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Trade officials have been assessing the impact of the recent escalation in technology competition between the United States and China after Beijing announced it would impose export restrictions on metals used to make semiconductors.
South Korea’s Ministry of Commerce called an emergency meeting to discuss China’s decision to restrict exports of gallium and germanium, metals used in chips, electric vehicles and various communications products.
“We cannot rule out the possibility that this measure will be extended to other items,” South Korea’s Vice Minister of Commerce Choo Young-joon said.
Japan’s trade minister Yasutoshi Nishimura said the Japanese government was investigating the impact on its own companies and checking the Chinese government’s plans to introduce the regulation. The Japanese government has warned that it will keep the door open to action at the World Trade Organization and oppose any violation of international rules.
South Korea and Taiwan are home to Samsung and TSMC, which dominate semiconductor manufacturing, while the Japanese group plays a key role in the chip supply chain.
Taiwan’s vice foreign minister, Roy Lee, said the Chinese government’s measures were likely to have short-term effects, including rising prices. Export controls “will be a kind of catalyst for countries including Taiwan, South Korea and Japan to reduce their dependence on China for the supply of these critical materials,” Lee added.
In Germany, Europe’s largest importer of metals, Wolfgang Niedermark, director of the industrial lobby group BDI, said the regulation shows how dangerous Europe’s dependence on China is.
He added that there was a “urgent need to reduce quickly” dependence on China for raw materials that are vital for Europe and Germany. The German government will give Intel a €10 billion subsidy for a project to build a manufacturing plant in Magdeburg.
Beijing’s announcement on Monday showed how President Xi Jinping’s administration intends to target the interests of the West as the United States tightens restrictions on China’s access to advanced technology. rice field. Metals regulations are important because China has a monopoly on the production of many raw materials essential to modern technology and infrastructure.
China’s foreign ministry spokesman Mao Ning said on Tuesday that China “has always implemented fair, reasonable and non-discriminatory export control measures.” He said the measures were “a general international practice and not aimed at any particular country.”
Gallium and germanium are among dozens of minerals classified by the U.S. government as important to the economy and national security. The U.S. State Department did not respond to a request for comment.
The move comes days before U.S. Treasury Secretary Janet Yellen’s Thursday visit to Beijing aimed at stabilizing turbulent U.S.-China relations.
“This looks like a punch from China to the US, a warning about how supply chain disruptions could affect inflation, interest rates and the presidential election,” Nomura analyst CW Chung said in Singapore. Stated.
Chinese officials and experts say the Chinese government is expected to introduce further retaliatory measures in response to the U.S.-led expansion of technology export controls.
“More retaliatory measures will be taken against the snowballing restrictions on semiconductor exports by Western countries,” said a senior official close to China’s Ministry of Commerce.
Shares in China’s gallium and germanium producers rose on Tuesday following the announcement, with traders expecting export controls to push metal prices higher.
Chip-making metals controlled by China
Gallium is used in the manufacture of semiconductor wafers used in integrated circuits, as well as important light-emitting devices used in advanced circuits and solar cells. These are components of a wide range of technologies such as telephones, high-performance computers, and medical devices.
This metal is a by-product recovered from the processing of bauxite and zinc, which is then converted to gallium arsenide, which is used to make wafers.
China controls 98% of global production, estimated at 430,000 kg in 2021. Processing of gallium into gallium arsenide is spread across North America, Europe and Asia. This metal is currently non-recyclable and has no alternative for use in some products.
Germanium is used to make silicon alloys for high-speed devices commonly used in many electrical products such as electronics, solar applications and fiber optics.
China controls 68% of global refinery production, estimated at 140,000 kg in 2021. The remaining processing is spread across Europe and North America.
Germanium is more widely available than gallium, with approximately 30% of the world supply being produced from recycled materials. The United States also stockpiles germanium, with 2021 reserves he is 80,000kg. Silicon and other compounds can be used as alternatives to germanium, but often at the expense of performance.
Source: U.S. Geological Survey
Shares of Yunnan Lincang Xinyuan Germanium Industry closed 10% of their high in the Shenzhen market on Tuesday, while shares of Yunnan Zhihong Zinc Germanium closed 6% higher. The rise added $350 million to the combined market cap of the two companies.
James Zimmerman said, “China will apply its laws extraterritorially, abandon its treaty obligations, and impose countermeasures with retaliatory measures. All of this is critical to China’s national security and public interests.” It will be done in the name of being recognized.” Attorney at Perkins Coie in Beijing.
Zimmermann also noted that China last week passed a foreign relations law that strengthened the legal basis for countering Western threats to national and economic security.
Kim Yang-pak, a researcher at the Korea Institute of Industry, Economy and Trade, said the regulation was “worrisome” for South Korean semiconductor makers.
“South Korean companies can find alternative sources, but it will take time… No matter how important it is, the shortage of some materials could affect chip production.” there is,” he said.
Samsung and SK Hynix, the world’s two largest memory chip makers, declined to comment.
Infineon, the largest supplier of semiconductors to the auto industry, said it had not seen a “major impact” on material supply. The Munich-based company added that the ban follows a “multi-sourcing strategy that includes suppliers from different regions”.
Chinese nationalist tabloid Global Times said the export controls came after the United States and some allies “relentlessly tightened their crackdown on China’s technological developments.”
Mr. Edward White and Ms. Song Jeong Ah interviewed in Seoul, Keyner Liu from Hong Kong, Hudson Rocket, Gloria Lee, Greg McMillan, Kathryn Hill from Taipei, Kana Inagaki from Tokyo, Patricia Nilsson from Frankfurt
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