The clash between the great powers over the chips writes a new chapter. China has announced limitations on the export of germanium and gallium, metals of which it is the largest producer and which are used in the manufacture of semiconductors, cars or defense equipment.
Starting in August, Chinese exporters will need a permit to sell abroad. It will also apply to subsidiaries of foreign firms. In practice it will mean that the Government will have control to say who can operate and who cannot.
The authorities rely on arguments of national security and affirm that they are not targeting any specific country. But analysts see the decision as a response to efforts by the US and its partners – Japan and the Netherlands mainly – to curb Chinese technological advances. Some even see it as welcoming a visit by US Treasury Secretary Janet Yellen, who is due to travel to China this week.
The fear is that the Chinese decision will later extend to the export of rare earths, used in electric cars or military material and of which China is the largest producer. For now, the prices of gallium and germanium have skyrocketed due to a sudden spike in demand from Europe, Japan and the US to stock up before the entry into force of the measure.
Japan, Germany and the Netherlands, the latter home to giants such as ASML, are the largest importers of gallium products from China, while Japan, France and Germany are for germanium, according to local media Caixin. Although they are substitutable metals and can be obtained in other territories, the abundance in that country and the low prices have made China the favorite source of access.
“Germanium and gallium are part of the important metals in the manufacture of technological products, and China is the dominant producer of most of these metals. It is an illusion to suggest that another country can replace China in the short or even in the future. medium,” says Peter Arkell, head of the China Global Mining Association. In addition to semiconductors, it is used in solar panels, vehicle components, or communications, space, and defense equipment.
Specifically, the sales of eight germanium-related products and another six with gallium are limited from August 1 to protect national security. This will force you to look for new suppliers.
The measure adds pages to the trade clash of recent months. The US, the Netherlands or Japan vetoed the shipment of chips to China in March to stop its developments in the military industry, artificial intelligence or quantum computing. The common front means that shipments from leading companies in the sector are limited, such as the American Applied Materials -largest global supplier of semiconductor production equipment- Lam Research and KLA, the Dutch ASML -second largest supplier- or the Japanese Tokyo Electron, third largest player in the market. China has also imposed certain limitations on purchases on its companies, such as the veto on the American company Micron.
According to Taiwanese Finance Minister Wang Mei-hua, it will not have a substantial impact and will only be in the short term. Tokyo is analyzing the impact and does not rule out countermeasures. And Seoul claims that they have sufficient reserves of gallium and that there are alternative sources for germanium.
