Manufacturing Update - 15 June 2026

Insights from articles and reports, excerpted and summarized, of interest on manufacturing technology, management, policy, and economics in the US and abroad.

Jun 15, 2026

US DEVELOPMENTS:

1. WHERE’S THE GOLDEN AGE?

“Donald Trump’s Pledge to Unleash a ‘Golden Age’ of US Manufacturing Sputters,” Chriatian Davies and Ian Hodgson, Financial Times, June 4, 2026

US private spending on manufacturing construction fell in April to $15.2bn, down about 16 per cent since Trump’s second term began, while factory employment has fallen by 77,000 jobs over the same period, according to official data.

The decline in spending on building plants comes despite 84 companies announcing more than $900bn in investments to expand US manufacturing since Trump’s inauguration in January 2025, according to FT calculations. The divergence underscores how Trump has struggled to usher in a domestic manufacturing boom — one of his flagship initiatives — despite tariffs and pressure on businesses to invest in American factories.“Announcements are what people say they’re going to do, but dollars spent is what’s actually happening,” said Didi Caldwell, chief executive of Global Location Strategies, which helps companies identify factory sites.

Diane Swonk, chief economist at KPMG, argued that while manufacturing output had grown modestly in early 2026, there were few signs of a reversal of manufacturing jobs being lost to automation and foreign competition. Recent increases in US manufacturing output appeared to be driven less by confidence than by fears over rising prices and domestic and geopolitical uncertainty, added Chris Williamson, S&P Global’s chief business economist.

“Companies are telling us that a lot of this growth is stock building because they’re worried about supply shortages and prices rising further as the Iran conflict continues,” said Williamson, noting similar upticks during periods of anxiety over pandemic-era disruptions and Trump’s so-called “liberation day” tariffs in April 2025. “It isn’t reflecting the true health of the manufacturing economy, and it’s more worrying than it is encouraging.”

Excerpted with edits (paywall): https://www.ft.com/content/573913be-f4e6-444e-9e55-65fe57f5286f?syn-25a6b1a6=1

2. TARIFF HEADWINDS FOR CHINA-OWNED GE APPLIANCES

“Why a Chinese-Owned Company is Bringing Factory Jobs Back to the US, But Tariffs Are Making it Harder,” David Lynch, Washington Post, May 31, 2026

At GE Appliances’ sprawling industrial headquarters, a vacant plant is a sign that jobs are coming home. This 1950s-era facility, one of five that turns out home appliances under familiar GE brands such as Hotpoint and Profile, is preparing to reclaim a manufacturing line that currently hums in China. If all goes well, about 800 American workers will begin producing a combination clothes washer and dryer here next spring. The work, which also includes a line of front-load washers, will mark a milestone in GE Appliances’ $6.5 billion, 13-year bid to boost domestic manufacturing.

This reshoring success story has drawn plaudits from the White House, even though a Chinese corporation now owns GE Appliances and its American boss complains about Trump’s tariffs. Reviving domestic production means overcoming daunting obstacles, including relentless cost pressures, young Americans’ aversion to factory jobs and gaps in the nation’s industrial base.

U.S. factories employ 12.6 million workers today, virtually unchanged from April 2018, when Trump began imposing tariffs on China. Once part of a business launched by famed inventor Thomas Edison, GE Appliances was sold to China’s Haier Group for $5.6 billion in 2016. The Chinese company, perhaps best known in the U.S. for its compact refrigerators, set out to revitalize a famous American brand by doubling down on local know-how.

GE Appliance’s reshoring initiative is a noteworthy break with its corporate lineage. When General Electric owned the business, then-CEO Jack Welch was an outspoken advocate of moving jobs to low-wage countries, once saying half-seriously that he wanted to put factories on barges that could sail wherever costs were lowest. Haier, which has more than 60 factories outside China, has pushed into global markets to offset the impact of a property market collapse at home. In recent years, the company has shifted from a “China-centric” supply chain to a more decentralized approach, in part to get inside Trump’s tariff wall.

