China Retaliates: Restricts Vital Chipmaking Materials Gallium and Germanium
China has announced new export controls on gallium and germanium, two key metals used in the semiconductor, telecommunications, solar and electric vehicle industries. bloomberg report. The move marks a significant escalation in the ongoing tech trade war with the US and Europe and could be part of the country’s new foreign policy law (as revealed). CNN) This would allow governments to “take proportionate measures and restrictive measures”.
New export regulations will require Chinese companies to obtain export licenses for gallium and germanium metals and products containing them from August 1, 2023 in the name of China’s national security. China is the world’s largest producer of both gallium and germanium, as it has vast reserves of these metals and produces the majority of the world’s supply. China accounts for about 94% of the world’s gallium production, and regulations in the country could dramatically affect many industries, including semiconductors, LEDs and solar power. Meanwhile, such restrictions will inevitably hit Chinese companies as well.
The move will not have a dramatic impact on the production of high-performance components such as CPUs, GPUs and memory. However, GaN and GaAs are used in power chips, high frequency amplifiers, LEDs and many other applications.
“It’s disruptive. Germanium and gallium are absolutely essential for the high-tech industry,” said Anthony Lippman, director of London metals trading firm Lippman, Walton & Company, in a short interview. bloomberg.
Both gallium and germanium are essential to high-tech industries and are used in the production of compound semiconductors. The metal is not rare, but it is kept cheap by China and can be relatively expensive to mine elsewhere. While the move may initially increase the price of these metals, it could make it economically viable for other countries to start mining these metals, reducing China’s market power. have a nature.
“If we stop suppressing prices, it will suddenly become possible for the West to mine these metals, and China will be aiming for its own goal again,” said Christopher Ecclestone, head of Hohlgarten. bloomberg. “Prices will be higher for a while, but then China will lose its market power. The same thing has happened before with antimony, tungsten, rare earths, etc.”
The Chinese government’s move could be a response to widespread sanctions imposed by the United States last October on the country’s semiconductor and supercomputing sectors. Last week, the Dutch government announced plans to limit the sale of ASML’s advanced chip-making tools to Chinese firms, a decision that provoked strong backlash from China.
