Information sources:
Enterprise check
Preface
Since the United States issued a chip ban on China, China has not fought back, and Huawei's move has directly given the United States a "slap in the face".
Huawei's stake in the world's largest "germanium element" production company has directly caused heavy losses to the semiconductor industry chain in the United States and Europe, which can be regarded as a "reversal of the game".
So, what exactly is this "germanium"? And how heavy are the losses of the United States and Europe?
Huawei takes a stake in global king "germanium"
On July 7, 2023, Yunnan Germanium announced online that Hubble Technology Venture Capital Co., Ltd., a wholly-owned subsidiary of Huawei, holds a 23.91% stake in its holding subsidiary, Yunnan Xinyao Semiconductor Materials Co., Ltd.
This Hubble Technology Venture Capital Co., Ltd. is a subsidiary of Huawei, and his investment in Yunnan Xinyao is the meaning of Huawei.
In other words, Huawei is now the second largest shareholder of Yunnan Xinyao Semiconductor Materials Co., Ltd., and in addition to Yunnan Xinyao himself, Huawei is his second boss.
This incident has aroused strong attention from many netizens.
You must know that Ren Zhengfei has always refused to list Huawei, and insisted on using the employee stock ownership system as the company's shareholding structure.
In addition, not entering the capital market is also Ren Zhengfei's bottom line, so Huawei rarely invests in listed companies, and this rule has become Huawei's bottom line for development.
However, Yunnan Xinyao Company is a listed company and the largest shareholder of Yunnan Lincang Xinyuan Germanium Industry Co., Ltd.
The company's main business is engaged in the research and development of semiconductor optoelectronic products, and it is also a key research and development company of "germanium" metal.
The amount of "germanium" it produces accounts for about 70% of the global market share, and it can be said to be the well-deserved king of "germanium" in the world.
The purpose of Huawei's stake in Yunnan Xinyao Company is self-evident.
Huawei's stake in Yunnan Xinyao is equivalent to taking "germanium" into its own pocket, which is tantamount to the most powerful counterattack against the United States.
Since the United States launched a series of "chip sanctions" against Huawei, Huawei has resisted on its own, and now it has germanium in its hands, which is equivalent to holding the "lifeblood" of chips in the United States and Europe.
As a result, Huawei has formed a "two-level reversal" in the status of chip development, and they have changed from the original passive position to the dominant position today.
Although this may seem like an exaggeration, if you understand the importance of "germanium", it can actually prove that Huawei has made a very wise choice.
So, what exactly is this "germanium"?
Information sources:
Ministry of Commerce of the People's Republic of China: Announcement No. 23 of 2023 of the Ministry of Commerce and the General Administration of Customs on the implementation of export controls on gallium and germanium-related items
King "Germanium"
Since August 1 last year, China has imposed export controls on germanium and gallium.
To be clear, China has only imposed export controls on these two metals, not banned them, and as long as they meet the relevant requirements, they can still be bought from China.
However, this price and quantity have changed.
First, let's talk about the importance of germanium.
In the research and development of semiconductors, the existence of germanium is irreplaceable, especially in chip production, germanium can be said to play a very key role.
Germanium is a metallic element, and although it is not unique to China, it is not produced in large quantities by other countries.
Germanium is one of the most dispersed elements in the earth's crust, so there are not many germanium-containing elements that can be mined in the world, and it is another "rare earth".
In addition to being used in chips to produce key equipment such as transistors and optoelectronic devices, germanium can also be used to convert optical signals into electrical signals.
For example, we usually use germanium in mobile phone cameras, because it has a high photosensitive capture cross-sectional area and a fast response speed.
It can be seen that germanium is really equivalent to the "king" status in the research and development of semiconductors, so germanium has an image term in the semiconductor industry, that is, "new food in the semiconductor industry".
Judging from the import trade data in recent years, China is one of the important exporters of germanium oxide and germanium dioxide in the world.
The United States, Japan, France, Germany, South Korea and other countries are our "common customers" for exports, so to a certain extent, we also monopolize the global market for germanium metal.
In 2021, the global production of germanium metal is about 178 tons, and China's supply accounts for 70.2%, which translates to 125 tons of 178 tons.
Yunnan Xinyao's holding company, Yunnan Germanium, is the world's largest supplier of germanium.
In 2021, Yunnan Germanium Industry will have a production capacity of 47.60 tons/year of molten germanium ingots, 35,500 sets of infrared optical germanium lenses, and 60 tons/year of germanium tetrachloride for optical fibers.
Now, Huawei's stake in Yunnan Xinyao is in disguise, and it has seized the initiative of this "grain" into its own hands.
So, how heavy did China's control of germanium cost the United States?
Information sources:
Global Network: How big is the impact of China's gallium and germanium export controls?
