The U.S. and China battle for global dominance over technology, including critical raw materials used in semiconductors. And chipmakers are already grappling with the fallout.
Volkswagen said it monitored the situation in metals markets after China imposed export restrictions on two minor metals used in semiconductors and electric vehicles, adding that it was “ready to take measures together with partners if necessary.” The company told Reuters that Volkswagen relies heavily on gallium and germanium for its cars, which play a role in future autonomous driving functions.
Other major chipmakers on Thursday played down the potential damage to supplies. But fears are growing that Beijing may step up curbs on strategic exports, including rare earths, seen as essential to high-tech industries. The limits on gallium and germanium, effective Aug. 1, will require companies to apply for a permit to export some products and specify how they will be used, according to the country’s Commerce Ministry.
Fears of further export controls are roiling the market for rare earth minerals, which are critical to producing high-tech devices such as smartphones and electric cars. The Trump administration seeks to curb China’s dominance of those markets, as it sees a threat to U.S. economic competitiveness and national security.
Meanwhile, the Russia-Ukraine conflict threatens to disrupt some supplies of the key material used in chipmaking. Ukraine produces more than 90% of the world’s high-grade neon needed for gas-phase lasers that are crucial to the manufacturing process, according to research firm Techcet. That explains why neon prices have soared during the conflict.
The conflict also stokes concerns that it could lead to broader retaliation by Beijing for the tariffs the United States has levied against Chinese goods. That could hit companies that rely on high-end computing like Apple, Amazon, and Nvidia. On Wednesday, the biggest maker of chipmaking tools, Applied Materials, said it expects sales next year to fall by $600 million to $900 million because of the new U.S. regulations on China-based customers, mainly semiconductor manufacturers.
Activists shouted outside Volkswagen’s shareholder meeting in Germany on Thursday to demand that the carmaker withdraws from Xinjiang, where it has a plant accused of using forced laborers from the Muslim minority. They held signs urging the company to stop supporting China’s alleged campaign of “ethnic cleansing.” A top V.W. executive said he would not discuss the matter but acknowledged that some shareholders had questions. He told the group he would respond to their concerns in a letter, the German news agency DPA reported. Activists also threw cake at the meeting. Several were wearing masks of Xi and Volkswagen CEO Oliver Blume. The activists also threw placards saying, “Uyghur Forced Labor Camps Must Go,” and, “W.V. Shareholders must speak up for Human Rights!” Xi has denied the camps exist. The demonstrators were members of the World Uyghur Congress, a rights group that says he leads an oppressed people in modern-day East Turkestan, or Xinjiang.
