The technology we increasingly rely on every day such as phones, tablets and personal computers are made up of different components. These components and other parts are made using raw materials that can be found in countries all over the world. Materials including aluminium, lithium and cobalt have been listed by the World Bank as likely to see heightened demand in the future as we become even more reliant on technology, highlighting potential issues around protectionism.
On 12th September at their special event in Cupertino, Apple announced their latest generation of hardware with a series of new iPhones and Apple Watch. While the technology giant no longer discloses pre-order numbers for their iPhone sales, the fulfilment of pre-orders for the iPhone X in 2017 experienced delays due to the scale of demand.
There are now three new iPhones in Apple’s smartphone line up with the iPhone XS, iPhone XS Max and iPhone XR. The iPhone XS and iPhone XS Max come with an A12 bionic chip and up to 512GB in capacity. These new features that are being made available in iPhones and other smartphones are being made possible by numerous raw materials. The governments that are rich in these materials have sway over global supply, having the ability to impact prices if other jurisdictions do not have the reserves to make up for any restrictions and meet demand.
How can protectionism affect technology?
The earth metals that are found in the components of devices like iPhones are sourced from jurisdictions across the globe. Some countries such as China are rich in these metals, causing the possibility of some concern for technology companies as they find themselves relying on foreign production.
Shortages and bottlenecks in the availability and sustainability of the raw materials used in technology may be affected by protectionist trade policies such as tariffs, duties or taxes. While measures have been put in place to overcome these potential issues, the discovery, extraction and production of raw materials is fast-paced and prices fluctuate as materials are found in new locations.
How will protectionism affect the future?
As technology continues to develop, the need for the production of natural resources will only continue to grow. The demand for raw materials like lithium is likely to become difficult to keep up with if the mass adoption of electric vehicles occurs. With changes such as the UK government banning the sale of petrol and diesel cars from 2040, the need for raw materials in comparison to the amount needed to power smartphones and other devices will exponentially increase.
Companies planning on investing in specific industries need to consider how much tax they will be paying or if prices will rise when demand increases. As raw materials continue to be discovered in new locations, local producing and processing companies should take advantage of the increased demand caused by technology to improve their own development and growth in the mining sector.
Taking advantage of protectionism
The global rise of protectionism must lead businesses to question whether they are leaving themselves open to risk or prepared to find opportunities.
Our Insights and Resources are recommended for businesses trading internationally. We will update you regularly with information from our legal experts on protectionism, as well as other sectors and services you may be interested in.