China to impose export controls on key materials for chipmaking

China will impose export controls on gallium and germanium, both used in the making of semiconductors and other electronic components, starting next month to safeguard national security and interests, two ministries announced on Monday. 

"In order to safeguard national security and interests, with the approval of the State Council, it is decided to implement export controls on items related to gallium and germanium," the Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) said in a notice.

According to the notice, starting on August 1, items meeting certain characteristics shall not be exported without approval. The ministries listed eight items related to gallium, and six items related to germanium.

Under the export control, exporters must file an application with local commerce authorities for exports of the relevant items and must be approved by the Ministry of Commerce before exporting such items. Exporters would face fines and criminal charges, if they export such items without permission.

Both gallium and germanium are key in the making of semiconductors and other electronics. For example, germanium is used in fiber optics and semiconductors, while gallium is used in making chipsets for electronic devices such as computer motherboards or portable phones, according to media reports. 

China is the world's top producer of raw gallium, which is used in making chipsets to generate high frequency raid waves in 5G base stations, accounting for 95 percent of the global output, according to industry information provider Fierce Electronics.

China is also a major supplier of germanium, which is mainly used in fiber and infrared optics, PET plastics, electronics and solar panels. The EU has listed the metal as a critical raw material, as it imports about 17 percent of its supplies from China, according to media reports. 

While the notice issued by the MOFCOM and GAC on Monday did not go into detail of what prompted the move, apart from saying it aims to protect national security and interests, the move comes as the U.S. and some of its allies are relentlessly stepping up crackdowns on China's technological development in various fields, including semiconductors. 

For example, in the latest move, under mounting pressure from Washington, the Netherlands' government last week announced a ministerial order restricting exports of certain advanced semiconductor equipment. As a result, Dutch chipmaking equipment giant ASML said that due to these export control regulations, ASML will need to apply for export licenses with the Dutch government for all shipments of its most advanced immersion DUV lithography systems.

China has repeatedly voiced dissatisfaction over the Dutch move and called on the Dutch government to respect market principles and contractual spirits in order to avoid damage to bilateral cooperation. Chinese officials have also slammed the U.S.' abuse of export control measures to maintain its hegemony, while creating disruption to global supply chains. 

As the U.S. and its allies continue to escalate their chip war and technological crackdown, it is normal and indeed crucial for China to take proactive measures to safeguard its technological development and national security and interests, Chinese industry analysts said.