China imposed restrictions on exporting two metals that are crucial to parts of the semiconductor, telecommunications and electric-vehicle industries in an escalation of the country’s tit-for-tat trade war on technology with the U.S. and Europe.
Gallium and germanium, along with their chemical compounds, will be subject to export controls meant to protect Chinese national security starting Aug. 1, China’s Ministry of Commerce said in a statement last week. Exporters for the two metals will need to apply for licenses from the commerce ministry if they want to start or continue to ship them out of the country, and will be required to report details of the overseas buyers and their applications, it said.
China is battling for technological dominance in everything from quantum computing to artificial intelligence and chip manufacturing. The U.S. has taken increasingly aggressive measures to keep China from gaining the upper hand and has called upon allies in Europe and Asia to do the same, with some success. The export limits are also coming at a time when nations around the world are working to rid their supply chains of dependencies on overseas equipment.
Impact on the tech industry “depends on the stockpile of equipment on hand,” said Roger Entner, an analyst with Recon Analytics. “It’s more of a muscle flexing for the next year or so. If it drags on, prices will go up.”
China is the dominant global producer of both metals that have applications for EV makers, the defense industry and displays. Gallium and germanium play a role in producing a number of compound semiconductors, which combine multiple elements to improve transmission speed and efficiency. China accounts for about 94% of the world’s gallium production, according to the UK Critical Minerals Intelligence Centre.
Still, the metals aren’t particularly rare or difficult to find, though China’s kept them cheap and they can be relatively high-cost to extract. Both metals are byproducts from processing other commodities such as coal and bauxite, the base for aluminum production. With restricted supply, higher prices could draw out production from elsewhere.
“When they stop suppressing the price, it suddenly becomes more viable to extract these metals in the West, then China again has an own-goal,” said Christopher Ecclestone, principal at Hallgarten & Co. “For a short while they get a higher price, but then China’s market dominance gets lost — the same thing has happened before in other things like antimony, tungsten and rare earths.”
Other countries that produce gallium include Japan, South Korea, Russia and Ukraine, according to the CRU Group, a metals industry intelligence provider. Germanium is also produced in Canada, Belgium, the U.S. and Russia.
