Graphite Export Controls: How long can China still turn off the tap?
Tit for tat: Last Friday, China announced further export controls. This time, the measure affects graphite—a specific form of carbon commonly known for its use in pencil leads, but which is also essential for batteries and computer chips. Is this a retaliation for the recent expansion of the American export ban on high-performance AI chips from NVIDIA?
US fears China's dominance in artificial intelligence
Last year, the US had already prohibited graphics card developer NVIDIA from supplying high-performance chips to China to prevent the development of supercomputers. With this expansion, the US also aims to prevent China from gaining the upper hand in artificial intelligence development. This is because NVIDIA is one of the leading providers of the computer chips required for developing AI programs like ChatGPT and Bard.
NVIDIA Stock Drops 8.2%
NVIDIA incurred significant losses due to the shock triggered by the announcement. The stock has lost 8.2 percent in the past 5 days. After the company’s profit increased by 5.7 billion dollars in the previous quarter, this new development represents a severe setback.
Export Controls Now for 3 Semiconductor Raw Materials
Why graphite? The so-called “black carbon,” just like lithium, is an important battery raw material. And like germanium and gallium, two critical metals for which China also imposed export controls on August 8, graphene, derived from graphite, is used in high-performance semiconductors. Semiconductor chips, in turn, are the core of modern technology – whether in communication or military applications like guided missile systems. It is therefore no wonder that these tiny building blocks of digitalization form the center of the conflict between the two major powers.
Gallium Prices Continue to Rise
Export controls are China’s weapon of choice in the trade conflict with the US. Particularly with gallium, it is evident that China is still capable of using scarcity as a means of power in this way. Nevertheless, China will not be able to continue this strategy indefinitely. The “West” is already reacting and expanding its supply chains. In the long run, China’s power in the raw materials sector will certainly be broken – albeit at significantly higher prices!