China limiting exports of raw materials
The Chinese Ministry of Commerce declared on July 3 that it will apply export curbs on goods connected to gallium and germanium in what is perceived as the nation’s retaliatory action in the “chip war.” It stated that the restrictions were put in place “to protect national security interests.”
Reason for the Curb
In an effort to limit the export of the two basic minerals, the Chinese Ministry of Commerce mandated that exporters now get a particular permit. The application procedure, which asks operators to name importers, end users, and end usage, is where the main disagreement resides. Also, they would have to present the original export contract.
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Reason for Concern
Gallium is used to create gallium arsenide, the fundamental semiconductor substrate. They are employed in the production of semiconductor wafers for LEDs, mobile and satellite chipsets, and integrated circuits (in displays). Moreover, it is employed for sensors in avionic, space, and defence systems, as well as in automobiles and lighting.
80% of gallium is produced in China, according to the European industry association Critical Raw Materials Alliance (CRMA). Moreover, 60% of the world’s production of germanium comes from China.
Fiber – optic cables, infrared imaging equipment (used by law enforcement for surveillance, target acquisition, and reconnaissance, particularly at night), and optical devices all make use of this element (to improve the ability to operate weapon systems in harsh conditions). Due to their better energy conversion efficiency and capacity to endure heat, they are also used in solar cells.
It has been designated a “essential raw material” by the European Commission, whose import dependency on China is 71% for gallium and 45% for germanium, respectively.
Impact for India
Given the interruption to immediate supply chains, it is anticipated that Chinese export bans will have an immediate effect on India and its industry. According to him, the export control order’s higher pricing would have an impact on the price and supply of chips, thereby affecting India’s intentions to produce chips.
Alternative supply sources, domestic semiconductor production capabilities, and strategic alliances like the India-U.S. Initiative on Critical and Emerging Technologies will all have long-term effects on India’s chip-making plans and businesses (iCET)
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China limiting exports of raw materials – GS Paper 2 – International Relations
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