China’s latest decision to impose export restrictions on gallium and germanium, two materials crucial for the semiconductor industry, is fueling the ongoing chip war with the United States. These materials, essential in chip manufacturing and with military applications, are set to be subject to special export licenses in the world’s second-largest economy. As China dominates the global supply chain of gallium and germanium, this move comes in response to efforts by the US to limit China’s access to advanced microprocessor technology.
China’s Dominance in Gallium and Germanium
According to the Critical Raw Materials Alliance (CRMA), China holds an overwhelming advantage in gallium and germanium production, accounting for 80% of the world’s gallium and 60% of germanium. Being “minor metals,” they are not readily found in nature and are often by-products of other processes. As a result, China’s new export controls on these materials are set to have significant implications for the global tech industry.
Geostrategic Competition and “Resource Nationalism”
China’s move to restrict exports adds to the rising concerns over “resource nationalism,” wherein governments hoard critical materials to exert influence over other countries. The ongoing tit-for-tat between the US and China has led to a shift away from the narrative of globalization, with countries increasingly seeking to secure their access to essential resources, including gallium and germanium.
Potential Impact and Alternatives
While China’s export restrictions may not cause immediate catastrophic effects, they could drive the development and exploration of alternative sources for these materials. The mineral-rich countries such as Australia and Canada see this situation as an opportunity to diversify supply chains and reduce reliance on China. Active mining and processing facilities outside of China also offer possible substitutes, though building up the capability to mine and process these metals will take time.
Long-term Consequences and Environmental Concerns
The weaponization of resources and technological capabilities by major economies like the US and China could have far-reaching global consequences, particularly for green technologies that heavily rely on these materials. Policymakers are urged to address these concerns to secure access to critical materials for the energy transition and tackle environmental challenges related to decarbonization.
As the chip war between the US and China escalates, the new export controls on gallium and germanium highlight the growing trend of “resource nationalism.” China’s dominant position in the production of these vital materials raises concerns about supply chain disruptions and the need for diversification. Policymakers and industry leaders must pay attention to these developments as they have implications for the future of technology and the environment.
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