But GE Appliances’ President Kevin Nolan confronts a catch-22: To reduce his dependence on foreign suppliers, he needs first to import new factory equipment from foreign suppliers. The Trump administration is not making it any easier. GE spends $4.6 billion per year with roughly 6,500 U.S. suppliers, up from 2,500 in 2019. But after decades of globalization, some key components — such as wiring harnesses — are no longer made in large volumes in the United States. “The equipment I need to put in that factory, it’s not made in America. We’ve got drum lines coming from New Zealand. We need some stuff from China,” said Nolan. “But the equipment I’m bringing over, we’re paying tariffs on it that are insane.”

Suppliers will not invest in new U.S. capacity unless they are convinced that large customers like GE Appliances will buy from them over the long haul. And Nolan says tariffs are making that harder. He wants the government to permit tariff-free imports of equipment that is not available from a U.S. supplier. Trade policy overall remains disconnected from the factory floor, Nolan said.

Excerpted with edits: https://www.washingtonpost.com/business/2026/05/31/chinese-owned-company-is-bringing-factory-jobs-back-united-states/

3. TARIFFS UP, IMPORTED STEEL DOWN

“Steel Imports Down 30% in 2026 as Tariffs Bolster US Production,” Nathan Owens, Manufacturing Dive, June 4, 2026

The amount of foreign steel entering the United States inched nearly 6% higher in April from the previous month, but remains about 30% lower on a year-to-date basis as Section 232 tariffs continue to disrupt trade flows and support domestic steel production. The largest supplier countries in April were South Korea, Canada, Brazil, Mexico and Vietnam, in that order, according to census data. From January to April, imports totaled 6.97 million net tons compared to 9.89 million net tons for the same period a year ago.

Excerpted with edits: https://www.manufacturingdive.com/news/steel-imports-down-30-percent-ytd-tariffs-bolster-us-production/821998/

4. QUANTUM COMPUTING MANUFACTURING

a. CHIPS ACT FUNDING FOR IBM AND GLOBAL FOUNDRIES QUANTUM CHIP FOUNDRIES: “Department of Commerce Proposes $2 Billion CHIPS Investment Across Nine Quantum Hardware and Foundry Developers,” US Department of Commerce, May 21, 2026

The US Commerce Department has signed nine non-binding letters of intent (LOIs) to allocate $2.013 billion in federal incentives under the CHIPS and Science Act. It seeks to build infrastructure across five quantum computing modalities: neutral-atom, silicon-spin, superconducting, photonic, and trapped-ion. As a protective condition for the distribution of these federal funds, the U.S. Department of Commerce will obtain passive, minority non-controlling equity stakes in each recipient entity consistent with the amount of funding. The investments will also likely include provisions to provide the government with a discount over the market price as well as specified milestones that must be met before different tranches of the funding is released.

The funding distribution divides capital between two core manufacturing foundries and seven specialized hardware vendors. First, within the foundry track, GlobalFoundries is allocated $375 million to build a multi-modality, secure quantum foundry covering superconducting, trapped-ion, photonic, topological, and silicon-spin architectures.

Concurrently, IBM will receive $1 billion to establish Anderon, a standalone pure-play subsidiary operating a 300-millimeter quantum wafer foundry in Albany, New York, to fabricate superconducting wiring, bumps, and through-silicon vias (TSVs) and also support other qubit modalities later on. To start, Anderon will not require a new building. It will be a tenant at the Albany NanoTech Complex and have access to a shared clean room space and utilize the IBM superconducting qubit fabrication process that IBM has developed over the years. So, Anderon will be ready to go as soon as the final legal documents are signed. An expansion of the facilities may be required in the future when Anderon decides to support additional modalities. By leveraging the 300mm fab and IBM’s Quantum process, Anderon aims to be ready on the day the documents are signed to produce wafers.

The remaining capital is distributed to resolve discrete, multi-modality engineering bottlenecks.

