The New Electrical Industry Stack
A new current is flowing across the globe, originating deep within the Earth, from the extraction of lithium, cobalt, and nickel, all the way to the quiet operation of autonomous vehicles or the voice of an AI assistant. This journey from mines to engines, and through digital frameworks, signifies what’s being termed the “Electrical Industry Stack.” The phrase may sound technical, yet it conceals significant shifts in power structures, influencing everything from societal organization to daily life.
There was a time when I remarked that software would, in many ways, dominate our world. It took over communication and media, but, paradoxically, that growth made the foundational machinery of civilization nearly unwieldy. Mines, factories, and power grids became like relics from a bygone era. The electrical industry stack represents a return—a reaffirmation of the physical over the digital. It intends to integrate digital intelligence with tangible machinery, thus reshaping the very rules of engagement.
In a constantly shifting world, the capacity to produce one’s own goods from inception to completion isn’t just practical; it’s empowering.
At the heart of this stack are minerals drawn from the Earth. Historically, empires were founded on coal and iron. Today, they pivot around lithium, copper, and rare earth materials. The geography of these resources has forged a new power map. China, understanding the importance of these resources earlier than many, not only leads in extraction but also dominates the crucial midstream purification processes. It controls nearly 90% of the world’s rare earth magnet supply, essential for everything from electric vehicles to drones. Moreover, about 80% to 95% of the world’s gallium, a critical metal for semiconductors—the very backbone of the electrical stack—also comes from China.
This centralization of control points to a vulnerability, reminiscent of the oil crises of the 20th century. As a response, a wave of techno-nationalism is rising. The US and its allies are advocating for “co-friends” to establish domestic gigafactories and secure their supply chains, essentially trying to wrest back control over essential production methods. This concern transcends industry; it’s a pressing national security matter, as reliance on external sources poses risks for the future built with such materials.
The next layer in this stack is the battery, crucial for energy storage and distribution. Prior to lithium-ion technology, electricity was a fleeting utility, utilized only at the moment of generation. Now, it can be captured, stored, and accessed at will. This advancement makes energy more personal and portable. However, the competitive landscape is stark—companies like CATL and BYD provide over half of the world’s electric vehicle battery capacity, with China holding a staggering 78% of global cell manufacturing. This position is not accidental; it’s a result of a calculated, long-term industrial strategy.
Take BYD as an example. Initially a battery manufacturer, it has expanded into electric vehicles, semiconductors, and electronic components. Their model exemplifies vertical integration—a modern echo of a system that aims for resilience and control, revisiting a production paradigm that values self-sufficiency over the presumed efficiencies of global supply chains.
Electricity then travels through power electronics, utilizing materials like gallium nitride and silicon carbide—key players that enable energy management with unprecedented efficiency. This development leads to quicker charging times, longer ranges, and enhanced computational capabilities, though, once again, it’s worth noting that gallium supplies are predominantly controlled by China.
As this conditioned electricity is transformed into motion via electric motors, reliance on rare earth magnets becomes evident. The potential over-dependence on China for these components has sparked a search for alternative solutions that can achieve similar efficiencies without the geopolitical complications.
The stack’s calculations also play a role in the digital world, processing data through AI models and sensors to make driving decisions, optimizing power flow in smart grids. While the top of the stack shows some diversification, the foundational geography remains concentrated. Nvidia, for instance, oversees more than 80% of GPUs used in AI training, while the most advanced semiconductors are produced by TSMC in Taiwan. This intersection of foundational materials and digital decision-making is where the tangible and virtual finally connect.
In sum, these stacks pave the way for a realm filled with smart appliances and autonomous drones, a landscape shaped by algorithms and voice commands. Yet, the narrative is still unfolding—entwined within the complexities of geopolitics, material science, and the understated nuances of the new electrical era.
