AUS
NZ
UK
CA
USA
IND
Ongoing tensions between China and the US are raising concerns about the stability of the global semiconductor supply, particularly for components critical to artificial intelligence and military technology. Industry experts have warned that escalating sanctions between the two nations could disrupt the availability of essential materials like germanium and gallium.
In comments featured by the Financial Times, a major purchaser of these metals expressed concern that if China continues to limit gallium exports as it did earlier in the year, there could be significant shortages. Jan Giese, a manager at raw minerals broker Tradium, supported this view, noting that the company has secured only a fraction of the germanium and gallium it had previously sourced.
Germanium and gallium are crucial in the semiconductor manufacturing process, with China playing a dominant role in their production. According to the Critical Raw Materials Alliance, China accounts for approximately 60% of global germanium production and 80% of gallium production. This substantial control positions China as a key player in the global chip supply chain, potentially creating bottlenecks in the market.
China’s reduction in metal exports is likely a reaction to stringent technology sanctions imposed by the US since October 2022. These export controls prevent technology companies from supplying advanced microchips to the Chinese market, aiming to restrict China’s access to cutting-edge AI and military technologies. The US has expressed concerns that high-end semiconductor designs from companies like Nvidia Corp and others could pose national security risks.
In response to these restrictions, US Secretary of Commerce Gina Raimondo stated in October 2023 that updated rules would enhance the effectiveness of the controls and close potential loopholes. Raimondo emphasized that the focus remains on military applications and countering threats posed by China’s military-civil fusion strategy. She assured that while the restrictions aim to protect national security, efforts would be made to minimize unintended impacts on trade flows.
The evolving sanctions and export controls are thus likely to have significant implications for the global supply chain of critical semiconductor materials, impacting industries reliant on these essential components.
