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China Implements Restrictions on Export of Crucial Chip Materials

China announced restrictions on the export of chip materials vital for the production of AI chips – namely gallium and germanium, and other chemical derivatives. China’s Ministry of Commerce emphasized that the purpose of its restrictive measures is to safeguard their natural security and interest.
Monday early morning in Shanghai featuring 3 iconic buildings in the city. Photo courtesy of roadtripwithraj
Monday early morning in Shanghai featuring 3 iconic buildings in the city. Photo courtesy of roadtripwithraj
July 29, 2023 3:32 am

China recently announced the implementation of tighter control over the export of raw materials that are necessary for the production of AI chips –  specifically gallium, germanium, and their chemical derivatives.

According to the notice from China’s Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC), these restrictions are implemented “in order to safeguard national security and interest.”

Exporters and manufacturers are now required to apply for a license from China’s commerce ministry before being allowed to purchase these metals overseas, the Chinese Ministry of Commerce said in a statement.

Consequently, detailed information about the overseas buyers and their associated applications must be provided before the shipment proceeds. The amount these exporters are permitted to purchase is also limited.

“The Chinese government’s export control on relevant items in accordance with law is a common international practice, and it does not target any specific country,” Chinese Foreign Ministry spokesperson Máo Níng said.

However, former vice-minister of China’s commerce ministry, Wei Jianguo, stated that this is just the beginning of China’s counteractions, if the “high-tech restrictions” wouldn’t stop, in an interview with Chinese state media.

Although he did not say what specific measures China plans to implement, he asserted that they would escalate if Western restrictions would get heavier.

In recent reports, the ultimate trigger that caused these restrictions seemed to be the U.S.’s decision to limit China’s access to Nvidia’s A100 and H100 chips. These chips are recognized as some of the most advanced on the market.

In addition, the Netherlands also limited the sale of products for chipmaking in China. This restriction exchange heightens the economic tension between the two poles, with both trying to gain an upper hand in the race of AI and technological supremacy. 

Given that China controls a huge portion of the supply, it tremendously impacts the US market. 

According to recent studies, China continues to dominate as the world’s top provider of these metals, with 94% of the world’s raw gallium and 83% germanium – both materials are on the list of crucial minerals that are key components for national and economic security.

Both gallium and germanium are necessary for highly specialized areas of chipmaking, alongside equipment used in communications and defense operations. 

The implementation of strict regulations would set boundaries for the export and exchange of these crucial minerals. 

More so, China's decision will significantly impact the global AI industry and escalate ongoing economic tensions and could even hinder AI technology development worldwide. At the same time, other nations are presented with the opportunity to invest and expand in the AI chip manufacturing market.

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Written by Marei Schiffmann
Marei, a linguistics enthusiast, recently joined the Gold Penguin team as a writer. During her studies on multilingual communication, she discovered her true calling in the world of writing. She developed a keen fascination for AI and technological advancements. As a result, her writing primarily focuses on delivering the latest news in the realm of artificial intelligence.
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