Let's Get Physical: AI Hardware Race, Small Modular Reactors & Magnesium #224
Plus China's trade surplus reached $112.5 billion in July, while Shein is scaling back its Vietnam operations
Six stories that matter lately:
China’s exports rose 23.9% year-on-year in July to $397.85 billion, while the monthly trade surplus reached $112.5 billion. High-tech product exports increased 52.67% in value, and integrated-circuit export value surged 116.57%, despite export volume rising only 1.76%. The unusually large gap between value and volume growth suggests a major price and product-mix effect, alongside strong AI-related semiconductor demand.
Meanwhile, China‘s rare earth exports dropped 29.54% by volume as Beijing tightens control over critical inputs to build their in-house capabilities. Despite new 12.5% US Section 301 tariffs, the global AI hardware boom is keeping China’s factories lights on (or off, thanks to their dark factories.) Both imports and exports are expected to maintain momentum through the second half of 2026, with the AI supercycle and green energy demand behind.
Speaking of the AI hardware, supercapacitors are emerging as a critical tech. The global supercapacitor market is expanding at 18.52% CAGR, growing from $7.65 billion in 2025 to $25.13 billion by 2032, more than 4x the growth rate of the broader energy storage market. Read our team’s full breakdown of supercapacitor markets by applications here.
Still on hardware, magnesium has crossed a historic threshold against aluminium. In early 2026, the magnesium-to-aluminium price ratio fell to 0.75 and hit a 20-year low of approximately 0.695 in April, far below the 1.3 threshold traditionally required for mass substitution. At identical volumes, 1 kg of aluminium becomes 0.64 kg in magnesium, a 30% weight saving that costs 25% less per unit volume. Global automotive magnesium demand is projected to reach 1.06 million tonnes by 2028 at a 36% CAGR. There’s a catch, though: China controls roughly 90% of global primary output. Read our team’s full analysis of magnesium 2026-2030 outlook here.
Big Tech is funding Small Modular Reactors (SMR) to bypass the grid. The global SMR market is set to grow from $6.54 billion in 2025 to $10.69 billion by 2033 at 6.8% CAGR, 3x faster than conventional nuclear. Some investments include: Microsoft signed a $16 billion, 20-year power purchase agreement to restart Three Mile Island. Google signed the first corporate SMR fleet deal with Kairos Power, targeting 500 MW by 2035. Amazon invested $700 million in X-energy for up to 12 reactor units. Meta announced plans for up to 6.6 GW of nuclear capacity. Meanwhile, China’s Linglong One entered commercial operation in 2026, giving them a first-mover export advantage. Read our briefing on SMR here for full picture of how this market will evolve, and what’s in it for you.
If this is the first time you’ve heard piezoelectric composite, you should take a closer look. The raw piezoelectric materials market sits at $1.73 billion, but the downstream device market it feeds is $32.9 billion and growing at 6.23% CAGR. The energy harvesting subsector alone is expanding at 11.2% annually. What is it used for? Two applications among several: 1) In automotive, flexible piezoelectric sensors sandwiched inside EV battery packs can detect cell swelling in under 10 milliseconds (much faster than normal sensors), 2) In civil infrastructure, cement-based piezocomposites embedded in aging bridges and tunnels are replacing periodic inspections with real-time monitoring. Read our analysis of this market here.
In other note, Shein is scaling back its Vietnam operations. Just over a year after leasing a 15-hectare logistics hub near Ho Chi Minh City, the company has cut its lease to 6 hectares and begun mass layoffs, with some teams retaining only 1 in 4 employees. Multiple chokeholds for Shein in Vietnam: 1) the US eliminated the de minimis exemption globally (dropping Shein’s US revenue 14% in Q1), 2) new 12.5% forced-labour tariffs hit both China and Vietnam equally, and 3) Vietnamese suppliers simply can’t support Shein’s signature ultra-thin margins.
Shein’s CEO pledged $1.5 billion for Guangdong supply-chain infrastructure in February, but domestic suppliers are not reciprocating. Orders are stagnant, thousands of smaller factories are diversifying to Temu and Amazon, and Guangzhou authorities reportedly warned Shein against moving orders away from the region. For anyone concerns with the “China+1” strategy, if you are looking to build a more solid plan than Shein, and if you have nothing to do with fast fashion, contact us with your case at business(at)tocco.earth.
Enjoy your week. Stay sharp, and keep building.
Anh & Tri
On behalf of the Tocco team
Further Readings · Material & Manufacturing News · 08.2026
(US 🇺🇸) On August 14, Trump is imposing 100% tariffs on national-security-sensitive drone imports (over 25 kg or equipped with thermal imaging) and 25% on smaller drones, with allied supply chains also hit: 15% on drones from the EU, Japan, South Korea, Switzerland, and Taiwan, and 10% on UK imports. The tariffs take effect in 21 days for sensitive items. The stated goal: incubate a domestic drone industrial base.
(Europe 🇪🇺) Over 135 million Europeans are enduring temperatures above 35°C. The UK recorded 38.1°C in west London, its hottest day of the year, while Paris hit 38°C. Air conditioning remains largely uncommon across the continent, and UK hospital nurses are reportedly collapsing from heat exhaustion in uncooled NHS facilities. Prolonged heat has intensified drought conditions and sparked wildfires across the region. Read more on El Nino and its impact on global supply chain this year here.
(South Korea 🇰🇷) The KOSPI plunged over 33% in July, its worst month in history, surpassing the crashes of 1997 and 2008. The trigger: a violent unwinding of $19.7 billion in leveraged bets on AI chip stocks after China reportedly achieved mass production of domestic DUV chipmaking tools. Samsung lost 35% and SK Hynix 46% over the month.
(China 🇨🇳) Unitree Robotics priced its $9 billion Shanghai IPO at 150.8 yuan per share, raising 6.1 billion yuan ($848 million) as “mainland China’s first humanoid stock.” Strategic investors include DeepSeek, which committed 141 million yuan ($20 million) under a 3-year lock-up to co-develop embodied AI. Unlike many peers, Unitree is profitable: 1.7 billion yuan in revenue and 591 million yuan in adjusted net profit last year. Trading at nearly 36x price-to-sales, the listing sets the valuation benchmark for a wave of Chinese robotics IPOs, in the context of recent US ban on Chinese humanoid robots.
(US 🇺🇸) Alphabet’s Waymo is importing thousands of Chinese-built EVs for its U.S. robotaxi fleet. Data reveals that Zeekr has shipped over 3,200 units of its CM1e electric minivan to the Port of Los Angeles since 2024, with 2026 alone making up 2,600. Industry analysts suspect Zeekr is offering steep discounts against the 127.5% tariffs to maintain the partnership. To comply with US laws, Zeekr ships stripped-down vehicle shells for Waymo to install its proprietary autonomous driving hardware at its Arizona facility.