Geopolitics, Advanced Materials and Technological Supremacy

The global competition for dominance in the science and production of advanced materials has emerged as a primary arena for 21st-century great power rivalry, fundamentally reshaping the landscape of international security and economic power. This report argues that this contest, particularly between the United States and the People’s Republic of China, is creating new, potent forms of strategic dependency and is best understood through the complementary lenses of the Thucydides Trap and a modern variant of resource nationalism, termed “techno-nationalism.” The era of viewing global supply chains as apolitical, efficiency-driven networks has definitively ended; they are now recognized as central battlegrounds of geopolitical competition.

Advanced materials, substances intentionally engineered to exhibit superior performance, are not merely incremental improvements but revolutionary enablers of next-generation military and economic capabilities. From the hypersonic vehicles and stealth aircraft that redefine strategic deterrence to the semiconductors and batteries that power the digital and green economies, leadership in materials science is now a core pillar of national power. This reality has triggered a fierce competition to control not just the raw mineral inputs but, more critically, the midstream processing, refining, and advanced manufacturing capabilities required to transform these resources into strategic assets.

This analysis reveals a critical vulnerability for the United States and its allies: the hyper-concentration of these midstream capabilities within China. This dominance, the result of a decades-long, state-directed industrial strategy, has granted Beijing significant coercive leverage, allowing it to weaponize interdependence by threatening or imposing export controls on critical materials like rare earth elements, gallium, and germanium.

This dynamic mirrors the structural stress described by the ancient Greek historian Thucydides, where a rising power (China) challenges the position of a ruling power (the United States), creating a dangerous rivalry. In the 21st century, this “Thucydides’ Trap” is manifesting not as a traditional arms race, but as a high-stakes contest for technological supremacy, where a breakthrough in materials science could confer a decisive strategic advantage.

In response, nations are embracing techno-nationalism, deploying state power to secure their technological base. This report examines the key strategic responses: China’s use of export controls as coercive economic statecraft; the United States’ landmark CHIPS and Science Act, a massive state-led effort to re-shore critical semiconductor manufacturing; and the formation of the Minerals Security Partnership (MSP), an alliance-based “friend-shoring” initiative to build resilient, non-Chinese supply chains.

The report concludes that mastery over the lifecycle of advanced materials, from mine to processing to finished product, is a defining feature of modern statecraft. It offers a series of strategic recommendations for policymakers and industry leaders focused on mitigating supply chain vulnerabilities through a multi-pronged strategy of onshoring, friend-shoring, strategic stockpiling, and investment in a circular economy. It further advises strengthening alliances and fostering foundational research and development to ensure long-term competitiveness, while simultaneously establishing diplomatic frameworks to manage this intense competition and avert a catastrophic escalation of conflict.

The Material Foundations of Modern Power

The history of human civilization and the balance of global power have always been inextricably linked to the mastery of materials. The progression from the Stone Age to the Bronze Age and the Iron Age marked not just technological evolution but fundamental shifts in military capability, economic productivity, and social organization. The Industrial Revolution was powered by the mass production of higher-grade steel, enabling the construction of empires. In the 21st century, a new material revolution is underway, one that is again redefining the sources of national power. This revolution is centered on advanced materials, a diverse class of substances whose properties are not merely discovered but are intentionally designed at the atomic and molecular levels for superior performance in demanding applications. Control over the science and production of these materials is no longer a niche industrial concern; it is a foundational element of military, economic, and technological supremacy.

From Conventional to Advanced Materials

Advanced materials are a broad and heterogeneous group of substances engineered to possess novel or enhanced properties compared to their conventional counterparts. They are the product of a paradigm shift in science, moving beyond the manipulation of bulk materials to the precise engineering of atomic structures, construction methods, and elemental components. This allows for the creation of materials with exceptional strength, durability, thermal resistance, conductivity, or other unique characteristics tailored for high-performance applications. The development of these materials is a multi-disciplinary endeavor, drawing on expertise in chemistry, physics, nanotechnology, ceramics, and metallurgy.

This revolution encompasses several key categories of materials, each enabling distinct strategic capabilities:

• Composites: These materials are formed by combining two or more constituent materials to achieve superior mechanical and structural properties. Carbon Fiber Reinforced Polymers (CFRPs), which consist of high-strength carbon fibers embedded in a polymer matrix, offer exceptional strength-to-weight ratios, making them lighter than traditional metals while maintaining high structural integrity. Ceramic Matrix Composites (CMCs), which reinforce a ceramic matrix with fibers (often silicon carbide), are prized for their ability to withstand extreme temperatures while remaining lightweight and strong.
  
