Retaliatory action against America; China has restricted the export of two important metals in chip making

China has restricted exports of gallium and germanium, two metals important in the semiconductor, communications, solar energy and electric vehicle industries. This move by China intensifies trade tensions with the United States and Europe and is likely to be part of China’s new foreign policy law; The law that the government Xi Jinping enables it to take “countermeasures and corresponding restrictive measures” when needed.

According to the news agency BloombergThe new developments mean that from August 1, 2023 (August 10, 1402) onwards, Chinese companies must obtain an official license from the government to export gallium and germanium metals to countries outside of China and products containing these metals. China says that exporting these types of metals to some countries may threaten national security.

China is considered the largest producer of gallium and germanium in the world, because it has a significant amount of reserves of these two metals and meets a significant part of global needs. China owns almost 94% of the world’s gallium production, therefore restricting gallium exports can have a significant impact on many industries, including semiconductor components, LED and solar energy. Of course, these restrictions will also harm Chinese companies at the same time.

Limiting the export of gallium cannot have a strong effect on the production of high-end components such as the central processor, graphics processor and memory; However, gallium nitride (GaN) and gallium arsenide (GaAs) are used in energy-efficient chips, radio frequency amplifiers, LED lights, and a number of other areas.

One analyst said China’s new move would be very “disruptive” because germanium and gallium are critical to high-tech industries.

Gallium and germanium are not rare elements, but their prices are kept low by China and their extraction is relatively expensive in other parts of the world. China’s new action may increase the price of these metals in the first stage; But probably, over time, gallium and germanium extraction will increase in other parts of the world, so that China’s share of the world market will decrease.

The restriction of gallium and germanium exports by the Chinese government is probably a countermeasure against the sanctions that the United States has imposed on the country’s chip industry since last year. The Dutch and Japanese governments have also agreed to embargo China.