Released September 29, 2023 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--China refused to export rare earth minerals vital to semiconductor manufacture during August according to the latest Chinese customs data.
The country's new export curbs are seen as the latest blow in a growing high-tech trade war, following on from the U.S. and Netherlands' halting the export of advanced semiconductor equipment to Chinese companies for fear of its use in military applications. In response, China's government requires exporters of germanium and gallium products to obtain an export license--which can take up to 45 days--for products that are classed as "dual-use" items and technologies--those used in both consumer and potential military products. Compared to nothing in August, Chinese companies exported 8.63 metric tons of germanium products in July alongside more than 5 tons of gallium products. Exports are expected to slowly improve for September as some Chinese companies reported receiving permits.
The new controls apply to eight gallium-related products and six germanium products: gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, indium gallium arsenide, germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride and zinc germanium phosphide.
Gallium and germanium are extremely rare metals, derived from the processing of aluminum and zinc. Gallium is used in high-frequency computer chips, as well as in the production of light-emitting diodes (LEDs) and solar panels. Germanium, while also used for microprocessors and solar cells, is also a key element used in night vision goggles and weapons sighting systems. China accounts for more than 80% of the world's production of low-grade primary gallium--the basis for all gallium-based products, according to the European industry association, Critical Raw Materials Alliance (CRMA). It also controls around 60% of the world's supply of gallium products.
Speaking to the BBC, Colin Hamilton from the investment firm BMO Capital Markets, said: "The timing of this announcement from China is not coincidental, given chip export restrictions announced by the Netherlands amongst others. Quite simply, if you won't give us chips, we won't give you the materials to make those chips."
This summer, the Dutch government imposed stricter export controls on advanced chip-making technology, impacting its own chip major ASML (Veldhoven, Netherlands) (NYSE:MUFG). It will need export licenses for shipment of some advanced deep ultraviolet lithography, or DUV, systems. They are vital to the production of the most advanced chips and ASML controls most of the market. "We have taken this step in the interest of our national security. It is good that the companies concerned now know where they stand. This way they can adapt to the new regulations in time," Dutch Foreign Trade Minister Liesje Schreinemacher said in the statement.
In the past week, China and the European Union (EU) have agreed to an exchange of information on export controls in an attempt to head off a potential trade war. Europe's Trade Commissioner said the relationship between the two was at a "crossroads." He added: "The European Union and China are key trading partners and our economies are deeply integrated. But our relations face headwinds, notably China's position vis-à-vis Russia's aggression against Ukraine, market access issues, and wider trade and investment challenges. This is why discussing issues openly at today's High Level Dialogue was vital. Our relationship needs rebalancing to be mutually beneficial, based on transparency, fairness, predictability and reciprocity. I am glad that we made progress in addressing some market access issues, agreeing to exchange information on export controls, create a new working group on financial services, and resume our macroeconomic dialogues. These are meaningful steps at a time when European companies, which have a major footprint in China, are facing increasing difficulties. The EU will continue engaging with China on these issues."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The country's new export curbs are seen as the latest blow in a growing high-tech trade war, following on from the U.S. and Netherlands' halting the export of advanced semiconductor equipment to Chinese companies for fear of its use in military applications. In response, China's government requires exporters of germanium and gallium products to obtain an export license--which can take up to 45 days--for products that are classed as "dual-use" items and technologies--those used in both consumer and potential military products. Compared to nothing in August, Chinese companies exported 8.63 metric tons of germanium products in July alongside more than 5 tons of gallium products. Exports are expected to slowly improve for September as some Chinese companies reported receiving permits.
The new controls apply to eight gallium-related products and six germanium products: gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, indium gallium arsenide, germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride and zinc germanium phosphide.
Gallium and germanium are extremely rare metals, derived from the processing of aluminum and zinc. Gallium is used in high-frequency computer chips, as well as in the production of light-emitting diodes (LEDs) and solar panels. Germanium, while also used for microprocessors and solar cells, is also a key element used in night vision goggles and weapons sighting systems. China accounts for more than 80% of the world's production of low-grade primary gallium--the basis for all gallium-based products, according to the European industry association, Critical Raw Materials Alliance (CRMA). It also controls around 60% of the world's supply of gallium products.
Speaking to the BBC, Colin Hamilton from the investment firm BMO Capital Markets, said: "The timing of this announcement from China is not coincidental, given chip export restrictions announced by the Netherlands amongst others. Quite simply, if you won't give us chips, we won't give you the materials to make those chips."
This summer, the Dutch government imposed stricter export controls on advanced chip-making technology, impacting its own chip major ASML (Veldhoven, Netherlands) (NYSE:MUFG). It will need export licenses for shipment of some advanced deep ultraviolet lithography, or DUV, systems. They are vital to the production of the most advanced chips and ASML controls most of the market. "We have taken this step in the interest of our national security. It is good that the companies concerned now know where they stand. This way they can adapt to the new regulations in time," Dutch Foreign Trade Minister Liesje Schreinemacher said in the statement.
In the past week, China and the European Union (EU) have agreed to an exchange of information on export controls in an attempt to head off a potential trade war. Europe's Trade Commissioner said the relationship between the two was at a "crossroads." He added: "The European Union and China are key trading partners and our economies are deeply integrated. But our relations face headwinds, notably China's position vis-à-vis Russia's aggression against Ukraine, market access issues, and wider trade and investment challenges. This is why discussing issues openly at today's High Level Dialogue was vital. Our relationship needs rebalancing to be mutually beneficial, based on transparency, fairness, predictability and reciprocity. I am glad that we made progress in addressing some market access issues, agreeing to exchange information on export controls, create a new working group on financial services, and resume our macroeconomic dialogues. These are meaningful steps at a time when European companies, which have a major footprint in China, are facing increasing difficulties. The EU will continue engaging with China on these issues."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
