The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - November 20, 2024
Gallium and germanium are critical to the semiconductors for computer chips that go into everything from household appliances to the most powerful supercomputers.
Gallium is a tech metal that melts at 85.6 F.
Germanium is a powerful superconductor metal.
Estimated net decrease in U.S. gross domestic product at different levels of restrictions of China's net exports of A, gallium or B, germanium, by industry.
From household appliances to high-end electronics, gallium and germanium are essential elements to a wide array of products manufactured in the United States. American manufacturers, however, must rely heavily on imports from China for both of these critical minerals. A cutoff of this supply could send America's gross domestic product (GDP) plummeting by $3.4 billion, according to a new model developed by U.S. Geological Survey researchers.
The idea that China could cut off global supplies of gallium or germanium is not completely hypothetical. Last year, the communist nation put in place controls that require Chinese businesses to get government authorization before exporting either of these tech metals critical to computer chips and other technologies.
Market and geopolitical analysts believe that China's export restrictions of these two critical semiconductor metals were a counter to restrictions by the U.S. and other Western countries on the exports of chipmaking technologies and equipment to China.
Whether the communist government's controls on exports of gallium and germanium were a trade war tactic or simply a means of ensuring that its own high-tech manufacturers have a plentiful supply, China has the mechanism in place to quickly and completely shut down exports.
And American manufacturers have very limited options when it comes to supply alternatives.
According to USGS data, China produced 98% of the world's gallium and was the leading global supplier of germanium during 2023.
Gallium is a tech metal that melts at 85.6 F.
Germanium is a powerful superconductor metal.
The combination of Chinese dominance and the outsized impacts of this pair of tech metals on the tech sector and the wider economy has raised concerns about impacts on the U.S. economy if the communist nation decides to cut off exports.
These concerns led the USGS to develop a model that would help quantify those impacts.
"Modern technology and manufacturing depend on reliable supplies of minerals, so it makes sense for the USGS to track mineral supply chains and develop approaches to scan the horizon for potential disruptions," said USGS Director David Applegate. "This research allows us to quantify how important supplies of particular minerals are to the U.S. economy, enabling policymakers, industry and the public to make informed decisions based on science. This cutting-edge research is also improving the analysis behind the U.S. List of Critical Minerals."
According to the USGS model, roughly 40% of the $3.4 billion blow to America's GDP from decreased imports of gallium and germanium would be concentrated in the semiconductor device manufacturing sector. These losses would trickle down to other high-tech manufacturers, automakers, and a wide network of other sectors of the economy that utilize electronic devices with gallium- or germanium-enabled computer components.
While a total cutoff of Chinese germanium would have a significant impact, roughly 88% of the GDP loss estimated by the USGS would come from losing its supply of gallium.
Estimated net decrease in U.S. gross domestic product at different levels of restrictions of China's net exports of A, gallium or B, germanium, by industry.
Based on the results of the new model, gallium prices could rise more than 150% and germanium prices by 26% in the case of a total ban. While these higher prices would be felt by electronics manufacturers and downstream consumers, the biggest economic impact would primarily be driven by the reduced capacity to produce semiconductors for a broad spectrum of the economy.
"Losing access to critical minerals that make up a fraction of the value of products like semiconductors and LEDs can add up to billions of dollars in losses across the economy," said Nedal Nassar, lead author of the gallium and germanium study. "The USGS has the expertise and the responsibility to help assure access to minerals and supply chain resilience."
USGS said the study considers the adjustments to global supply if China were to decide to cut off exports.
"Our model projects the impacts in the near term and in many cases developing new supply sources or substitute materials takes far longer," