Xi Pressures Takaichi by Throttling Key Mineral Exports to Japan

China is blocking shipments of tungsten powder to Japan, which seriously disrupts Japanese production of WF6 a gas used in semiconductor manufacturing. Tungsten exports to Japan have been virtually zero for the past few months.

This Bloomberg article doesn’t give enough detail on the severity of this disruption because as of right now a significant portion of Japanese WF6 production has been shut down. This represents around 25% of global supply. While I don’t think this will result in semiconductor shortages due to lack of inputs, it still represents greater upstream prices for semiconductors at a time of already high demand, which will push prices up even further.

It should be noted that these export controls have actually benefited China economically. Because of the disruptions to WF6 supply coming from Japan, more countries are now importing WF6 from China, thus creating a situation like Indonesia did with nickel, where restricting exports incentivized moving up the value chain in manufacturing.