Graphite vs GPUs
European EV battery makers may well be caught in the middle of the global trade war between the US and China as tariffs on graphite are applied.
China is applying restrictions on the shipment of battery-grade graphite not just to the US but also other countries including the EU and Japan. Graphite is the main material for anodes in EV batteries, although various European and US companies have been commercialising silicon as a higher energy replacement.
The decision by China is widely seen as retaliation for the US restrictions on leading edge semiconductor technologies for AI chip, including GPUs from Nvidia and AMD and the EUV lithography technology used to build those chips. China is the world’s largest supplier of graphite, processing 90% of all the material used.
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From December 1st, exporters will have to apply for permits to ship two types of graphite, including high-purity, high-hardness and high intensity synthetic graphite material and natural flake graphite.
China’s commerce ministry said the move was “conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests,” in statements that are similar to the US rationale for the AI restrictions.
The new measures will ensure the domestic supply of graphite for military use, such as in the aerospace sector, as well as domestic battery-making, say analysts.
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Russia was previously a major supplier of graphite to the EU before the Ukraine war,
Silicon materials for anodes have ben successfully commercialised by Nexeon in the UK, which is building a volume production plant in South Korea and has a key partnership with battery maker Panasonic. Amprius and Sila Nano in the US both has significant grants from the Inflation Reduction Act to boost production of silicon for anodes.
DAEJOO in Korea plans to expand its existing production line with an annual output of 2,000 tons of silicon anode composite oxides to 10,000 tons by the end of 2024 and 40,000 tons by 2027 to supply silicon anode materials for LG Energy Solution, which has battery plants in the EU and provides the batteries in the Hyundai IONIQ6 EV.
In response, the US government accelerated its Additional Export Controls on GPUs with immediate effect on 23rd October. This impacts on shipments of Nvidia’s A100, A800, H100, H800, and L40S products. “Given the strength of demand for the Company’s products worldwide, the Company does not anticipate that the accelerated timing of the licensing requirements will have a near-term meaningful impact on its financial results,” said the company.