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Despite warning signs in 2010, China could hold technology producers to ransom in a trade war. Stewart Mitchell unearths the facts
When Tim Cook stepped in at the eleventh hour to persuade Donald Trump not to impose Chinese tariffs on his company's products, he had good reason not to further provoke the Chinese.
The global tech industry remains dependent on China when it comes to critical rare earth elements, a situation that could lead to production lines grinding to a halt.
The scale of the risk is highlighted by the variety of tech where manufacture would be impossible without one of the 17 rare earth minerals for which China holds more than 80% of the world's supply.
"Neodymium, for example, makes the strongest permanent magnets [NdFeB] - used in all sorts of equipment from direct drive motors in electric vehicles, speakers in mobile phones and computer hard disk drives," said Professor Frances Wall, a specialist in rare earths at the University of Exeter's Camborne School of Mines.
"Practically all red colour in display screens comes from europium. The problem is that the whole part of the supply chain is concentrated in China. If China choose not to export rare earths and rare earth alloys and compounds, it would be difficult to manufacture any of these things outside China."
China has a history of choking supply for its own political gain, too. In 2010, a trade dispute with Japan saw severe restrictions on exports - a tactic that resulted in a huge spike in prices and led to a scramble to activate mines and production plants elsewhere. Between 2009 and 2011, as the shortage kicked in, the price per metric ton of neodymium soared from aroun $15,000 in 2009 to $250,000 in 2011.
Inevitably, such swings have an impact on the prices ofthe gadgets the materials are used in. "An increase in NdFeB permanent magnet prices would have a greater impact on hard disk drive [HDD] prices than it would mobile phones," said Ryan Castilloux, managing director of market watcher Adamas Intelligence.
"In mobile phones, NdFeB is used in the loudspeaker and vibration motor, while in HDDs NdFeB is used in the voice coil and spindle motors.
"If HDD prices went up, that would absolutely...