China bans export of metals needed for semiconductors amid US-China chip war

China has fired the latest salvo in the ongoing electronic chip war with the US by restricting the export of two metals required for manufacturing semiconductors, mostly used in electric vehicles, displays, and defense equipment.

In a statement released on Monday, the Ministry of Commerce of the People’s Republic of China said it is using the provisions under its Export Control Law and Foreign Trade Law to “implement export control on gallium and germanium-related items” to maintain national security and interests.

As part of the new restrictions, exporters of the two metals have to apply for licenses detailing the buyer and the application or usage of the metals.

Beijing’s move to exercise more export controls on the two metals comes after a series of moves by the US to restrict China’s access to advanced chips, and several moves by the EU to reduce its dependence on China.

In January, the US convinced the Netherlands and Japan to join it in expanding the ban on exports of chip-making technology to China.

According to analysts, Washington’s strategy to strike a deal with the two countries was a significant move, as some of the world’s largest manufacturers of semiconductor manufacturing equipment are headquartered in these nations.

This move saw Beijing banning the use of semiconductors manufactured by US-based chipmaker Micron, followed by Japan imposing restrictions on chip exports to China.

China has urged Japan to repeal the restrictions citing international and trade regulations violations.

The US first imposed restrictions on exports of chips to China in 2015, extending them in 2021 and twice in 2022. The most recent restrictions were introduced in December.

US lawmakers have also been urging the Biden administration to take more action to impede China’s progress in gaining dominance in areas such as artificial intelligence and quantum computing.

The suggestions included imposing trade restrictions on Chinese memory chip maker Changxin Memory Technologies as a counter-offensive to China banning the use of Micron’s chips.

The ongoing chip war has also seen the EU trying to reduce its dependence on China. This week, the EU formed a new partnership with Japan to improve cooperation on digital issues, after recently pledging billions of dollars in investments to shore up their domestic chip industries.

In April, the European Council and the European Parliament agreed to invest $3.6 billion in EU funds to build out the EU’s semiconductor manufacturing capabilities, with the aim of attracting a further $43.7 billion in private investment. The investments could help avoid a Taiwanese bottleneck in the world’s semiconductor supply chains.

During the same time, the Japanese government said it was planning to invest $532 million (70 billion yen) in projects to develop and make next generation chips in the country, including a deal with Rapidus to make 2nm chips in Japan by 2025.