TSMC’s production of Apple chips is not expected to be affected by China’s decision to restrict exports of two key materials, gallium and germanium. According to a recent Reuters article, the market is moving quickly to avoid problems once restrictions come into effect.
But there is a fear that the situation could change depending on how the relationship between China and the United States evolves, which in fact could deteriorate further. There is also a further concern, greater if you will, and concerns the possibility that China may decide to operate similar limitations with lithium and rare earth elements.
The United States and China have been at loggerheads for some time, and there have been diplomatic incidents and multiple events over the past few years. On the one hand there is the question of the Ukrainian War and the proximity to Russia of the Asian country, on the other the problems of alleged espionage that have been going on since time immemorial, but which have been exacerbated with events such as that of the alleged Chinese spy balloon, suspected of having flown at high altitude specifically over the USA.
China has always denied spying on the United States, saying it was a civilian weather balloon diverted from its path, however according to the United States, the recovery of the debris highlighted the presence of intelligence-gathering equipment that was not consistent with China’s claims.
There was then a further escalation of retaliation, with the latter responding by ordering state-affiliated companies to stop buying chips from the US company Micron. In turn, the Biden administration has banned sales of U.S. AI cloud services to China.
We have finally arrived at the export limits of the two key materials for chips, as reported at the beginning, but it should not be a sensitive problem right away. Taiwan’s TSMC, the world’s largest custom chip maker, said it did not expect any direct impact on its production from China’s decision to limit exports of two metals widely used in semiconductors and electric vehicles. However, analysts warn that if the two countries fail to resolve the dispute, the situation could get much worse. The biggest fear is that China could impose restrictions on exports of rare earth elements, including lithium, vital to the world’s battery production for almost all electronic devices. The restrictions announced this week are “just the beginning,” Wei Jianguo, a former vice trade minister, told the official China Daily on Wednesday, adding that China has other tools with which to counterattack. The issue is rather thorny and it should be remembered that China is responsible for about 60% of the world’s rare earth raw materials.