China is choking exports of gallium and germanium semiconductor secret sauce

China imposed export restrictions on two elements used in semiconductors and other electronic components, a move likely to be seen as a calculated response to Western restrictions on sales of chips and their production technology to the Middle Kingdom.

China’s Ministry of Commerce issued a statement announcing that Beijing had decided to impose export controls on gallium and germanium, as well as some compounds containing these elements, such as indium gallium arsenide, phosphor germanium zinc, and silicon chip manufacturing technology. .

This means that anyone wishing to export these materials, from China, must first apply to the Ministry of Commerce and obtain a permit to do so. This is necessary “to safeguard national security and interests,” the statement said. These measures are set to come into force on August 1.

Gallium and germanium are both materials for which China is the largest global source. For example, China is said to be responsible for about 60 percent of the world’s germanium, according to the Critical Raw Materials Alliance, with the remainder coming from Canada, Finland, Russia and the United States.

The situation is even worse for gallium, with 80 percent of it coming from China, while gallium arsenide – the second most common semiconductor used today – is only produced to the quality required by a few companies around the world, one of which is in Europe.

Applications of germanium include fiber-optic systems, infrared optics, solar cells and light-emitting diodes (LEDs), while gallium is said to include microwaves and high-speed switching circuits.

It is possible this may be retaliation by Beijing for blocks placed on technology exports to Chinese companies by the US and its partners to restrict advanced chip processing technology. Well, maybe, but very likely.

Just last week, Washington is believed to be considering further restrictions on exports of advanced chips used for AI processing to China, while export licenses are already required for any technology used in the design or manufacture of advanced semiconductors.

China has retaliated by blacklisting US memory chip maker Micron as a security risk and barring its home country’s operators of critical information infrastructure from purchasing products containing Idaho’s technology.

However, IDC’s Senior Research Director for Europe, Andrew Buss, said he did not believe this would lead to an immediate shortage of these key elements, and the possibility of China playing the long game and securing its own supply for future use.

“There is no major global shortage of gallium or germanium, and both are widely produced in many countries and regions, so it is unlikely that there will be a large external impact outside of China, but this could be a strategy to ensure China has sufficient internal supplies for its growth ambitions.” itself for semiconductor manufacturing or technology,” said Buss.

And while there are some risks, limiting global supply will only make it more economically attractive to mine these elements elsewhere, he argues.

“For germanium there is more supply risk as production has recently been concentrated in China and Russia to some degree, but the cost economy is likely to lead to industrial production in other regions as the element is neither too rare nor rare, nor is production technologically challenging. “

However, it is likely to focus more politicians and industry executives on the importance of the entire supply chain for semiconductors, and not just the final product.

The US and EU were reported earlier this year to be considering establishing a “critical minerals club” with the aim of diversifying supply of critical minerals and finding ways to reduce dependence on countries such as China. ®

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