Key Points
- TSMC, the leading chip manufacturer, expects no immediate production impact from China’s export controls on gallium and germanium.
- Taiwan’s dominant position in semiconductor manufacturing strengthens amid global chip demand and strained China-Taiwan relations.
- Long-term effects and international market monitoring necessary for assessing pricing and supply implications.
TSMC, the chip giant from Taiwan, has stated that it does not anticipate any immediate impact on its production as a result of China’s latest export controls on two rare metals crucial for semiconductor manufacturing. The Ministry of Commerce and Customs in China recently announced that licenses would be required for the export of gallium and germanium starting from August 1 due to security concerns arising from the ongoing competition between Beijing and Washington for global chip market dominance.
TSMC, a major supplier to Apple and Intel, holds control over more than half of the world’s production of silicon wafers, which are essential components for various devices ranging from coffee machines to cars and missiles. In a statement, the company noted that after a thorough evaluation, it does not anticipate any direct impact on its production from the export restrictions on gallium and germanium. Although the company did not provide further details regarding potential long-term indirect impacts, it affirmed that it would closely monitor the situation.
The tensions between China and the United States encompass multiple areas, including technology, trade, and Taiwan. As the primary manufacturing hub for semiconductors, Taiwan is not only home to TSMC but also holds a dominant position in the global microchip market. This dominance has become even more significant due to the increased demand for microchips worldwide and the strained relations between China and Taiwan.
Wang Mei-hua, Taiwan’s economic minister, downplayed the effects of the new export controls, emphasizing that the germanium and gallium mined in China primarily serve as raw materials, which are then refined in countries like the United States and Japan. She further stated that Taiwan imports the refined materials, limiting the short-term impact on the nation. However, she acknowledged the need for close monitoring of the long-term impact of export restrictions on pricing and supply in the international market.
Gallium, a critical raw material used in integrated circuits, LEDs, and photovoltaic panels, is deemed essential by the European Union. According to a 2020 report by the European Commission, China accounted for 80 percent of global gallium production. Similarly, 80 percent of the world’s germanium, crucial for optical fibers and infrared camera lenses, also originates from China, as stated in the same report.
These export restrictions imposed by China follow the United States’ blacklisting of Chinese companies in recent years. The blacklisting aimed to restrict their access to advanced American technologies, including cutting-edge chips. On Thursday, July 6th, Chinese Ministry of Commerce and Customs commented on US restricting chip exports to China, saying that the US approach is detrimental to Chinese companies legitimate interests, hinders global, economic, trade exchanges and cooperation.
About TSMC
Taiwan Semiconductor Manufacturing Co Ltd (TWSE: 2330, NYSE: TSM) is a Taiwan-based company mainly engaged in the provision of integrated circuit manufacturing services. The integrated circuit manufacturing services include process technology, special process technology, design ecosystem support, mask technology, 3DFabricTM advanced packaging and silicon stacking technology services. The Company has completed the transfer and mass production of 5nm technology, and is engaged in the research and development of 3nm process technology and 2nm process technology. The product application range covers the entire electronic application industry, including personal computers and peripheral products, information application products, wired and wireless communication system products, servers and data centers. To learn more, visit www.tsmc.com
Credits: Photo Copyright © TSMC Taiwan Semiconductor Manufacturing Co., Ltd
