You probably know that the primary element used in the construction of semiconductors and computer chips is silicon, which is primarily extracted from quartz rock. What you may not know, however, is that silicon is far from the only element used in semiconductor manufacturing, and the other elements needed are some of the rarest in the world.
That’s important today because control over those other materials, such as gallium arsenide and germanium, are at the heart of a geopolitical conflict that has been brewing for a while between the U.S. and China, and it could send shockwaves through an industry responsible for providing essential components needed for almost every electronic device we use today.
China’s introduction of export restrictions for gallium and germanium is being viewed by some as a response to the United States government’s recent attempt to prevent Chinese companies from using U.S.-based cloud computing providers, like Microsoft’s Azure and Amazon Web Services, in order to curb their ability to develop AI technologies.
The market implications are potentially staggering. China accounted for over 70% of the world’s mining production of rare earth elements in 2022, and currently controls about 85% of the world’s capacity to process those elements into manufacturing materials for semiconductors and other electronics.
That’s putting extreme pressure on the United States and Europe to create their own production pipelines, and domestic mining companies are seeing an uptick in stock prices off of the recent news. As this conflict continues to heat up, I see increasing demand pushing that sector even higher, and a small company out of Nevada that controls the only rare earth mine and processing facility in the U.S. is going to be a major beneficiary.
They’re already up about 5% intraday as I write this, and I think it’s the beginning of a long skyward climb, especially if China sticks to its guns. Now is the time to get in.
For all the info, check out this video:
— Shah Gilani
Source: Total Wealth