China dominates the global industry for extracting and refining the strategic minerals, giving it vital leverage in a renewed trade war this year with Washington.

Since April, Beijing has required licenses for certain exports, sending ripple effects across worldwide manufacturing sectors.

Following a tense summit in July hosted by Beijing, European Union chief Ursula von der Leyen said that leaders had agreed to an improved mechanism for Chinese exports of rare earth minerals to the bloc.

But in its annual position paper released Wednesday, the European Union Chamber of Commerce in China said that “many companies—particularly small and medium-sized enterprises (SMEs)—are still experiencing significant supply chain disruptions”.

“No long-term, sustainable solution has been put forward,” it said, adding that the Chamber is in “regular contact” with Chinese authorities on the matter.

“We have a number of members who are right now suffering significant losses because of these bottlenecks,” Chamber president Jens Eskelund told journalists.

“We have raised with our members more than 140 applications and it’s a fraction of these so far that have been resolved,” he said.

“So this has not gone away.”

In its latest publication, the lobby representing over 1,600 member companies put forward 1,141 recommendations to Chinese policymakers, aimed at smoothing over various obstacles faced by European firms in the country.

Chief among those hurdles this year, Eskelund said, is a wavering Chinese economy that has struggled to mount a robust rebound since the end of the COVID-19 pandemic.

Sluggish consumption, a manufacturing glut and prolonged woes in the country’s vast property sector are among the main challenges now vexing Beijing policymakers and businesses.

In a sign of entrenched woes facing the world’s second-largest economy, data released this week showed factory output and consumption rising in August at their weakest pace in around a year.

“I actually see a greater convergence in terms of the challenges Chinese companies have and the challenges foreign companies have,” said Eskelund.

“The big enemy here—that’s the state of the domestic economy and supply-demand balance,” he said.

“I think we see completely eye-to-eye with the vast majority of Chinese companies.”

But OpenAI’s earlier decision to release open-source versions of its powerful model—the first time it’s done so since 2020, may be more consequential. OpenAI’s move follows a flood of Chinese AI models spurred by the surprise release from Chinese AI startup DeepSeek.

It’s a major shift for the U.S. AI developer, now worth $300 billion. Open weight models allow developers to fine-tune for specific tasks without retraining it from scratch. Despite its name, OpenAI has focused on releasing closed, proprietary models, meaning developers couldn’t get under the hood to see how they worked—allowing OpenAI to charge for access to its powerful models. 

DeepSeek tested that strategy. The Hangzhou-based start-up made waves by releasing models that matched the performance of products from Western rivals like OpenAI and Anthropic. By making its technology openly accessible, DeepSeek allowed developers around the globe to experience the power of its models firsthand.

Since then, Chinese AI development has exploded, with companies large and small rushing to unveil increasingly advanced models. Most releases are open-source. 

“Globally, AI labs are feeling the heat as open source models are increasingly recognized for their role in democratizing AI development,” Grace Shao, an China-based AI analyst and founder of AI Proem, says. 

U.S. tech stocks have rebounded from the slump triggered by DeepSeek, but the shift to open-source may be more permanent. In March, OpenAI CEO Sam Altman conceded that the developer may have been on the “wrong side of history” by maintaining a closed approach. 

The race is now geopolitically charged. Ahead of releasing the open-source models, Altman said he was “excited for the world to be building on an open AI stack created in the United States, based on democratic values, available for free to all and for wide benefit.” Altman’s statement leans into a growing competition over AI–one that developers in the U.S. are worried of losing.

“This plethora of simultaneous open AI models (with published weights and papers about technique) is an ‘idea orgy.’ The collective innovation should easily soar past anything one company can do alone,” Benchmark general partner Bill Gurley wrote on X in late July. “It’s formidable and should easily win over single proprietary players (anywhere in the globe).”

China embraces open-source

Chinese AI firms are now aggressively championing open-source. 

Baidu, once the leader in China’s AI development with its ERNIE model, went open-source a few months ago to catch up with Alibaba and DeepSeek. Kuaishou and Tencent have both released open-source video-generation models. Zhipu AI, Moonshot AI and MiniMax–some of China’s so-called “AI tigers”—have also released open-source models in recent weeks.

Rather than closely guard their breakthroughs, Chinese developers think an open approach will encourage greater innovation and encourage adoption. “When the model is open-source, people naturally want to try it out of curiosity,” Baidu CEO Robin Li told analysts in February, soon after the company unveiled its plans to go open-source

And there’s a business argument too: Alibaba executives, for example, argue that their open-source Qwen models encourage companies and startups to use Alibaba’s cloud computing services. 

Since DeepSeek’s release, Chinese companies have rushed to integrate Chinese AI models into their products, including social media platforms, cars, and even air-conditioners. 

There may also be a psychological element at play. Going open-source lets users around the world see the power of Chinese AI models for themselves, appealing to an up-and-coming tech sector that’s long been denigrated by outsiders as a copycat.

Export controls

China has supported other open-source technologies. Officials back the use of the RISC-V chip design architecture, an open-source alternative to proprietary architectures like ARM and Intel’s x86. RISC-V allows Chinese chip engineers to share best practices and ideas, spurring the growth of the broader sector. 

Beijing seeks to develop a self-sufficient semiconductor sector, in part due to concerns of the U.S.’s control of critical parts of the chip supply chain. The Biden administration’s decision to impose chip controls in 2022 intensified China’s push for domestic innovation. 

China’s embrace of RISC-V has raised eyebrows in Washington. Last year, the House Select Committee on the Chinese Communist Party recommended that U.S. officials study the risks of RISC-V, and reportedly proposed preventing U.S. citizens from aiding China on the open-source architecture. 

