China has announced new export restrictions on gallium and germanium, two elements used in chip production, solar panels, and fiber optics.
The export of these materials will now require government approval through a license system for national security reasons.
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This move is seen as a retaliation against the export restrictions imposed by the US and Western allies on cutting-edge technologies, which have hindered China’s tech growth.
While China’s action may cause price increases and stockpiling of gallium and germanium, the impact on the US is expected to be less significant than the impact of American export restrictions on China.
These materials have niche applications in the semiconductor industry, and other countries have the potential to increase their own production and substitute the supply from China.
The implementation of the export license regime will be effective from August 1.
Companies have already started placing purchase orders to secure the materials before the new restrictions take effect.
The stock prices of Chinese companies producing gallium and germanium have risen in response to the increased demand.
AXT, an American semiconductor wafer manufacturer, has stated that its China-based subsidiary will apply for an export license to continue its business operations.
It is important to note that the new measures are not a ban but rather a licensing system. The impact will depend on the ease of obtaining export licenses.
While it is unlikely that licenses will be granted to US defense contractors, the licensing system provides China with leverage in trade negotiations, particularly with countries like Japan and South Korea that rely on these imports for their semiconductor industries.
The escalating technology war between China and the West continues, with both sides employing export restrictions as a strategic tool.
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The latest move by China indicates its determination to respond to the restrictions it has faced and assert its position in the global tech landscape.
The long-term implications of these measures on the semiconductor industry and global trade dynamics remain to be seen.
