China’s retaliation in the chip trade war

China imposes export restrictions on two metals necessary for chip production.

From August 1, China will restrict exports of gallium and germanium, two metals needed to bake chips.

chip war

The decision is another minor battle in China’s trade war with the United States and the European Union. It is probably even a direct reaction to the export ban on certain technologies recently imposed by the USA and the Netherlands.

This news came shortly after Washington also said it would not grant AI chips to China.

stricter rules

Now the Asian superpower is restricting the export of these two important metals and also their chemical compounds. In the interest of national security, artists will be controlled much more strictly from August.

The export of both metals will no longer be possible without licenses from the Chinese Ministry of Commerce. Artists must also disclose information about their foreign trading partners and the use of gallium and germanium.

metal fatigue

China is by far the world’s largest producer of both metals, which are used, for example, in the manufacture of electric vehicles or certain military technologies. About 94 percent of global gallium production is said to be in Chinese hands.

However, both elements are not rare and are actually by-products of coal and bauxite processing. So far, China has mostly kept metal prices at a low level. However, if supply is severely restricted, the price will increase. Then there is the possibility that other countries will increase their production, which would quickly erase the advantage of China.