China’s export controls on critical semiconductor materials, such as gallium and germanium, have significantly impacted global supply chains and intensified fears of shortages in Western production of advanced chips and military optical hardware. These restrictions, which China implemented as a response to U.S.-led controls on its access to advanced technologies, have nearly doubled the prices of these materials in Europe over the past year.
China controls 98% of the world’s gallium supply and 60% of germanium, essential components for producing advanced microprocessors, fiber-optic products, and night-vision equipment. The introduction of export restrictions has drastically affected availability, with overall exports of gallium reportedly halved since the controls began. This has led to heightened concerns about potential shortages.
The controls have introduced significant challenges for companies relying on these materials. Long-term supply contracts are increasingly unfeasible due to the unpredictability and lengthy approval process required for each shipment. Traders have reported that the new licensing requirements, which involve detailed applications specifying the buyer and intended use, are adding layers of complexity to already difficult markets.
In addition to gallium and germanium, China has recently imposed export restrictions on antimony and other critical minerals, further exacerbating the situation. The move is seen as a strategic response by Beijing to Western pressure on its technology sector. The export restrictions are partly aimed at signaling China’s ability to retaliate against international pressure and to secure its own supply of materials essential for clean energy technologies and industrial advancement.
The impact of these restrictions has been particularly severe on industries dependent on these minerals. For instance, prices for germanium have surged by 52% since early June, with traders struggling to secure adequate supplies. The difficulties in obtaining export licenses and the uncertainty surrounding future availability of these materials are placing additional stress on global supply chains.
China’s recent export controls on crucial semiconductor materials, including gallium and germanium, have had profound effects on global supply chains and have heightened concerns about shortages in Western production of advanced technologies. These controls, introduced last year, were Beijing’s response to Western restrictions targeting Chinese access to advanced chips and semiconductor equipment. The restrictions have led to nearly a twofold increase in the prices of these materials in Europe, reflecting the significant role China plays in the global supply of these resources.
China dominates the global market for gallium and germanium, producing 98% and 60% of the world’s supply, respectively. These materials are essential for the manufacture of advanced microprocessors, fiber-optic cables, and military technologies such as night-vision equipment and thermal imaging cameras. As a result, China’s decision to impose export controls has severely impacted global availability. Since the controls were implemented, overall exports of gallium have reportedly fallen by about half, raising fears of potential shortages if these trends continue.
The export controls have introduced several challenges for industries dependent on these materials. Each shipment now requires approval, which can take 30 to 80 days, making long-term supply contracts increasingly unviable due to the uncertainty and extended lead times. Traders and manufacturers are struggling with the additional complexity this creates in already difficult market conditions.
The controls have also affected other critical materials. For instance, China has recently extended its restrictions to include antimony, a mineral used in armor-piercing ammunition and precision optics. This follows previous controls on graphite and technologies related to rare earth extraction. Such measures are seen as part of China’s broader strategy to assert its control over vital resources and respond to international pressures on its technology sector.
The significant rise in germanium prices—up 52% since early June—illustrates the severe impact of these controls. Traders have reported difficulties in securing supplies, and there are concerns about running out of stock. The new export licensing requirements, which necessitate detailed information about buyers and intended uses, have added another layer of complexity to an already challenging market environment.
China’s motivations behind these export controls include a strategic push to secure its own supply of materials critical for clean energy technologies and industrial upgrading. By leveraging these controls, China aims to bolster its position in the global technology sector and potentially retaliate against Western restrictions on its technology companies.
The ongoing situation highlights the strategic importance of these semiconductor materials and the broader geopolitical and economic tensions surrounding their supply. As long as the U.S.-China relationship remains strained, it is likely that China will maintain or even expand its export controls, further complicating efforts to stabilize and secure the global supply chain for these essential resources.