Beijing Jabs In US-China Tech Fight With Chip Material Export Curbs

Written by on July 4, 2023

China’s restriction of exports of some metals widely used in semiconductors, electric vehicles and high-tech industries has ramped up a trade war with the United States and could potentially cause more disruption to global supply chains.

China’s commerce ministry said on Monday it would control exports of eight gallium products and six germanium products from Aug. 1 to protect national security, a move analysts saw as a response to escalating efforts by the United States to curb China’s technological advances.

Companies caught out by the abrupt news acted to secure supplies, with one U.S. semiconductor wafer manufacturer saying it was applying for export permits to assure investors, and a China-based germanium producer saying enquiries from buyers came in overnight as prices surged.

“China has hit the American trade restrictions where it hurts,” said Peter Arkell, chairman of the Global Mining Association of China.

Jeffries analysts said the timing of the measure raised questions about it being possibly directed at this week’s visit to Beijing by U.S. Secretary of Treasury Janet Yellen and whether Washington would cancel the trip.

Some in the industry said they feared China could follow this with new restrictions on rare earth exports, after curbing shipments 12 years ago in a dispute with Japan. Rare earths are a group of metals used in EVs and military equipment and China is by far the world’s biggest producer.

“Gallium and germanium are just a couple of the minor metals that are so important for the range of tech products and China is the dominant producer of most of these metals. It is a fantasy to suggest that another country can replace China in the short or even medium term,” Arkell said.

China produces most of the world’s gallium and germanium. In 2022, top importers of China’s gallium products were Japan, Germany and the Netherlands, news website Caixin said, citing customs data. Top importers of germanium products were Japan, France, Germany and the U.S., it said.

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