China Implements Export Restrictions on Crucial Metals for Semiconductors

China has taken a significant step in its ongoing tech war with Western nations by announcing export restrictions on two little-known metals that are vital to the semiconductor industry. Starting from August 1, China will limit the export of gallium and germanium, metals essential for chipmaking. The move is being justified by Chinese authorities as necessary to safeguard national security and interests. Analysts interpret this export curb as a retaliatory measure by Beijing in response to the chip war between China and the West.

The semiconductor industry is once again thrown into uncertainty as China’s latest export restrictions loom. In a joint notice issued by China’s commerce ministry and customs department, it was revealed that the exports of gallium, germanium, and their compounds will be under control from August 1. Exporters have the option to apply for licenses to continue shipping these products out of China. This development closely follows the Netherlands’ recent restrictions on the sale of high-end chipmaking equipment, a move believed to target China. Additionally, the Biden administration seeks to limit Chinese companies’ access to US-based cloud providers, further exacerbating the chip war. These actions underscore the escalating battle between China and Western countries to gain dominance in the strategically important semiconductor sector.

Gallium and germanium are critical materials in chip manufacturing, electronics, and solar products. Consequently, China’s export restrictions are seen as a retaliatory move in the country’s ongoing tech war with Western nations. The limited availability of these metals, which are found in trace amounts naturally and primarily sourced as by-products of other industrial processes, adds to the disruption caused by the export curb.

China currently dominates global production, accounting for approximately 80% of gallium production and 60% of germanium production, according to the Critical Raw Materials Alliance. While there is no significant global shortage of these metals, China’s competitive advantage in production costs has made it difficult for manufacturers elsewhere to match their prices. As prices rise, other manufacturers in North America and Europe may consider increasing their production capacity in the long term to meet the demand for these crucial metals.