In a recent declaration, the government of China expressed its intention to tighten controls on the export of gallium and germanium products, crucial elements in the fabrication of semiconductors.
The Chinese government has unveiled plans to regulate exports of metals that are key components in the manufacture of semiconductors, which are vital for the progression of artificial intelligence (AI) systems.
On the 3rd of July, the Ministry of Commerce of China, in conjunction with the General Administration of Customs, issued a unified statement. They proclaimed that these export controls aim to safeguard national security interests, and the export of specific gallium and germanium products would necessitate a government-granted license.
These controls will come into effect on August 1, encompassing eight gallium-based products: gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, and indium gallium arsenide.
Six germanium products will also be subject to the new rules: germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride, and zinc germanium phosphide.
Gallium is a metal frequently used in electronics, primarily in semiconductors, transistors, and lasers, and for the creation of LEDs. Germanium plays a significant role in the manufacturing process of semiconductors, solid-state electronics, and fiber optic systems.
The official communication warns that any exports of such products without the necessary approval or in surplus will incur penalties.
A 2023 report from the European Commission and the European Association of Critical Raw Materials Alliance (CRMA) indicated that “the global supply of germanium remains heavily concentrated in China.” Furthermore, the CRMA revealed that China accounts for more than 80% of the global gallium supply.
In response to the U.S. sanctions imposed in October 2022, which hindered Chinese developers from accessing top-tier semiconductors in the market, including Nvidia’s A100 chips and the latest H100 version, Chinese companies are reportedly exploring alternative solutions to cope with their limited access to high-performance chips.
As of now, U.S. officials are contemplating the imposition of additional restrictions on the export of advanced AI chips required for the creation of robust systems.
Since the surge of AI, Nvidia — a significant player in the semiconductor market — has witnessed a dramatic increase in its chip values. Nvidia was contacted by Cointelegraph for comments on China’s recent developments, but there was no immediate response.
The Implications for the Global Tech Industry
This move by China has significant implications for the global technology industry, particularly the AI and semiconductor sectors. China’s dominance in the supply of gallium and germanium makes this decision likely to disrupt the global supply chain, impacting not only Chinese firms but also international companies that depend on these elements for their production processes.
Possible Outcomes and Predictions
With China tightening export controls on these crucial elements, we may see an increase in the costs of manufacturing semiconductors and, consequently, the price of AI-related products. This situation could also stimulate other countries to explore new ways to secure these materials or develop alternatives, driving innovation and potential changes in the global tech industry.