• Advanced Alloys: This category includes traditional metals that have been tuned to achieve extreme performance. Nickel-based superalloys are indispensable for their ability to maintain strength and resist corrosion at the very high temperatures found inside jet engines and rocket propulsion systems. Titanium alloys offer an exceptional combination of high strength, low density, and corrosion resistance, making them ideal for critical aerospace structures like aircraft frames and landing gear. Aluminum-lithium alloys provide a lighter and stiffer alternative to conventional aluminum, contributing to significant weight savings in aircraft fuselages and wings.
  
• Advanced Ceramics: Engineered ceramics like alumina, zirconia, and silicon carbide offer extreme hardness, high strength, and resistance to heat and wear that surpasses metals and polymers in many applications. They are used as insulators in electronics, heat shields in aerospace propulsion, and biocompatible implants in medicine.
  
• Nanomaterials: Operating at the scale of one-billionth of a meter, nanomaterials such as graphene and carbon nanotubes exhibit unique physical and chemical properties due to their size. These properties are being harnessed to create stronger and lighter composites, more efficient electronics, and novel medical treatments like targeted drug delivery.
  
• Smart Materials: These materials are designed to respond dynamically to changes in their environment, such as temperature, pressure, or electricity. Shape-memory alloys that can return to their original shape when heated are being explored for adaptive structures like morphing aircraft wings, while piezoelectric materials that convert mechanical stress into electricity can be used for structural health monitoring.

The transition to advanced materials represents a fundamental shift from a resource-extractive model of power to a knowledge-based one. Historically, geopolitical strength was closely tied to the control of vast quantities of bulk commodities like iron ore and coal. The defining characteristic of advanced materials, however, is not their raw abundance but their sophisticated synthesis and engineering. This means that national power is no longer determined solely by possessing territory rich in natural resources. It is now increasingly defined by the possession of the scientific infrastructure, intellectual capital, and advanced manufacturing base required to design, develop, and produce these materials at scale. A nation can possess immense mineral wealth but lack the technological capability to convert it into strategic assets, rendering it dependent on those nations that can. This dynamic creates a new and more complex hierarchy of global power, one predicated on technological prowess rather than just geological luck.

Military and Economic Supremacy

The superior properties of advanced materials translate directly into tangible strategic advantages, enabling entirely new technological and military capabilities that were previously unattainable. They are the foundational building blocks for the systems that will define the competitive landscape of the 21st century.

In the aerospace and defense sectors, the impact is revolutionary. The constant drive for lighter, stronger, and more durable structures is a paramount requirement for maintaining a military edge. Advanced materials are the key to achieving this goal.

• Enhanced Performance and Efficiency: The high strength-to-weight ratios of composites like CFRPs and advanced alloys like titanium and aluminum-lithium allow for the construction of aircraft and spacecraft that are significantly lighter without sacrificing structural integrity. This weight reduction directly translates into improved fuel efficiency, greater payload capacity, and longer range, critical attributes for both commercial aviation and military power projection.
  
• Survivability and Durability: Aircraft and missiles operate in extreme environments, subject to high temperatures, intense pressures, and corrosive elements. Superalloys and CMCs are essential for components in the “hot sections” of jet engines, such as turbine blades and combustor liners, allowing them to operate at higher temperatures for greater thrust and efficiency. The corrosion and fatigue resistance of composites reduces maintenance requirements and extends the operational lifespan of military platforms.
  
• Next-Generation Capabilities: Advanced materials are the primary enablers of disruptive military technologies. Hypersonic vehicles, which travel at speeds above Mach 5, are entirely dependent on materials like CMCs and specialized alloys that can withstand the extreme heat and aerodynamic stress generated during flight. Similarly, the stealth capabilities of modern fighter jets like the F-22 and F-35 rely on advanced composites and coatings that absorb or deflect radar signals, reducing their detectability and enhancing their survivability in contested airspace.

Beyond defense, advanced materials are critical drivers of the global economy, particularly in the high-technology and energy sectors.

• Energy Transition: The global shift to renewable energy is heavily reliant on advanced materials. High-performance magnets made from rare earth elements are essential for the generators in wind turbines and the motors in electric vehicles. Next-generation solar cells using materials like perovskites promise higher efficiency, while advanced polymers and composites are used in energy storage systems.
  
• Digital Infrastructure: The digital economy is built upon a foundation of advanced materials. Nanomaterials and conductive polymers are enabling the development of faster, smaller, and more efficient electronic devices, from smartphones to advanced computing systems. The entire semiconductor industry, a cornerstone of modern technology, is a story of materials science, constantly pushing the boundaries of silicon and exploring new materials to continue the trend of miniaturization and increased processing power.

The performance gap created by the adoption of advanced materials is not merely incremental; in many cases, it is exponential, creating a “capability chasm” between technological leaders and laggards. A fighter jet constructed with advanced composites and powered by an engine with superalloy turbine blades is not just marginally better than a predecessor built from conventional aluminum. It may possess the ability to fly faster, higher, and longer while remaining undetected by enemy radar, rendering the older platform strategically obsolete. This is particularly true for disruptive technologies like hypersonics, where the capability itself is impossible without materials that can survive the punishing physics of high-speed flight. Consequently, the nation that achieves and maintains a lead in materials science can secure a decisive, and potentially irreversible, military and technological advantage. This dynamic dramatically raises the stakes of the global competition for material supremacy, transforming it from an industrial race into a core component of national security strategy.

