![]() ![]() “Russia has been pretty much blocked out of the global tech ecosystem at this point … but they still have oil, they still have food, and that’s how they survived. There’s also a strategic concern that holding onto these critical materials could serve China’s interests if a conflict breaks out, says Xiaomeng Lu, director of geotechnology practice at the Eurasia Group. Control of gallium and germanium is one of the tools Beijing wields to push the US and its allies back to the negotiation table. ![]() “Beijing was … sending a signal before the Yellen visit that China will play the game of controlling exports in key sectors of concern to the US government,” says Paul Triolo, a senior vice president for China and technology policy lead at the consultancy Albright Stonebridge Group. Many experts point to the China visit of Janet Yellen, the US secretary of the treasury, which happened last week, as the major reason these export controls were announced when they were. China certainly is feeling the pressure, and its attempts to negotiate with the US on the restrictions have been unsuccessful. In June, both Japan and the Netherlands announced their decisions to restrict the export of chip-related materials and equipment to China. The US government has spent the past year lobbying allies to join forces in restricting China from sourcing high-end chipmaking equipment like lithography machines, and the results are showing. Why is China announcing these restrictions now? They will not be granted to US defense contractors, I imagine,” says Klyman, who notes that American defense companies Raytheon and Lockheed Martin were the first two names added to China’s newly established “unreliable entity list” earlier this year.īut the ability to control who can be granted the permits will give China more leverage in trade negotiations with other countries, particularly those-like Japan and Korea-that rely on such imports for their own semiconductor industries. “We see no evidence that no licenses will be granted. It’s important to remember that this is not a ban but a licensing system, which means the impact will depend on how difficult it is to secure an export license. The stockpiling has raised the price of the two materials, as well as the stock prices of Chinese companies that produce them.ĪXT, an American maker of semiconductor wafers, quickly responded to say that its China-based subsidiary would apply for an export license to maintain business as usual. Right after it was announced, purchase orders reportedly began swarming into Chinese gallium and germanium producers. The new export license regime will start being implemented on August 1. But because China doesn’t have the capacity to turn these materials into later-stage semiconductor or optical products, a big chunk of it is exported to companies in Japan and Europe. ![]() ![]() These applications also make them useful components in modern weapons.Ĭurrently, about 60% of the world’s germanium and 90% of the world’s gallium is produced in China, according to the Chinese metal industry research firm Antaike. Meanwhile, gallium has unusual crystallization properties that lead to some useful alloying effects.” Gallium is used in the manufacture of radio communication equipment and LED displays, while germanium is widely used in fiber optics, infrared optics, and solar cells. “That is especially true for germanium, which is prized for its high electrical conductivity. “Beijing likely chose gallium and germanium because both are important for semiconductor manufacturing,” says Felix Chang, a senior fellow at the Foreign Policy Research Institute. Gallium is usually produced in the process of mining zinc and alumina, while germanium is acquired during zinc mining or separated from brown coal. Gallium and germanium are two chemical elements that are commonly extracted along with more familiar minerals. What are gallium and germanium? What are they used for? ![]()
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