After the recent wave of chip sanctions against the Chinese Communist Party (CCP) in the United States, on Tuesday (December 3), the CCP announced a ban on exporting key minerals indium, germanium, and antimony with broad military applications to the United States, intensifying trade tensions between the US and China. The White House responded to the CCP’s mineral ban.
The CCP’s ban on Tuesday further strengthens the enforcement of export restrictions on key minerals that it began implementing last year, but it only applies to the US market. The Chinese Ministry of Commerce stated on Tuesday that, in principle, it does not allow the export of indium, germanium, antimony, and superhard materials to the US, and also requires stricter scrutiny of the final use of graphite products shipped to the US.
The banned minerals and metals are used in the production of semiconductors, batteries, communication equipment components, and military hardware such as armor-piercing ammunition.
The National Security Council of the White House stated that they are still “evaluating” these control measures, will take steps to mitigate their impact, and prevent Beijing from taking “coercive action,” but did not disclose specifics.
A spokesperson for the National Security Council further stated, “These new control measures only emphasize the need to enhance cooperation with other countries to reduce risks and to keep critical supply chains away from the People’s Republic of China.”
According to Chinese customs data, as of October this year, the US has not received any exported processed or unprocessed germanium or indium; a year ago, China was respectively the fourth and fifth largest market for these minerals.
Similarly, after the measures restricting exports enacted by Beijing last year took effect, overall shipments of antimony products in October from China plummeted by 97% compared to September.
Wendy Cutler, a trade expert at the Asia Society Policy Institute, told the Financial Times that the direct impact of these measures is not yet clear, given the United States’ ongoing efforts to diversify its supply chain.
According to the US Geological Survey, China produces 98% of the world’s indium and 60% of its germanium.
Perpetua Resources, with US government financial support, is developing an antimony mine in Idaho, with the company stating that the CCP is “weaponizing” access to crucial minerals essential for the US military and tech companies.
Jon Cherry, CEO of Perpetua, stated, “We must take seriously US mineral resources. It is time to end reliance on China and ensure our future.”
US Antimony, which refines antimony in Montana, believes that the CCP’s actions will raise metal prices, thereby increasing supply for its smelter, but acknowledges that developing mines takes time.
Before the CCP announced the mineral export ban, on Monday, the US imposed sanctions on the CCP’s semiconductor industry for the third time in three years, restricting exports to 140 companies, including major suppliers to Apple and Samsung, like Wingtech Technology. Wingtech has been actively seeking to acquire foreign semiconductor technology.
Since 2018, Wingtech has spent over $4 billion acquiring Dutch semiconductor group Nexperia and attempted to acquire the UK’s largest chip manufacturer, Newport Wafer Fab, only to be blocked by the UK government.
Wingtech’s blacklisting in the US led to a more than 10% drop in its shares listed in Shenzhen within two days, highlighting the dilemma facing Chinese companies between expanding international business and supporting Beijing’s domestic policy priorities.
Previously, Wingtech had acquired Apple-related camera module business from another Chinese group and was sanctioned in 2020.
“A western company is no longer buying products from us,” a manager of a blacklisted Chinese company told the Financial Times, “For the past two years, we have basically ceased growth because we have replaced foreign components.”
Charlie Chai from 86Research told the Financial Times that, if necessary, Wingtech may be split up to retain its overseas business. He pointed out that the latest US control measures plug loopholes, making it more difficult for Chinese chip companies to purchase foreign equipment.
“This has turned into a classic cat-and-mouse game, but the room for maneuvering for Chinese companies is rapidly shrinking,” he said.
(This article references reports from Reuters and the Financial Times)