China has hit back at US-led semiconductor restrictions by seeking to throttle exports of two metals used in chipmaking and communications equipment as the geopolitical tit-for-tat between the two superpowers steps up.
Gallium and germanium will be subject to export restrictions in order to “safeguard national security and interests”, China’s Ministry of Commerce and Administration of Customs said on Monday. Exporters will have to apply to the ministry for permits from the beginning of August, it said.
Both materials can form alternatives to traditional silicon wafers in specialised applications, as well as for components used in military and communications equipment.
The Chinese measures come days after the Netherlands announced its plans to apply the latest set of controls that will limit the sale of high-end chipmaking equipment abroad, in a move that is expected to prevent dozens of ASML’s immersion lithography machines from reaching Chinese companies.
The Dutch controls, which are nominally “country neutral”, are due to be enforced from September 1 and follow similar restrictions on semiconductor manufacturing equipment from the US and Japan. The Netherlands’ announcement comes on the heels of Washington’s block on the most advanced US chips needed for artificial intelligence from being sold to China.
The US is weighing further limits on exports of AI chips made by Nvidia and AMD, people familiar with the matter said last week.
Beijing’s most pointed response to date to these attacks on its tech sector had been its move in May to ban the use of US memory chipmaker Micron’s products in “critical national infrastructure”, citing security risks that the US commerce department has argued have “no basis in fact”.
China is the world’s leading producer of gallium and germanium, according to the US Geological Survey, so any reduction in its output to the rest of the world is likely to slow production or increase prices for manufacturers and their clients in the tech, telecoms, energy and automotive sectors.
Gallium is used in compound semiconductors, offering faster operation with lower power consumption or greater heat resistance, although it is harder for manufacturers to work with than silicon. Gallium nitride is already widely used in the chips that power 5G network base stations, as well as by the military in radar systems and, increasingly, in electric vehicle chargers. Gallium arsenide is used in some components for wireless communications and lasers.
Germanium, which was used to make the first transistors in the mid-20th century, is sometimes added in small quantities to silicon to facilitate more advanced chip structures. It is widely used in fibre-optic cables, solar panels and LEDs, as well as in thermal imaging cameras by the military.
Some Chinese companies are worried that the export controls may backfire. “It may affect the business of Chinese manufacturers instead during the economic downturn, but with a limited impact on the international market in the short term,” said an executive from a Chinese semiconductor material company.
Source: Economy - ft.com
