China limits the exports of gallium and germanium

By Alexander Miller, consultant in emerging markets. Eurasia Business News – July 5, 2023

Restrictions have been imposed by China on its export of gallium and germanium from August 1 – materials that are used in the production of semiconductors and other high-tech products, announced the Chinese Ministry of Trade.

A license from the Chinese ministry of trade will be required for export of gallium and germanium, starting on August 1. The Chinese seller will have to explain for what purposes the use of materials is planned.

The restrictions will also affect the export of various compounds with these materials. These two metals are key to the manufacturing of semiconductors, and China is the world’s largest source of both metals

China announced on July 3 this restrictive measure on the eve of a visit to Beijing by US Treasury Secretary Janet Yellen.

The list includes gallium metal, gallium arsenide (GaAs), gallium oxide (Ga2O3) and five other compounds with this element, as well as metallic germanium and five compounds with it.

Beijing decided to respond to the restrictions imposed by the United States on the import of various modern technologies into the country. According to the British research center Critical Minerals Intelligence Centre, China accounts for 94% of the world’s gallium production.

It is noted that gallium and germanium themselves cannot be called rare earths materials – it is a by-product of the processing of other types of raw materials, for example, coal and bauxite. However, supplies from China make it possible to keep prices for gallium and germanium quite low. With these restrictions on Chinese exports, price of gallium and germanium are expected to raise.

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It is important to note that gallium and germanium are not found naturally and are instead formed as by-products of the refineries of other metals. While China produces 60% of the world’s germanium and 80% of gallium, there are other sources of the metals and substitute materials can be used.

In May, China responded to the U.S. by restricting access to key Western technologies. Beijing has banned the purchase of chips from the American company Micron. Micron is the largest manufacturer of memory chips in the United States, with a quarter of its revenue for 2022 coming from China and Hong Kong, writes the Financial Times.

Industry executives see the export ban on gallium and germanium as retaliation over chip curbs by the U.S. and others. However, analysts said the impact of the restrictions will be limited, as there are other sources of the metals and substitute materials can be used.

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