Leaders vs. followers

China’s embrace of open-source aligns with the country’s initial position as a runner-up in AI.

“If you’re an OpenAI, an Anthropic, a Google…if you’re really leading, then you have this incredibly valuable asset,” Helen Toner, the director of strategy at Georgetown’s Center for Security and Emerging Technology, said at the Fortune Brainstorm AI Singapore conference in mid-July. “It’s easy to understand why they wouldn’t want to just hand out [their models] for free to their competitors if they’re able to sell access to their closed systems at a premium.”

But for followers, who “can’t compete at the frontier,” releasing an open-source model is a way to show “how advanced you are,” she explained. 

Open-source models also “buy a lot of goodwill,” Toner, who once served on OpenAI’s board, added. “What we’ve seen over the last couple years is how much soft power is available to people who are willing to and organizations that are willing to make their technology available freely,” she explained.

The U.S. may now recognize the “soft power” potential of open-source. “The United States is committed to supporting the development and deployment of open-source and open-weight models,” Michael Kratsios, director of the U.S. Office of Science and Technology Policy, said in South Korea earlier this week

And with OpenAI’s decision, U.S. AI is now perhaps put in a rare position: Following, not leading.

Following a Pro Publica report that Microsoft was using engineers in China to help maintain cloud computing systems for the U.S. Department of Defense, the company said it’s made changes to ensure this will no longer happen.

The existing system reportedly relied on “digital escorts” to supervise the China-based engineers. But according to Pro Publica, those escorts — U.S. citizens with security clearances — sometimes lacked the technical expertise to properly monitor the engineers.

In response to the report, Secretary of Defense Pete Hegseth wrote on X, “Foreign engineers — from any country, including of course China — should NEVER be allowed to maintain or access DoD systems.”

On Friday, Microsoft’s chief communications officer Frank X. Shaw responded: “In response to concerns raised earlier this week about US-supervised foreign engineers, Microsoft has made changes to our support for US Government customers to assure that no China-based engineering teams are providing technical assistance for DoD Government cloud and related services.” 

Nvidia (NVDA 4.08%) shares surged 4% to close at $170.70 on Tuesday, outpacing broader market indices as investors responded positively to news about graphics processing unit (GPU) exports to China resuming. The chipmaker received assurances from the Trump administration that it can once again export its H20 GPU to the Chinese market.

While Nvidia rallied, major indices showed mixed performance. The S&P 500 fell slightly, dropping 0.4%, while the Nasdaq Composite remained relatively flat with its 0.18% gain, highlighting Nvidia’s strong individual performance against market headwinds. Among competitors, Advanced Micro Devices (AMD 6.55%) showed even stronger performance, jumping 6.4% to $155.61, while Intel (INTC -1.59%) declined 1.63% to $22.92, highlighting the diverging fortunes within the semiconductor sector.

Nvidia’s trading volume reached approximately 229 million shares, below its 200-day average of approximately 253 million shares, according to Barchart data. Technically, the stock has established positive momentum by reclaiming its 200-day moving average of around $131.40, with the shares now trading nearly 30% above this key technical indicator.

The company’s renewed access to the crucial Chinese market, combined with ongoing sector rotation into artificial intelligence (AI) infrastructure investments, appears to be solidifying Nvidia’s position as the premier semiconductor manufacturer in the rapidly expanding AI space.

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

The firm is the flagship subsidiary of South Korean giant Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia’s fourth-largest economy.

The tech giant said in a regulatory filing that its April-June operating profits were expected to drop to 4.6 trillion won ($3.3 billion)—down 56% from a year earlier and 31% from the previous quarter.

The figure was 23.4% lower than the average estimate, according to South Korea’s Yonhap news agency, which cited its own financial data firm.

Sales were estimated at 74 trillion won, down 0.1% from a year earlier and 6.5% from the previous quarter.

The company did not disclose its net income or the detailed earnings of its business divisions.

In a separate release, the company explained why the results “fell short of market expectations”.

The company’s key semiconductors division “recorded a quarter-on-quarter decline in profit due to inventory value adjustments and the impact of U.S. restrictions on advanced AI chips for China”, it said.

Washington has expanded efforts to prevent Beijing getting state-of-the-art chips over concerns that they could be used to advance the country’s military systems and other tech capabilities.

The restrictions mean the company’s high-tech factories were running well below capacity.

However, Samsung projected that in the second half of the year it would trim operating losses “as utilization improves due to a gradual recovery in demand”.

Shares in Samsung were down around 0.8% in Seoul on Tuesday.

‘Weak foundry’

The sharp profit and revenue drop is attributed “primarily to the weak foundry business, while the performance of the memory business stayed relatively stable”, Tom Hsu, an analyst at TrendForce told AFP.

The outlook for the next quarter is more optimistic, with “memory chip prices and shipments to keep rising, thanks to strong demand”, especially from data centers, added Hsu, including for AI.

Performance from the company’s HBM chips—used for advanced AI computing—”likely fell short of expectations”, said Chae Min-sook, an analyst at Korea Investment and Securities.

In addition, a price drop for its NAND—used for data storage—”likely widened losses slightly”, Chae added.

“The sharp decline in the won-dollar exchange rate since June will likely weigh on both sales and operating profit (for the second quarter),” she added.

Samsung is among the smartphone makers under pressure from U.S. President Donald Trump, who has threatened South Korea with 25% tariffs in a letter to Seoul on Monday.

Trump has repeatedly demanded that global companies—including Samsung and rival Apple—relocate production to the United States, which many experts warn is unrealistic, citing complex Asia-based supply chains.

South Korea has already been hit by levies on steel and car exports, and said Tuesday it was maintaining “close communication” with the Trump administration as it sought to head off additional measures.