Will US Export Curbs and China’s Retaliation Redefine Semiconductor Supply and Tech Markets?

Will US-China Chip Curbs Disrupt Global Semiconductor Supply?

The semiconductor sector faces a growing geopolitical rift as the U.S. and China impose fresh restrictions targeting critical technologies and materials. The U.S. recently expanded export controls on advanced chip technologies, while China retaliated with tightened export curbs on metals vital to semiconductor production, raising supply chain concerns.

How Will US Export Curbs Affect Semiconductor Supply Chains?

The U.S. Commerce Department’s expanded restrictions now include controls on 24 types of chip-making equipment and software tools critical to semiconductor development. The measures directly impact 140 companies, including key Chinese players like Piotech and SiCarrier, as well as regional suppliers in Japan, South Korea, and Singapore. The U.S. justifies these controls as a safeguard against the use of advanced chips in China’s AI development and military modernization.

This move builds on previous efforts to curb China’s access to cutting-edge technology, with potential implications for companies like Applied Materials (NASDAQ: AMAT), Lam Research (NASDAQ: LRCX), and KLA Corporation (NASDAQ: KLAC). These firms, major suppliers of chip-making tools, could facetsmin disruptions in their China-dependent revenue streams. Analysts expect ripple effects throughout the supply chain as companies grapple with reduced market access and escalating compliance requirements.

How Does China’s Retaliation Impact Global Semiconductor Production?

China’s countermeasures focus on curbing exports of gallium, germanium, and antimony—metals indispensable for high-speed chip manufacturing. Beijing’s dominance in these materials is staggering: it accounts for 90% of global gallium output and 60% of germanium production. Already, reports suggest Chinese suppliers are exporting only a fraction of previous volumes, leaving manufacturers scrambling for alternatives.

The semiconductor industry is feeling the pinch. Major firms like Intel (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Company (NYSE: TSM) have downplayed immediate risks due to their diversified supply chains, but smaller players may not be as insulated. Prices for gallium and germanium have nearly doubled since China’s export curbs began, threatening to squeeze margins and delay production schedules globally. The Pentagon’s lack of gallium stockpiles further complicates matters, raising concerns about long-term U.S. tech and defense capabilities.

Which Companies Are Most Exposed?

While some chipmakers have adapted by securing diversified supply chains, firms reliant on Chinese materials are facing significant uncertainty. The U.S. government’s push to establish alternative sources, such as reopening tungsten mines in South Korea and exploring domestic reserves, will take years to materialize. Until then, the price volatility of key materials will likely benefit mining firms like Almonty Industries (TSX: AII) and materials suppliers with non-China-based operations.

What’s the Outlook for Traders?

The semiconductor sector faces heightened volatility as the U.S.-China tech war escalates. In the short term, chip equipment makers with significant Chinese exposure are bearish prospects due to export restrictions. Simultaneously, miners and alternative material suppliers may see bullish momentum as they fill the void left by China’s curbs. Investors should monitor material price trends and government incentives closely, as these will shape market opportunities in the coming quarters.

More Information in our Economic Calendar.