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On October 10, local time, Palmer Luckey, founder of Anduril Industries, a U.S. artificial intelligence military company, complained in an interview with Bloomberg TV that the U.S. defense manufacturing supply chain is too dependent on China.

¡°We have to get out of China¡¯s supply chain,¡± said Lukaku, ¡°we need to reindustrialize, we need to have our own rare earth supply, and we need to produce our own chips and computers, and China has a lot of influence.¡±

At the same time, as the Sino-US economic and trade game continues, Shyam Sankar, chief technology officer of Anduril, exaggerated that the conflict between the two countries has been "brewing for nearly 50 years." On the other hand, Brian Schimpf, CEO of Anduril, declared that the current tariff confrontation would be a "long-term conflict" between the United States and China, and "we must be prepared for it".

On June 17, 2025, an autonomous aircraft (AAV) of the Anduryl Industrial Company was exhibited at the 55th Paris Air Show.

According to Bloomberg, Anduril Industries is the largest of many defense technology start-ups in the United States. These companies aim to use artificial intelligence and autonomous software to command drones, fighter jets, submarines and other vehicles to realize the modernization of the U.S. military.

The report emphasized that the United States is vigorously developing this industry mainly because of "increasingly fierce competition with China."

Schmidt said he expects the company's revenue to double this year to more than $2 billion, and production will also increase by 400 percent, while LeChi said the company's output could grow again next year.

Companies such as Andrill Industrial and another listed company, Palantir Technologies, have long regarded China as a potential rival and are aiming to develop U.S. defense technology.

Sankar said China is ¡°stronger in terms of overall production capacity,¡± but that the United States ¡°has the best software in the world.¡±

Risk investors have increased their attention to defense in recent years, both due to concerns about geopolitical tensions and optimism that U.S. procurement policy reforms may be conducive to start-ups.

Some in the industry are concerned that the United States may be at a disadvantage in the drone arms race with China, so the desire to expand manufacturing capacity is also part of the high-cost plan to build a new U.S. defense plant. According to research agency PitchBook data, investors invested $20 billion in U.S. defense technology in the second quarter of this year, up 200 percent from the same period last year.

Anduril's high-level hype on the "decoupling" of the U.S. defense manufacturing industry from China comes at a time when China issued two announcements on October 9 on strengthening export controls on rare earth-related items.

According to the new regulations announced by China's Ministry of Commerce on October 9, China will implement export controls on some overseas rare earth-related items and rare earth-related technologies containing Chinese ingredients. According to the Financial Times, this means that all magnets that contain Chinese rare earth components or are produced by Chinese rare earth mining, smelting and magnetisation technology need to be approved by foreign companies when exporting them.

The new regulations coverage contains 0.1% or more of China's rare earth components, foreign-made rare earth magnets and some semiconductor materials, as well as the items listed using rare earth mining, metallurgy separation, metal metallurgy, magnetic materials manufacturing, rare earth secondary resource recycling and recycling related technologies produced abroad, these items will apply from December 1; for the items listed originated in China, the new rules will be implemented immediately.

In addition, for most export licenses for military use, China is "principally not permitted"; China will also "approve case by case" for export applications involving the development of AI with potential military uses.

On October 9, the spokesperson of the Ministry of Commerce answered a reporter's question on strengthening the export control of rare earth-related items, saying that rare earth-related items have dual-use attributes for military and civilian use, and it is an international practice to implement export control on them. To this end, the Chinese government controls some overseas rare earth-related items containing Chinese ingredients in accordance with the law, with the aim of better safeguarding national security and interests and better fulfilling international obligations such as non-proliferation.

As a responsible big country, China's implementation of controls on related goods reflects the consistent position of firmly safeguarding world peace and regional stability, and actively participating in international efforts to prevent proliferation.China is willing to strengthen communication and cooperation with all parties through the multilateral export control dialogue mechanism, promote compliance trade, and guarantee the security and stability of the global industrial supply chain.

Extended reading

On October 9, China issued new regulations on rare earth exports. While the United States is jumping, Europe is also unable to sit still.

According to Bloomberg News, on the 10th local time, a spokesman for the German Ministry of Economic Affairs said in response to the new Chinese regulations that it is too early to assess the impact of the new regulations, but Germany is "currently conducting in-depth discussions on this issue at the national and EU levels".

Related rare earth items have dual-use attributes, and it is an international practice to implement export control on them.

However, the spokesman later claimed that China's increasingly tightening restrictions on exports of critical minerals from technology industries was "great concern", and also said that Germany must reduce its dependence on supplies outside the European Economic Area.

A spokesman for the German Ministry of Economy said that the government is keeping close contact with the affected enterprises and communicating with the European Commission and other European partners.

