The AI race is really an electro-industrial race

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Oct 24, 2025

The podcast delves into China's new restrictions on rare earth exports, highlighting their strategic implications for the U.S. economy. It explores the concept of the 'electric stack' and its critical role in AI and clean energy. The hosts assess the potential disruptions these restrictions could cause for U.S. industries and discuss how America is competing in an electro-industrial landscape. Industry responses, geopolitical influences, and the challenges of U.S. manufacturing are also examined, offering a nuanced view of global technological rivalry.

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INSIGHT

Rare Earths Pack Outsized Strategic Value

China's rare earth export controls give it meaningful leverage over global manufacturing supply chains.
These minerals are small in dollar value but critical to chips, motors, and clean-energy systems.

ADVICE

Diversify Processing Despite Higher Costs

Diversify rare-earth processing outside China even if initial costs rise; scale will blunt price impacts.
Accept higher short-term costs to secure long-term supply resilience and ethical processing.

ADVICE

Protect Recycling Projects And Feedstock

Preserve and fund recycling and processing projects to secure domestic feedstock and refinery capacity.
Keep grants for recycling facilities to avoid cutting off essential upstream infrastructure.

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After years of U.S. restrictions on advanced semiconductors, Beijing is fighting back by cutting off exports of the raw materials that make those chips possible: rare earths, graphite, gallium, germanium — the invisible ingredients inside motors, power electronics, defense systems, and data centers.

The move caught Washington off guard. The Treasury Secretary compared it to “pointing a bazooka at the industrial base of the entire free world.” These minerals only make up hundreds of millions of dollars worth of imports, but their strategic value is enormous. They’re woven into every emerging industry the U.S. hopes to dominate.

And that’s the point. Under China’s new export rules, foreign companies will need government approval to trade or process these materials, giving Beijing leverage over the supply chains that feed both clean energy and artificial intelligence.

In this episode, we look at the impact of China’s restrictions. And we also ask: is the AI war really an energy war?

If you zoom out, this isn’t just a chip war or a minerals dispute — it’s a systems war. America has been pouring billions into digital intelligence, while China has been focusing on the “electric stack” that brings enormous strategic economic value.

The electric stack is the vertically-integrated network of mining, refining, manufacturing, and grid infrastructure that underpins both the emerging electricity-based economy. China has spent decades mastering it.

In the second half of the episode, we unpack an essay from Packy McCormick and Sam D’Amico that argues America is playing the wrong game. Are we overestimating the value of artificial intelligence and underestimating the electric infrastructure that intelligence runs on?

Resources discussed in this episode:

The Electric Slide by Packy McCormick & Sam D’Amico
Mastering the Electro Tech stack by Noah Smith
The Electrotech Revolution report from Ember
The Electro-Industrial Stack from Andreessen Horowitz
NYT: China’s Rare Earth Restrictions Aim to Beat the U.S. at Its Own Game

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