5D Computer Chip Chess…is good for ASX small caps?

What does a Cold War era piece of Dutch legislation have to do with ASX small and micro-caps?

Hear me out on this, as it could have a big impact on your investments in 2026.

Let’s start with the apparent US-China trade truce story playing out in the headlines.

There’s news out of Reuters today – apparently Beijing is issuing new “general licenses” to its biggest rare earth magnet makers allowing them to fast-track exports to Western clients.

It’s being hailed as the first concrete fruit of the “Trump-Xi Truce” struck back in late October.

The narrative is seductive.

The holidays are here. Oh good! The trade war is over.

No chance.

Here’s where computer chip geopolitics come into play.

Trump’s AI and Tech Czar
revealed this about China…

While the diplomats are patting themselves on the back about magnet licenses, the actual architects of the tech arms race are sounding the alarm.

Take David Sacks, the White House’s AI and Tech Czar.

The administration’s strategy was supposed to be clever: allow Nvidia to sell its H200 chips, powerful, but not their absolute cutting-edge, to China. The logic was to hook Chinese AI companies on American silicon, capturing billions in revenue while keeping them just a step behind.

But Sacks let the cat out of the bag this week.

“They’re rejecting our chips,” he told Bloomberg. “Apparently they don’t want them, and I think the reason for that is they want semiconductor independence.”

Think about what that means. Beijing isn’t just reacting to US bans anymore; they are actively rejecting American tech even when it is offered. They’ve “figured out” the trap, as Sacks put it, and are choosing to double down on Huawei’s domestic ecosystem instead.

That is not the behaviour of a country looking for a trade thaw. That is the behaviour of a rival battening down the hatches for a total decoupling.

The Nexperia Warning

If you need more proof of how fragile this “peace” is, look at the mess in the Netherlands with Nexperia.

Only months ago, the Dutch government invoked a dusty Cold War-era statute, the Availability of Goods Act, to effectively seize control of the Chinese-owned chipmaker. It was an unprecedented move, triggered by US pressure and fears of technology transfer to its parent company, Wingtech.

China retaliated instantly, blocking exports and throwing European auto supply chains into chaos.

Now, we’re told the intervention has been “suspended” after “constructive talks.” But the damage is done. The trust is gone. The Dutch government knows it can’t rely on Chinese ownership, and Beijing knows its assets in Europe can be seized at the stroke of a pen.

Here’s where ASX stocks come in.

Positioning for 2026

So, where does this leave us?

We have a superficial calm as 2025 winds down. But the structural reality hasn’t changed.

I believe 2026 will see the tension ratchet up significantly.

The “streamlined” rare earth licenses can be revoked just as quickly as they were issued. The moment Beijing feels confident in its own chip supply, those export controls will return with a vengeance.

For Australian investors, this is the signal to get set.

When the gloves come off, the only safe haven is in the raw materials the West desperately needs to secure outside of China.

I’m talking about the high-quality critical minerals plays.

The ASX has heaps of these.

But you can’t just buy any junior explorer with a PowerPoint presentation. In this market, I look for three non-negotiable features:

1. Tight Share Registers: I want to see a Top 20 that holds 50-60% of the stock. When good news hits…say, a Department of War grant or a strategic offtake, you want a shortage of paper on the market to drive the price vertical.
2. Skin in the Game Management: I want MDs who are buying on market and hold a good chunk themselves, not issuing themselves options. If they don’t believe in the project enough to put their own cash up, why should you?
3. Low Enterprise Value (EV): The best leverage comes from buying assets for cents on the dollar compared to their resource value. Companies where the cash backing is high and the market cap is not inflated.

Tomorrow I’ll share some examples of recent companies that have had great success because they had these characteristics.