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 cars 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 electronic hardware industry. Production costs could increase, and this inevitable price escalation could reverberate on products already subject to significant increases. However, the precise size of these increases will depend on the application of the restrictions and the quantity of materials available in stock.
It's worth noting that both gallium and germanium are not particularly rare to come by. While China holds 94% control of 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 resulting from the processing of resources such as coal and bauxite, which means production can take place in multiple areas where aluminum is produced.
The market for materials like gallium is slowly diversifying beyond China's borders. Countries such as Japan, South Korea, Ukraine and Russia are getting involved in gallium production. Similarly, germanium is produced by nations such as Canada, Belgium, the United States and once again Russia. While the market may take some time to adapt to these new developments, industry experts suggest that a pattern similar to what has already happened with strategic resources such as rare earths, antimony and tungsten could emerge.
Perspectives on the Future Impact on China and the Global Market
Looking deeper, an interesting perspective on the future emerges. According to some experts, China's dominance over the production of critical materials may gradually weaken. When China loses its supremacy, the strategic move could backfire. This show of strength could eventually normalize the market, spurring greater global diversification and competition.
While this may be the trend, it should be emphasized that the tech industry is heavily influenced by a constantly evolving set of geopolitical and economic variables. Therefore, the responses of companies specializing in semiconductors and electronic components may change unpredictably. For now, the performance of the shares of these companies seems to react relatively stable, but this situation could suddenly change.
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 has the lead, future events could lead to significant changes that will reshape the global balance in the electronics and technology sector.
