China’s restrictions on the export of germanium and gallium, crucial for semiconductor production, have raised concerns over supply chain disruptions. This move came in response to restrictions imposed by the United States, Europe, and Japan on sales of chips and chip making equipment to China, sparking a trade war over critical technology access.
China has a near-monopoly on the production of these elements, accounting for 98% of global gallium and 68% of refined germanium production. Alternatives do exist, but establishing an independent supply chain outside China could require a substantial investment of over $20 billion and several years of development. The processing of these elements is technically challenging, energy-intensive, and environmentally impactful.
China’s dominance is rooted in its low production costs and strategic policies to boost production. While there are alternative suppliers, such as Russia, Japan, Korea, Canada, the US, and Europe, transitioning to these sources would take time. Global mining companies have expressed interest in entering the market if China disrupts supply.
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Higher prices for germanium and gallium may encourage competition and reduce China’s dominance over time. Recycling is another option, with the US Defense Logistics Agency initiating a program to recycle optical-grade germanium. The situation is dynamic, with China’s export licenses fluctuating, and prices for these elements have been on the rise. The availability of substitutes like silicon, indium, and zinc selenide offers some flexibility.
In summary, China’s control of germanium and gallium production and its export restrictions have highlighted vulnerabilities in the global tech supply chain. Alternative supply sources and recycling initiatives are potential mitigations, but the transition will take time and substantial investments, impacting the tech industry’s access to critical materials.
source: cnn.com
