The AI arms race is built on tungsten. Can the West keep up?

AI sees silicon chips run hotter and work harder than anything before them — and tungsten is the hidden metal making it possible. But with China dominating supply and prices climbing, can the West secure enough of it to keep pace?

Artificial intelligence may run on code, but its hardware runs on metals. And one of the most critical is also one of the least discussed: tungsten. Without it, the high-performance chips powering today’s AI models would simply fail.

“No tungsten gas, no chip, no semiconductor. And no semiconductor means no AI,” says Lewis Black, chief executive of Almonty Industries. “The only way AI has come to fruition is because of tungsten gas. It not only conducts electricity but dissipates heat, which means you can pump more processing into chips. That’s been the secret sauce of this entire revolution.”

The “gas” he refers to is tungsten hexafluoride (WF₆), used in semiconductor fabrication plants through chemical vapor deposition. It forms the ultra-thin tungsten films that connect transistors and fill the microscopic contacts inside chips. Tungsten’s high melting point and robustness mean these interconnects remain stable under extreme current and temperature conditions, allowing manufacturers to build denser, more powerful processors.

A separate breakthrough has been tungsten–copper wire. Drawn to the width of a human hair, it has enabled a new level of miniaturisation in electronics. “It was a huge leap,” Black says. “Yet the West let China dominate production of that wire, just as it dominated gas. Five years ago, Western companies could have invested. They said it would never catch on.”

The illusion of supply

Chipmakers often assume tungsten will always be available. But the reality is fragile. According to Black, 97.4% of the tungsten oxide imported into South Korea — a hub for chip fabrication — comes from China. Taiwan is equally dependent. “They’re highly exposed,” he says. “If China turned off the taps, whole sectors would close within months.”

The appearance of diversity masks the truth. Borders between Myanmar, China and Southeast Asia remain porous, and tungsten mined in conflict zones often flows into Chinese channels before reappearing on world markets. “Unfortunately, conflict material is used widely,” Black says. “Everyone knows it’s bad, but the view for many is: beggars can’t be choosers. If they don’t buy it, someone else will. And that’s how the system looks the other way.”

Analysts have started to echo these warnings. CNBC recently reported that the US has not mined tungsten domestically since 2015 and now relies heavily on imports, over a third of which come from China. In effect, Washington is dependent on the very supplier it is trying to reduce reliance on.

Pressure rising

This dependence is colliding with surging demand. The boom in AI has driven semiconductor fabricators to capacity, while tungsten markets remain tight. Almonty’s Sangdong project in South Korea, one of the largest non-Chinese deposits in the world, will be commissioned by the end of 2025. But even that, Black cautions, is not a silver bullet. “We can cover defense demand across the US, EU and Korea, but not the whole civilian market. There’s simply not enough material yet. And panic buying won’t fix it. It just distorts the market further.”

In 2025, tungsten prices hit their highest levels in more than a decade as Beijing tightened export controls. The Sydney Morning Herald reported European prices for ammonium paratungstate (the benchmark traded form of tungsten) rising above $400 per metric ton unit in early 2025, up nearly 20% in just weeks. Traders describe scrap stocks being drained and buyers scrambling for non-Chinese material at any price.

Black argues that the squeeze is partly self-inflicted. “Western companies enjoyed 30 years of cheap Chinese supply and got rich on it. They dismissed alternatives when they had the chance. Now they’re paying for it.”

Beyond rare earths

Part of the problem is policy myopia. Until recently, governments have put rare earths – elements such as neodymium and dysprosium, essential for magnets in wind turbines and electric vehicles – at the center of critical minerals strategies. But tungsten rarely featured in the debate, despite being just as vital to advanced technologies. Indeed, the AI sector depends on it as much as defence does. A recent CSIS study of Indo-Pacific supply chains warned that concentration of minerals like tungsten in China is a direct risk to semiconductor resilience. McKinsey also highlights barriers to scaling chip production in America — from equipment to inputs — that are already slowing the build-out of fabrication plants. Tungsten belongs squarely in that category.

“No one in Washington or Brussels really talks about it,” Black says. “They act like it’s some side issue. But you can’t run a semiconductor fab without tungsten gas. It’s as simple as that.”

The overlap with defence makes the challenge more acute. Tungsten is also the material of choice for armor-piercing munitions, aerospace counterweights and military electronics. That dual use means AI and defence sectors are competing for the same constrained supply. “The military rarely admits it, but we all know the choke points,” Black says. “And AI is just adding a new layer of demand.”

What comes next

What, then, is the way forward? Black is clear that supply cannot be conjured overnight, but sustainable solution begins with transparent prices that reflect the real value of tungsten mined and processed outside of China. To help the process, Black advises the DARPA Critical Minerals Forum on how transparent benchmarks could help capital flow into viable projects. Western tungsten consumers are major corporations with the resources, and the motivation, to invest in new mines and processing facilities, he says.

“Mines historically have been their own customers, producing raw materials that were processed in vertically integrated supply chains. We forgot the values of that over decades of cheap and convenient supply from China, but that’s the model that will solve this problem for the long term.”

For investors, that creates an opportunity: tungsten is shifting from obscurity to centrality in AI and high-tech supply chains. For policymakers, the message is clear: leaving pricing and supply entirely to Beijing is no longer tenable.

“We didn’t get here overnight, and we won’t get out overnight,” Black says. “But without a transparent market and real investment, the West will always be running behind. And in the age of AI, running behind is not an option.”