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Semiconductor materials to face Chinese export controls from August

The flag of China

Chinese authorities have announced that there will be export controls placed on gallium and germanium-related items. While it may sound innocuous, these two metals are crucial for the semiconductor, telecoms, and electric vehicle industries, according to Bloomberg.

Worryingly, China is responsible for 94% of the world’s gallium production so these control could eventually see rising prices for tech gadgets, electric vehicles, and more. Both metals are byproducts from processing coal and bauxite among other things so rising prices could see production ramp up elsewhere but it would still mean we see a period of higher prices.

Under the new rules, which come into force on August 1, exporters will have to apply for licenses for the two metals. They will also need to report the details of the overseas buyers and what the buyer plans to do with the metals.

China’s decision to put up export controls comes just days after the Dutch government decided to impose its own controls on the export of advanced machinery needed for making some chips. China called on the Dutch government to safeguard international trade and remove the barrier, according to Tom’s Hardware.

The Dutch restrictions come at the request of the US. The small Western European nation already limited access to EUV machines but the latest control stymie the export of DUV machines too. The export controls from the Netherlands are not due to go into effect until September 1, one month after China’s controls come into force.

Consumers shouldn’t immediately see high prices on electronics as it will take a while for increased prices to feed through, but unless this decision is reversed, higher prices will eventually be passed on.

Aside from restricting access to advanced machinery from China, Western nations are also increasing their capacity to produce semiconductors. This week, the EU Commissioner for Internal Market, Thierry Breton, is in Japan trying to boost cooperation between the EU and the East Asian country.

Source: Ministry of Commerce PRC (translated) via Bloomberg

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