What Display Daily Thinks: Whether it is higher prices for materials leading to higher panel prices or uncertainty around imports and exports of equipment and products, it is likely that China and US tensions around high technology will continue well into the US elections next year, possibly creating more problems than we are seeing today.
Buckle up because the ride is going to be bumpy.
US and China Tit-For-Tat Restrictions on Technology
Beijing is imposing export controls on crucial raw materials used in the production of semiconductors, communication equipment, and solar panels which may disrupt US-led attempts to shift critical supply chains away from China. These raw materials include gallium and germanium, among other industrial compounds and starting from August 1, their export from China will be subject to state approval.
The measures are reportedly in response to the US’s ban, in October 2022, on the export of some cutting-edge semiconductor technology to China. Experts suggest that while many countries will likely be impacted, the main target of these measures is the US.
China is the world’s largest producer of gallium and germanium, accounting for more than 95% of global gallium output and 67% of germanium production. A recent report from the US Geological Survey and Department of the Interior indicated that between 2018 and 2021, 53% of US gallium imports and 54% of germanium imports came from China.
The Wall Street Journal (WSJ) is reporting a potential new rule proposed by the Biden administration. If adopted, the rule would require U.S. cloud-service providers like Amazon and Microsoft to obtain permission from the U.S. government before offering cloud-computing services to Chinese customers that use advanced artificial intelligence (AI) chips. The purpose of this rule is to address concerns over national security and the ongoing technology competition between the United States and China.
The U.S. government has been implementing various measures in its efforts to protect its technological advancements and maintain control over critical supply chains. In response, Beijing has also taken actions to safeguard its own interests and limit reliance on foreign technology. This move is seen as an attempt to close a loophole where Chinese AI companies might have been using cloud services to access powerful computing capabilities without having to directly purchase restricted equipment, such as advanced chips like Nvidia’s A100 chips.
