China’s export control of gallium and germanium, the United States: will negotiate with allies

Reuters reported on July 5 local time that a spokesman for the U.S. Department of Commerce said on the same day that the U.S. “resolutely opposes” China’s announcement to impose export controls on gallium and germanium, key metals needed for the production of semiconductors and other electronic products, adding that the U.S. will Consult with allies and partners to resolve this issue.

“These actions underscore the need to diversify supply chains. The United States will work with our allies and partners to address this issue and build resilience in critical supply chains,” a Commerce Department spokesman said in an emailed statement Express it like this.

Gallium and germanium are important raw materials for chip manufacturing. China occupies a leading position in the world in terms of reserves and exports of these two metal minerals. Germanium is used in high-speed computer chips, plastic products and military applications such as night vision equipment and satellite image sensors; gallium is used in radar and radio communication equipment, satellites and LEDs, Reuters added.

According to a 2020 report by the Institute of Mineral Resources of the Chinese Academy of Geological Sciences, the current total gallium reserves in the world are about 230,000 tons. China’s gallium metal reserves rank first in the world, accounting for about 80%-85% of the world’s total reserves. A statistic released by the US Geological Survey in 2016 shows that the world’s proven germanium reserves are only 8,600 metal tons, of which the United States accounts for 45% of the world’s total, followed by China, which accounts for 41% of the global germanium reserves.

According to the South China Morning Post, China is also the largest producer of gallium and germanium, accounting for more than 95% of the world’s gallium output and more than 67% of the world’s germanium output. Reuters noted that according to customs data, in 2022, China’s largest importers of gallium products are Japan, Germany and the Netherlands; the largest importers of germanium products are Japan, France, Germany and the United States.

A Chinese germanium producer revealed that they received a large number of inquiries from buyers in the United States, Japan and Europe after the restriction order was issued, and product quotations also soared overnight. On the other hand, after China issued export control measures, the reactions of enterprises and governments in some countries are worth noting.

According to reports, AXT, headquartered in California, USA, has production facilities in China. The company issued a statement on its official website on July 3, saying that its Chinese subsidiary Beijing Tongmei Crystal Technology Co., Ltd. will immediately start applying for a license to Continue to export gallium and germanium substrate products from China. The company will announce further details when it holds a second-quarter report conference call on August 3.

As major importers of the two metals, the governments of Japan and South Korea responded to this by saying they were seeking countermeasures. Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura said that Japan does not believe that China’s move is a countermeasure against Japan’s control of the export of semiconductor manufacturing equipment in May. South Korea’s Ministry of Industry also held an emergency meeting to assess the impact of the matter, hoping to negotiate and communicate with China.

At the same time, the Netherlands, which recently put some semiconductor equipment under export control in spite of China’s opposition, seems to be unable to sit still. The Dutch government claimed on July 4 that the EU must respond to China’s export controls. The EU said earlier in the day that it wanted China to impose export controls for “clear security considerations”. German Deputy Chancellor and Minister of Economy and Climate Protection Robert Habeck claimed that any expansion of controls on materials such as lithium would be “problematic”.

Reuters pointed out that China has stated that this move is out of consideration for protecting national security, but some economic analysts believe that this move is China’s response to the United States’ escalating containment of its technological development and progress. On the eve of Secretary Yellen’s visit to China.

According to the report, this marks the “opening of a new page” in the tense situation between China and the United States after the escalation in recent years on issues such as trade tariffs, new crown virus traceability, cyber security, espionage allegations and technological competition.

Chinese Foreign Ministry spokesperson Mao Ning pointed out on July 4 that China has always been committed to maintaining the security and stability of the global production and supply chain, and has always implemented fair, reasonable, and non-discriminatory export control measures. It is an international common practice for the Chinese government to implement export control on relevant items in accordance with the law, and it does not target any specific country.

Chinese Foreign Ministry spokesperson Wang Wenbin also further emphasized on July 5 that items related to gallium and germanium have obvious dual-use attributes for military and civilian purposes, and it is an international practice to implement export controls on items related to gallium and germanium. EU members also implement export controls on some items, and the Chinese government implements export controls on related items in accordance with the law to ensure that they are used for legitimate purposes and are not targeted at any specific country.

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