By Michael Kern - Dec 02, 2025, 4:00 PM CST
- The United States is leading a diplomatic initiative with eight allied nations—including Japan, South Korea, and Australia—to forge secure supply chains for the critical minerals and advanced semiconductors essential to the artificial intelligence sector.
- The primary motivation is to build resilience and reduce the West's dependence on China, which accounts for a dominant share of global refining capacity for key materials like rare earth elements, posing a risk of "coercive dependencies."
- The strategy is comprehensive, focusing on all layers of technology from the extraction of critical minerals like lithium and cobalt to the advanced manufacturing of semiconductors, complementing domestic investments like the CHIPS and Science Act.
The United States is launching a pivotal diplomatic push with eight allied nations to forge secure, end-to-end supply chains for the critical minerals and advanced semiconductors that underpin the burgeoning artificial intelligence (AI) sector. The effort, driven by geopolitical concerns over concentrated global production, is set to formally begin with a summit at the White House on December 12, according to Jacob Helberg, the Undersecretary of State for Economic Affairs.
This strategic alignment, involving Japan, South Korea, Singapore, the Netherlands, the United Kingdom, Israel, the United Arab Emirates, and Australia, marks an escalation of the U.S. strategy to build resilience and reduce the West's dependence on China in high-stakes technological domains. The focus of the agreements will span energy, critical minerals, advanced manufacturing of semiconductors, AI infrastructure, and transportation logistics.
The Supply Chain as the New Strategic Battleground
The immediate impetus for the initiative is the strategic competition between the U.S. and China over future technologies. Helberg noted, "It’s clear that right now in AI, it’s a two-horse race—it’s the U.S. and China." The risk is not merely commercial; it is one of "coercive dependencies," a vulnerability highlighted by China’s history of imposing export controls on key materials.
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The participating nations were selected for their specific roles in the global tech ecosystem: either as home to world-leading semiconductor firms—like the Netherlands' ASML or South Korea's Samsung and SK Hynix—or for their rich critical mineral resources, such as Australia. This targeted approach is a shift from previous, broader coalitions, emphasizing countries that control essential stages of production.
Fueling the Energy Transition and AI Boom
The stability of these supply chains is paramount, not just for AI, but for the global energy transition. Critical minerals like lithium, cobalt, nickel, and rare earth elements (REEs) are non-negotiable inputs for electric vehicle (EV) batteries, wind turbines, and the high-efficiency motors in advanced manufacturing.
The vulnerability is stark: China accounts for a dominant share—upwards of 90 percent—of global refining capacity for rare earth elements and the subsequent manufacturing of rare earth permanent magnets, according to the International Energy Agency (IEA). REEs, such as neodymium and dysprosium, are essential for the high-power magnets used in nearly all modern EV motors and large-scale wind generators. A disruption in the supply of these materials would directly impede the decarbonization efforts of the allied nations.
Similarly, the demand for cutting-edge semiconductors, which are the fundamental hardware for AI models, requires vast inputs of critical materials, including gallium and germanium. The U.S. relies on East Asia for an estimated 75 percent of global semiconductor production, illustrating a structural risk this initiative aims to mitigate.
Building on Prior Efforts with a Broader Mandate
The current initiative builds upon years of groundwork laid by prior administrations. The first Trump administration launched the U.S. Energy Resource Governance Initiative to focus on securing minerals like lithium and cobalt, while the Biden administration’s Minerals Security Partnership (MSP) aimed to funnel investment into trusted producer countries.
However, Helberg noted that the new plan is broader, focusing on all layers of technology involved in AI, acknowledging the sector's explosion since platforms like ChatGPT came to the fore. Furthermore, the strategy complements major domestic investments, such as the CHIPS and Science Act, which earmarks billions of dollars for boosting domestic semiconductor manufacturing capacity. Other efforts, like the Department of Energy's (DOE) recent announcement of $355 million in funding to expand domestic recovery of critical materials from industrial byproducts, underscore the multi-faceted push to de-risk the supply chain from the mine to the final product.
Ultimately, the goal is to create a parallel, resilient ecosystem among trusted partners. As Helberg stated, "Countries who are participating understand the transformative impact of AI, both for the size of a country’s economy, as well as the strengths of a country’s military." The December summit is an effort to translate this shared understanding of strategic risk and economic opportunity into concrete, collaborative agreements.
By Michael Kern for Oilprice.com
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