By Africa Links 24
Published on 2024-03-28 04:00:00
In October of last year, authorities in Beijing announced that they would be tightening export controls on certain types of graphite, a critical mineral used in the production of batteries and electronics. This move, intended to safeguard national security and interests, caused concern in South Korea. Major electronics companies in South Korea, such as LG and Samsung, heavily rely on imports from China for essential goods, including semiconductors.
In response to this disruption, South Korea turned to Africa, particularly Mozambique and Tanzania, which are home to significant graphite reserves. South Korea has been investing in diplomatic and economic relations with Africa, recognizing the continent’s growing importance. Africa is rich in natural resources like graphite, silicon, and quartz, which are necessary for semiconductor production.
Various countries, including the United States, Europe, Russia, Saudi Arabia, India, and China, are increasing their financial resources and diplomatic efforts in Africa to access critical minerals. The semiconductor industry, valued at $500 billion globally, plays a crucial role in modern technology, and Africa has the potential to benefit economically from this industry. Despite having vast reserves of valuable minerals, African countries currently account for less than 1% of the global semiconductor market.
While some African countries, like South Africa and Egypt, export these materials to manufacturers abroad, there is a lack of capacity for more advanced activities related to semiconductor production. However, there have been exceptions, like Si-Ware Systems in Cairo and South Africa’s modest export of semiconductor devices.
Nii Simmonds, a non-resident senior fellow at the Atlantic Council, believes that Africa has the opportunity to move up the semiconductor value chain by engaging in research, design, testing, and manufacturing activities. Some progress has been made, with countries like South Africa and Kenya establishing research and development centers focused on semiconductor production.
Simmonds suggests that African countries should follow the example of Southeast Asian nations in attracting foreign multinationals to establish manufacturing hubs and R&D centers. By encouraging major technology companies to invest in Africa, Western governments can differentiate themselves from China and build positive relationships in Africa.
Google, Microsoft, and IBM have already made investments in Africa, but more capital and projects are needed to unlock economic benefits for Africa and strengthen the supply chains of Western companies. Africa could also capitalize on the trend of diversifying supply chains away from China by offering a more stable investment environment.
South Korea’s decision to replace graphite imports from China with those from Africa is an example of the potential for countries and companies to proactively adopt “China Plus One” strategies. African countries have the opportunity to play a greater role in global semiconductor supply chains, benefiting from their geographical location and abundance of essential materials.
Despite challenges, such as the need for foreign capital and technical knowledge, Africa has the potential to devise a winning strategy in the semiconductor industry. By capitalizing on its resources and geographical position, Africa can establish itself as a valuable player in this crucial sector.
