As the chip conflict between China and the United States heats up, China will begin restricting exports of two key semiconductor industry materials.
Under the new regulations, exporting gallium and germanium from the world's second largest economy will require special licenses. The materials are used to manufacture electronics and have applications in the military.
The restrictions are a result of efforts by Washington to restrict Beijing's access to advanced microprocessor technology. China is by far the largest participant in the global gallium and germanium supply chain.
The materials are "minor metals," which means that they are rarely found in nature and are frequently a byproduct of other processes.
In addition to the United States, Japan and the Netherlands - home to key semiconductor equipment manufacturer ASML - have imposed export restrictions on China's chip technology.
"The timing of China's announcement is not coincidental, given the semiconductor export restrictions announced by the Netherlands and others," Colin Hamilton of BMO Capital Markets told sources.
According to the CRMA, only a handful of companies worldwide produce gallium arsenide of the purity required for use in electronics. The Chinese export restrictions are anticipated to have limited long-term effects.
Although China is the leading exporter of gallium and germanium, there are substitutes for the materials in the manufacture of components such as computer circuits, according to the political risk consultancy Eurasia Group.
In addition, there are active mining and processing facilities outside of China, the document states. Over a decade ago, China restricted exports of rare earth minerals. The consulting firm drew parallels between the current situation and that time.
In October, Washington announced that any company exporting processors to China using US-made equipment or software would be required to obtain licenses, regardless of where the circuits were manufactured.
China has frequently accused the United States of "tech hegemony" in response to Washington's export controls. Beijing has imposed additional restrictions on Lockheed Martin and other U.S. firms with military ties in recent months.
In the meantime, Western governments have discussed the need to "de-risk" from China, which entails reducing their dependence on Chinese raw materials and finished goods.
It will take years to diversify supply chains and establish the crucial capacity to mine and then process metals such as gallium and germanium.
Mineral-rich nations, such as Australia and Canada, view the materials crisis as an opportunity in the long run.
Experts warn that weaponizing resources and technological capabilities, as both the United States and China have done, will have global environmental consequences. This is due to the fact that crucial new ecological technologies rely on these types of materials.
This is not a national problem, it is a problem that the human race must confront. Dr. Harper stated that he hopes policymakers will bring their best selves to the table, secure access to the critical materials that are unquestionably necessary for the energy transition, and start addressing some of the difficulties associated with decarbonization.
Dr. Harper asserts that the average person cannot relate to gallium and germanium. However, they are also concerned with the price of their vehicle and the cost of switching to green technology.