China to impose stricter regulations on the export of AI chip-making materials

The Chinese government has unveiled its plans to enforce tighter regulations on the export of certain metals used in the production of semiconductors, specifically those utilized in artificial intelligence (AI) systems.

In a joint statement released on July 3 by the Chinese Ministry of Commerce and the General Administration of Customs, the government expressed its intention to safeguard national security interests by imposing export controls. Under the new regulations, a government-issued license will be required to export specific gallium and germanium products.

These export controls will take effect on August 1 and cover eight gallium-related products, including gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, and indium gallium arsenide. Additionally, six germanium products will be subject to the controls, such as germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride, and zinc germanium phosphide.

Gallium is a metal commonly used in the electronics industry, particularly in semiconductors, transistors, lasers, and LED manufacturing. Germanium also finds application in semiconductor production, solid-state electronics, and fiber optic systems.

According to a 2023 report by the European Commission and the European Association of Critical Raw Materials Alliance (CRMA), China remains highly concentrated in the global supply of germanium. The CRMA further states that China accounts for over 80% of the world’s gallium production.

Any individual or entity found exporting these restricted products without proper authorization or exceeding the permitted limits will face penalties, as stated in the joint statement.

In October 2022, the United States imposed sanctions that restricted Chinese developers’ access to the most advanced semiconductors available, including Nvidia’s A100 and H100 chips. While Nvidia’s A800 and H800 chips are still accessible in the Chinese market, their technological limitations restrict their use to small-scale AI models. Chinese companies have been exploring alternative solutions to compensate for the lack of access.

In the United States, officials are currently considering the possibility of imposing additional restrictions on their existing limitations regarding the export of high-level AI chips required for the development of powerful systems.

Nvidia, a major developer of sought-after semiconductors, has experienced a surge in chip value since the rise of AI.

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