The New Great Game

The strategic value of advanced materials has given rise to a new “Great Game,” a global competition for control over the resources that form their foundation. Unlike the geopolitical contests of the past, which often centered on control of territory or sea lanes, this 21st-century rivalry is focused on dominating the complex, globally dispersed supply chains that transform raw minerals into high-technology components. An analysis of these supply chains reveals a landscape of profound strategic vulnerabilities, characterized by extreme geographic concentration and critical choke points. This structure of “interdependence” is no longer a benign feature of globalization; it has become a potent weapon that can be leveraged by states to achieve geopolitical objectives.

The journey from a mineral in the ground to a finished component in a defense or technology system is a long and complex one, typically involving three stages: upstream mining and extraction, midstream processing and refining, and downstream manufacturing. While public attention often focuses on the location of mines, the true strategic leverage lies in the midstream stage, where raw ores are transformed into the high-purity metals, alloys, and chemical compounds required for advanced applications. It is here that global production is most heavily concentrated, creating dangerous dependencies for consumer nations.

This concentration is stark across a range of materials deemed critical for economic and national security :

• Rare Earth Elements (REEs): This group of 17 elements is essential for high-performance permanent magnets used in everything from F-35 fighter jets and precision-guided missiles to electric vehicle motors and wind turbines. While China accounts for approximately 60% of global REE mining, its dominance in the midstream is far more pronounced, controlling over 85% of global processing capacity and more than 90% of the manufacturing of the powerful neodymium-iron-boron magnets.
  
• Cobalt: A key component in the lithium-ion batteries that power electric vehicles and portable electronics, as well as in high-temperature superalloys for jet engines. The Democratic Republic of Congo (DRC) is the source of roughly 70% of the world’s mined cobalt, a concentration that itself poses significant risks due to political instability. However, the strategic choke point lies in refining, where Chinese companies process approximately 70% of the global cobalt supply, much of it sourced from the DRC.
  
• Lithium: Another indispensable battery material, lithium is primarily mined in Australia and Chile. Yet, again, China is a dominant force in the refining stage, converting raw lithium concentrate into battery-grade chemicals and controlling nearly 60% of this critical processing capacity.
  
• Gallium and Germanium: These minerals are vital for advanced semiconductors, fiber optics, and military applications like night vision and advanced radar systems. China’s control here is overwhelming, producing around 90% of the world’s gallium and 60% of its germanium in 2022. This near-monopoly gives it a powerful lever over the foundational elements of the digital and defense economies.

The Midstream as the Center of Gravity

China’s dominance in midstream processing is not an accident of geology or a simple outcome of market forces. It is the result of a deliberate, decades-long state-directed industrial strategy designed to capture the most critical nodes of the global materials supply chain. This strategy involved a combination of powerful tools:

• State Subsidies: The Chinese government provided massive financial support to its domestic processing and refining industries, allowing them to undercut global competitors and achieve economies of scale.
  
• Environmental Standards (Historically): For many years, less stringent environmental regulations lowered operational costs for Chinese processors, making it difficult for firms in more heavily regulated Western countries to compete.
  
• Strategic Acquisitions: Chinese state-owned and state-influenced enterprises have aggressively acquired stakes in mining operations and processing facilities around the world, securing access to raw materials and extending their control across the value chain.
  
• Export Quotas and Taxes: Beijing has historically used tiered quotas and taxes to discourage the export of raw materials and incentivize the export of higher-value, processed materials and finished goods, effectively forcing downstream manufacturing to relocate to China to be near the processed supply.

The cumulative effect of this strategy is a profound global dependency. Even when critical minerals are mined in friendly and allied nations, such as lithium in Australia or rare earths from the revitalized Mountain Pass mine in the United States, the raw concentrate often has to be shipped to China for processing into usable forms. This dynamic creates a critical vulnerability at the heart of Western defense and industrial supply chains.

The pursuit of economic efficiency through globalization by Western nations inadvertently created their greatest strategic vulnerability. For decades, economic policy in the U.S. and Europe prioritized cost minimization and just-in-time logistics. This led to the systematic offshoring of capital-intensive and environmentally challenging activities like mineral processing and refining to lower-cost jurisdictions, chief among them China. While this approach successfully lowered costs for consumers and manufacturers, it was predicated on a profound miscalculation: the failure to account for geopolitical risk. China, operating with a long-term strategic vision, expertly capitalized on this by subsidizing these industries to achieve market dominance. The result is a classic case of short-term economic optimization leading to long-term strategic dependency. The West, in effect, outsourced a critical component of its national security infrastructure in the name of efficiency.

