European and American countries are going to suffer, how long can they sustain China's ban on exporting gallium? The answer is unexpected

Tech 2023-07-07 23:36:59 Source: Network

introductionSemiconductor is the core material in the high-tech field of the world today, and it is also an important symbol of national security and competitiveness. China happens to be the largest exporter of gallium metal, and it is not one of them

introduction

Semiconductor is the core material in the high-tech field of the world today, and it is also an important symbol of national security and competitiveness. China happens to be the largest exporter of gallium metal, and it is not one of them.

Against the background of the United States' continuous suppression of China's Semiconductor industry, China decided to implement export control on related items of gallium and germanium from August 1, 2023, which aroused widespread concern of the international community.

Gallium and germanium are both key raw materials for manufacturing semiconductors, and this move is deeply ingrained in the hearts of 140000 Chinese people. It is considered a reciprocal response to US sanctions, and it is truly satisfying! So, what impact will China's ban on exporting gallium have on the gallium industry in the West and China?

How long can Western gallium last?

Gallium is a silvery white metal, which usually does not exist in nature. It is a by-product of processing zinc, coal, Bauxite and other bulk commodities. It can be used after recycling, and it is also very interesting. Its melting point is very low. You just need to put it on your hand, and your body temperature can melt it.

However, gallium has a wide range of applications in semiconductors, and combining gallium with other elements can improve transmission speed and efficiency.For example, gallium nitride, a compound of gallium, is used by the US military in radar manufacturing; Another type of gallium arsenide is more resistant to high temperature and humidity than commonly used semiconductor material silicon, and has better conductivity, making it widely used in high-performance chips.

According to market research firm Precedence Research, the sales of chips using gallium nitride reached $2.47 billion last year, and it is expected to climb to $19.3 billion by 2030; In addition, according to research firm ResearchandMarkets, it is expected that by 2030, the production of chips using gallium arsenide will increase from $1.4 billion last year to $3.4 billion.It can be seen that gallium has huge demand and potential in the semiconductor market.

However, Western countries face difficulties and challenges in the supply of gallium. According to the Key Raw Materials Alliance (CRMA) of the European Industrial Association, China's gallium production accounts for approximately 80% of the global total production; Germanium production accounts for approximately 60% of the global production.According to the United States Geological Survey, 53% of gallium in the United States will come from China from 2018 to 2021, followed by Germany, Japan, Ukraine, etc. After the United States imposed higher tariffs on Chinese gallium, import volumes significantly decreased in 2019. According to Chinese customs data, the largest importers of gallium products in China in 2022 are Japan, Germany, and the Netherlands; The main importing countries for germanium products are Japan, France, Germany, and the United States.

In 2021, the total global production of gallium metal was only 430 tons, while China alone accounted for 420 tons. Gallium metal is the main raw material for semiconductors, so it can be seen how heavily Western countries rely on our gallium metal.

From the above data, we can see that western countries are highly dependent on China's supply of gallium. If China implements export control, it will have a serious impact on the Semiconductor industry of western countries.Although Western countries also have some other sources of gallium supply, such as Japan, South Korea, Russia, and Ukraine, their production and quality cannot be compared to China and are also influenced by China. In addition, the consumption of gallium in Western countries is much greater than their own production and reserves, and the recycling rate of gallium is very low, so Western countries' gallium reserves will soon be depleted. It is estimated that without adding new sources of supply, the United States' gallium reserves can only be maintained for about 5 years.

Holding the throat of the fate of the Semiconductor industry in Europe and the United States, it is exciting to just think about it. Previously, the United States, together with other European and American countries, imposed sanctions on China. This move by the Ministry of Commerce was really popular!

Did China's blockade actually support European and American technology?

Some people may think that China's ban on exporting gallium will stimulate Western countries to develop their own gallium industry, thereby reducing their dependence on China? This idea may seem reasonable, but in reality it overlooks the particularity and dependence of the gallium industry, as well as the advantages and resilience of China's manufacturing industry.

In the past few years, the United States and other European and American countries have blocked China's semiconductor industry. We can't buy good foreign equipment, such as the Stepper in the Netherlands. However, this high-precision Stepper can only be produced in the Netherlands. During this period, many Chinese companies are in trouble, and their hearts are full of anger!

My answer to the title question is no!

