The ongoing chip conflict between the U.S. and China intensifies with reports suggesting that China's upcoming regulation, set to take effect soon, will target rare-earth materials. According to sources like Nikkei and Tom’s Hardware, this new regulation, slated for October 1, asserts state control over these crucial materials essential for semiconductor manufacturing.
According to reports, this measure is intended to safeguard national and industrial interests, yet it is viewed globally as part of China's strategic response to its ongoing trade dispute with the U.S. By prohibiting unauthorized access to or disruption of rare-earth resources by any entity, the regulation asserts state control over vital elements such as gallium and germanium. It covers the entire rare-earth supply chain, encompassing activities from mining and smelting to processing, distribution, and export.
Since October 2022, the U.S. has implemented export controls aimed at reducing China’s access to advanced semiconductor technologies. This includes restrictions preventing tech giants like Intel, Qualcomm, and NVIDIA from exporting their most advanced chips to China. Recent reports indicate a new development: the White House is reportedly contemplating additional measures to limit China’s access to gate-all-around (GAA) transistor technology and high-bandwidth memory (HBM).
China’s latest move may be a reaction to U.S. export regulations on advanced wafer fabrication equipment, the reports stated. According to the reports, China accounted for approximately 70% of global rare-earth element production as of 2023. Particularly in the case of gallium, which is essential for power ICs, China dominates around 94% of global supply. While the production of high-performance components such as CPUs, GPUs, and memory may not be severely affected, restrictions on gallium nitride (GaN) and gallium arsenide (GaAs) could notably affect power chips, radio frequency amplifiers, LEDs, and other critical applications, the reports said.
Conversely, China's forthcoming regulations concerning rare-earth metals could have broader implications. Reports indicate that gallium and germanium, which are not in short supply, have been kept at low price levels in China, discouraging profitable mining operations elsewhere. These new restrictions have already begun affecting metal prices, prompting companies in other nations to consider starting extraction projects. This shift could potentially diminish China's dominant position in the global market over time.