South Korea is already screwed economically. The
desperation of South Korea already became apparent when it tried to
source rare earth ores from Mongolia for refining to support its
semiconductor manufacturing, to no avail. China is not going to support
the move by allowing Mongolia to ship rare earth ores to South Korea for
refining, using its Tianjin port. This was an attempt by the USA and
South Korea to exploit Mongolia's rare earth ores to counter China's
rare earth control. It is plain logic that China will never allow such
Mongolian ores to pass through its territory, when it is in the process
of countering the chip war initiated by the USA and its Chip4 alliance
countries, which South Korea is part of.
Samsung is now suffering
big time, with profits plunging so rapidly that it has been touted as
catastrophic losses quarter on quarter. Samsung and Hynix are both
anticipating further losses without Chinese rare earth elements for
their semiconductor manufacturing. They will be left in the lurch by the
USA, by following the USA to sanction China in high end chips. They
reap what they sow and deserves no sympathy.
South Korea's
economy depends for a major part on the nations semiconductor sector,
and any downturn is not going to be taken lightly. It is still early
days since China's restrictions on rare earth came into effect on lst
August. The sector probably can still fall back on stock piling earlier,
but such stocks will not last forever.
As a self conforting
narrative, the West is saying there is not much to worry abou, as it
will take only a few years for the rest of the world to set up
facilities to do it and not depend on China totally. Let us wait and
see.
China as the dominant player can influence the market by
flooding the market or restricting it. China will just let them set up
expensive facilities and plants to refine rare earth, but China could
easily kill them off by flooding the market when they come on line, with
much cheaper rare earth elements. Therefore, let us see who wants to
invest in such expensive facilities when the outlook appears so
uncertain, with returns not guaranteed. Investors are not going to throw
money into ventures with uncertain prospects. There have been
facilities being mothballed due to losses from uncompetitive pricing
resulting in their failures.
Anonymous
When the news came out that Apples's iphone 15 sales in China is worse than anticipated, you know it is really bad. With some rotten Apples made in India unable to be sold to the EU, and China already having been alerted that Tim Cook is attempting to unload Made in India iPhones onto China, according to sources, Chinese buyers are not that foolish to buy substandard iphones made in India. That is even more so, when iPhones made in China are now being avoided by Chinese consumers, not knowing what the Chinese Government will do next in the face of USA escalating the tech war.
ReplyDeleteWith the Chinese Government issuing new guidelines to Government offices and employees not to make use of Western made phones for National Security Reasons, the writing is on the wall for the iPhones market share in China. Sure, foreigners will still be carrying iPhones around, but when the tech sanctions escalate further, China could tighten the screw further as well by demanding that access to Government sites must be made on phones made in China. It has not reached that stage yet, but who knows?
China can make or break Western, Japanese and South Korean market share in any sector in China by tightening its policies. This is no longer the China of old. Take the case of Internal Combustion Engine (ICE) Vehicles manufactured by the EU, Japan and USA. China is phasing out such vehicles and migrating totally to EVs, which new buyers have to consider when buying new vehicles. China is the biggest market for those ICE vehicles for decades, and the loss of the China market is telling.
Coupled with the problem lies the late entry of the EU, USA (with the exception of Tesla) and Japan into the EV sector, including China's control of supply chains and resources available to China. Japan had betted on Hydrogen fuel cell vehicles, knowing that China already controlled the raw materials needed for EVs, and Hydrogen fuel cell vehicles are proving extremely unpopular. The whole vehicle industry in Japan was forced upon them by Toyota, the kingpin of car manufacturing in Japan, which other Japanese car manufacturers were not in favour, but had to follow the Government's call. They are now paying the price of their late entry into EVs and betting on Hydrogen as the way forward to counter China.
As I always say, China does not fear the USA and it allies trying to control the rare earth sector, as China today is still in a position to make or break new entrants into the rare earth processing sector. China is now in a position to dictate the price of its rare earth elements by flooding or restricting supply and demand. Whoever stands in the way will suffer the consequences.
China dictates rare earth elements, Russia and OPEC dictates oil production. USA dictates war and destruction.
ReplyDeleteRussia also dictates the supply of nuclear fuel for Nuclear Power Plants. The EU, particularly Germany, may try to fire up their nuclear power generation to compensate for the expensive oil and gas, but is still under a cloud of uncertainty over the supply of nuclear fuel needed to power those plants.
The world is just realising the control the Russians had over the energy sector after the war in Ukraine, but Russia is in control of more than that. Food comes to mind, but more than that below the surface is, for example, the semiconductor sector that depends largely on Neon gas and other essential elements from Russia. There was the talk of the West trying to strangle Russia in the semiconductor sector, without realising they are using the rope to hang themselves, just like the sanctions on energy by the EU.
The fun is just beginning with the start of the Middle East War. Zelenskyy and Netanyahu are now having a verbal battle fighting over who gets USA funding, which is getting scarcer and more difficult. It is becoming common knowledge that the USA is running out of weapons to send to Ukraine, and with Israel equally needing weapons, the writing is on the wall for Zelenskyy. Israel is more important now for the USA and with so many Israeli senators in the USA establishment, it is just no brainer to try to guess who will be getting the bulk of the USA support going forward.
Zelenskyy is going under the bus, for his failure in his counteroffensive, and that is a given.