Supply Chains as Levers of Power

This deep-seated dependency has transformed the nature of global interdependence. What was once seen as a force for peace and stability, the idea that interconnected economies are less likely to go to war, can now be “weaponized.” A state that occupies a central, unavoidable node in a global network can leverage this position to coerce or pressure other states by threatening to restrict or deny access to critical goods or markets.

China’s overwhelming control of midstream mineral processing gives it precisely this capability. It can create artificial supply shortages, drive price volatility, and, in a crisis, potentially cut off the supply of materials essential for an adversary’s defense industry and critical infrastructure. This potential for economic blackmail transforms commercial supply chains into instruments of national power and arenas of geopolitical conflict.

Furthermore, control over processing provides not only coercive leverage but also a powerful intelligence advantage. By refining the vast majority of the world’s strategic minerals, a dominant state like China gains unparalleled, real-time visibility into global supply and demand dynamics. It can monitor which companies and countries are purchasing specific materials, in what quantities, and for what likely end uses. A sudden surge in demand from a U.S. defense contractor for the specific rare earth alloys used in missile guidance systems, for example, could serve as an early warning indicator of a ramp-up in military production. This “supply chain intelligence” is a subtle but potent form of strategic advantage, providing a window into an adversary’s industrial and military activities that is difficult to obtain through traditional intelligence-gathering methods.

Table 1: Global Choke Points in Critical Mineral Supply Chains

*Note: Percentages are approximate and can fluctuate based on annual production data. The table synthesizes data from multiple sources to illustrate general market dominance.

Thucydides Trap and Technological Competition

The intensifying rivalry between the United States and China over advanced materials and technological supremacy is not merely a trade dispute or an industrial competition. It reflects a deeper, structural shift in the international order that echoes one of history’s most dangerous patterns. The ancient Greek historian and general Thucydides, in his seminal work History of the Peloponnesian War, provided a timeless diagnosis for why established and rising powers so often clash. His analysis offers a powerful, if unsettling, lens through which to understand the dynamics of the U.S.-China relationship today.

The concept of the “Thucydides Trap” was popularized by Harvard political scientist Graham T. Allison to describe the severe structural stress that occurs when a rising power threatens to displace a ruling one. Thucydides himself identified this dynamic as the root cause of the catastrophic war that devastated ancient Greece, famously writing: “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable”.

The trap is not about the malevolent intentions of leaders or cultural misunderstandings, but about the powerful, impersonal forces generated by a rapid shift in the balance of power. The rising power, growing in strength and influence, naturally demands a greater say and role in the international system. The ruling power, accustomed to its preeminent position, views this ascent as a fundamental threat to its interests and security. This dynamic creates a volatile environment where even minor incidents, a trade dispute, a cyberattack, or an accident at sea, can escalate into a major conflict. Allison’s research at Harvard’s Belfer Center identified 16 historical cases over the past 500 years where this power transition dynamic occurred. In 12 of those cases, the result was war.

U.S.-China Rivalry

The contemporary relationship between the United States, the established global hegemon since the end of the Cold War, and a rapidly rising China fits the classic Thucydidean pattern. China’s decades of remarkable economic growth have translated into expanding military capabilities and growing global influence, creating precisely the structural stress that Thucydides described.

The “fear” in Washington is palpable. It is not merely a fear of China’s economic size, but a deeper anxiety about the nature of its ambition. China is not seeking to simply become a richer version of its current self; it is striving for global leadership in the foundational technologies of the 21st century, including artificial intelligence, 5G telecommunications, quantum computing, and, critically, advanced materials. Success in these areas would not only erode America’s economic competitiveness but would also undermine the technological superiority that has long been the bedrock of its military power and global influence. From this perspective, China’s rise is a direct challenge to the entire U.S.-led international order.

Battlefield of the 21st Century

While the structural dynamic of the Thucydides Trap is ancient, the primary domain of the U.S.-China conflict is distinctly modern. A direct, large-scale military confrontation between the two nuclear-armed powers, while possible, is constrained by the logic of mutually assured destruction. As a result, the competition is being sublimated and channeled into other arenas, with the conflict focused more on economics, technology, and politics than on a conventional “hot” war.

The struggle for dominance in advanced materials and their critical applications, particularly semiconductors, has become a central front in this new form of great power conflict. It is a proxy war for the larger struggle for global hegemony. Control over the materials that enable hypersonic missiles, advanced AI chips, and next-generation energy systems is seen by both sides as a prerequisite for long-term strategic advantage. In this context, an action like imposing export controls on semiconductor manufacturing equipment is not just a trade measure; it is a strategic move in a larger geopolitical contest, akin to a naval blockade in a previous era.

