Gallium and Germanium Restrictions Spark Surge in Chinese Metal Companies’ Shares
Date: July 5, 2023 In a move that further intensifies the ongoing tech battle with the United States, China has implemented export controls on metals crucial for semiconductor production, with an influential trade policy advisor indicating that this is just the beginning. The announcement comes just days before the scheduled visit of US Treasury Secretary Janet Yellen to Beijing, strategically timed to deliver a message to the Biden administration.
China’s recent decision to impose restrictions on the export of gallium and germanium products, effective from August 1, has sparked a race among companies to secure supplies and has already caused a surge in prices. Notably, gallium is utilized in the construction of radars, radio communication devices, satellites, and LEDs, while germanium finds applications in high-speed computer chips, plastics, military equipment like night-vision devices, as well as satellite imagery sensors.
The impact of these export controls has resonated throughout the industry, particularly in relation to electric vehicles (EVs) and fiber optic cables, which heavily rely on these metals. As a result, market analysts are speculating whether this move by China could be followed by restrictions on the export of rare earths, given the country’s dominant position as the world’s largest producer of these vital materials. Rare earths are essential components in the manufacturing of EVs and military equipment.
Furthermore, Chinese metal companies specializing in gallium and germanium have experienced a significant boost in share prices for the second consecutive session, as investors anticipate higher revenues driven by the increased demand and elevated prices for these metals. These developments showcase the anticipation and confidence among market players regarding the potential financial gains resulting from China’s export restrictions.
With tensions escalating between China and the US in the realm of semiconductor technology, this latest maneuver by China underscores its determination to safeguard its domestic chip sector and respond to external pressures. The Biden administration has been actively targeting China’s chip industry while urging its allies, including Japan and the Netherlands, to adopt similar measures.
The implications of China’s export controls on semiconductor metals will undoubtedly reverberate throughout the global tech landscape. Industry stakeholders are keenly observing the developments in this escalating tech fight, as both China and the US maneuver to gain a competitive advantage in the vital semiconductor sector.
Nitin Jain
Morningglobe