Excerpted with edits from: https://quantumcomputingreport.com/u-s-department-of-commerce-proposes-2-billion-chips-investment-across-nine-quantum-hardware-and-foundry-developers/

b. ANALYZING THE QUANTUM COMPUTING ANOUNCEMENTS: “U.S. Quantum Bet Puts Hardware First, But Utility Remains the Test,” Pat Brans, EE Times, May 22, 2026

The Commerce Department quantum package that backs quantum foundries and hardware companies across major modalities, signals that Washington sees quantum computing as strategic infrastructure. But the harder challenge is turning qubits, wafers, and architectures into useful applications. The bet also raises a harder question. If public money accelerates quantum manufacturing and hardware capacity, will the industry be ready to turn that capacity into measurable value?

IBM is the clearest sign that quantum manufacturing is becoming part of the strategic-technology conversation. IBM said, aside from the CHIPS Act funds, it would contribute $1 billion in cash, intellectual property, assets, and workforce to the new Anderon company. That makes the IBM award more than a company subsidy. It points to a deeper policy objective: building the manufacturing backbone for quantum systems, from fabrication processes and specialized materials to device integration and supply chain control.

The Commerce package also includes GlobalFoundries, which NIST describes as part of the two-foundry element of the announcement. Together, the investments in IBM and GlobalFoundries suggest that Washington is not treating quantum purely as a software or laboratory problem. It’s treating it as a manufacturing problem.

D-Wave, another recipient, shows a second part of the strategy: The government is not only funding foundries but also backing quantum companies pursuing different technical paths. D-Wave said it signed a letter of intent for $100 million in proposed CHIPS and Science Act funding. The company said the funding would support both its superconducting annealing quantum systems and gate-model quantum technology development. The company also said the U.S. government would receive an equity stake in D-Wave in connection with final award documents.

The D-Wave award is notable because it points to a portfolio approach. Quantum computing remains a field of competing architectures: superconducting qubits, trapped ions, photonics, silicon spin, neutral atoms, annealing, and other approaches all have supporters. Each has different tradeoffs in speed, fidelity, scaling, cost, and maturity.

According to Sumit Kapur, CEO of Zapata Quantum, that breadth is one of the most important parts of the Commerce announcement. “It’s encouraging to see that they are covering all the modalities, because ultimately, we don’t think it’s going to be one modality that wins the day,” Kapur.

Kapur welcomed the U.S. commitment to quantum hardware and manufacturing but said the policy conversation cannot stop at the bottom of the stack. The danger is that the U.S. builds qubits and wafers without developing the applications, algorithms, and enterprise readiness needed to turn quantum capacity into business value. “If we focus all of our efforts on building these capacities, but we don’t end up with the actual applications and use cases that connect these capacities and make them tangible and advance ROI at the enterprise level, then we’re not making real progress,” Kapur said.

Excerpted with edits: https://www.eetimes.com/u-s-quantum-bet-puts-hardware-first-but-utility-remains-the-test/

c. QUANTUM NETWORKING COULD ACCELERATE QUANTUM COMPUTING: “The Entanglement Edge: Strategic Priorities In Quantum Networking,” Costanza Vidal Bustamante and Morgan Peirce, CNAS, May 26, 2026

Quantum networking—technologies that transmit quantum states between nodes—is an underappreciated but potentially consequential dimension of U.S.-China quantum competition. If harnessed at scale, quantum networking could accelerate the path to useful quantum computers by linking processors into more powerful systems; enhance the precision of sensors critical to navigation, surveillance, and scientific discovery; and potentially secure sensitive communications against eavesdropping.

In practice, however, quantum networking remains nascent and far from delivering on this potential. Some first-generation versions are commercially available but substantially limited in capability, while the more advanced applications are still confined to research and early prototypes. Distinguishing between diverse quantum networking technologies—in both their maturity and strategic value—is critical for evaluating and strengthening the United States’ position in this field.

