Prof. ST Hsieh
Director, US-China Energy Industry Forum
July 3, 2023
The US and allies have fired the first shot of the Chip war against China and now China has hit back: the global trade war is on! Trade war is nothing new, for example the OPEC embargo oil export to the west in the 1970’s was a classic case. But any war is easy to start, do the politicians have the wisdom of ending this global trade war?
The current trade war is unprecedented, and the impacts are not easy to assess. Because this trade war is between the world’s two largest economies competing for global dominance. It implies that the winner takes all is the only endgame. Compromises will not be easy because the warring parties have lost mutual trust, and no one has the appetite to think about surrendering!
Secondly, it is a global war, it is a war between two camps and not just two nations. Most major nations are forced to take sides, as such there would be no credible peace makers who can mediate a cease fire. The real risk is an escalating full-scale war with no winners. Unfortunately, this global trade war will hurt the disadvantaged innocent populations the most.
Fortunately, these export restrictions have not been effective yet, there is still time for some compromises. Further, these announced restrictions have some built-in review/approval procedures. So even during the implementation phase, governments have some “brakes” before a full scale, no turn, trade war blown up.
China hits back with export curbs on chipmaking materials
China has hit back at US-led semiconductor restrictions by seeking to throttle exports of two metals used in chipmaking and communications equipment as the geopolitical tit-for-tat between the two superpowers steps up. Gallium and germanium will be subject to export restrictions in order to “safeguard national security and interests”, China’s Ministry of Commerce and Administration of Customs said on Monday. Exporters will have to apply to the ministry for permits from the beginning of August, it said.
The Chinese measures come days after the Netherlands announced its plans to apply the latest set of controls that will limit the sale of high-end chipmaking equipment abroad, in a move that is expected to prevent dozens of ASML’s immersion lithography machines from reaching Chinese companies. The Dutch controls, which are nominally “country neutral”, are due to be enforced from September 1 and follow similar restrictions on semiconductor manufacturing equipment from the US and Japan. The Netherlands’ announcement comes on the heels of Washington’s block on the most advanced US chips needed for artificial intelligence from being sold to China. The US is weighing further limits on exports of AI chips made by Nvidia and AMD, people familiar with the matter said last week. Beijing’s most pointed response to date to these attacks on its tech sector had been its move in May to ban the use of US memory chipmaker Micron’s products in “critical national infrastructure”, citing security risks that the US commerce department has argued have “no basis in fact”. China is the world’s leading producer of gallium and germanium, according to the US Geological Survey, so any reduction in its output to the rest of the world is likely to slow production or increase prices for manufacturers and their clients in the tech, telecoms, energy and automotive sectors.
Some Chinese companies are worried that the export controls may backfire. “It may affect the business of Chinese manufacturers instead during the economic downturn, but with a limited impact on the international market in the short term,” said an executive from a Chinese semiconductor material company.
China hits back in the chip war, imposing export curbs on crucial raw materials
Mon, July 3, 2023 at 9:27 AM PDT
Gallium and germanium will be subject to export controls starting August 1 “to protect national security and interests,” China’s Ministry of Commerce said in a statement Monday.
Exporters of these raw materials will need to apply for “special permission from the state” to ship them out the country, the statement said.
China is by far the world’s biggest gallium producer and a leading global producer and exporter of germanium, according to the U.S. Geological Survey.
The measure is the latest development in the global battle to control chipmaking technology, which is vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing.
Beijing’s move comes just days after the Dutch government announced new restrictions on exports of some semiconductor equipment, drawing an angry response from Beijing, according to Reuters. The new rules mean that ASML (ASML), Europe’s largest tech firm, will need to apply for export licenses for products used to make microchips.
Japan and the United States have also taken steps to limit Chinese companies’ access to chips and chipmaking equipment. Italy last month imposed several curbs on Pirelli’s biggest shareholder, Sinochem, to block the Chinese government’s access to sensitive chip technology.
China’s announcement of the new export curbs comes on the eve of a visit by US Treasury Secretary Janet Yellen to Beijing from July 6 to July 9. Yellen will meet with senior Communist Party officials, according to a statement from the Treasury.
— Olesya Dmitracova contributed reporting.
China to impose export controls on key materials for chipmaking as West’s ‘chip war’ escalates
By Global Times Published: Jul 03, 2023 09:36 PM
China will impose export controls on gallium and germanium, both used in the making of semiconductors and other electronic components, starting next month to safeguard national security and interests, two ministries announced on Monday.
“In order to safeguard national security and interests, with the approval of the State Council, it is decided to implement export controls on items related to gallium and germanium,” the Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) said in a notice.
According to the notice, starting on August 1, items meeting certain characteristics shall not be exported without approval. The ministries listed eight items related to gallium, and six items related to germanium.
Under the export control, exporters must file an application with local commerce authorities for exports of the relevant items and must be approved by the Ministry of Commerce before exporting such items. Exporters would face fines and criminal charges, if they export such items without permission.
China is the world’s top producer of raw gallium, which is used in making chipsets to generate high frequency raid waves in 5G base stations, accounting for 95 percent of the global output, according to industry information provider Fierce Electronics.
China is also a major supplier of germanium, which is mainly used in fiber and infrared optics, PET plastics, electronics and solar panels. The EU has listed the metal as a critical raw material, as it imports about 17 percent of its supplies from China, according to media reports.
China Retaliates: Restricts Vital Chipmaking Materials Gallium and Germanium
Mon, July 3, 2023 at 8:51 AM PDT
China has announced new export controls on gallium and germanium, two important metals used in semiconductor, telecommunications, solar power, and electric vehicle industries, Bloomberg reports. This move marks a significant escalation in the ongoing technology trade war with the US and Europe and could be a part of the country’s new foreign policy law (as revealed by CNN) that enables the government to “take corresponding countermeasures and restrictive measures.”
The new export rules will require Chinese companies to obtain an export license for gallium and germanium metals as well as products containing them starting August 1, 2023, in the name of China’s national security. China is the world’s largest producer of both gallium and germanium, as it has significant reserves of these metals and produces a large proportion of the global supply. China accounts for about 94% of the world’s gallium production, so its restrictions could have a drastic effect on numerous industries, including semiconductor, LED, and solar power. Meanwhile, such restrictions will inevitably hurt Chinese companies, too.
The move will not have a drastic effect on the production of high-performance components like CPUs, GPUs, and memory. But GaN and GaAs are used for power chips, radio frequency amplifiers, LEDs, and a number of other applications.
“It will be disruptive – germanium and gallium are absolutely critical to high-tech industries,” said Anthony Lipmann, a director of London metals trader Lipmann Walton & Co, in a brief interview with Bloomberg.