On July 3rd, the Chinese government announced that it would impose export controls on two crucial metals, gallium and germanium, starting from August 1st, 2023, in order to protect national security and interests. This decision immediately garnered widespread attention and discussion both domestically and internationally, highlighting China's emphasis on protecting strategic resources.

According to the announcement, the following gallium and germanium-related items cannot be exported without permission: metallic gallium (elemental), gallium nitride, gallium oxide, gallium phosphide, metallic germanium, zone-refined germanium ingots, germanium phosphide-zinc, germanium dioxide, etc.

The export controls involve two rare metals, gallium and germanium, which play a critical role in semiconductor manufacturing. As a result, the impact of export controls on the semiconductor industry may have the following implications:

1. Supply chain disruption: Export controls may lead to supply chain disruptions for gallium and germanium, as these metals are typically sourced from overseas suppliers. This may affect supply chain management in semiconductor manufacturing, resulting in production stagnation or delays.
2. Increased production costs: If semiconductor companies are unable to obtain sufficient supplies of gallium and germanium, they may need to pay higher prices in the market to acquire these metals, leading to increased production costs. This could have a negative impact on profitability and competitiveness.
3. Limited technological research and development: The importance of gallium and germanium in semiconductor manufacturing means that export controls may restrict international technical cooperation and research and development activities. This could impact technological progress and innovation in the semiconductor industry, affecting overall competitiveness.
4. Decreased market competitiveness: If semiconductor companies are unable to secure sufficient supplies of gallium and germanium, they may not be able to produce and sell at lower costs, potentially causing them to lose their advantage in international market competition.
5. In terms of global production, China has the highest proportion of gallium and germanium metal, accounting for 90% and 68%, respectively. Analysts have pointed out that the future global trade structure in the gallium and germanium market may change, and the export controls on gallium and germanium in China may lead to possible price increases for related products.

The implementation of export restrictions on gallium and germanium rare metals may have a significant impact on the semiconductor manufacturing industry. Semiconductor companies should be prepared to address potential impacts in terms of supply chain, production costs, technological research and development, and market competition.