Key Findings:

Linking quantum computing modules within data centers is the most pressing and consequential application of quantum networking. Quantum computing companies across hardware modalities identify modular interconnections—links enabling separate processors to function as a single, more powerful system—as essential for scaling to the performance levels needed for high-impact applications from materials discovery to cryptanalysis. Unlike other quantum networking applications, whose value remains more speculative or niche, modular quantum interconnects are critical to realizing the economic and national security potential of quantum computing itself.
Longer-distance quantum networking applications present narrower use cases and harder technical requirements. Scaling quantum computing is more efficiently achieved within a local facility.
QKD is at best a potential niche complement to post-quantum cryptography (PQC), not a replacement for it. The National Security Agency and several allied cybersecurity agencies have concluded that QKD’s practical limitations—including implementation vulnerabilities, distance constraints, costly specialized infrastructure, and its inability to provide authentication—make PQC the primary solution for mitigating the threat of quantum computers capable of breaking current encryption tools. Even China, the world’s strongest QKD proponent, began developing its own PQC standards in 2025, and a prominent government advisory body separately acknowledged that PQC can meet security requirements in most scenarios.
China leads in first-generation quantum networking deployment, but that infrastructure does not automatically translate into readiness for higher-impact quantum networks. China operates over 10,000 km of QKD fiber across 80 cities, complemented by satellite-based demonstrations, providing a foundation of infrastructure and technical expertise it can build on as next-generation technology matures. However, next-generation quantum networks for distributed computing and sensing impose far greater technical requirements across enabling hardware, performance, and synchronization, which first-generation QKD infrastructure cannot meet.
The United States holds substantial assets, but its position is not self-sustaining. A growing ecosystem of leading researchers and companies—backed by substantial federal research and development (R&D) support as well as private capital—is making strides toward high-value quantum networking applications in computing, sensing, and communications. The U.S. government has avoided overcommitting to first-generation applications of limited strategic value, instead prioritizing next-generation technologies with high economic and security returns. However, additional steps could help the United States reap greater benefits from these investments.

Excerpted with edits from: https://www.cnas.org/publications/reports/the-entanglement-edge

5. LASERS FOR 3D PRINTING ALLOYS

“NIST Researchers Discover a New Way to Whisk Alloys Together With Lasers,” NIST News, June 4, 2026

A major challenge for 3D-printing of metal alloys is ensuring that the molten metal is well and evenly mixed. NIST researchers have developed a new approach for 3D printing that can whisk the molten metal together as it forms using lasers. This opens a new route for creating hard-to-make metal alloys, making possible certain high-performance alloys. To verify their success, they also developed a way to watch changes in the metal using X-rays, as they melted and solidified in a fraction of a second. So NIST has improved how X-rays are used to study the atomic structure of metals in real time during 3D printing, allowing researchers to observe how materials change under extreme conditions, which can be a key verification tool.

Over the last 20 years, researchers have begun developing a new class of alloys called “high-entropy alloys” (HEAs). At the atomic level, HEAs have an unusual arrangement, which can improve their performance at high temperatures. HEAs can be ideal for applications that need the material to stay strong at high temperatures, such as jet engines or nuclear reactors. But they’re also more difficult to make. Traditional alloys are mostly made of just one base metal with small amounts of other elements added. Basic steel, for example, is almost entirely iron with small amounts of carbon. Adding other elements such as nickel or chromium can make the steel stronger or more corrosion-resistant.

HEAs break that pattern; they contain more metals in more equal proportions than traditional alloys. So, an HEA might be made up of 20% each of five different metals.“HEAs need to be mixed down to the atomic level,” said Fan Zhang, the NIST physicist who co-led the project. “It takes extra effort to get metals to blend together in those ratios.” The new approaches NIST has developed could be key enablers for HEA 3-D Printing.

