New export controls imposed by China on key critical minerals could disrupt global supply chains, Japanese officials have warned.
They highlight a new Chinese export licensing regime that could see Japanese manufacturers of components for Apple products requiring an export licence from Beijing, the FT reports.
Their warnings come as a number of tech and auto firms attempt to shift their supply chains to avoid being caught in the fallout from years of Chinese-US trade tensions, as both nations introduce security and tariff measures on exports.
Compliance challenges
Japanese officials have raised particular concern about further controls being placed on gallium, which is used by advanced Japanese manufacturers to produce semiconductor chips used in Apple’s iPhones, as well as to support 5G communications and radar technologies.
Several manufacturers told the publication they would try to avoid providing the information required to secure an export licence from Beijing by using intermediaries, who could instead procure the metal from China, becoming licensed instead.
Many claimed compliance would be impossible, owing to the difficulty of confirming the end user of many components produced with the metal.
Mineral crackdown
Over years of tit-for-tat on tariffs with the US, China has continued to exert a tighter grip on its critical mineral supply. In December, China added additional restrictions to exports of gallium, as well as geranium, which first became subject to export controls in July 2023. It introduced curbs on antimony, a ‘hard metal’ used in the production of weapons.
Following US president Donald Trump’s 10% blanket levy on all Chinese imports earlier this month, China responded with curbs on five critical minerals: tungsten, indium, bismuth, tellurium and molybdenum.
However, its “possible” that there could be a thaw in relations, according to Trump, who told press yesterday that a deal with China could still be on the cards.
Apple’s de-risking
This development coincides with fresh reports of Apple’s progress in ‘derisking’ from China by moving some of its production to India.
Last year, CNBC reported that the firm had produced US$14bn worth of iPhones in India, totalling 14% of all iPhones, or one in seven units – double the previous year.
While this year the percentage of units produced in India hasn’t risen significantly, still at 15%, the FT reports this is projected to grow to 25% by 2027. Mobile phones are now the country’s biggest export, overtaking diamonds.
Taiwanese electronics manufacturer Foxconn is set to produce the latest model – the iPhone 16 Pro – with India’s Tata Electronics.
However, the move has yielded retaliation from China, which introduced fresh restrictions on the movement of Chinese engineers and capital goods to India.
Nissan move?
Returning to Japan, struggling auto-manufacturer Nissan has been attracting unwanted attention from Foxconn, which is one of several hostile operators considering a takeover bid.
The FT reports that, after refusing a $58bn merger with Honda last year, Nissan is hoping that US EV-maker Telsa will consider investing, following reports that a proposal is being drawn up by Tesla board members, as well as ex-Japanese prime minister Yoshihide Suga.
The move is designed to mitigate Trump tariff threats, with the group eyeing Nissan’s assembly plants in Tennessee and Mississippi, which have a combined capacity to produce 1m units per year.
Tesla assembles its vehicles in the US but also sources parts internationally.
