A move by China to impose export restrictions on metals essential to make semiconductors, electric vehicles, and high-tech sectors has escalated its trade war with the United States, threatening to derail already-fragile global supply chains.
The controls, China said, were aimed at protecting national security and interests. Exporters will now need prior permission to ship some gallium and germanium products.
Following the sudden announcement on Monday, companies are scrambling to soothe investor worries. A China-based germanium producer told Reuters enquiries from abroad and prices had surged overnight.
China’s commerce ministry stated that, starting from August 1, it would exercise control over the exports of eight gallium products and six germanium products, citing the need to safeguard national security and interests. Analysts interpret this move as a retaliatory response to Washington’s increasing efforts to curb China’s technological advancements.
Peter Arkell, Chairman of the Global Mining Association of China, told Reuters, “China has hit the American trade restrictions where it hurts.” He emphasized the significance of gallium and germanium, among other minor metals, in a wide range of tech products, highlighting that China dominates their production. Replacing China as a major supplier in the short or even medium term is deemed unrealistic.
Gallium, germanium, and other minor metals play a crucial role in wide-bandgap semiconductors used in communication equipment, solar panels, and electric vehicles.
China is the primary producer of gallium and germanium. According to customs data cited by news website Caixin, Japan, Germany, and the Netherlands were the top importers of China’s gallium products in 2022, while Japan, France, Germany, and the United States were the top importers of germanium products.