Excerpted with edits: https://www.nist.gov/news-events/news/2026/06/nist-researchers-discover-new-way-whisk-alloys-together-lasers

6. IT’S NOT JUST RARE EARTHS - THE PHARMA SUPPLY CHAIN IS VULNERABLE

“The Pharma Choke Point: US Dependence on Chinese Pharmaceutical and Biotechnological Supply Chain,” Thomas Bollyky, Rush Doshi, Olivia Kosloff, Prashant Yadav, and Elena Every,” US Council on Foreign Relations, June 4, 20256

The U.S. pharmaceutical supply chain faces a threat equal to the rare-earths challenge already posed by China’s exploitation of its dominance of those critical minerals. The Council on Foreign Relations has released a major policy report, The Pharma Choke Point: How to Reduce U.S. Dependence on Chinese Pharmaceutical and Biotechnology Supply Chains. It is the product of a year-long, blue-ribbon study group of biopharmaceutical specialists, China scholars, and industrial policy experts to identify the true scope of U.S. pharmaceutical dependence on China and recommend policies to reduce it.

The report undertakes an original analysis of trade and customs data and U.S. Pharmacopeia ingredient sourcing records, mapping supply chain dependencies for U.S. essential medicines, tier by tier. It is the first major policy effort to assess the risks of China weaponizing pharmaceutical supply chains as it has critical minerals—not during a military conflict or health emergency, but as a tool of economic or geopolitical coercion.

The risks are greatest for the subset of essential medicines and inputs that China exports directly, which include medications to prevent organ transplant rejections, broad-spectrum hospital antibiotics, and a powerful blood thinner. China also dominates upstream inputs for many other critical medicines, such as the antibiotic amoxicillin and the circulatory stimulant norepinephrine, but those inputs are not exported directly to the United States. China would need to restrict supplies or their use in a third country—typically India—to prevent those inputs from being made into active pharmaceutical ingredients (APIs, the chemical compounds in a drug responsible for its effect) or finished dosage forms (FDFs, the final, consumer-ready version of the drug) and exported to the United States. But it has the means, clandestinely if desired, to do so. And if Chinese authorities choose to act, the adverse consequences of cutting off the supply of key starting materials (KSMs), the building blocks that typically feed multiple API and FDF manufacturers, would reverberate throughout multiple pharmaceutical supply chains.

Case Study Example: Mapping Amoxocillin Components:

The report outlines a replicable solution framework for each of the major choke points in the US biopharmaceutical supply chain: (a) reliance on China for upstream supplies of generic drugs; (b) the erosion of US manufacturing and clinical trial capacity to China; and (c) US dependence on China for R&D infrastructure for sensitive biotechnology.

The report concludes that the vulnerability of the U.S. pharmaceutical supply chain needs to be addressed with the same level of urgency and resources that the U.S. has committed to reducing dependence on China for rare earths. The only question is whether the U.S. acts before a crisis makes the cost unavoidable.

Excerpted with edits https://www.cfr.org/reports/the-pharma-choke-point

7. WHERE’S THE AI?

“Why Most US Manufacturers Still Aren’t Using AI and Automation,” Sakshi Udavant, Manufacturing Dive, May 26, 2026

While AI and automation seem to be the biggest trends in the industry, Intrinsic Chief Technology Officer Brian Gerkey recently shared a striking statistic: 80% of U.S. manufacturing facilities have zero automation. In spite of discussion about the potential benefits of this technology, it’s still far from widespread in the United States, let alone at the level of fully automated factories as seen in countries like China and Japan.

Deloitte’s 2025 Smart Manufacturing and Operations Survey showed similar results. An estimated 92% of manufacturers surveyed said they believed smart manufacturing will be the main driver for competitiveness over the next three years. Yet only about 29% of manufacturers reported already using AI or machine learning at the facility or network level, and only 24% had deployed generative AI. Looking ahead over the next two years, 41% of respondents said they planned to prioritize factory automation investments.