This technological competition introduces a variation on the classic security dilemma, which could be termed a “capability dilemma.” The traditional security dilemma describes a situation where one state’s defensive military buildup is perceived by another as an offensive threat, leading to a reciprocal arms race that makes both sides less secure. In the technological realm, the dynamic is subtly different but equally dangerous. When China announces a breakthrough in a new superalloy that enables hypersonic flight, the concern in the United States is not simply that China will build more missiles. The fear is that China has achieved a qualitative leap in capability that existing U.S. technology cannot counter, rendering entire defense systems obsolete. This fear of being technologically out-classed, of facing a “capability chasm,” forces a frantic and destabilizing race for innovation in foundational sciences like materials research. In this race, falling behind means not just being outgunned, but being strategically checkmated.

The deeply interconnected nature of the 21st-century global economy adds another layer of complexity and danger to this Thucydidean dynamic. Sparta and Athens were largely separate economic entities. The United States and China, by contrast, are profoundly intertwined through trillions of dollars in trade and investment. This very interconnectedness means that actions taken by one side to reduce its perceived vulnerability can themselves become triggers for conflict. When the United States implements policies like the CHIPS and Science Act to re-shore semiconductor production, it views this as a necessary defensive measure to secure its supply chains and mitigate a strategic dependency. From Beijing’s perspective, however, this is perceived as an aggressive and hostile act designed to “cause China to stop expanding as an economic power” and to deny it its rightful place in the global order. Such actions, intended to enhance U.S. security, are interpreted by China as a direct threat to its core national interests, prompting retaliation, such as the export controls on gallium and germanium. This creates a perilous tit-for-tat cycle of escalation, where each side’s defensive moves are seen as offensive by the other, increasing the risk of miscalculation and spiraling the two powers deeper into the Thucydides Trap.

The Rise of Techno-Nationalism

In response to the strategic vulnerabilities exposed by hyper-concentrated supply chains and the escalating great power competition, a powerful new ideological force is reshaping global economic policy: techno-nationalism. This represents an evolution of traditional resource nationalism, adapting its principles to the realities of the digital age. States are increasingly deploying the full spectrum of their power, legislative, financial, and diplomatic, to assert control not just over physical resources, but over the entire technological ecosystem, from critical materials to advanced manufacturing. This trend marks a decisive break from the post-Cold War consensus on globalization and is actively creating a more fragmented and contested global order.

Resource nationalism is broadly defined as the tendency of governments to assert control over natural resources located within their territory for strategic and economic reasons. Historically, this has manifested in various forms, including the imposition of higher taxes and royalties on foreign investors, demands for increased local ownership, contract renegotiations, and, in its most extreme form, the outright nationalization of assets. The primary motivation has often been to capture a larger share of the economic rents from finite resources, particularly during periods of high commodity prices.

In the 21st century, this concept is evolving into “techno-nationalism.” The focus is shifting from resources that are valuable simply for their revenue-generating potential to those that are critical inputs for high-technology and defense industries. The strategic objective is no longer just national wealth, but technological sovereignty and a decisive edge in geopolitical competition. Under this paradigm, controlling the supply of gallium or rare earth elements is not just about maximizing export revenue; it is about controlling the foundational building blocks of an adversary’s semiconductor and defense industries. This shift elevates resource control from a matter of economic policy to one of paramount national security.

Offensive Techno-Nationalism

China’s actions regarding gallium and germanium serve as a prime example of offensive techno-nationalism. In July 2023, Beijing announced it would require export licenses for these two critical minerals, and in December 2024, it escalated this policy to an outright ban on their export to the United States. These materials are indispensable for a range of advanced technologies, including high-performance semiconductors, 5G infrastructure, and military radar systems.

This move was not a random act of commercial policy. It was widely and correctly interpreted as a direct, tit-for-tat retaliation for U.S. export controls aimed at crippling China’s advanced semiconductor industry. By targeting gallium and germanium, Beijing sent a clear signal: if the U.S. attacks China’s technological ambitions at its choke points (e.g., access to advanced chip-making equipment), China will respond by attacking U.S. vulnerabilities at its own choke points (e.g., access to critical raw materials). This act demonstrated both China’s awareness of its leverage within global supply chains and its willingness to weaponize that leverage as a tool of coercive economic statecraft.

Defensive Techno-Nationalism

The CHIPS and Science Act of 2022 represents the cornerstone of the United States’ defensive techno-nationalist strategy. This landmark legislation authorizes roughly $280 billion in new funding, with a core appropriation of $52.7 billion specifically to incentivize the onshoring of semiconductor research, development, and manufacturing. The act provides subsidies, investment tax credits, and R&D funding to encourage companies to build advanced semiconductor fabrication plants (“fabs”) on U.S. soil.

