China retaliates against US' chip ban, limits exports of essential chipmaking metals

China announced on Monday that it will implement fresh limitations on the export of two vital metals crucial for the production of semiconductors and other electronic components. This move intensifies the ongoing technology trade dispute between China and the United States.

Starting from August 1, exporters will require a permit to ship gallium and germanium, along with associated chemical compounds, out of China, according to the Ministry of Commerce and the General Administration of Customs.

Gallium is an essential component of compound semiconductors used in electronic devices. Gallium nitride, specifically, finds application in lasers and various other fields, and its use in power semiconductors for electric vehicles is expected to grow.

The utilization of gallium compounds aids in minimizing power loss, prompting companies like Nidec and Renesas Electronics from Japan to explore the incorporation of gallium nitride substrates in a jointly developed electric vehicle component.

China currently accounts for 98 per cent of global gallium production, as reported by the U.S. Geological Survey. The imposition of restrictions on gallium exports by Beijing aligns with the country’s export control law, enacted in late 2020, which allows authorities to prohibit the shipment of controlled items to specific overseas companies under the pretext of national security concerns.

Chinese authorities have utilized this law to place limitations on the export of encryption technology and semiconductors used for data leak prevention.

These restrictions on gallium exports are a response to export curbs placed on China by the United States and other nations. The US, as reported by The Wall Street Journal, is contemplating stricter trade restrictions on semiconductors destined for China, particularly those utilized in artificial intelligence applications.

Manufacturers who are unable to procure gallium or related products from China may face limited alternatives, potentially resulting in increased costs for the metal and impeding the adoption of cutting-edge technologies.

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