The supply chain of semiconductor raw materials around the world is chaotic, and the ripple effect caused by China's restrictions on gallium and germanium exports is spreading throughout the semiconductor industry. The root cause of the crisis can be traced back to the Dutch government's announcement of new restrictions on some semiconductor equipment exports, followed by China's subsequent restrictions on gallium and germanium exports. The chain reaction of this series of events has had a profound impact on the global semiconductor industry.
At first, the Dutch government's export restrictions seemed like a partial policy adjustment, but it set off a series of chain reactions. The European Parliament quickly introduced a chip bill that calls for an increase in the EU's global share of chip production to 20% by 2030 to meet its own needs and that of the global market. This move shows the EU's ambition to establish its own supply chain of chip raw materials and achieve independent production and sales.
However, Europe faces a serious problem: it is almost impossible to expand the production capacity of semiconductor raw materials such as gallium and germanium in a short period of time. The Financial Times report sheds light on Europe's predicament, with the EU urgently contacting a group of aluminium and zinc refiners hoping to obtain gallium as a by-product of aluminium production. However, the reality is quite depressing. The refiners say that expanding capacity for gallium by-products requires a special process that no refinery in Europe seems to have.
The magnitude of the problem is gradually becoming apparent, especially after China restricted exports of gallium and germanium. China has more than 90% of global gallium production and more than 40% of germanium production, so China's export restrictions on these rare materials have led to a spike in global gallium and germanium prices, which in turn has pushed up the price of end-semiconductor products. The American press began to accuse the Netherlands, shifting the blame to the Netherlands itself. They claim that the Netherlands is behind the ban on Chinese lithography machines and has nothing to do with the United States.
At the heart of the matter, however, is that Europe finds itself mired in uncertainty between the two superpowers. The United States has taken unilateral actions to try to direct the industrial chain to North America, put pressure on Europe, and even shift the blame to the Netherlands. Europe had to find its own solution with the chip bill. Behind this bill is the EU's desire to respond to the crisis by promoting the development and utilization of local and overseas resources.
However, the problems facing the Netherlands are the most urgent. Due to China's export controls on gallium and germanium, intra-European companies cannot achieve self-sufficiency in raw materials in the short term. Therefore, European and American countries have to turn to other countries to buy these raw materials, although other countries have limited reserves and lack of processing industrial chains. China controls the industrial chain of gallium and germanium production and processing, which makes European and American countries have to accept high prices and face supply chain instability.
However, China is not the only country with these rare materials, and it is not the only one with processing and mining technology. European and American countries can try to import these rare materials from non-Chinese regions, but the actual situation is not so simple. This global semiconductor crisis has become a battle between great powers, and the small country of the Netherlands has become a victim of it. Although the Dutch semiconductor industry is developed, it is almost completely dependent on imports for small metals such as gallium and germanium, which makes the Netherlands' profits potentially suffer huge losses.
The problem in the Netherlands is that semiconductor profits may fall sharply after losing contact with the Chinese market, and the cost of obtaining mineral resources will also rise sharply, which will be a major blow to the profits of the semiconductor industry. This is followed by a decrease in R&D investment, which will affect the upgrading process of the chip and lithography machine industry, thereby weakening the competitiveness of Dutch products. This series of problems may also continue to affect the lithography machine industry in the Netherlands, making it more troubled.
In general, the chain reaction of the semiconductor industry is spreading to the entire global market, and the Netherlands, as a small country in Europe, faces serious challenges. This story reflects the complexity and fragility of global supply chains and suggests the need for countries to be more careful and holistic when formulating policies. Behind the big country wrestling, small countries may become
The most hurt side, and in this era of globalization, neutrality and balance may be the best option for small countries.
Of course, the Netherlands will not be helpless in the face of this crisis. Despite the loss of the Chinese market, the Netherlands still has some opportunities. After all, both middlemen and second-line dealers can always find some way to sell these mineral resources to the Netherlands. The problem, however, is that the Netherlands' costs for acquiring these resources will increase exponentially, which will have a significant impact on the product margins of its semiconductor industry.
In addition, the Netherlands faces product development challenges. In the highly competitive semiconductor market, R&D investment in products is critical. However, due to the impact of lower profits, the Netherlands may reduce investment in R&D, resulting in a decrease in the competitiveness of products. This will adversely affect the long-term development of lithography machines and semiconductor industry in the Netherlands.
Taken together, the problem with the Netherlands is that it has fallen victim to the game between the great powers. This global semiconductor crisis has not only had a serious impact on the Netherlands' own industry, but also revealed the fragility of global supply chains. In the future, countries will need to consider the security and sustainability of their supply chains more carefully in response to possible crises. For the Netherlands, finding new partners, reducing production costs and increasing investment in research and development will be important copies. In this volatile global economic environment, flexibility and innovation will be key for the Netherlands to emerge.