Manufacturers are still building the foundational capabilities required to scale AI and automation, said Tim Gaus, a principal and smart manufacturing leader at Deloitte. Despite nearly three in four companies planning to deploy agentic AI within two years, only one in five reported having an equipped model, according to the company’s State of AI in the Enterprise report. “Many organizations are still working with fragmented legacy systems and data that is not structured for AI use,” said Jasmeet Singh, executive vice president and global head of manufacturing at Infosys.

According to Singh, it often comes down to digital maturity. Manufacturers that have already modernized their core systems, invested in cloud and built strong data foundations are moving faster on AI. Singh said such companies are better positioned to scale beyond pilots because their data is ready to support advanced use cases. Singh added that a key shift where many manufacturers struggle is the transition from pilot projects to measurable business outcomes, because they want a clear return on investment before committing significant funds.

Excerpted with edits: https://www.manufacturingdive.com/news/most-us-manufacturers-still-not-automating-ai-robotics/819725/

EUROPE DEVELOPMENTS:

8. PULLING AWAY FROM US TECH CO’S

“Europe Wants to Be Less Reliant on American Tech. Here’s the Plan,” Adam Sartariano, New York Times, June 3, 2026

European Union officials unveiled a broad plan on June 2, 2026 to reduce dependence on American technology, which they increasingly see as a threat to the region’s economic future and geopolitical security amid a rocky relationship with the Trump administration. Under the plan, officials outlined more government involvement in the region’s tech industry to accelerate the construction of data centers and revive its semiconductor industry. It would also push European governments and businesses to purchase technology from domestic suppliers, while potentially barring American firms from cloud computing contracts seen as critical to security.

European leaders have become increasingly alarmed by the reliance on American technology in areas like artificial intelligence, cloud computing and semiconductors. Many worry the dependence creates a “kill switch” that the Trump administration or future U.S. presidents could exploit to block access to essential tech services.“We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure,” said Ursula von der Leyen, the president of the European Commission, the executive branch of the 27-nation bloc, in a statement.

By adopting more protectionist economic policies, the so-called technology sovereignty package could further strain Europe’s relationship with the Trump administration after past disagreements over trade, the war in Ukraine and control of Greenland. Jamieson Greer, the U.S. trade representative, previously threatened retaliation against Europe over its digital policies. European officials are working to carry out a trade pact with the United States, and President Trump has told them they must finish by July 4. The European Parliament is expected to vote on the package in mid-June, just ahead of that deadline.

The Computer and Communications Industry Association, an industry trade group, called the tech package “discriminatory” against companies based outside Europe. “By excluding trusted international technology providers based on their headquarters location and organizational structure, the commission forces users to rely on a much more limited selection of digital products,” the group said in statement.

The tech package is part of a wider strategy shift to drive economic growth. Europe has been squeezed between the United States’ dominance in technology and China’s strength in manufacturing. The European Union ran a trade deficit with China of about 145 billion euros in the first three months of this year, worth about $170 billion, driven in part by an influx of Chinese-made machinery and electric vehicles.

Excerpted with edits (paywall): https://www.nytimes.com2026/06/03/technology/european-union-tech-sovereignty.html?smid=em-share

CHINA DEVELOPMENTS:

9. IT’S NOT SIMPLY SUBSIDIES

The Underlying Operating System of Chinese Manufacturing: The R.I.C.E. System,” China Arb, January 3, 2026

In the pantheon of management over the past half-century, one idol has been worshipped above all others: the Toyota Production System (TPS). As the highest crystallization of the Industry 3.0 era, the Toyota model and its core, JIT (Just-in-Time), represent humanity’s ultimate pursuit of “certainty.” It is as precise as a Swiss watch—zero inventory, zero waste, linear flow. For a long time, this was the only standard answer for industrial civilization. However, in the past twenty years, a new, savage, yet physically dominant industrial form has emerged on the western shore of the Pacific. It’s China R.I.C.E system.