The primary motivation behind the CHIPS Act is national security. The COVID-19 pandemic exposed the extreme fragility of the semiconductor supply chain, and the growing rivalry with China highlighted the profound strategic risk of being dependent on foreign sources, particularly Taiwan, for the most advanced chips. The act is therefore a massive state-led industrial policy initiative designed to reduce these critical vulnerabilities, ensure U.S. leadership in a foundational technology, and counter China’s own ambitions to dominate the industry. Significantly, the act identifies advanced materials as one of the ten key technology areas critical to national security, authorizing investments to accelerate innovation in this field. The legislation also includes “national security guardrails” that prohibit recipient companies from expanding advanced chip production in countries of concern, like China, thereby aiming to prevent U.S. funding from benefiting a strategic rival.

Alliance-Based Techno-Nationalism

Recognizing that no single nation can fully re-shore the entire complex web of critical mineral supply chains, the United States has also pursued an alliance-based techno-nationalist strategy. The Minerals Security Partnership (MSP), launched in June 2022, is a collaboration between the U.S., the European Union, and 13 other partner countries, including Australia, Canada, Japan, and the United Kingdom.

The explicit goal of the MSP is to catalyze public and private investment to build diverse, secure, and responsible critical mineral supply chains that adhere to high environmental, social, and governance (ESG) standards. Implicitly, its primary objective is to develop viable supply chains outside of China, thereby reducing the collective dependence of its members on a single strategic competitor. This strategy is a form of “friend-shoring”, a policy of reorienting supply chains to be primarily within the borders of allied and trusted nations. The MSP aims to achieve this by sharing information, coordinating diplomatic engagement, and de-risking strategic projects in mining, processing, and recycling to attract private capital. However, this approach is not without challenges. The initiative has been criticized by some as the “NATO of Metals,” a geopolitical bloc that could force non-aligned, resource-rich nations to choose sides in the U.S.-China rivalry, potentially creating new tensions.

The rise of these competing techno-nationalist strategies signals a fundamental reversal of the post-Cold War consensus on globalization. For over three decades, the dominant ideology held that open markets, free trade, and globally integrated supply chains would promote efficiency, prosperity, and peace. Policies like the CHIPS Act and the MSP are an explicit rejection of that premise. They represent a clear-eyed acknowledgment that certain industries and supply chains are too vital to national security to be left to the vagaries of the market or, more pointedly, to the control of a geopolitical rival. This paradigm shift involves a conscious trade-off, accepting potentially higher costs and reduced market efficiency in exchange for greater security and resilience, a bargain that would have been politically untenable just a decade ago.

The logical endpoint of these parallel and competing strategies is not a single, integrated global market, but a bifurcated or “fragmented” global technology ecosystem. U.S. policy, through the CHIPS Act’s guardrails and the MSP’s friend-shoring logic, is actively working to create a technology sphere free from Chinese control and influence. Simultaneously, China’s policies, from its “Made in China 2025” program to its use of export controls, are aimed at building a self-reliant technological ecosystem free from U.S. dependence. This divergence is likely to lead to the emergence of competing tech blocs with different technical standards, separate supply chains, and distinct material dependencies. Such market fragmentation will inevitably increase costs, may hinder the pace of global innovation, and will force smaller, non-aligned nations into difficult geopolitical choices, fundamentally reordering the global economy.

Case Studies in Material Conflict

To fully grasp the geopolitical stakes of the competition over advanced materials, it is necessary to examine the specific battlegrounds where this rivalry is most acute. Two case studies stand out for their strategic importance and for what they reveal about the nature of 21st-century material conflict: the decades-long struggle for control over the rare earth element supply chain, and the ongoing “war” for supremacy in the semiconductor industry. These cases illustrate the profound dependencies that have developed, the strategic responses being deployed, and the central role that materials science plays in modern national power.

The Rare Earth Magnet Monopoly

The market for Rare Earth Elements (REEs) is a textbook case of how a long-term, state-directed industrial strategy can create and then weaponize a global dependency. REEs are not geologically rare, but they are difficult to mine and, more importantly, exceptionally difficult to separate and process into the high-purity oxides and metals needed for advanced applications. Their most critical use is in the production of high-strength, high-performance permanent magnets, particularly neodymium-iron-boron (NdFeB) magnets.

Beginning in the 1980s, China methodically executed a long-range plan to dominate every segment of this value chain. As Chinese leader Deng Xiaoping reportedly stated, “The Middle East has oil; China has rare earths.” This vision was realized through massive state investment, the consolidation of domestic producers, and aggressive pricing that drove most international competitors out of business. Today, China controls nearly 60% of REE mining, but its stranglehold on the midstream and downstream is far more complete, accounting for over 85% of processing and over 90% of permanent magnet manufacturing.

This dominance has created a critical dependency for Western defense industries. High-performance REE magnets are indispensable components in a vast array of modern military systems. They are used in the electric motors that drive the control surfaces of aircraft like the F-35 fighter jet, in the guidance systems of precision munitions like the JASSM guided missile, in the motors of MQ-9 Reaper drones, and in advanced naval radar and sonar systems. A 2019 Department of Defense report estimated that even a six-month disruption in the REE supply could cost the U.S. military $1.75 billion in delayed projects, severely impeding production of essential platforms.

