China’s new move in microchip war means for world
As the chip war with the US heats up, China is set to restrict exports of two materials key to the semiconductor industry.
Exports of gallium and germanium from the world’s second largest economy will require special licences.
Chips are madeand they have military applications as well.
As a result of Washington’s efforts to restrict Beijing’s access to advanced microprocessors, Beijing has been
Gallium and germaniummost elements in the global supply chain. Globally, it produces 80% according to the Critical Raw Materials Alliance (CRMA).
As minor metals, these materials are not typically found inare often by-products of other processes.
Aside from the US, Taiwan, Japan, and the Netherlands – where ASML, a key chip maker, is based – also impose export restrictions on chip technology from China.
As Colin Hamilton from BMO Capital Markets told theannouncement is not coincidental given the Netherlands’ restrictions on chip exports.
“Quite simply, if you don’t give us chips, we won’t give you the materials to make those chips,” he said.
Concerns have been raised over the rise of so-called “resource nationalism” – when governments hoard criticalexert influence over other countries.
The University of Birmingham’s critical materials research fellow Dr Gavin Harper says governments are moving away from
Western industry might be facing an existential threat if youbroadly. supply materials is
A compound of gallium and arsenic, gallium arsenide is used in high-frequency computerlight-emitting diodes (LEDs) and solar panels.
The CRMA reports that only a few companies around the world produce gallium arsenide that is pure enough to use in electronics.
Microprocessors and solar cells are also madegermanium. Also, it is used in vision goggles that are “key to the military,” according to Hamilton.
“There should be enough regional supply from base metal smelters to provide alternatives. Top quality semiconductors are aproblem, since China said Hamilton.
As of last month, the US hadnone of gallium, according to a Pentagon spokesperson.
According to the spokesperson, “[the Defense Department] is taking proactive steps to increase domestic mining and processing of critical materials for microelectronics and space.”
export restrictions are expected to have a limited impact.
Despite China’s dominance in gallium and germanium exports, there are substituteschips, according to political risk consultancy Eurasia Group.
As well as mining and processing facilities in China, there are also facilities outside the country.
a decade ago on rare earth minerals exports.
China’s dominance of the rare earths supply chain fell from 98% to 63% in less than a decade, according to Eurasia.
According to Anna Ashton, Eurasia’s director for China corporate affairs and US-China, “We can expect to see the development and exploitation of alternative sources of gallium and germanium, as well as greater efforts to recycle these commodities and identify more readily available alternatives.”
Those restrictionsfrom China’s recent announcement,” she added. China’s documented willingness to restrict imports and exports in service of political and strategic ends has contributed to rising demand, intensifying geostrategic competition, and distrust.”
No matter where chips are made, Washington has announced it will require licenses from companies exporting them to China using US software or tools.