Chips and Aerospace at Risk: China Imposes Export Ban on This 'Critical Material'

According to Nikkei Asia, China is restricting or delaying exports of critical aerospace and optical materials to Taiwan, disrupting supply chains for Taiwanese businesses.

Insiders told Nikkei Asia that since last year, Chinese customs inspections have taken longer, causing significant delays and obstacles for some optical technology manufacturers trying to obtain materials from Chinese suppliers.

A senior optical industry executive, who requested anonymity due to concerns about retaliation from Beijing, said: 'This is an industry-wide problem. Many of my peers are facing the same situation, which could significantly delay our delivery timelines.'

The executive noted that germanium-based and quartz-based materials are encountering difficulties when passing through Chinese customs.

Germanium is a crucial material for infrared lenses used in thermal imaging and defense and industrial applications, and is one of the key materials used in fiber optics and photonics. Quartz is an essential material for optical components, semiconductor manufacturing, and other technology applications.

China is the world's main supplier of these materials and has previously used its control over supply to pressure trade partners during geopolitical disputes.

Insiders said: 'We've been told that some Chinese suppliers have been summoned by authorities to answer questions about their customers and shipments. We've already lost some orders, and with delivery times for specific materials extended, we can't meet our clients' delivery schedules.'

A senior executive at a chip equipment manufacturer told Nikkei Asia that due to China's restrictions on quartz exports, overall production has been affected, and delivery times for the company's products have been extended by several months.

The executive said: 'The semiconductor industry has very strict requirements for the quality and precision of quartz. Currently, we have no alternative sources outside of China.'

Sources indicated that the aerospace industry is also facing similar challenges, with bottlenecks in the supply of permanent magnets from China.

In particular, neodymium permanent magnets are critical for manufacturing motors, including those used in advanced robots.

A senior executive at an aerospace supplier told Nikkei Asia: 'We've found that the supply of key permanent magnets needed to manufacture motors is being blocked by China's export controls. It's not easy to find cost-effective alternatives elsewhere.'

Beijing has previously used export controls on key materials and metals to pressure trade partners involved in disputes. This has prompted many countries, including Japan and the U.S., to seek ways to reduce their reliance on Chinese supplies.

In December 2024, China updated its list of dual-use items under strict export controls, adding quartz-based materials because they can be used for both defense and civilian purposes.

Beijing has also temporarily suspended exports of germanium and gallium to the U.S. in retaliation for the Biden administration's export control measures targeting China's semiconductor industry.