Firstly, let's take a look at the gallium industry, which is a highly specialized and technology intensive industry that cannot be established overnight.Moreover, the gallium industry involves multiple links such as mineral exploration, mining, smelting, refining, chemical synthesis, and semiconductor manufacturing, each of which requires a large amount of funds, equipment, talent, and technical support. Moreover, the gallium industry also needs to form synergies with other related industries, such as electronics, communication, solar energy, etc. These industries all have complex supply chains and market demands, and simply increasing input cannot increase output.

Even if we leave these aside, the global gallium industry is highly dependent on the Chinese market and manufacturing industry, and it cannot be easily decoupled and transferred.China is not only the world's largest producer and exporter of gallium, but also the world's largest consumer and importer of gallium. China has a huge foundation and market demand in the electronic manufacturing industry, providing stable support and momentum for the gallium industry. Moreover, China has formed a complete industrial chain and innovation system in the gallium industry, with a group of enterprises and research institutions with core competitiveness. These advantages give China an irreplaceable position in the gallium industry.

Therefore, even if Western countries want to develop their own gallium industry, it can be said that it is extremely difficult. They need to invest huge amounts of funds, time, and energy, bear enormous risks and uncertainties, and face strong competitive pressure from China.Moreover, in the context of globalization, there is a deep level of complementarity and cooperation between Western countries and China in the gallium industry, rather than a zero sum game. If Western countries excessively isolate China, in the short term, it may bring some difficulties to our country, but it is also painless. However, in the long run, it will definitely have a significant impact on their own interests!

Will banning gallium exports lead to the collapse of China's gallium industry?

As for the short-term difficulties mentioned above, some people may start to worry excessively. Will China's ban on exporting gallium have a negative impact on the domestic gallium industry? My answer is also no.

In fact, such concerns are unnecessary. All decisions made by the senior management in China are in line with their own interests and the hearts of the people, after all, it is related to export trade. Simply put, it is a profitable job.China's ban on exporting gallium will not have a negative impact on the domestic gallium industry, but will instead bring many opportunities and momentum.

For example, China's ban on exporting gallium does not include finished semiconductor electronic devices, which means that China can still export products such as chips, LEDs, and radars containing gallium, with added value and profit margins much higher than gallium itself.Therefore, China's ban on exporting gallium will not affect the export revenue and market share of the domestic gallium industry, but will instead promote the development of the domestic gallium industry towards high-end, refined, and intelligent directions.

For example, China's ban on exporting gallium will not affect the supply and demand balance and price stability of the domestic gallium industry. According to data statistics, in 2022, China's gallium production was 606 tons, consumption was 500 tons, export was 89.35 tons, and import was 10.85 tons, indicating a basic balance between supply and demand.Moreover, China's gallium reserves are also abundant, reaching 24794.6 tons, accounting for nearly half of the global reserves. Therefore, China's ban on exporting gallium will not lead to a shortage or surplus in the domestic gallium market, nor will it cause significant price fluctuations.

Finally, as an example, this is also the most important thing. China's ban on exporting gallium will not hinder the innovation and progress of the domestic gallium industry. Domestic enterprises have been at ease for too long, forgetting the inherent bloodline of the Chinese nation. This time, it is also important for them to seize opportunities and continue to innovate!China already has strong technological strength and competitive advantage in the gallium industry, with a group of leading enterprises and research institutions. It has made outstanding achievements and contributions in fields such as gallium arsenide and gallium nitride. Moreover, China has huge market demand and development potential in fields such as semiconductors, communication, and new energy, providing broad application space and innovative impetus for the gallium industry. Therefore, China's ban on exporting gallium will not weaken the innovation and competitiveness of the domestic gallium industry, but will instead force the domestic gallium industry to improve its own level and quality.

Conclusion

Through reading the whole article, we can see that China's ban on the export of gallium is a strategy of reciprocal retaliation. All the starting points are to protect national security and interests, but also an opportunity to force industrial upgrading.For western countries, China's ban on the export of gallium will have a serious impact and challenge on its Semiconductor industry, forcing it to find other supply sources or develop its own production capacity.

For China, banning the export of gallium does not have a negative impact or dilemma on its gallium industry, but rather promotes its development towards high-end, refined, and intelligent directions.Therefore, we advise Western countries led by the United States to stop imposing sanctions on China. In the current globalized environment, China and the United States should stop harming and imposing sanctions on each other, and seek win-win solutions for cooperation and the well-being of the global people. Only in this way can the healthy development and common progress of the global Semiconductor industry be achieved.

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