Companies affected by China’s recent decision to limit exports of two metals commonly used in semiconductors and electric vehicles were scrambling to secure alternative supplies. Industry suppliers expressed concerns that restrictions on rare earth exports could also be implemented, further disrupting global supply chains.
The announcement of export controls, set to take effect from August 1, regarding specific gallium and germanium products, has escalated the trade war between China and the United States. Analysts viewed this move, cited by the Chinese commerce ministry as a measure to safeguard national security, as a response to Washington’s increasing efforts to hinder China’s technological advancements. Significantly, the decision was made just before US Secretary of Treasury Janet Yellen visited Beijing, coinciding with US Independence Day.
In response, a US semiconductor wafer manufacturer intended to apply for export permits, while a Chinese germanium producer reported a surge in buyer inquiries as prices rose. The gallium and germanium products affected by the restrictions are also utilized in other high-tech industries.
Members of the metals industry feared that China might impose additional limitations on rare earth exports, reminiscent of the restrictions imposed 12 years ago during a dispute with Japan. China is the largest global producer of rare earths, a group of metals crucial to electric vehicles and military equipment.
Exploring Production Outside China
“Gallium and germanium are just a couple of the minor metals that are so important for the range of tech products, and China is the dominant producer of most of these metals,” stated Arkell, adding, “It is a fantasy to suggest that another country can replace China in the short or even medium term.” China currently produces the majority of the world’s gallium and germanium.
According to sources familiar with the matter, the Chinese commerce ministry has scheduled a meeting on Thursday with major metal producers to discuss the export restrictions.
Nyrstar, highlighting the potential for production outside China, stated its intention to explore germanium and gallium projects in Australia, Europe, and the United States.
US semiconductor wafer manufacturer AXT Inc announced that its Chinese manufacturing arm, Tongmei, would seek permits to export gallium and germanium substrate products.
Intel and Infineon responded to the situation by evaluating the ministry’s statement. Intel emphasized maintaining a diverse, global supply chain to mitigate risks from local changes and interruptions. Infineon stated that most of its supplies are sourced from outside China, with gallium nitride semiconductors being produced in Austria and soon in Malaysia.
