China and the US are duking it out in a tech fight, and things just got hotter! China decided to put the brakes on exporting certain metals that are like gold for semiconductors, electric vehicles, and high-tech industries. And let me tell ya, it’s stirring up a real trade war storm, causing disruptions in global supply chains.
The Chinese commerce ministry declared they’d be reigning in the exports of eight gallium products and six germanium products from August 1. Their reasoning? National security, they say. But analysts think it’s their way of hitting back at the United States’ efforts to slow down China’s tech progress.
This news hit some companies like a bolt from the blue, and they scrambled to secure their supplies. One US semiconductor wafer manufacturer was like, “We need those export permits, like, now!” They wanted to keep investors calm. Meanwhile, a Chinese germanium producer was inundated with orders as prices soared like a rocket.
Peter Arkell, the head honcho of the Global Mining Association of China, summed it up perfectly: “China’s given the US a taste of their own medicine.”
The timing of this move raised some eyebrows, too. People wonder if it’s a not-so-subtle jab at US Secretary of Treasury Janet Yellen’s visit to Beijing this week. Some are even betting on Washington canceling the trip in response.
Folks in the industry are biting their nails, fearing that China could follow up with restrictions on rare earth exports like they did 12 years back in a showdown with Japan. And let me tell you, rare earths are vital for EVs and military gear, and China’s got the monopoly on them.
“Gallium and germanium are just a couple of the minor metals that are so important for the range of tech products, and China’s got the upper hand. No one can replace them anytime soon,” said Arkell, shaking his head.
You see, China’s like the boss when it comes to producing gallium and germanium. The top importers of China’s gallium products last year were Japan, Germany, and the Netherlands, according to the folks at Caixin. As for germanium, Japan, France, Germany, and the good ol’ United States were the big buyers.
Now, the US semiconductor folks aren’t sitting idle. AXT Inc, the company with manufacturing facilities in China, is hustling to get those export permits. They want to keep the show running smoothly for their customers.
And the Chinese germanium producer is on fire! They’re getting tons of inquiries from all over, with folks in Europe, Japan, and the US hoping to stock up on the goods before the export controls kick in. Everyone’s playing the waiting game, as it could take a couple of months to get those precious permits.
Prices are skyrocketing, too, both in the domestic market and for exports. You’re talking 10,000 yuan (that’s over $1,380) per kg in China and over $1,500 per kg abroad. It’s like a bidding war out there!
Sure, some thought export controls were coming, but this surprise move has got everyone on edge. Downstream users with long-term sales contracts are worried sick about the possibility of raw material prices going through the roof. And nobody wants to deal with losses, right?
But hold on, Taiwan and South Korea are trying to stay cool amidst all this drama. They say there won’t be a huge disruption, just a little bump in the road. Taiwan