1. The Kernel: “R” - Redundant Infrastructure:

Balance Sheet Shift: The secret of China’s industrial competitiveness lies in a special financial arrangement that strips CapEx (Capital Expenditure)—which originally belonged to enterprises—and transfers it to the sovereign balance sheet of the state (or local governments). According to Bank for International Settlements (BIS) data, while debt in China’s non-financial corporate sector is high, it is underpinned by an even more massive implicit debt of approximately $9 trillion borne by Local Government Financing Vehicles (LGFVs).

When Tesla builds a factory in Shanghai, or BYD expands in Hefei, they do not need to build their own power plants or roads as they might in India or Mexico. They simply “plug and play.” This means the ROIC (Return on Invested Capital) of Chinese companies is artificially inflated because a large portion of the infrastructure input in the denominator has been “written off” by the state.

The Inverted Energy Structure: Energy prices are the blood of industry. In Germany and parts of the US, to subsidize residents or environmental initiatives, industrial electricity prices are often higher than residential prices. China has long implemented a “cross-subsidy” strategy. 2023 data shows that the average price of industrial electricity in China is about 0.63 RMB/kWh (approx. $0.09), while German industrial electricity prices, even after subsidies, approach $0.18-$0.20. This effectively turns energy into “cheap calories” for industry. For energy-intensive industries like aluminum electrolysis and polysilicon, this price spread constitutes an insurmountable moat.

2. The Architecture: “I” - Integrated Clusters

Physical High Density and the “One-Hour Industrial Circle:” Chinese manufacturing no longer relies on transoceanic logistics but pursues extreme proximity. In the Yangtze River Delta, a new energy vehicle (NEV) factory can source 95% of its components (from battery packs to die-castings to automotive chips) within a 4-hour drive. By comparison, for Tesla’s factory in Monterrey, Mexico, the core supply chain still needs to span the Pacific or the US border, with logistics cycles calculated in “weeks.”

Fractal Network: This structure is not linear; it is fractal. Around every node (factory), supporting sub-nodes grow in self-similarity. Shenzhen’s Huaqiangbei or Suzhou Industrial Park. Within a single park, you can find manufacturers for molds, injection molding, PCBs, and final assembly. This high density eliminates logistics resistance. While Toyota is still calculating shipping schedules for transoceanic logistics, Chinese engineers can visit 5 suppliers in a single morning and receive modified samples by the afternoon. This is not an improvement in efficiency; it is the folding of physical distance.

3. The Algorithm: “C” - Computational Parallelism

Traditional manufacturing (including Japan and Germany) follows a Serial Algorithm: Market Planning ➔ Product Design ➔ Engineering Verification ➔ Supply Chain Preparation ➔ Trial Production. Each step must conclude perfectly before the next begins. This is to avoid risk. R.I.C.E. introduces Parallel Algorithms derived from internet thinking.

Parallel: Utilizing highly digitized backends (such as Shein’s MES system or BYD’s vertical integration system), Chinese manufacturing achieves “Data Streams commanding Material Streams.” Before the design drawings are even finalized, the supply chain has already begun locking in raw material capacity and even opening molds based on algorithmic predictions. Shein’s “Small Order, Quick Return” model is the ultimate embodiment of the C layer. It doesn’t produce then sell; instead, by crawling global fashion data in real-time to predict demand, it commands thousands of factories to simultaneously conduct micro-production runs (100 units).

The Physical Collapse of the NPI Cycle: For VW/Toyota, developing a new vehicle platform typically takes 48-54 months, while with China EV Startups (NIO/Xpeng) this cycle has been compressed to 18-24 months. This explains why Chinese EVs iterate annually like smartphones. In the R.I.C.E. system, time is not linear; it is processed in parallel by algorithms. Western carmakers are competing using 2019 technology against Chinese cars launched in 2024; this is a dimensional strike on the time axis.

4. The Driver: “E” - Evolutionary Pragmatism

The Benchmark is Toyota’s Kaizen (Continuous Improvement), but the core difference is the inevitability of emergence. This is the cruelest and most central part of the R.I.C.E. operating system. It is the “Spiritual Fuel” driving the operation of the first three layers. Toyota philosophy pursues “The Perfection of Planning,” while the Chinese model believes in “The Inevitability of Evolution,” a Darwinian worldview.

