US, Japan race to secure chip-grade minerals as China curbs exports

Chinese technology firms eyeing public stock offerings are increasingly focusing on areas where Beijing aims to reduce reliance on foreign technology, as US export controls reshape the country's IPO pipeline. A Morgan Stanley analysis of 229 IPOs between 2022 and July 2026 reveals that about 20% of companies launched this year are tackling key technological "chokepoints" in China, compared to just 8.1% in 2022.

In 2026, 60% of firms contributed to China's push for supply chain self-sufficiency, up from 41% four years ago, the report indicates. China's critical tech bottlenecks have also narrowed, shifting from a broad mix of strategic goods to a focus on semiconductors and the semiconductor supply chain, according to the study. The identified chokepoints have moved upstream to raw materials, complex machinery, specialized parts, and core manufacturing tools, with 19 of the 21 firms targeting the semiconductor supply chain this year.

As chokepoints expanded over the past three to four years, domestic companies dedicated to these areas grew, many ready to tap into the capital market to further scale up, Morgan Stanley analysts noted. US export controls, particularly on semiconductors, have restricted China's access to advanced computing chips and manufacturing equipment since 2022.

In December 2024, Washington further curbed access to high-bandwidth memory for AI and blacklisted Chinese organizations linked to military ambitions. Despite heavy research and development spending, many companies remain less commercially proven despite technological advancements, with only 46% of 2026 firms profitable at scale, down from 72% in 2022, according to the report.