Germany Mulls Chip Chemical Export Controls To China As Tech War Heats Up

Whether the conversations have been about Chinese spy balloons or AI breakthroughs, Western nations and China are increasingly ramping up a “tech war.” The latest development emerges from Germany, as Berlin contemplates restricting exports of chemicals to Chinese firms, which are essential for producing advanced semiconductors. 

Bloomberg reports that Chancellor Olaf Scholz’s government is considering new measures that would restrict German companies like Merck KGaA and BASF SE from exporting some of their chemicals to China for advanced semiconductor production. 

Scholz and Economy Minister Robert Habeck are falling in line with other European countries, such as the Netherlands, to ensure Beijing’s development of advanced chip technology is halted. 

In March, the Netherlands became embroiled in political tensions between the US and China by announcing plans to move ahead with export controls on “advanced” semiconductor manufacturing equipment. The tiny European nation is home to ASML, one of the world’s top manufacturers of semiconductors machines.

Bloomberg said talks concerning German export controls are still in the early stages, and lawmakers understand any final decision could severely damage relations with Beijing. 

“Habeck, who is also the vice-chancellor, has advised officials in his department to work on a toolbox of measures to strengthen Germany’s economic resilience in certain areas and reduce one-sided dependencies on China. The idea of imposing export controls on chip chemicals is part of these deliberations,” sources said. 

“The quickest and most practical way to implement such export controls would be to put the respective goods and services on Germany’s national dual-use list,” the sources continued, adding that other approaches via international lists and treaties would probably take too long.

Export restrictions could be imposed on goods that have the potential to be used for both civilian and military purposes. The purpose of these dual-use lists is to prevent China from making advanced weaponry with Western materials or chip technology. 

Bloomberg pointed out that export controls on supplies from Merck and BASF could disrupt Chinese supply chains for developing advanced chip technologies. 

It appears now the Biden administration is pressing numerous European countries to help stop China from further developing its chip industry. In October, the US unveiled export curbs, blocking multiple chip technologies from being acquired by Chinese companies. 

Washington prohibited US companies Applied Materials Inc., Lam Research Corp., and KLA Corp from exporting some chips to China. Japan’s Tokyo Electron Ltd. and ASML would be critical in the West’s move to restrict chip products to China.

The technology war between the US and China is heating up as numerous European countries are aligning with Washington to ensure the West maintains its supremacy in global technological developments. 

And by the way, China is beginning to hit back.