NEW YORK – A few days after China acted to restrict export of rare-earth materials to Japan in late September, I was on my way to Japan. I already knew that this embargo was a huge headline item back in Japan, since Japan is one of the countries hardest hit by the tightening of rare earth supplies.
Without being jingoistic (yes, I originally come from Japan), I’d like to point out why this story should matter to everyone working in the global electronics industry. I see in this rare earth story a microcosm of our future – how our business and technology relationship with China could very well unfold over the next decade. The worst case scenario in dealing with China — an outcome we’ve been secretly dreading for decades —looms ever larger.
As Paul Krugman succinctly pointed out in his recent Op-ed column in The New York Times, “Couple the rare earth story with China’s behavior on other fronts — the state subsidies that help firms gain key contracts, the pressure on foreign companies to move production to China and, above all, that exchange-rate policy — and what you have is a portrait of a rogue economic superpower, unwilling to play by the rules.”
As Krugman frames it and we all wonder, the question is: What are the rest of us going to do about this?
As EE Times prepares for the cover story on the rare earth topic in the next Monday issue (Oct. 25th), what struck me as odd -- although I probably shouldn’t have been so naïve -- was an unwillingness to risk any comment at all, especially among those working in electronics companies who use rare-earth materials and/or who use components made of rare-earth materials. Clearly, these “customers” are leery of scrutiny from China or their shareholders, or both. Some anonymously admitted fear of Chinese retaliation.
Others pretend that rare earth is no big deal, because they don’t use much of it, or — if they can’t source rare-earth components from Japan — they’ll simply switch to vendors in China. So, what’s the big deal?
Well, I think there is a big deal here.
I understand that many of our readers recoil at the politicization of technology issues. But let’s face it. Sometimes our livelihoods – our engineering jobs, our economy and the future of our kids – intertwines inextricably with the policy decisions our government makes in diplomacy, economics, global trade, etc.
While in Japan, I found one clear and unafraid voice in Hiroshi Shimizu, Prof. of applied physics at Keio University and president of SIM-Drive Corp., a Keio spin-off that’s developing a new EV prototype for the mass market.
Shimizu proposed three steps Japan can take to minimize Japan’s dependence on China for rare-earth elements.
Shimizu explained that Japanese researchers, such as Masato Sagawa, led the world in the development of the Neodymium permanent magnet nearly 30 years ago. The magnet, further improved with the addition of Dysprosium, is now used in air conditioners, refrigerators, hybrid cars and EV motors, according to Shimizu. Among all rare-earth elements, Neodymium is relatively abundant. It is mined throughout the world, but at the moment, China is the main source of its supply. More problematic is Dysprosium, said Shimizu, because it’s harder to find outside China.