In what is seen as a significant countermove to the U.S. and others’ restrictions on high-end chips and chip-making equipment sales to China, Beijing has declared export restrictions Monday on products and materials containing gallium and germanium, potentially escalating an ongoing technology war with the United States.
China’s Clampdown On Semiconductor Metals: The export restrictions on gallium and germanium are seen as a part of Beijing’s strategy to gain a stronger position in the escalating tech war, as these metals are fundamental in various high-tech industries. These metals are critical in the production of semiconductors, 5G base stations and solar panels.
Experts believe that the decision to restrict exports of key metals in the production of chips, could be a part of Beijing’s response to the United States’ recent move to limit semiconductor supplies to Huawei Technologies Co. and other major Chinese technology firms. Moreover, this step comes amid the ongoing efforts by China to achieve self-sufficiency in semiconductor manufacturing, reducing its dependence on foreign countries. In recent months, the Chinese government has also been investing heavily in its domestic chip industry.
Chip Stocks To Watch: Given the increasing importance of semiconductors in various high-tech sectors, the U.S. has been tightening its grip over the global supply chain. A recent example is the Biden administration’s meeting with industry leaders from the chip sector, including companies like Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD), to address the ongoing chip shortage.
Simultaneously, ETFs related to semiconductors such as the VanEck Vectors Semiconductor ETF (NYSE:SMH) and the iShares PHLX Semiconductor ETF (NASDAQ:SOXX) could see significant impacts due to these geopolitical shifts.
According to Alastair Neill, a board member of the Critical Mineral Institute with nearly 30 years of experience in China’s metals industry, “this measure will have an immediate ripple effect on the semiconductor industry, especially with regards to high-performance chips.”
Some experts argue the restrictions might only have a limited impact on the global chip industry since most of the metal imports used by chip manufacturers come from outside China.
While the longer-term impact of these restrictions is still to be determined, it undoubtedly indicates the struggle for control over the global technology supply chain is far from over.
Produced in association with Benzinga
(Additional reporting provided by Benzinga Newsbot)
