Chinese exports of two rare minerals essential for semiconductor manufacturing fell to zero in August, a month after Beijing imposed them. borders on foreign sales, citing national security.
China produces about 80% of the world’s gallium and about 60% of germanium, according to the Critical Raw Materials Alliance, but it did not sell any of those elements in international markets last month, according to Chinese customs data released Wednesday. In July, the country exported 5.15 tons of forged gallium products and 8.1 tons of forged germanium products.
Asked about the lack of exports last month, He Yadong, a spokesperson for China’s Ministry of Commerce, said at a press briefing on Thursday that the department had received requests from companies to export the two materials. Some requests have been approved, he said, without elaborating.
The restrictions signal China’s apparent willingness to retaliate against U.S. export controls, despite concerns about economic growth, as a technology war simmers.
The second largest in the world The economy is already struggling with weak domestic demand and a housing crisis. Last month, the country’s exports suffered their biggest drop in more than three years, dealing another blow to its faltering recovery.
Analysts say restricting exports is a “double-edged sword” that could hurt China’s economy and accelerate the shift of supply chains out of the country.
China may be the industrial leader in the production of both, but there are alternative producers, as well as substitutes available for both materials, Eurasia Group analysts said. in a July research report.
CFOTO/Future Publishing/Getty Images
A researcher from the International Science and Innovation Center of China’s Zhejiang University in Hangzhou examines gallium oxide wafers on May 30, 2022.
The impact of the collapse in exports is already being felt domestically. Gallium prices fell in China as export controls led to a build-up of stocks.
On Thursday, the spot price of gallium stood at 1,900 yuan ($260) per ton, down nearly 20 percent from early July, according to information from the Shanghai Metal Market.
The spot price of germanium, meanwhile, rose slightly due to tight supply, reaching 10,050 yuan ($1,376) per metric ton on Thursday.
In July, Beijing said the two elements, which are used in a variety of products including computer chips and solar panels, would be subject to export controls to protect the country’s “security and national interests.” .
Starting August 1, exporters will need to apply for special permission to ship them out of the country.
The move intensified the technology war with the United States over who has access to advanced chipmaking technology, which is vital to everything from smartphones and self-driving cars to weapons manufacturing.
Last October, the Biden administration unveiled a set of export controls banning Chinese companies from purchasing advanced chips and chipmaking equipment without a license.
But for Washington’s campaign to be successful, other countries had to participate. Japan and the Netherlands joined the effort earlier this year, further dampening chip exports to China.
Beijing responded by launching a cybersecurity investigation in April on US chipmaker Micron before banning it from selling to Chinese companies working on key infrastructure projects.
More restrictions on Washington’s chips could come after Huawei’s introduction the Mate 60 Pro smartphone last month, sending shockwaves through the tech world.
The model is powered by an advanced chip, created despite US sanctions intended to exclude the Chinese tech giant from this technology.
The release of the Mate 60 Pro has “created political pressure” for the United States to step up sanctions against Huawei and Semiconductor Manufacturing International Corp. (SMIC), the Chinese chipmaker believed to have made the semiconductor, Jefferies analysts wrote in a research note Monday. .
“We expect Biden to focus on tightening (chips) ban against China in the fourth quarter,” they added.