Taiwan-based chipmakers confident in face of export restrictions
Taiwan-based chipmakers are taking a 'wait and see' approach to the Chinese gallium and germanium export restrictions, as they believe the impact on the industry will be minimal. Chipmakers like TSMC believe that the impact on their business will be minimal due to their sourcing of gallium and germanium from suppliers outside of China, but companies in China that produce GaN and GaAs chips may struggle due to their heavy reliance on gallium and germanium ore exports.
TSMC says it doesn't expect the export restrictions to impact its production, but it will continue to monitor the situation closely. Taiwan-based chipmakers Win Semiconductor and Visual Photonics Epitaxy have also stated that their business won't be affected by the export restrictions.
“We don't have any direct business from China,” Visual Photonics Epitaxy CEO Henry Hsu tells GTR. “We only purchase a limited number of substrates from China, and we obtain the majority of our substrates from other sources.”
According to Win Semiconductor president Raymond Cheng, gallium, germanium, and their derivatives are not a key component of the company's chip production. “We do not use gallium, germanium, or their derivatives as material for our products,” he says. “Therefore, the potential impact on our business is not significant.”
However, suppliers of gallium and germanium will be severely impacted by the export restrictions, as China controls over 90% of global production of these materials. For companies that rely on gallium and germanium ores for their products, the impact could be severe.
“The biggest problem will be for suppliers of wafers that buy raw gallium and germanium from China,” explains Richard Nott, CEO of GTR sponsor GaN Systems. “While they may face challenges in obtaining raw materials, it's unlikely to be impossible.”
The global supply chain for gallium and germanium-based products may still operate, albeit with additional requirements for export approval. However, it's unclear whether China will ban sales of gallium and germanium ores, which would disrupt the global GaAs and GaN industries.
“If China bans sales of gallium and germanium ores, there are two possible scenarios,” says Nott. “Either China doesn't export purified materials, disrupting the global GaAs and GaN industries, or China improves its refinement technologies and strengthens its near monopoly.”
Foreign suppliers of gallium and germanium-based products should assess their inventories and reliance on Chinese mineral sources. Non-Chinese gallium and germanium products are expected to be more expensive than those sourced from China, but suppliers will most likely obtain raw gallium and germanium from other sources.
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