China cuts export of metals used in semiconductor industry

China’s commerce ministry announced that it would implement export controls on certain metals widely utilized in the semiconductor industry.
BE SemiconductorThe purpose of these controls, according to China, is to safeguard national security and interests. Exporters will now be required to obtain permission before shipping specific gallium and germanium products.

This move to regulate the export of rare elements classified as strategic by Beijing coincides with reports suggesting that Washington is contemplating imposing new restrictions on the shipment of advanced microchips to China.

Moreover, the United States and the Netherlands are planning to deal a blow to China’s chipmakers by further limiting sales of chipmaking equipment. These measures are part of broader initiatives aimed at preventing China from leveraging technology to bolster its military capabilities.

China’s controls will become effective on August 1 and will cover eight gallium-related products. This apart, six germanium products will also be subject to these controls.

Exporters will be required to follow specific procedures to obtain export licenses, as outlined by China’s commerce ministry. The statement warns that individuals who export these products without permission or exceed the permitted volumes will face punitive measures. It is worth noting that germanium also finds applications in infrared technology, fiber optic cables, and solar cells.

By imposing export controls on metals crucial to the semiconductor industry, China is escalating the technology rivalry with the United States, which could potentially result in further disruptions to global supply chains.

The Critical Raw Materials Alliance (CRMA), an industry association in Europe, reports that 60 percent of the world’s germanium is produced in China, with the remaining supply coming from Canada, Finland, Russia, and the United States. According to Chinese customs data, China exported 43.7 metric tons of unwrought and wrought germanium last year. The U.S. Geological Survey (USGS) states that the consumption of germanium reached roughly $39 million in value, reflecting a 10 percent increase from 2021.

The CRMA notes that approximately 80 percent of the world’s gallium is produced in China. Gallium is primarily used in the production of gallium arsenide, a key component in electronics manufacturing. According to the CRMA, only a few companies, one in Europe and the rest in Japan and China, possess the capability to produce gallium arsenide with the required purity.

China’s gallium exports reached 94 metric tons in 2022, marking a 25 percent increase compared to the previous year. The USGS reports that the United States imported gallium metal and gallium arsenide (GaAs) wafers worth approximately $3 million and $200 million, respectively, in 2022. Furthermore, high-purity refined gallium production in 2022 was estimated to be around 290,000 kilograms, indicating a 16 percent increase from the previous year’s 250,000 kilograms.

These metals play a vital role in various industries, including high-speed computer chips, defense, and renewable energy. Germanium is essential for fiber optic cables, high-speed computer chips, plastics, and infrared radiation applications. It finds use in military devices such as night-vision equipment and satellite sensors, and it is crucial for low-carbon technologies like solar cells.