Semicon Wars: China has shot itself in the foot by limiting chip-making metals, says US national security advisor

China has decided to limit some rare earth metals that are vital to the manufacturing of semiconductors like gallium and germanium. Although this was in retaliation to the ongoing US-China chip war, this move may backfire on China

White House National Security Adviser Jake Sullivan criticized China’s planned restrictions on the export of two metals used in various industries, including semiconductors, telecommunications, and electric vehicles.

Sullivan stated that these restrictions would ultimately harm China itself. He argued that such measures would only strengthen the resolve of other countries to reduce their reliance on China and enhance the resilience of their own supply chains.

“I think it’s a self-defeating move because I believe that will only reinforce the determination of many other countries in the world to de-risk,” Sullivan said.

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He added, “Those countries will be spurred “to find ways to reduce dependencies and increase the resilience of their own supply chains, including for the kinds of minerals that are at issue in this particular decision.”

Sullivan expressed concerns that this decision by China would lead to a further escalation of the ongoing trade war centred around technological dominance between China and the United States and Europe.

The US government, under President Joe Biden’s administration, has been engaging in diplomatic efforts to convey to China that while they do not seek complete disengagement from trade, they are committed to defending their national security interests.

In response to US-led restrictions on exporting advanced chip-making technology to China, China has announced export controls on gallium and germanium, which are crucial minerals for global production, as a means to protect its national security.

Controlling trade with China
The Biden administration is reportedly considering blocking the sale of certain chips used in artificial intelligence programs. However, Sullivan clarified that the US is not aiming to sever all trade with China but rather imposing targeted restrictions on technology with national security implications.

“We’re not looking to end all trade with China,” he said. “What we’re looking to do is have a small yard of restrictions on technology with national security implications and a high fence around that yard.”

“That’s what we’re going to continue to do and China of course will have to make its own decisions,” Sullivan said.

Sullivan emphasized that the US approach is not a sign of weakness, as some Republican lawmakers have suggested.

He reiterated the US’s intention to maintain a balanced stance, with restrictions in place to safeguard national security interests while allowing for continued trade with China within certain boundaries. Sullivan highlighted that China will have to make its own decisions in response to the US position.