Quotes: What people are saying about China's chipmaking export controls

AXT

04/07/2023 11:27

(Adds quotes from Lucy Chen of Isaiah Research)
       July 4 (Reuters) - China will control exports of some
metals used in the semiconductor industry, ramping up a
technology war with the United States and potentially causing
more disruption to global supply chains. 
    
    Here's what people are saying about the measure: 
    
        LUCY CHEN, VICE PRESIDENT AT TAIPEI-BASED ISAIAH
RESEARCH:
  
    "We believe that gallium and germanium are indeed important
raw materials for the semiconductor industry, and China
currently accounts for at least 80% of their supply. The gallium
and germanium export controls that China has recently
implemented have a direct impact primarily on the field of
compound semiconductors, such as GaAs substrate suppliers
Sumitomo, Freiberger and AXT, as well as U.S. GaN substrate
suppliers including Cree and II-VI. This also has a knock-on
effect on the production of related products such as radio
frequency, power amplifier, LED and communication equipment."
        "Although the above-mentioned substrate suppliers rely
on gallium imported from China as raw materials, there are other
secondary suppliers in Japan, South Korea, Europe, America and
other regions that can provide materials, which can control the
risk of upstream material shortages. However, under China's
export controls, the cost of gallium and germanium may increase.
Whether other suppliers can provide enough material to meet
demand is also the focus of our continuing observation."
    
       
  
    JOHN STRAND OF STRAND CONSULT: 
    "Gallium and Germanium are not like the rare earths where
there is almost no alternative suppliers. These are metals that
can be gotten in other ways, by-product of coal mining. The
effect of restriction would yes be an increase in price, but not
at all as painful for the rest of the world as chip restrictions
are for China."
    
    BEN WOOD, CMO OF INDUSTRY ANALYSIS FIRM CCS INSIGHT:
    "There has been speculation for some time that China would
respond to the escalating sanctions it has faced from the U.S.
and others. This is a bold move that will take time to filter
through the supply chain but there is little doubt raw materials
play a key role across numerous sectors which could cause some
disruption over time."
    
    KAZUMA KISHIKAWA, ECONOMIST AT DAIWA INSTITUTE OF RESEARCH: 
    "From what I've seen, they haven't narrowed down the
countries targeted by the export restrictions, but since Japan,
the U.S., and the Netherlands will naturally be included, I
think it's fair to say that this is a de facto retaliatory
measure." 
    
    PETER ARKELL, CHAIRMAN OF GLOBAL MINING ASSOCIATION OF
CHINA: 
    "It hardly comes as a surprise that China would respond to
the American-led campaign to restrict China's access to
microchips. With roughly 90% of global production of these minor
metals, China has hit the American trade restrictions where it
hurts. It seems to be a pretty fundamental trade negotiation
tactic. 
    "Gallium and germanium are just a couple of the minor metals
that are so important for the range of tech products and China
is the dominant producer of most of these metals. It is a
fantasy to suggest that another country can replace China in the
short or even medium term."
    
    STEWART RANDALL AT SHANGHAI-BASED CONSULTANCY INTRALINK:
    "Chinese suppliers would lose customers, and in the short
term it would cause supply issues if China did actually deny
exports. 
    "To me it doesn't seem as much of a chokepoint because
there's no difficult technological blocker. It is a logistical
supply chain blocker of finding new raw materials suppliers."
    
    MANAGER AT A CHINA-BASED GERMANIUM PRODUCER, WHO DECLINED TO
BE NAMED DUE TO THE SENSITIVITY OF THE MATTER: 
    "The number of enquiries from abroad surged overnight after
the export control news. Many overseas buyers are asking, mainly
from Europe, Japan and the United States, as it may take as long
as two months to get licence permit for exports, so overseas
buyers will need to stockpile more cargoes in advance to sustain
production in at least two months.
    "Offer prices in the domestic market and the export market
have increased to 10,000 yuan ($1,380) per kg and over $1,500
per kg, respectively." 

 (Reporting By Kentaro Sugiyama on Tokyo, Amy Lv in Beijing,
Brenda Goh in Shanghai, Sarah Wu in Taipei, Toby Sterling in
London and Supantha Mukherjee in Stockholm;  Compiled by Anne
Marie Roantree; Editing by Tom Hogue, Himani Sarkar and Louise
Heavens)
 ((annemarie.roantree@thomsonreuters.com; +852 97387151; Reuters
Messaging: annemarie.roantree.thomsonreuters.com@reuters.net))