Saturation Entry: Whether it was the “Thousand Groupons War,” bike-sharing, or now photovoltaics and EVs, the R.I.C.E. system always tends toward Over-Entry. In 2018, there were over 480 registered EV manufacturers in China. By 2025, this number had shrunk to about 10-15 mainstream players through a brutal knockout tournament. From a Western perspective: This is a massive waste of resources (destruction of capital). But from a Systems Perspective: This is the necessary Cost of Evolution.

The “Gu” Strategy (The “Gladiator Pit”): In the R.I.C.E. perspective, this redundancy is fuel. Through unrestricted hyper-competition (Neijuan/Involution), the system automatically washes out 99% of the weak. The 1% that survive (such as CATL, DJI, BYD) are the “Gu Kings” (Venom Kings) that have fought their way out of hell mode. Their characteristics: They possess not only cost control capabilities that violate common practice, but also a perverse adaptability to environmental changes. They do not need policy protection because they crawled out of a pile of dead firms.

This is why Western “anti-subsidy investigations” targeting single products always fail. You cannot stop a bottom-up upgrade of an industrial operating system by imposing tariffs on a few parts. R.I.C.E. is an overclocked engine designed for “Catch-up” and “War.” It has a greedy appetite for external resources.

Excerpted with edits:

ChinArb

The Underlying Operating System of Chinese Manufacturing: The R.I.C.E. System (The China Trilogy Part I)

In the pantheon of management over the past half-century, one idol has been worshipped above all others: the Toyota Production System (TPS…

7 months ago · 72 likes · 14 comments · ChinArb

10. BUT THERE ARE MAJOR SUBSIDIES

“Chinese Firms’ Market Share Gains Driven by Subsidies, Says OECD,” Peter Foster and Joe Leahy, Financial Times, June 1, 2026

A company-level analysis of government subsidies across 15 key industrial sectors found that nearly 60 percent of Chinese firms’ global market share gains since 2005 could be attributed to subsidies. The OECD’s findings come amid rising tensions between Beijing and rival economies over the growing glut of Chinese-manufactured goods, chemicals and raw materials that are driving their own industrial groups out of business. The research by the Paris-based organisation suggests that Chinese firms received three to eight times more government support on average in 2024 than companies in the 38 OECD countries. Overall, global subsidies hit $108bn in 2024, of which 52 percent were in China. It was the second-highest level since the 2008-09 financial crisis, which led to government bailouts in a number of sectors, including in the US auto industry.

In semiconductors, the average global subsidy was calculated at just over 2 percent of company revenue, while for firms based in China, subsidies reached nearly 10 per cent of their revenue in 2021 and 2022. The OECD’s Manufacturing Groups and Industrial Corporations (MAGIC) database tracks subsidies received by 525 of the world’s largest industrial companies between 2005 and 2024 to capture a representative share of global manufacturing activity. Over that period, Chinese firms’ global market share has advanced rapidly in many industrial sectors, led by solar panels, where it has jumped from 14 to 87 percent.

Excerpted with edits (paywall): https://www.ft.com/content/885ca606-5339-47d5-8ee9-14593f5a8d11

The MIT Initiative for New Manufacturing (INM) aims to redefine what’s possible in manufacturing. Through research, hands-on training, and deep industry collaboration, INM aims to build the tools, systems, and talent to shape a more productive, sustainable, and resilient future. INM is a campus-wide manufacturing effort directed by Professors Suzanne Berger, A. John Hart, Christopher Love, and Y. Karen Zheng that convenes industry, government, and non-profit stakeholders with the MIT community to accelerate the transformation of manufacturing.

MIT’s Bill Bonvillian and David Adler edit this Update. We encourage readers to send articles that you think will be of interest to us at mfg-at-mit@mit.edu.

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