China began curbing exports of two key materials for the semiconductor industry about a month ago as the chip war between Beijing and the United States intensifies. Exports of gallium and germanium, metals used in the production of computer chips and military equipment, from the world’s second-largest economy require special licenses under new Chinese restrictions. This is how China reacted to Washington’s move, which tried to limit Beijing’s access to advanced technology for the production of microprocessors, writes the BBC server.
China is by far the largest player in the global gallium and germanium supply chain, accounting for 80 percent of all global gallium and 60 percent of germanium production, according to the Critical Materials Alliance (CRMA). These belong to the type of metals that do not normally occur in nature and are usually a by-product of other processes or an ingredient of other metal ores.
In addition to the United States, restrictions on the export of semiconductor technology to China have also been imposed by Japan and the Netherlands, home to major chip maker ASML.
“The timing of this announcement by China is not coincidental given the chip export restrictions announced by the Netherlands, among others,” Colin Hamilton of investment firm BMO Capital Markets told the BBC. “In short, if you don’t give us the chips, we won’t give you the materials to make them,” he added.
This ongoing eye-for-an-eye, tooth-for-a-tooth conflict between the world’s two largest economies raises concerns about the rise of so-called “resource nationalism,” where individual governments stockpile critical materials to exert pressure on other countries.
“We’re seeing governments move further and further away from the globalization narrative,” said Gavin Harper, a research assistant in critical materials at the University of Birmingham. “The idea that international markets will simply supply us with materials is a tatam, and if you look at it more broadly, Western industry may be facing a bit of an existential threat,” the researcher said.
Gallium arsenide, a compound of gallium and arsenic, is used, for example, in high-frequency computer chips, but also in the production of infrared and semiconductor lasers and photovoltaic cells. Only a few companies in the world produce this compound in such purity that it can be used in electronics, according to CRMA. Germanium is also used to manufacture microprocessors and solar panels, but it is also found, for example, in military night vision goggles.
A Pentagon spokesman said last month that the United States has reserves of germanium but no stockpile of gallium.
Still, China’s export restrictions are expected to have limited impact in the long run. Although China is the world’s leading exporter of gallium and germanium, there are substitutes for these materials in the production of components such as computer chips, said consultancy Eurasia Group. In addition, according to her, there are also active plants for their extraction and processing outside the territory of China.
Eurasia Group also pointed to the similarity with the situation more than a decade ago, when China restricted the export of precious minerals. Other exporters soon emerged, and in less than a decade China’s dominance of the mineral supply chain has fallen to 63 percent from an initial 98 percent, according to estimates by the consulting firm.
“Alternative sources of gallium and germanium can be expected to begin to be developed and exploited, alongside increased efforts to recycle these commodities and find more readily available alternatives,” Anna Ashton, Eurasia Group’s director of Chinese corporate affairs and US-China relations, told the BBC . “And it won’t just be because of the recently announced Chinese restrictions, but also due to expectations of growing demand, intensifying geostrategic competition and China’s demonstrated willingness to subordinate exports and imports to political and strategic goals,” she added.
Experts warn that using natural resources and technological capabilities as weapons – as China and the United States are doing – will also have global environmental implications, as many new green technologies depend on these types of materials.
“This is not a national problem. This is the problem we face as humanity. “Hopefully politicians can sit around the table in good faith, secure access to these critical materials that are really vital to the transition to green energy, and we can start to address some of the challenges around decarbonisation,” said Harper from the University of Birmingham .
2023-08-11 14:47:00
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