China retaliates in chipmaking war with the West

Lazy eyes listen


China has responded to US-led efforts to stymie advancements in its chipmaking industry by imposing export restrictions on critical raw materials required by Western rivals to manufacture semiconductors.

The Chinese Commerce Ministry announced new export limitations on Monday, which will apply to gallium and germanium, rare metals used in computer circuits and a number of other products such as solar panels and advanced radar equipment. The ministry stated that exporters will need “special permission” to move either of the two metals or their derivative compounds out of China, citing national security concerns.

China is the world’s major producer of gallium and a significant exporter of germanium. Both metals have been added to the European Union’s list of key raw resources, indicating that they are “crucial to Europe’s economy.” According to the US Geological Survey, the US has not produced gallium since 1987 and depends on China for 53% of its gallium imports between 2018 and 2021.

Beijing’s move comes just three days after the Dutch government slapped fresh curbs on sophisticated semiconductor equipment exports, bolstering US attempts to prevent China from gaining access to technology deemed essential to artificial intelligence research.

The Chinese government reacted angrily to Amsterdam’s decision, claiming that the US was coercing other countries to assist preserve its “global hegemony” and impose “semiconductor suppression against China.” Beijing also stated that the Netherlands should “refrain from abusing export control measures” in order to help maintain the global supply chain stability of the semiconductor industry.

The new raw material limits appear to be in response to China’s warning about the chipmaking supply chain. According to an editorial published on Monday in the state-owned China Daily newspaper, Beijing’s move was done in response for the restrictions imposed by the US and its allies.

“Those who are skeptical of China’s decision should ask the US government why it owns the world’s largest germanium mines but rarely exploits them,” the editorial said. “Alternatively, they could inquire as to why the Netherlands included certain semiconductor-related products, such as lithographic machines, on its export control list.” They are the ones threatening the global supply chain, and the burden should never be passed to China, which is defending its own legal national interests in this very uncertain environment.”