Stealing chickens is not a recipe for rice
Since the United States launched the first shot of the "chip war", Japan, as the younger brother of the United States, first stood up and announced export restrictions on 23 kinds of semiconductor equipment and materials.
The Netherlands, as the world's largest producer of lithography machines, also actively "responded" to the U.S. policy and began to restrict the export of lithography machines to China, while South Korea directly cut off the supply of chips to China.
I have to say that the United States' lock-up of a series of semiconductor industry chains is intended to force China's chips to a dead end.
But there is an old Chinese saying called "the road of heaven and man", if you force each other desperately, then we will break out of a desperate situation.
First of all, China took the lead in carrying out export controls on germanium.
Although some netizens are puzzled, why China does not directly ban exports, but this will cause product squeeze for our enterprises, and ultimately cause great pressure on enterprises, while export controls can raise prices, which is more beneficial to us.
Our decision to implement export controls is the first step in reciprocal countermeasures.
China's countermeasures are also a last resort, and the long-term suppression of the United States has made it difficult for China's semiconductor development.
For a long time, China has a huge demand for semiconductor silicon wafers, which are the core materials for the research and development of semiconductors, but the United States has monopolized us for a long time and exported to China at a higher price than the market price.
For example, we need to develop integrated circuits, diodes, power devices and other professional technical equipment, all of which require a large number of silicon wafers.
In 2020, the total global wafer fabrication materials market reached US$34.9 billion, and the sales of silicon wafers and silicon-based materials accounted for 36.64%, with a total value of about US$12.8 billion.
Breaking through the technical barriers of silicon wafers has always been the goal of China's development.
It is only in the last few years that we have made a technological breakthrough in silicon wafer machines, thus breaking the long-standing monopoly of foreign countries.
Therefore, some technical barriers are difficult to break through, such as our "germanium metal", not to mention technology research and development, how to obtain this metal alone is enough for the United States and European countries to be anxious for a long time.
Because germanium metal not only plays an important role in the research and development of semiconductors, it is also one of the most critical metals in national defense reserve resources.
In 1984, the United States included germanium metal in the list of defense reserve resources.
Although the United States is the world's largest reserve of germanium metal resources, it is not the largest producer, so it needs to rely on China for large imports.
Therefore, China has fought very beautifully in this counterwar.
Information sources:
Observer.com: China's ambassador to the Netherlands responded to the export control of lithography machines: countermeasures are not expected, but China will not swallow its anger
China's trade strikes back
As I mentioned earlier, while China is controlling the export of germanium, it is also controlling another metal, gallium, which is also a very scarce strategic resource.
In addition to research and development in the field of semiconductors, these two metals are used in various scientific and technological fields such as satellite communications, solar cells, and artificial intelligence, and they are indispensable and important metal materials.
Gallium and germanium have equally important advantages, germanium is the "new food of the semiconductor industry", and gallium is the "backbone of industrial electronics".
Gallium is a metal with a low melting point and a high boiling point, which is also widely distributed and has very limited resources that can be mined.
However, the United States has not tried to find some other metal materials to replace them, but it has not succeeded in trying many methods.
According to the Wall Street Journal, last year, the United States did not find a metal capable of replacing gallium in the field of chips and in the military industry.
Therefore, our export controls can still effectively make a strong response to the United States from the front.
In 2023, global sales of GaN-using chips will be $2.47 billion, and this amount is expected to reach $19.3 billion by 2023.
Therefore, when China implemented export controls on germanium and gallium, the United States was the first to jump out to "protest".
However, not to mention the controls and sanctions you have imposed on China, we will naturally use such scarce metal elements as gallium and germanium.
There's no reason to say that we leave our R&D projects alone, and sell them to you for use, and in turn have to bite us.
This kind of farmer and snake behavior has not happened in China's history, so it is only reasonable for China to carry out export controls.
In addition to our research and development in the field of semiconductors, such as our aerospace industry and military production, we also need to use a large amount of germanium and gallium.
At present, the United States, together with Japan, is looking for other sources of germanium and gallium resources around the world, with the intention of "breaking" our monopoly.
In any case, we are not completely sure that the United States really cannot find a "treasure of resources", but this scarce metal, which is the most widely dispersed metal element, is not something that can be found by looking for it.
"Interlaced like a mountain, I wish him success."
Information sources:
Hunan Daily: It's about "chip grain"! Two departments have taken action: How big is the impact on the export control of the two major rare metals? The interpretation is →
epilogue
China has gradually moved away from dependence on foreign technology in various fields, and as for some special materials, we are also trying to find ways to ensure stable channels.
China's export control of germanium and gallium will not only affect the United States, but will have a relatively large impact on the world.
Huawei's choice to invest in Yunnan Xinyao Company this time is definitely a "win-win" decision, and it is also a win-win situation, and we look forward to Huawei playing a greater role in the semiconductor field!