China has already demonstrated its willingness to leverage this dominance for political ends. In 2010, following a territorial dispute over the Senkaku/Diaoyu islands, Beijing halted REE shipments to Japan, causing a major supply shock and sending prices soaring. This event served as a stark warning to the world about the risks of such a concentrated supply chain. In response, the United States and its allies have begun to take nascent steps to rebuild an alternative supply chain. This includes the revitalization of the Mountain Pass mine in California, which now produces about 15% of the world’s rare earth concentrate, and a new project by its owner, MP Materials, to build processing facilities on-site and a permanent magnet factory in Fort Worth, Texas. However, these efforts are still in their early stages and are dwarfed by the scale of China’s established industry, leaving the dependency largely intact for the foreseeable future.

The Semiconductor War

If rare earths represent a dependency on a specific class of materials, the semiconductor industry represents a dependency on an entire, globally integrated technological ecosystem. Semiconductors, or microchips, are the “brains” of all modern electronics and are arguably the most critical technology for both economic prosperity and national security. The semiconductor supply chain is a marvel of globalization, but it is also hyper-specialized and riddled with strategic choke points. Key stages are dominated by single companies or countries: the U.S. leads in chip design software, the Netherlands’ ASML has a monopoly on the advanced lithography machines needed to print the most complex circuits, and Taiwan’s TSMC is the world’s preeminent manufacturer of the most advanced chips.

The U.S. CHIPS and Science Act is the primary strategic response to the immense risks this structure presents. The dual shocks of the pandemic-induced chip shortage, which crippled industries like automaking, and the rising geopolitical tensions with China over Taiwan, where the majority of advanced chips are made, created an urgent consensus in Washington that this dependency was an unacceptable national security threat. The Act’s massive infusion of public funds is designed to achieve two goals: first, to de-risk the supply chain by building advanced manufacturing capacity on U.S. soil, and second, to ensure the U.S. maintains its technological lead in the next generation of semiconductor innovation.

This battle for semiconductor supremacy is fundamentally a battle over materials science. The continued advancement of chip technology, as described by Moore’s Law, is pushing the physical limits of silicon. The future of the industry depends on breakthroughs in new “compound” semiconductor materials like gallium nitride (GaN) and silicon carbide (SiC). These materials can handle higher voltages and temperatures than silicon, making them ideal for power electronics in electric vehicles, 5G base stations, and advanced military radar systems. China’s decision to restrict exports of gallium, a key component of GaN, was a calculated move to target this next-generation technological frontier. Control over the underlying materials for future semiconductors is therefore a critical battleground in the broader semiconductor war.

These two case studies reveal different models of strategic competition. China’s dominance in rare earths was the result of a patient, centrally-planned, decades-long industrial strategy that methodically captured an entire value chain. The U.S. response was largely absent until the dependency had become a clear and present danger. In contrast, the semiconductor vulnerability became acute much more rapidly, driven by the twin crises of the pandemic and heightened geopolitical risk, prompting a massive, reactive, and urgent infusion of capital through the CHIPS Act. 

This highlights a potential asymmetry in strategic planning: China’s long-term, incremental approach versus a U.S. model that often relies on short-term, high-intensity responses to crises. The central question for the coming decade is whether a massive injection of capital can successfully counter decades of strategic industrial positioning. These cases underscore a critical lesson: a focus on “onshoring” only the final stage of production is an incomplete solution. Building a state-of-the-art semiconductor fab in Arizona with CHIPS Act funding is a visible and important step. However, that fab remains dependent on a global supply chain for hundreds of specialized precursor gases, photoresists, and the raw materials, like gallium and germanium, that are at the heart of the geopolitical conflict. A truly resilient strategy cannot focus solely on the final, high-value manufacturing step. It requires a much deeper, more complex, and more costly effort to re-shore or “friend-shore” the entire ecosystem, from the midstream processing of minerals to the synthesis of the ultra-pure chemicals and materials required for production. The CHIPS Act is a necessary and historic first step, but it does not, by itself, solve the entirety of the dependency problem.

Strategic Outlook and Recommendations

The era of viewing global supply chains through a purely economic lens of efficiency and cost-minimization is over. The global competition for the science and production of advanced materials has become a central and defining feature of 21st-century great power rivalry. Control over these materials and their associated technologies is now a core component of state power, and the structural stress of the U.S.-China rivalry, echoing the Thucydidean dynamic, is playing out most intensely in this technological domain. The weaponization of interdependence is no longer a theoretical risk but a demonstrated reality, and the risk of conflict through miscalculation and escalation in this sphere is significant and growing. Navigating this new geopolitical reality requires a fundamental shift in strategy for both governments and private industry, moving from a posture of passive reliance to one of active resilience.

