In a move that could have significant implications for the global semiconductor industry, the Chinese government has announced new regulations requiring special licenses for the export of two crucial materials: gallium and germanium. As the world's largest producer of these metals, China's decision comes amidst heightened tensions with the United States, which has been actively seeking to limit Chinese access to advanced microprocessors.

The timing of this announcement is particularly noteworthy, as it precedes US Treasury Secretary Janet Yellen's upcoming visit to Beijing. With the objective of safeguarding national security and interests, China's Ministry of Commerce has justified these restrictions. Gallium and germanium are not only essential components in the production of semiconductors but also find applications in communication systems, military equipment, and even solar panels.

The dispute over semiconductors lies at the heart of the escalating conflict between the world's two largest economies. Fearful of potential military applications, the US has taken measures to restrict China's access to certain technologies, including chips used for supercomputing and artificial intelligence. In a significant move last October, Washington announced that licenses would be required for companies exporting chips to China, regardless of where they were manufactured.

The Netherlands and Japan have also joined the efforts to curb certain exports related to semiconductor manufacturing. Following the Netherlands' earlier announcement restricting the export of its most advanced microchip technology, the country has now tightened controls on semiconductor manufacturing equipment. This measure is expected to impact Dutch chip equipment maker ASML, a key player in the global microchip supply chain. Likewise, Japan revealed its plans to restrict exports of 23 types of semiconductor manufacturing equipment in March.

China has consistently criticized the US for its export controls, labeling it a "tech hegemony." In response, Beijing has imposed restrictions on US companies associated with the American military, including aerospace giant Lockheed Martin. However, US Treasury Secretary Janet Yellen, who is set to embark on a four-day visit to China this week, has emphasized the importance of maintaining economic ties between the two nations. She believes that open trade and investment are advantageous for both countries and warns against attempts to decouple from China.

Yellen's visit follows US Secretary of State Antony Blinken's high-level talks with China's President Xi Jinping in June, marking a renewed effort to engage in meaningful dialogue between the rival superpowers.

As the global semiconductor landscape continues to evolve, the latest regulations on gallium and germanium exports demonstrate China's determination to assert control over crucial materials. The implications of these restrictions will undoubtedly shape the future of the semiconductor industry and the ongoing economic relationship between China and the United States.