The supply chain will focus on semiconductors, electric vehicle batteries, rare earths and medical devices.
According to Nikkei, US President Joe Biden will sign an executive order this month to build the supply chain of important chips and technology products without relying on China, through cooperation with Japan and South Korea.
The supply chain will focus on semiconductors, electric vehicle batteries, rare earths and medical devices. It would be a supply chain less susceptible to disruption such as natural disasters or the policies of hostile countries.
The executive order clearly states that working with U.S. allies will help build a strong and flexible supply chain. Washington will cooperate with Japan and South Korea in chipmaking and Asia-Pacific economies, including Australia, to exploit rare earths.
The United States will cooperate with allied countries to share the supply of this technology. Consider securing a huge stock, ready to deliver in the most urgent cases. This would threaten China’s position as a world producer.
According to Boston Consulting Group, the United States has seen its share of semiconductor manufacturing decline in recent decades. From 37% in 1990, this percentage fell to just 12% in 2020.
More importantly, the United States imports up to 80% of all rare earth metals from China and around 90% of medical products. The Biden administration sees this dependence as a risk to national security.
Electric vehicle batteries are also an important source. While Koreans Panasonic and LG Chem are slowly losing market share to their Chinese rivals, the United States will not let this continue.
However, restructuring the technology supply chain away from reliance on China will take a long time.