China Limits The Export Of Critical Chip-Making Metals

As a retaliatory move against the Western countries, who are trying to restrict the growth of China in the semiconductor industry, the country has made it clear that it would not submit to the dominance of the European power, and in response, has put restrictions on the export of metals crucial to build semiconductors and are used in chip making. This retaliatory move will also bring about discrepancies in the Indian market for semiconductors. 

Germanium and gallium are the two essential metals that are used in the process of chip making and semiconductors. China controls about 80% of the supply of germanium and 90% of the gallium supply. The Ministry of Commerce and China Customs has notified that after August 1, the exports of germanium and gallium will require a licence and will have to specify the purpose of use to “preserve security and national interest,” as the department claims. 

Gallium is one of the main components used in LEDs, integrated circuits, and photovoltaic panels. It is considered a critical metal, while germanium is necessary for making optical fibres and infrared camera lenses. China has a monopoly in supplying both these essential metals. China, on Monday, imposed an export control on both these metals. 

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The main reason for imposing the export control is Beijing and Washington’s scuffle to retain a global position in the semiconductor market. The retaliatory move was initiated after the blacklisting of multiple Chinese companies to limit their presence in the American technology market. The United States has also imposed strict restrictions on semiconductors, followed by the Netherlands imposing restrictions on advanced electronic chip-making technology. 

All these developments in the global market are putting a toll on the Indian market for semiconductors, as they will ultimately increase the rates of these precious metals, making the manufacturing of semiconductors costlier. Do you think this move by China will prove to be disadvantageous for the Indian economy? 

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