30/08/2025

BIZ & FINANCE SATURDAY | AUG 30, 2025

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Chips-for-rare-earths is US-China circuit breaker

Major changes at Temasek over two decades SINGAPORE: Singapore’s state investment company Temasek announced on Thursday a major reorganisation of its operations, marking one of the most significant structural shifts in its 51-year history. Following are some of the key changes at Temasek before Thursday’s announcement: Structural shifts In 2011, Temasek Holdings formed Temasek International as its management arm to separate ownership and investment functions, enhancing governance and operational agility as it evolved as an active investor with a growing and increasingly global portfolio. In 2016, Temasek announced an organisation structure change, saying the aim was to align the firm with its core priorities in challenging global times. In 2020, Temasek established a new asset management group, Seviora Holdings, as the operational holding company for its wholly owned asset managers. Leadership transitions Ho Ching, wife of former PM Lee Hsien Loong, became Temasek CEO in 2004, globalising and diversifying its portfolio from S$90 billion (RM296 billion) to over S$300 billion by her 2021 retirement. She was succeeded by Dilhan Pillay, a Temasek veteran since 2010 with roles spanning investment, portfolio and market teams. On Oct 9, former DPM and navy chief Teo Chee Hean will take over as Temasek’s fifth chairman, succeeding Lim Boon Heng after a decade. Global expansion Under Lim Boon Heng’s 12-year chairmanship, Temasek’s portfolio grew from S$223 billion to S$389 billion by March 2024. A former cabinet minister and labour chief, he oversaw expansion into Europe and the US, major investments in Alibaba and BlackRock, and a pivot from real estate to tech, healthcare and sustainability. Portfolio moves Temasek oversaw some major restructurings in its portfolio companies to enhance their value. This included CapitaLand’s acquisition of property group Ascendas-Singbridge in 2019 and eventual split into a listed real estate investment manager CapitaLand Investment and a privately held developer CapitaLand Development in 2021. Others include energy and urban infrastructure company Sembcorp Industries’ demerger from Sembcorp Marine, now Seatrium, an offshore marine company, in 2020; and Keppel’S divestment of its offshore and marine operations in 2022. – Reuters

HONG KONG: Which will last longer: China’s stranglehold on critical minerals including rare earths, or the US-led grip on advanced chips? The answer will help shape relations between Beijing and Washington for years to come. The world’s two largest economies are currently stuck in an uneasy standoff. Earlier this month, they agreed to extend a tariff truce for another three months, staving off triple-digit duties on each other’s imports. For now, hostility is restrained by Western dependence on China’s rare earth supply chain and by Beijing’s need for advanced semiconductors dominated by the US and its allies. Washington and Beijing have both deployed export and licensing rules to limit the other’s access on grounds of national security. Given that semiconductors and critical minerals are both vital to electronics, cars, artificial intelligence and military systems, they have become key sources of leverage in the broader economic rivalry. Earlier this year, when Trump imposed his latest round of trade tariffs, both sides upped the ante with more tit-for-tat curbs. Those proved short-lived, though, when Washington in May reversed a month-long export ban on Nvidia’s H20 chip in exchange for continued supplies of Chinese rare earths. July shipments to the US soared 660% compared to the previous month; Nvidia now expects up to US$5 billion (RM21 billion) of H20 revenue over the next three months, pending government approvals. That suggests the prospect of mutually assured economic pain is a deterrent against escalation. Both sides made marginal concessions. US Commerce Secretary Howard Lutnick defended the US U-turn by saying the H20 was only Nvidia’s “fourth best” chip. And Beijing didn’t have to lift or change any of its licensing and export rules. The truce might be enough to keep the flow of chips and rare earths flowing in the short term. Yet both sides can easily tighten the chokehold. That is why Washington is stepping up efforts to develop its own rare-earths

chip promises 2.5 times more performance than the previous generation, leaving even once-dominant rivals like Intel struggling. By comparison, China’s monopoly in rare earths processing – where it accounts for up 90% of global separation and refining capacity and a similar share in permanent magnet production – looks more assailable. It will take years to build up expertise across the supply chain. But the science is well-established and the know-how already exists overseas, though not at a scale comparable to China’s. Australia, Malaysia, Japan and the European Union, among others, are expanding refining capacity and magnet production. It’s therefore no surprise that the Chinese government is clamping down on its domestic firms in the sector to prevent talent and technology from leaving the country. Overcoming financial and environmental hurdles will be a longer slog, though. Given China’s heft in global supply, miners and refiners there can keep prices low to dissuade governments and companies from investing in capacity elsewhere. Western governments might have to establish floor prices for more types of critical minerals and set aside more funds. The world’s largest producer outside China, Australia’s Lynas Rare Earths on Thursday reported a 90% drop in net profit in the year to June, blaming expansion costs and lower-than-expected production; it also raised A$750 million (RM2.1 billion) in new equity. Even if one side gains an upper hand, however, there are other pressure points. Washington could restrict other high tech goods like airplane parts, or impose financial sanctions, while China could make it harder for businesses like Apple and Nvidia to operate in the country. As with chips and rare earths, the mutual dependence in these respective areas will also take decades to unravel. But at the very least, these shared pain points act as a circuit-breaker on trade hostilities. Robyn Mak is a Reuters Breakingviews columnist. The opinions expressed are their own.

supply chain. The group of 17 elements are abundant in the Earth’s crust; what makes them rare is the costly, complex and dirty process of extracting, separating and refining them. The market is small: the total volume bought worldwide in 2024 was just US$3.5 billion, analysts at Project Blue reckon – a fraction of the US$600 billion-plus spent on semiconductors worldwide. Last month, Las Vegas-based MP Materials, which operates the only US rare earths mine, said the US Department of Defense will buy US$400 million in convertible shares, becoming the company’s largest shareholder. The tie-up also includes the government agency guaranteeing a price floor for two types of rare earths. Similar deals could follow: the Trump administration is considering reallocating at least US$2 billion from the CHIPS Act, which earmarked subsidies for domestic semiconductor manufacturing, to fund critical minerals projects, Reuters reported last week, citing sources. The bet is that the US can cut its reliance on Chinese minerals before the country’s tech giants, led by Huawei and Cambricon Technologies, achieve a made-in-China chip breakthrough. On first glance, the US has decent odds of winning the race. Huawei’s semiconductor progress seems to have stalled, as it faces a multitude of technological bottlenecks in design, equipment, precision tools, and software that are irreplaceable and largely controlled by suppliers in the US, Japan, the Netherlands and South Korea. Without access to Dutch tech giant ASML’s high end lithography machines, for example, it’s unlikely Chinese chipmakers can competitively manufacture anything more advanced than the 7nm-generation of processors, which Taiwan’s TSMC commercialized back in 2018. Catching up will require simultaneous technological leaps across the entire supply chain. Even if Huawei overcomes those hurdles, there’s no guarantee that the Shenzhen-based group will be able to keep up with bleeding-edge technology from Nvidia. The US$4 trillion US giant’s latest