The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - September 22, 2023
Chinese restrictions on the exports of gallium and germanium, tech metals used in computer chips, fiber optics, and other high-tech devices, went into effect on Aug. 1.
China's gallium and germanium export bans are believed to be a countermove to the CHIPS Act and other plays made by the U.S., Japan, and Netherlands to restrict the export of semiconductors and chipmaking technologies to China.
While gallium and germanium exports out of China dropped to zero during August, it is too early to determine just how restrictive the government plans to be on shipping this pair of semiconductor elements out of the country, or the impacts such export curbs will have on the manufacturing of computer chips, fiber optic cables, and other high-tech goods that need these tech metals.
In July, China's Ministry of Commerce announced that government authorizations would be required for exports of various gallium and germanium products starting on Aug. 1.
Due to these new restrictions emplaced to "safeguard national security interests," the exports of both metals dropped to zero in August.
This, however, is more of a product of the new export application and approval process than an indication of how much gallium and germanium the country is going to allow to be exported.
Immediately following the release of Chinese customs data that showed there were no exports of these metals on the official books in August – previous bans on exports of rare earth elements from China resulted in smuggling of these tech metals – spokesman He Yadong reported that China's commerce ministry had begun to approve some applications.
Gallium and germanium's impact on the U.S. and global economy is enormous when compared to the relatively small markets for this pair of tech metals.
According to the U.S. Geological Survey, roughly $39 million of germanium and $225 million of gallium metal and gallium arsenide semiconductor wafers were used by American manufacturers during 2022.
While these numbers are orders of magnitude smaller than industrial metals like copper ($33 billion) and zinc ($4 billion), gallium and germanium have tremendous market leverage due to their uses in high-tech and green energy products.
"Gallium and germanium are used in small but often necessary amounts in certain types of high-end fiber optics, solar cells and most critically, in microchips used for quantum computing, telecommunications, electric vehicles, defense, and an array of other mission critical applications," Adamas Intelligence, a critical minerals and metals analyst penned in a Sept. 21 briefing.
The scarcity of new vehicles for sale on showroom floors in the U.S. during and after the COVID-19 pandemic is an example of how a lack of computer chips can stall the economy.
According to USGS data, China, which produced 98% of the world's gallium and was the leading global supplier of germanium during 2022, holds a dominant position when it comes to these critical chipmaking materials.
The combination of Chinese dominance and the outsized impacts of this pair of tech metals on the tech sector and wider economy has raised concerns that were underscored when Reuters reported that China did not export either of these critical minerals in August.
While it is still unclear to what degree China will restrict exports, the August lapse was expected due to the new rules that require want-to-be exporters to file applications for state approval, a process estimated to take 45 days.
Understanding that there would be a gap in exports and not knowing exactly how much gallium and germanium the Chinese government would approve for exports once the new government-controlled export process was underway, many tech companies and specialty metals dealers stocked up ahead of the restrictions.
Due to these measures and his company's ability to "significantly expand production of gallium and germanium from its Salt Lake City plant" in Utah," American Elements CEO Michael Silver said, "U.S. domestic supply will not be impacted by this short-sighted decision of China."
With more than 16 years of covering mining, Shane is renowned for his insights and and in-depth analysis of mining, mineral exploration and technology metals.
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