The gallium and germanium export ban could be the tech trade war game changer
China has announced new export controls on gallium and germanium, two important metals used in the production of everything from semiconductors to solar power and electric vehicles. The move is likely to be seen as a significant escalation in the ongoing technology trade war between China, the US, and Europe, with serious implications for global supply chains.
On June 20, the Chinese General Administration of Customs (GAC) announced new export control measures for gallium and germanium. They will take effect on August 1, 2023, and require Chinese companies to obtain an export license for gallium and germanium metals, as well as products containing them.
Gallium and germanium are both used in the production of compound semiconductors, which are used in everything from smartphones to supercomputers and increasingly being used in areas such as autonomous vehicles. China accounts for about 94% of the world’s gallium production and 82% of its germanium production, meaning that companies and countries dependent on these metals will be most affected.
“China is the world leader in gallium and germanium,” a GAC spokesperson tells Global Trade Review. “The aim of the new policy is to ensure the effective management of gallium and germanium resources and ensure a stable supply for economic and social development.”
However, any reduction in Chinese gallium and germanium exports is likely to have a knock-on effect for other countries that rely on them for their production processes, including the EU and US. The price fluctuations resulting from these restrictions could also create opportunities for other countries to enter the market and compete with China.
“I think that China has been keeping these prices low in order to support their industry,” London metals trader Lipmann Walton & Co director Anthony Lipmann says. “This may lead to other countries producing these metals, and it may lead to the loss of market dominance.”
China’s suppression of prices may ultimately lead to losing market dominance, as seen with other metals like antimony, tungsten, and rare earths, Christopher Ecclestone, a principle at Hallgarten & Co., adds. However, the Chinese government’s decision to restrict the export of these metals is also likely to come as a response to sanctions imposed by the US on China’s semiconductor and supercomputer sectors. The Dutch government’s plans to restrict sales of advanced chip-making tools to Chinese companies has also sparked opposition from China.
Stay on top of these and other developments to navigate the changing landscape effectively and be prepared for the potential impact on your global supply chain.