The future geopolitical landscape will be shaped by the contest for technological supremacy, which in turn rests on a foundation of material science. Nations that can secure reliable access to critical minerals, master their processing and refinement, and lead in the innovation of next-generation materials will hold a decisive advantage. Conversely, nations that remain dependent on strategic rivals for these foundational inputs will find their economic sovereignty, national security, and diplomatic freedom of action severely constrained. The Thucydidean dynamic between the United States and China is real, but war is not inevitable. The challenge for statecraft is to manage this intense competition, which will be vigorous and long-term, without allowing it to escalate into catastrophic conflict.

To secure national interests in this new era, governments, particularly in the United States and its allied nations, should adopt a comprehensive and proactive strategy built on the following pillars:

• Embrace Strategic Industrial Policy: The laissez-faire approach to critical industries is no longer tenable. Policymakers must fully fund and effectively implement initiatives like the CHIPS and Science Act, treating it as a national security imperative rather than just an economic program. This model of public-private partnership, using state incentives to catalyze private investment in strategic sectors, should be considered for other critical material supply chains, such as permanent magnets and battery materials. This requires a long-term commitment that transcends short-term political cycles, acknowledging that building industrial resilience is a generational project.
  
• Strengthen and Expand Alliances: Unilateral onshoring is not a complete solution; collective action with allies is essential. The Minerals Security Partnership (MSP) is a critical first step and its work should be deepened and accelerated. However, careful diplomacy is needed to frame the MSP not as an exclusive, anti-China bloc, but as an inclusive partnership for building transparent, sustainable, and ethical supply chains. Engaging with non-aligned, resource-rich nations in the Global South by offering investment, technology transfer, and support for local value creation will be crucial to preventing them from falling exclusively into a rival’s economic orbit.
  
• Invest in a Multi-Pronged Diversification Strategy: Reliance on any single point of failure is a strategic error. A robust diversification strategy must include four parallel lines of effort:
  
  • Onshoring: Identify the most critical processing and manufacturing capabilities that must be located domestically for national security reasons and provide the necessary incentives to build them.
  • Friend-shoring: Work through the MSP and other bilateral agreements to build redundant and resilient supply chains with trusted allies and partners, ensuring multiple sources for key materials.
  • Strategic Stockpiling: The National Defense Stockpile (NDS) must be modernized and recapitalized. A thorough review of acute vulnerabilities should be conducted, with a focus on stockpiling materials for which the U.S. has near-total import reliance, particularly processed rare earths, cobalt chemicals, and high-purity gallium and germanium.
  • Circular Economy: Aggressively fund research, development, and commercial-scale deployment of technologies for recycling and recovering critical materials from end-of-life products. Creating a robust domestic resource base from electronic waste and industrial scrap, “urban mining”, can significantly reduce import dependency over the long term.

• Foster Foundational R&D: The ultimate competitive advantage lies in innovation. Governments must increase public investment in fundamental materials science and engineering. This research should focus on two key areas: developing novel materials that can substitute for those with vulnerable supply chains (e.g., magnets with little or no rare earths), and creating new, more efficient, and environmentally sustainable processing techniques that can be deployed domestically at a competitive cost.

The private sector is on the front lines of this geopolitical competition and must adapt its strategies accordingly:

• Integrate Geopolitical Risk into Corporate Strategy: Corporate boards and C-suites can no longer afford to treat geopolitics as an externality. Supply chain decisions must be evaluated not just on the basis of quarterly cost savings, but through the lens of long-term geopolitical risk. Building resilience and redundancy into supply chains should be considered a core fiduciary duty.
  
• Collaborate with Government: Industry should actively seek to partner with government on initiatives like the CHIPS Act and the MSP. This collaboration can help de-risk major capital investments in domestic manufacturing and align corporate strategy with national security objectives, creating a symbiotic relationship where public policy supports private sector competitiveness and vice versa.
  
• Prioritize Supply Chain Transparency: Companies must invest in the technology and processes necessary to achieve deep visibility into their supply chains, mapping them down to the raw material level. This is the only way to identify hidden dependencies and single points of failure before they are exposed during a geopolitical crisis.

While the competition over advanced materials will be fierce and enduring, all-out conflict remains the worst possible outcome for all parties. The United States and China must work to establish guardrails to manage this rivalry responsibly. This should include establishing clear channels of communication and expert-level dialogues specifically focused on supply chain security and critical materials. The goal is not to eliminate competition, which is inevitable, but to prevent miscalculation and accidental escalation. Just as the U.S. and the Soviet Union developed protocols and treaties to manage their nuclear competition during the Cold War, a new strategic concept is needed to allow for vigorous technological and economic rivalry without tipping into open conflict. The central challenge of 21st-century statecraft will be to manage this competition in a way that secures national interests while preserving global stability.

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