US proposes AI pact with EU as 30 nations join Pax Silica

The US has proposed a formal AI partnership declaration to the European Union covering semiconductor supply chain security and regulatory coordination, as the bloc formally joined the US-led Pax Silica initiative now encompassing more than 30 nations.

"The scope of cooperation now spans from critical minerals mining to AI model development, creating a coordinated allied front," European Commission spokesperson Paula Pinho said Thursday, confirming the bloc's accession to Pax Silica.

The one-page draft declaration focuses on three areas: innovation-friendly regulation, R&D and export cooperation across the AI technology stack, and joint action to promote bilateral investment. Pax Silica, launched in December 2025 with an initial roster including Japan, South Korea, Singapore, Israel, Qatar, the UK and the UAE, has since expanded to include Australia, Finland, Norway, the Philippines and Sweden alongside the EU and its member states Germany, Greece and the Netherlands.

The initiative layers on top of existing mechanisms — the US CHIPS Act committed tens of billions in domestic semiconductor subsidies since 2022, while the EU's Chips Act facilitated €31.5 billion in public-private investments. Together, they represent a coordinated Western response to China's dominance in rare earth supply chains, where Beijing controls 94% of global sintered permanent magnet production, according to the International Energy Agency.

The partnership proposal arrives as the US deepens its bet on domestic materials independence. On June 17, the Department of Commerce awarded SandboxAQ, an Alphabet spinout valued at $5.75 billion, $500 million under the CHIPS and Science Act to develop PFAS-free process chemicals, rare earth-free magnets, advanced catalysts and novel battery chemistries — four material categories where US semiconductor fabs remain dependent on foreign, largely Chinese-controlled, supply chains.

China's April 2025 export controls on rare earth materials demonstrated the leverage those dependencies create. Yttrium exports to the US fell from 333 metric tons in the eight months before the controls to just 17 metric tons in the eight months after, according to Commerce Department data. The controls remained active as of June 2026.

Supply Chain Coordination vs. Digital Sovereignty

Not all EU member states greeted the partnership with uniform enthusiasm. Some expressed concern that the framework could become a vehicle for the US to promote its own AI ecosystem, according to people familiar with internal briefings. The Trump administration's recent decision to restrict foreign access to Anthropic's latest AI model has sharpened European anxieties about technology dependence.

Brussels has been pushing to strengthen its "digital sovereignty" and is drafting a technology autonomy package covering semiconductors, AI and cloud computing. EU Commission Executive Vice President Henna Virkkunen said Thursday the bloc had already dispatched officials to Washington for talks on the Anthropic access restrictions.

The Pax Silica framework is non-binding — it carries no dedicated joint funding and no mandates compelling member nations to take specific actions. Its effectiveness will depend on whether the coalition can translate declarations into coordinated investment. The last time the US and EU coordinated industrial policy at this scale — through the Trade and Technology Council established in 2021 — it produced early-warning systems for supply chain disruptions but stopped short of joint funding. Pax Silica extends that network to Asia and the Middle East, creating a broader coalition that could accelerate the reshoring of critical materials production.

For investors, the alliance signals that semiconductor supply chain diversification will remain a defining theme of the technology cold war. The question is whether non-binding coordination among 30 nations can outpace China's structural advantages in rare earth processing and magnet manufacturing, where decades of industrial policy have built an entrenched lead that the IEA estimates at 94% of global sintered magnet output.

This article is for informational purposes only and does not constitute investment advice.