How does the China-US chip war affect India?
In an escalating trade war with the West, particularly the U.S., China brought in export curbs on two metals used in the manufacture of semiconductors and solar panels – germanium, gallium.
Buyers will have to apply for export permits for these two metals. It is not a ban but will likely lead to lower exports by China. The country is responding to export curbs by the US and Netherlands on equipment to make semiconductors.
It’s interesting that media reports have referred to the two metals in the same breath as rare earth elements. Germanium and Gallium are not part of the set of 17 rare earth elements.
The reason why they are all tagged together is that this is not the first time China has used trade as a weapon. In 2010, China imposed similar curbs on exports to Japan with which it was engaged in a territorial dispute. Japan scrambled to explore other supply chains for its semiconductor interests.
China’s one-upmanship with the US is raising global anxiety. What will happen to supply chains that took decades to perfect? Will costs rise? Will availability of critical materials itself become a challenge?
China’s recent export curbs on its germanium and gallium output raises temperatures only further.
If China acts funny, what can India do to protects rare earth supplies?
Let’s look at the why and what of it.
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