China produces nearly 80% of the world’s gallium and germanium products used to make chips critical to AI development.

The Xi Jinping-led government has once again urged the now at ease PRC to stand up against enemy artillery fire. In particular, the Chinese government has issued stern warnings against the export of gallium and germanium products, which are primarily used in the manufacture of semiconductor chips. On July 3, China’s Ministry of Commerce issued a joint statement with the General Administration of Customs, calling for government approval for all gallium and germanium metal exports.

The Chinese government, citing national security interests, I got it The government reportedly took punitive action against those caught violating the issued orders.

Metal products highlighted by recent export restrictions include gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, and gallium indium arsenide.

Other germanium products include germanium dioxide, germanium epitaxial growth substrates, germanium ingots, germanium metal, germanium tetrachloride, and zinc germanium phosphide.

China Checkmates U.S. Sanctions on AI Chips

Undoubtedly, the Chinese government has outmaneuvered the U.S. government and taken control of future technologies by restricting the export of key materials. Moreover, a 2023 report from the European Commission and the European Critical Materials Alliance (CRMA) indicates that the Republic of China accounts for more than 80% of the world’s gallium supply. Chinese tech experts are now working to scale up production of the latest semiconductor chips to remain a major global hub for tech companies in the future.

Chinese tech companies, in particular, have struggled with supply shortages of emerging U.S. technologies since the Trump administration began imposing sanctions. The situation has worsened over the years as the Biden administration launched similar sanctions and pressured allies, including Japan, to cut off semiconductor supplies to China.

Since the artificial intelligence (AI) boom, related stocks and products have surged amid intense speculation. Nvidia (NASDAQ:NVDA), for example, saw its market cap rise toward his $1 trillion earlier this year after a supply-demand turmoil. NVDA shares were up about 19% year-to-date on Tuesday, trading at about $424, according to the latest stock market data. Interestingly, about 50 Wall Street analysts expect the NVDA stock market to rise further, with an average rating of ‘Buy’.

The White House’s reaction to the matter is expected to either escalate or de-escalate the situation, after Chinese officials earlier called on countries to cooperate in developing technologies for the future of mankind. Nevertheless, the ongoing war between Russia and Ukraine has complicated relations between the West and China.

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