China hits back on US chip war, restricts export of some rare elements
4 Min Read
Beijing's decision comes as Biden's administration is preparing more curbs on US cloud-computing services from being provided to Chinese firms.
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US President Joe Biden meets with China's President Xi Jinping during a virtual summit from the Roosevelt Room of the White House in Washington, DC, November 15, 2021 (AFP)
China will curb the export of some critical material used in the chips industry in retaliation to growing US restrictions on China's access to the technology in attempts to cripple the country's advancement in the field, Reuters reported on Tuesday.
The commerce ministry announced that the new controls aim to protect national security and interests. Exporting rare earth metals, such as gallium and germanium, now requires special permission.
The United States announced last week that it is considering introducing more bans on semiconductor exports to China, claiming concerns over the possibility of its use in the military and cyber industry.
Read more: Biden signs on $52.7 bln microchip investment bill to 'counter China'
American giant IT companies, such as Nvidia and Advanced Micro Devices (AMD) among other chipmakers, will be prohibited from exporting semiconductor technologies to China and other countries deemed by the US as "security threats", The Wall Street Journal reported citing officials.
But Washington's tech aggression on the world's second-largest economy was not limited to physical hardware.
The newspaper said on Tuesday citing sources that the Biden administration is drafting further controls to prohibit US cloud firms that use advanced artificial intelligence AI chips, such as Amazon and Microsoft, from providing services to Chinese companies without official permission.
The Netherlands will also be part of the US anticipated measures against China's chipmakers.
According to Reuters, the Dutch government is set to announce further curbs on sales of equipment used in semiconductor production in the coming weeks.
It is expected that the Netherlands' move will be mainly directed at ASML Holding NV, a domestic firm that has a monopoly over extreme ultraviolet (EUV) lithography machines that manufacture the chips.
Read more: US pressures allies into containing China Chips industry: Global Times
Starting August 1, the Chinese control on the sales of eight gallium-related products will go into effect.
The elements include gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, and indium gallium arsenide.
It will also apply to six germanium products: germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride, and zinc germanium phosphide.
Chinese firms not abiding by the new process of obtaining a ministry license to export these materials will be subjected to a penalty.
Germanium is also used in infrared technology, fiber optic cables, and solar cells.
Backfire and feasibility
Some American tech companies, however, chose to remain in the Chinese market despite growing pressure from Washington to cut all tech ties with the Asian giant.
US memory-chip pioneer firm Micron announced last month plans to increase investment in its China-based factory by over half a billion dollars.
Micron's decision came shortly after China banned critical infrastructure operators from buying the firm's products in response to Washington's tech-trade hostility against Beijing.
But Washington's tech war against China could end up backfiring and fuel the Chinese drive to independently develop their own IT hardware and solutions, while US companies would have been deprived of large profits from the largest chip market in the world.
In May, WSJ reported that American sanctions on Chinese IT businesses have caused them to expand research to build artificial intelligence (AI) without relying on cutting-edge US semiconductors.
According to the report, Chinese firms searched for strategies that might enable them to employ fewer or less powerful chips to achieve high-level AI performance.
