Licenses will now be required to export metals essential for the production of electronic chips from China. China has a monopoly on the production of these metals and could do great harm to the global economy.
New episode in the economic war between China and the United States around electronic chips. The Chinese Ministry of Commerce announces that it will put in place controls on the export of by-products of gallium and germanium, metals essential for the production of chips. Concretely, from August 1, companies will have to apply for licenses to be able to export these products.
The Chinese ministry, relayed by Reuters, invokes “the protection of national security and interests” as the reason for these measures. An argument that China uses for many other restrictions, in different sectors. But in the line of sight, there would also be new restrictions discussed in the United States and the Netherlands. The two countries want to further restrict exports of chip production equipment to China, starting this summer.
With the production of 60% of germanium and 80% of gallium, China is definitely alone in the lead of world production. In addition, only one factory in Europe and a few in Japan are capable of producing gallium arsenide pure enough for the needs of the chip industry. More concretely, these chips are used in objects such as radars, radio communication systems, satellites or even LEDs. Germanium is used in the production of semiconductors for solar panels, among others.
These restrictions risk hurting a whole range of sectors. It remains to be seen how strict China will be in license applications and how long the procedures will take, but companies are already fearing complications in supplies, reports Reuters.
The pandemic has shown this well: shortages in the field of chips are putting a large number of sectors, downstream, in trouble: from vehicles to computers, smartphones and consoles.
The outlook is therefore not rosy. “China has hit U.S. trade restrictions where it hurts,” says Peter Arkell, president of the Global Mining Association of China. “Gallium and germanium are just some of the minor metals that are so important to the range of technology products and China is the dominant producer of most of these metals. It is an illusion to think that another country can replace China in the short or even the medium term. »
However, it should be noted that the chips developed by China are less advanced than foreign chips. Chips are also one of the first products imported into the country. The “factory of the world” needs it to manufacture the objects that it then exports. So if Beijing restricts exports of gallium and germanium too much, it could also backfire on the country.
economic war…
Last year, the United States imposed restrictions on exports of the most successful chips and the material to produce them to China, among other things for fear that they could end up in equipment for the Chinese army. Washington then tried to convince other countries, such as Japan, South Korea and Taiwan, to join these measures. The Netherlands, after some hesitation, followed suit. This is not insignificant: the Dutch company ASML develops some of the most efficient and precise chip production equipment in the world.
After these US restrictions, the two countries took economic measure on economic measure. Eye for eye, tooth for tooth. But Monday’s decision still seems to be the strongest made so far by China, as it could potentially shut down many supply chains. The relationship between the two countries is already tense and is not likely to improve.
… and de-globalization
More generally, many observers note a phenomenon of de-globalization and withdrawal. Many countries, including Western ones, want to repatriate factories, or are more reluctant to have foreign companies set up on their territory.
Morris Chang, the emblematic founder of Taiwan Semiconductor Manufacturing Company (TSMC), the world number 1 in the chip sector, also throws a stone into the pond on Tuesday. “Globalization takes a back seat to priorities like national security and technological leadership,” and “US-China relations are more about competition than cooperation,” he says. he at a forum in Taipei. He even goes so far as to wonder whether we can still speak of “globalization”.
2023-07-04 09:48:01
#turn #chip #war #China #United #States #Beijing #hits #hurts
