The US trade war with China has profoundly affected the high-tech market. The electronics industry has been concerned primarily with the roles of chip manufacturers and the suppliers of equipment for making ICs, because that’s where the biggest disruptions in the supply chain are today.

But those disruptions have given companies around the world a reason to re-examine their entire supply chains, and there’s growing concern that China controls the market for nearly 35 precious minerals and metals that are necessary for manufacturing a very wide range of products, everything from drill bits to semiconductors. But it’s not clear precisely how concerned the global industry is about that.

Recently, a supplier of tungsten conducted what appears to be the first survey of US companies on their views of the part of the supply chain having to do with precious minerals and metals. Materials that topped the list of specific concerns include tungsten, indium, tantalum, barium, germanium and phosphorus. Most of those are important in the manufacture of semiconductors and other electronics systems.

Not all the respondents in the survey are sourcing their strategic materials from China, but among those that do, many of them rely heavily on China. A little over 10 percent get 40 to 50 percent of their strategic materials from China. Another 20 percent of respondents get between 30 to 40 percent of their strategic materials from China.

Three-quarters of the respondents say that supply chain disruptions are their biggest threats to their manufacturing business in the next 12 months.

The company that conducted the survey is Almonty, a specialist in supplying tungsten. We spoke with the company’s chairman and CEO, Lewis Black.

Can you tell us what the goal was with the survey and what the results were?

LEWIS BLACK: I think there’s a lot of information out there regarding what the supply chain issues that are being faced by companies are looking like. But there were no real sort of studies done on it. So we’re hoping that by starting off that process of really asking companies directly rather than political leaders, we could get a much better sense of what the current process is within US companies. And ultimately it showed to us what we suspected. That further diversification is imperative and that there is an over-reliance, especially on China, for products. Because ultimately there are very few other alternatives.

BRIAN SANTO: The companies you spoke to, you were talking about the end customers of materials. Did they also include any of the other suppliers or procurers of rare materials?

LEWIS BLACK: Essentially, these were all end users. Because ultimately the end of any chain is where the answers are to be found. They’ll drive what the rest of the chain looks like.

BRIAN SANTO: And you didn’t ask just about tungsten. You asked about a multiplicity of different materials.

LEWIS BLACK: Yes, we did. And that was very important, because not everyone uses tungsten, although many do. But it’s to get an overall picture of what the situation was.

BRIAN SANTO: Did you ask the survey respondents what materials they were using?

LEWIS BLACK: We asked them, obviously, What sector are you in? So there was a broad range of industries. We also then asked them, What are the strategic metals that you’re most in need of? And then we also asked them, Where do you get these from? So then you can start building a picture of their current supply chain. And then finally we asked them, What worries you? So it’s given us a good overall picture among over a hundred companies of the current concerns are with US companies. And from all over the United States. This was another question we asked them: Where in the United States are you?

BRIAN SANTO: Can you characterize some of the different industries that were surveyed?

LEWIS BLACK: Yes. We spoke to automotive, maritime, oil and gas, machine tools and industrial household good, jewelry, electrical, manufacturing both nontechnology and technology, aerospace. This gives you an example. It’s a very broad range. Because tungsten is used extensively through most, if not all, manufacturing.

BRIAN SANTO: As you know, a lot of our readers are in the electronics industry and the semiconductor industry. Did you get any results that spoke directly to that segment?

LEWIS BLACK: Yes. We spoke to consumers in the electrical space. And we found that, obviously, they are voracious consumers of tungsten. For instance, in South Korea, which is the largest producer of semiconductors in the world. They actually consume more tungsten per person than anywhere else in the world because of the semiconductor business. So tungsten is an absolutely essential ingredient in the production of semiconductors.

BRIAN SANTO: Now I understand that some of the alternate suppliers include Mexico, some of the other Asian countries, Vietnam I think was mentioned. Is it an issue of whether the materials exist elsewhere? Or is it an issue of the infrastructure to extract those materials?

LEWIS BLACK: At Almonty, our mandate is that we’ll only operate in safe jurisdictions. When we say “safe,” we mean with legal systems. So they’re all allied with the United States. I think that the biggest problem that a lot of countries face is the knowledge. The knowledge of how to extract tungsten. It’s very technical. It has been during the ’80s and ’90s and into the 21st Century, low-cost countries have had obviously a huge advantage. Even though currently they’re not so low cost anymore. But it’s almost extinguished all the knowledge in the West. And that’s really been the main problem.

In terms of infrastructure, a mine requires power and water and a road to get in and out. So they apply to that. But it’s about stability of supply. If you have a contract, does it mean anything? Can it be enforced? Are there often disputes? Is it transparent so there are not conflict material? There’s a very broad spectrum now that includes conflict material. So there are lots of those questions that unfortunately apply to many of the current sources that you can acquire from.

BRIAN SANTO: This is consistent with what I’ve heard about the supply chain, whether you’re talking about a raw material or a finished good. If you want to repatriate a capability, one of the biggest barriers is just the knowledge base. Do you know how to do what you intend to do? And often those skills are lost, right?

LEWIS BLACK: Yes. Absolutely. If there’s no industry for them to exist in, then people retire and they move on.

BRIAN SANTO: What are the courses of action or remedies that are options for these companies as they look for alternative suppliers?

LEWIS BLACK: There’s one school of thought that says government should be more actively involved. I don’t subscribe to that because traditionally governments perhaps don’t make the best decisions in regard to such technical projects. A mine is a very complex project, and there are many governments who have tried this approach, and it has not worked. It’s cost a lot of money, and ultimately they’ve ended up with no more supply than they currently had. I think that government can encourage customers to consume from more allied countries through tax benefits, simplification of the import/export process, preferred status. There are a number of programs that could be incorporated. And the market itself then would ensure that the best projects are developed, and they’re developed in neighborhoods where you can function and where you know that you can rely on that supply, and it’s transparent. So that’s really what I would expect to look to government to do. Encourage the end consumers to diversify their supply chain by offering them incentives to do so. And therefore free market principles will encourage development.

BRIAN SANTO: Excellent. Any other recommendations for a functional, diversified supply chain?

LEWIS BLACK: You have to have a strategy. You either have two strategies. You either have the strategy where you hold a vast amount of inventory to protect yourself from supply chain disruptions, or that you try and encourage multiple allies to develop supply chain options for you. I think this ultimately means increasing the knowledge base, but you can’t rely… We are the leaders in tungsten outside of China. But I say to all my customers, Don’t go more than 30 or 40 percent of what you require for me. And even then, in the long term you should reduce it. It’s not good business to be dependent. It has to be a broader diversification.

BRIAN SANTO: Very good. Anything that I’ve neglected to ask about that’s pertinent to the issue?

LEWIS BLACK: No, I think you’ve covered it very well.

BRIAN SANTO: Well, great, I want to thank you very much for your time.

LEWIS BLACK: Thanks, Brian.

BRIAN SANTO: We should note that the actual supply of most precious metals and minerals has been flowing. Few shortages have been reported. The concerns are entirely tied up with uncertainty with the political situation and the awareness that that situation has created about relying too much on any one source.

I want to thank my colleague Barb Jorgensen from EPS News for contributing to this segment. There are few journalists who know anywhere near as much as Barb does about the global supply chain. You can find her coverage at epsnews.com.

感谢收听本期推送,全球联播 (EE|Times On Air) 现已同期在喜马拉雅以及蜻蜓FM上线,欢迎订阅收听!