In the shadow of the conflict that is taking place between Russia, Ukraine and their alliances, an equally crucial arena of conflict, but of a technological nature, is developing between the United States and China. These two global giants are engaging in a silent, but extraordinarily relevant, fight to the sound of chip and semiconductors, which reveals how global technological destiny is influenced by this epochal challenge. China, restrictions on the export of raw materials.
The US-China Technology Challenge: An Expanded Context
China has established itself as a major exporter of key materials for the electronics industry, including chips, solar panels, electric vehicles, and LEDs. This advantage has been achieved through an economic strategy that has led the country to hold a key position in the production of crucial materials, such as gallium and germanium, which form the basis of many advanced electronic devices.
In response to China's rise in this sector, the United States has sought to limit the export of AI chips to China. On the other hand, China has adopted restrictive measures, starting from August, on the export of germanium and gallium, essential materials in the electronics sector. Exporting such materials outside the country now requires obtaining a license issued by China's Ministry of Commerce.
Tangible Effects in the Hardware Industry and Future Prospects
The implementation of these new regulations could have a tangible impact on the electronics hardware industry. Production costs could increase, and this inevitable price escalation could impact products already subject to significant increases. However, the exact extent of these increases will depend on the enforcement of the restrictions and the quantity of materials available in stock.
It's worth noting that both gallium and germanium are not particularly rare. Although China controls the global gallium production, its dominance is based on its ability to maintain competitive prices, rather than the rarity of the materials themselves. Both are byproducts of the processing of resources like coal and bauxite, meaning production can occur in multiple areas where aluminum is produced.
The market for materials like gallium is slowly diversifying beyond China's borders. Countries like Japan, South Korea, Ukraine, and Russia are entering the gallium production space. Similarly, germanium is being produced by countries like Canada, Belgium, the United States, and once again Russia. While the market may take time to adapt to these new developments, industry experts suggest a similar pattern could emerge as has already occurred with strategic resources like rare earths, antimony, and tungsten.
Perspectives on the Future Impact on China and the Global Market
Upon closer inspection, an interesting perspective on the future emerges. According to some experts, China's dominance in the production of critical materials could gradually weaken. When China loses its supremacy, this strategic move could backfire. This show of strength could ultimately normalize the market, spurring greater diversification and global competition.
While this may be the trend, it should be noted that the technology industry is heavily influenced by a series of constantly evolving geopolitical and economic variables. Therefore, the responses of semiconductor and electronic components companies could change unpredictably. For now, the performance of these companies' stocks appears to be relatively stable, but this situation could change suddenly.
In conclusion, the rivalry between the United States and China goes far beyond mere political confrontation, revealing a technological conflict that shapes the modern world. While China currently holds the lead, future events could lead to significant changes that will reshape the global balance of power in the electronics and technology sectors.
