, data showed that sales of rare earths to the U.S. dropped 37% in April, while the sales of rare earth magnets fell 58% for the U.S. and 51% worldwide.

German automakers warned that China's export restrictions threatened to shut down production and rattle their local economies, following a similar complaint from an Indian EV maker. At the time, Reuters reported Hildegard Mueller, head of Germany's auto lobby, stating that "If the situation is not changed quickly, production delays and even production outages can no longer be ruled out."

Western response and alternative strategies

China secured relaxations in U.S. tariffs and export controls on AI chips by leveraging its dominance in the rare earth supply chain. The restrictions imposed by Beijing also exposed the West's dependency on Chinese supplies of these esoteric metals and the permanent magnets they help power. This could lead to the West trying to build its supply chains while looking for ways to use fewer rare earth elements.

The U.S. Department of Defence has reportedly become the single largest investor in the country's rare earths sector, with the stated goal of being able to support "all U.S. defence requirements by 2027".

Automakers like Renault, BMW, and others are also investing in alternatives to reduce their dependence on rare earths. However, despite the investments, it will be years before alternative supply chains can be developed and reliance on China’s REE supply reduced. Meanwhile, governments and companies must navigate carefully to maintain global supply chains, even if it means conceding access to advanced AI technology to Chinese firms.

Geopolitical implications of rare earth dependency

The story of rare earth elements (REEs) is no longer just about geology or materials science; it has become one of the defining narratives in the global contest for technological and geopolitical supremacy. As the AI arms race intensifies, the world is coming to terms with an uncomfortable truth: cutting-edge innovations in artificial intelligence, electric vehicles, renewable energy, and defence technologies are all underpinned by a fragile and highly concentrated supply chain of critical minerals.

China’s move to restrict exports of key rare earth elements in 2025 was a stark reminder of this vulnerability. In weaponising its dominance over REE extraction and processing, Beijing sent a clear message, not just to the United States but to the entire global technology ecosystem: access to AI chips can be regulated, but the flow of rare earths can also be choked. And when that flow slows or stops, the ripple effects are immediate, from EV production slowdowns in Germany to rising anxiety in Washington’s national security circles.

What makes this situation more urgent is that building alternative supply chains is not as simple as discovering new deposits. Mining and processing REEs require significant capital investment, environmental safeguards, and years of regulatory approvals.

This evolving dynamic of rare earths is a reminder that the infrastructure powering AI is as much physical as it is digital. The chips, servers, data centres, and networks depend on raw materials buried beneath the Earth’s surface. The geopolitics of silicon cannot be separated from the geopolitics of mining. In that sense, the AI revolution may not be won solely in labs or boardrooms, but also in mines, smelters, and international treaties.

In a world increasingly defined by AI-driven innovation, the future won’t just belong to the country that writes the best algorithms. It will belong to those who control the elements that make those algorithms possible. And as the rare earth standoff has shown, access to those elements can shift the balance of power just as much as any technological breakthrough.

Quick Bits, No Fluff

• 🧠 Nvidia to boost H20 AI‑chip sales to China after export rules eased amid rare-earth export deal.

• 🔋 Apple inks $500M rare‑earth magnet deal with MP Materials to build domestic supply lines and reduce dependence on China.

• 🇩🇪 Germany launches AI offensive plan aiming at 10% GDP from AI by 2030 with EU-backed AI gigafactories by 2027.

• 🎥 Holographic storage emerges as a low-energy solution for AI-scale data stores in UK startup research.

• 🏭 U.S. DoD backs critical‑minerals push, continuing heavy investment in MP Materials to diversify supply chain.

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