Key Points
- China imposes restrictions on gallium and germanium exports: China’s commerce ministry announced new regulations requiring exporters to obtain licenses to ship gallium and germanium compounds, crucial metals for semiconductor manufacturing, citing national security concerns.
- Battle for technological supremacy intensifies: The move is part of a growing global trade war centered around access to microchips, with China being the largest global source of these key metals.
- Countries seeking to secure supply chains and bolster domestic chip industries: Amid the trade war, nations are taking steps to safeguard their supply chains and enhance their own chip industries.
On Monday, July 3rd, China announced restrictions on the exports of gallium and germanium compounds, essential metals for semiconductor manufacturing. These regulations, justified on grounds of national security, will require exporters to obtain a license starting from August 1. The license applications must include information about importers, end users, and the intended use of these metals. This move further escalates the technological trade war between China and Europe and the United States, as access to microchips becomes a contentious issue.
China, being the largest global source of both gallium and germanium, holds significant leverage in this battle for technological supremacy. In response to the news, Chinese germanium producers experienced a surge in share prices.
Germanium and gallium are not naturally occurring metals but are instead produced as by-products during the refining processes of other metals. Germanium is typically formed during zinc production, while gallium is a by-product of bauxite and zinc ore processing.
Germanium, with its silvery-white appearance, finds application in various fields. It is transparent to infrared radiation, making it useful in solar products and fiber optics. Additionally, germanium is utilized in military applications such as night-vision goggles. Solar panels containing germanium are particularly employed in space-related activities.
On the other hand, gallium is primarily used in the production of gallium arsenide, a chemical compound that plays a vital role in manufacturing radio frequency chips for mobile phones, satellite communication, and other electronic devices. However, producing gallium arsenide is a complex process, and only a few companies worldwide possess the capability to do so. Among these companies, one is located in Europe, while the others are based in Japan and China. According to the Critical Raw Materials Alliance, China accounts for 60% of global germanium production and 80% of gallium production.
The United States had previously implemented comprehensive regulations in October aimed at cutting off exports of crucial chips and semiconductor tools to China. These measures were designed to hinder China’s efforts to enhance its domestic technology industries. Additionally, the U.S. has been actively encouraging key chipmaking nations and allies, including the Netherlands and Japan, to impose their own export restrictions.
In response to the U.S. calls, the Netherlands recently introduced new export restrictions on advanced semiconductor equipment, effectively preventing ASML, a prominent semiconductor company, from exporting to China. However, these Dutch restrictions do not specifically target ASML.
Several countries are taking steps to secure their own supply chains and bolster their domestic chip industries, focusing on areas where they have traditionally excelled. For instance, a Japanese government-backed fund proposed a 903.9 billion yen (~$6.2 billion) acquisition of JSR, a semiconductor materials giant.
Semiconductors are vital components in various technological products, ranging from smartphones and cars to refrigerators. They play a crucial role in military applications and the advancement of artificial intelligence, underscoring their significance in today’s tech-driven world.
About ASML
ASML Holding N.V. (Euronext: ASML, NASDAQ: ASML) is a holding company based in the Netherlands. The Company operates through its subsidiaries in the Netherlands, the United States, Italy, France, Germany, the United Kingdom, Ireland, Belgium, South Korea, Taiwan, Singapore, China, Hong Kong, Japan, Malaysia and Israel. The Company operates through one business segment which is engage in development, production, marketing, sales, upgrading and servicing of advanced semiconductor equipment systems, consisting of lithography, metrology and inspection systems. The Company offers TWINSCAN systems, equipped with lithography system with a mercury lamp as light source (i-line), Krypton Fluoride (KrF) and Argon Fluoride (ArF) light sources for processing wafers for manufacturing environments for which imaging at a small resolution is required. TWINSCAN systems also include immersion lithography systems (TWINSCAN immersion systems). To learn more, visit www.asml.com
Credits: Photo by Laura Ockel on Unsplash
