China played a trump card in the chip war

From August 1, the Chinese authorities will impose restrictions on the export of rare earth materials – gallium and germanium, which are widely used in the production of chips. 

Suppliers from China will now need a license to export these materials, which will be issued by the Ministry of Commerce. They will also have to indicate the purpose of using these materials. 

The introduction of export controls is explained by national security and the interests of the country. China is the only state with a full cycle of rare earth metals mining, and, according to various estimates, controls from 60% to 85% of the global market.

The decision of the Chinese authorities is the next step in the «chip war» that has been going on for years. In October 2022, the United States imposed restrictions on the supply of high-tech components to the country. Six months later, in April 2023, the Chinese State Internet Information Office launched an investigation into the American chip manufacturer Micron Technology, expressing concern about the risks posed by the import of products of this company. 

In May, it became known that Micron had not passed the inspection and now cannot sell its products to local operators of critical infrastructure.

At the end of June, the Netherlands also announced new export restrictions on modern semiconductor technologies aimed at depriving China of key chip manufacturing equipment.