In a move that further intensifies the technology trade dispute with the United States and Europe, China has imposed restrictions on the export of two crucial metals essential for the manufacturing of electronics and semiconductors, according to a report by CNBC.
The metals are germanium and gallium, both of which play a pivotal role in various technological applications.
US and Japan establish new subsidy rules to bolster semiconductor industries and counter China's influence, emphasizing global efforts to secure supply chains and maintain competitiveness.Dan Williams from Pixabay
Escalating Tech Trade War
It is worth noting that since 2019, China and the US have been engaged in a technology trade war that has progressively escalated. Washington has implemented trade blacklists and stringent export limitations to sever China's access to vital technology components and semiconductors, commonly known as chips.
Hence, these technological components have emerged as a central point of contention between the two global powers.
While China has not yet responded significantly to these measures, it took a significant step in May by designating the US chip company Micron as a "major security risk." Currently, China is shifting its focus toward its areas of strength-the metals and materials used in electronics and semiconductors.
On Monday, China's Ministry of Commerce announced new regulations that will mandate exporters of gallium and germanium to obtain a license before shipping these metals. National security concerns justify the implementation of these regulations.
According to the Critical Raw Materials Alliance, an industry organization, China is responsible for 60% of global germanium production and 80% of gallium production.
The production of gallium arsenide, a compound crucial for various electronic applications, is an intricate process handled by only a handful of companies worldwide. While one of these companies is based in Europe, the others are located in Japan and China, as stated by the CRM Alliance.
What is Galium?
Gallium is a soft, silvery metal in a solid state at room temperature but melts easily just above 29 degrees Celsius (84 degrees Fahrenheit). One of the significant uses of gallium is in the field of electronics and semiconductors.
Gallium compounds, particularly gallium arsenides (GaAs), are employed in producing high-speed electronic devices, such as transistors, diodes, and integrated circuits. Gallium-based semiconductors provide enhanced performance in terms of power efficiency and frequency response, making them essential for telecommunications, aerospace, and military applications.
What is Germanium?
Germanium is a hard, brittle, grayish-white metalloid that is in a solid state at room temperature. In addition to its role in electronics, germanium is employed in fiber-optic systems and infrared optics.
It is transparent to infrared radiation, making it useful in lenses and windows for infrared spectroscopy and thermal imaging applications.
Furthermore, germanium is utilized in the production of certain types of alloys. When added to other metals, such as iron, aluminum, or silver, it improves their hardness, strength, and resistance to corrosion. Germanium-based alloys are used in the manufacturing of mirrors, catalysts, and some types of jewelry.
Companies use gallium and germanium for various purposes, primarily in electronics. Gallium, in particular, is widely employed in producing gallium arsenide (GaAs) wafers, which are essential components in electronic devices.
The extraction of gallium primarily occurs during the processing of aluminum, where it is obtained as a residue. Additionally, gallium can be extracted via electrolytic zinc, and fly ash collected from burning coal can serve as another source.
Several countries, including Australia, China, Germany, Kazakhstan, Japan, and Russia, play a significant role as suppliers of primary gallium. Notably, France stands out as the largest single source of refined gallium globally, with GEO Chemicals accounting for a substantial portion of the world's annual production.
Approximately 60 companies across 18 countries actively participate in the supply of gallium products. The majority of gallium is utilized in the production of gallium arsenide wafers, which find widespread application in the electronics industry.
Why did China trade gallium and germanium?
China trades gallium and germanium due to several reasons. First and foremost, China is a major producer of these metals, with significant reserves and production capabilities. This positions China as a key player in the global market for gallium and germanium.
On an international level, China's trade in gallium and germanium allows the country to capitalize on its competitive advantage regarding production capacity and resources.
With abundant reserves and efficient production processes, China can supply these metals to global markets and cater to the needs of electronics manufacturers worldwide.
This trade not only contributes to China's economic growth but also strengthens its position as a key player in the global electronics supply chain.
What the Ban Could Mean in the Tech World
The restriction on the export of germanium and gallium by China is expected to have significant implications for the global electronics and semiconductor industry.
With China being a dominant player in the production of these metals, the move will likely disrupt supply chains and lead to increased concerns about dependence on a single source.
The actions taken by China in response to the ongoing technology trade war highlight its strategy of leveraging its strengths to counter the restrictions imposed by the United States.
China aims to assert its position and ensure a more balanced playing field by targeting metals and materials crucial for advanced technological manufacturing.