The spokesman continued to repeat the old rhetoric of "unity" and "localization", saying that the German government's "goal is to achieve a coordinated European response" while gradually shifting raw material mining and processing steps to Germany.

According to the New York Times, the day before (9th), European Commission spokesman Olof Gill said at a press conference that the EU was "concerned" about China's latest export restrictions. He also said: "The European Commission hopes that China will show its attitude as a reliable partner and ensure a stable and predictable supply of key raw materials."

China dominates the global market for rare-earth magnets

Rare earth metals and magnets are the core materials of high-precision products such as smart phones, electric vehicles and fighter jets. China has long realized its importance and spent decades establishing a dominant position in the global field of rare earth mining and processing.

Data show that China controls about 70% of the world's rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.

According to the new regulations announced by China's Ministry of Commerce on October 9, China will implement export controls on some overseas rare earth-related items and rare earth-related technologies containing Chinese ingredients. According to the Financial Times, this means that all magnets that contain Chinese rare earth components or are produced by Chinese rare earth mining, smelting and magnetisation technology need to be approved by foreign companies when exporting them.

The new regulations coverage contains 0.1% or more of China's rare earth components, foreign-made rare earth magnets and some semiconductor materials, as well as the items listed using rare earth mining, metallurgy separation, metal metallurgy, magnetic materials manufacturing, rare earth secondary resource recycling and recycling related technologies produced abroad, these items will apply from December 1; for the items listed originated in China, the new rules will be implemented immediately.

In addition, for most export licenses for military use, China is "principally not permitted"; China will also "approve case by case" for export applications involving the development of AI with potential military uses.

In April this year, after the Trump administration announced the imposition of tariffs on China, China immediately included rare earth items in the scope of export control. Since then, the United States and the West have felt deeply "stuck", hyped the so-called "rare earth shortage", and at the same time spent money to develop "non-Chinese" supply chains.

However, the U.S. government stumbled on heavy money to invest in its own mineral mining, but capital smelled uncertainty and avoided it; the EU looked forward to next month, and in September issued a report proposing to go to space mining, it was unrealistic.

Space Mining Concept Map US Space News Site

After the announcement of China's new rare earth regulations, it immediately triggered heated discussions in foreign media. Foreign media generally believe that China's measures to impose export controls on rare earths have dealt a blow to the U.S. automobile supply chain, forcing the Trump administration to sit at the negotiating table. Since then, the issue of rare earths has repeatedly appeared in several rounds of Sino-US trade negotiations, and the timing of the introduction of the new regulations happens to be close to the time of the formal meeting between the leaders of the two countries speculated by the outside world.

The Financial Times notes that China¡¯s new restrictions are similar to the U.S. ¡°Foreign Direct Product Rules¡± (FDPR) export control system, which is exactly the U.S. rules used to prevent third-country exports of semiconductor-related products to China.

Bloomberg commented that as the United States and China are about to sit down for face-to-face negotiations again, China has demonstrated its trade influence.

The U.S. Wall Street Journal analyzed that China's latest measures have further expanded its control over the supply chain of rare earth, as Western countries strive to establish a rare earth industrial chain to reduce dependence on China.The paper also believes that China's latest measures on rare earth are considered to be an "almost unprecedented" export control, giving itself a bigger point in trade negotiations.

"The timing is very strategic," analyzed Gracelin Baskaran, an expert on key mineral issues at the Center for Strategic and International Studies (CSIS), a U.S. think tank."China has just put down a new batch of chess pieces on the negotiating table."

¡°These rare-earth minerals and their refining capabilities are the foundation of modern civilization,¡± said Dean Ball, who recently resigned as a White House AI policy adviser and now senior researcher at the U.S. Innovation Foundation, saying that given the importance of AI capital spending for the economy, if these regulations are strongly enforced, it could lead to a recession in the U.S. economy.

On October 9, the spokesperson of the Ministry of Commerce answered a reporter's question on strengthening the export control of rare earth-related items, saying that rare earth-related items have dual-use attributes for military and civilian use, and it is an international practice to implement export control on them. To this end, the Chinese government controls some overseas rare earth-related items containing Chinese ingredients in accordance with the law, with the aim of better safeguarding national security and interests and better fulfilling international obligations such as non-proliferation.

As a responsible big country, China's implementation of controls on related goods reflects the consistent position of firmly safeguarding world peace and regional stability, and actively participating in international efforts to prevent proliferation.China is willing to strengthen communication and cooperation with all parties through the multilateral export control dialogue mechanism, promote compliance trade, and guarantee the security and stability of the global industrial supply chain.