![]() “It is a shot across the bow intended to remind countries including the United States, Japan, and the Netherlands that China has retaliatory options and to thereby deter them from imposing further restrictions on Chinese access to high-end chips and tools,” Eurasia Group said in a research note.Ĭhinese authorities may also intend to use its control over these niche metals as a possible bargaining chip in discussions with US Treasury Secretary Janet Yellen, who is scheduled to visit Beijing later this week. It imported more than 50% of the gallium and germanium it used in 2021 from the country, the US Geological Survey showed.Įurasia Group analysts described China’s export controls as a “warning shot.” The United States is dependent on China for these the two critical elements. Nvidia says US curbs on AI chip sales to China would cause 'permanent loss of opportunities' Photographer: Marlena Sloss/Bloomberg Marlena Sloss/Bloomberg/Getty Images Nvidia Corp., suddenly at the core of the world's most important technology, owns 80% of the market for a particular kind of chip called a data-center accelerator, and the current wait time for one of its AI processors is eight months. Lynas Rare EarthsĪ Nvidia Grace CPU Superchip, left, and Grace-Grace module arranged at the company's headquarters in Santa Clara, California, US, on Monday, June 5, 2023. Shares of Chinese producers of the two raw materials surged by 10% on Tuesday.īeyond China, Australian rare earths producers also advanced, as investors expected Beijing might extend export curbs to that group of strategically important minerals. “The economies of scale in China’s extensive and increasingly integrated mining and processing operations, along with state subsidies, have allowed it to export processed minerals at a cost that operators elsewhere can’t match, perpetuating the country’s market dominance for many critical commodities,” analysts from Eurasia Group said on Tuesday. The country accounted for 98% of the global production of gallium, and 68% of the refinery production of germanium. This is because they are usually formed as a byproduct of mining more common metals, primarily aluminum, zinc and copper, and processed in countries that produce them.Ĭhina is the world’s leading producer of both gallium and germanium, according to the US Geological Survey. ![]() Like rare earths, they can be expensive to mine or produce. Gallium and germanium do not belong to this group of minerals. The export controls have drawn comparisons with China’s reported attempts in early 2021 to restrict exports of rare earths, a group of 17 elements for which China controls more than half of the global supply. Germanium is a hard, grayish-white and brittle metalloid that is used in the production of optical fibers that can transmit light and electronic data. It’s commonly used to produce compounds that are key materials in semiconductors and light-emitting diodes. Gallium is a soft, silvery metal and is easy to cut with a knife. Micron warns of lost revenue after China slaps it with sanctions Double-Data-Rate Synchronous Random-Access Memory (SDRAM) chips are arranged for a photograph in Tokyo, Japan, on Wednesday, July 15, 2015. On Monday, Beijing announced the restrictions on gallium and germanium. In April, it launched a cybersecurity probe into Micron before banning the company from selling to Chinese companies working on key infrastructure projects. For the curbs to be effective, Washington needed other key suppliers, located in the Netherlands and Japan, to join. US officials have talked about the move as a measure to protect national security interests.īut it didn’t stop there. Last October, the Biden administration unveiled a set of export controls banning Chinese companies from buying advanced chips and chip-making equipment without a license.Ĭhips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. ![]() Here’s what you need to know about gallium and germanium, how they could play into the chip war and whether more countermeasures could be coming. Sanctioning one of America’s biggest memory chipmakers, Micron Technology “We see this as China’s second, and much bigger, counter measure to the tech war, and likely a response to the potential US tightening of AI chip ban,” said Jefferies analysts. A trade war between China and the United States over the future of semiconductors is escalating.īeijing hit back Monday by playing a trump card: It imposed export controls on two strategic raw materials, gallium and germanium, that are critical to the global chipmaking industry.
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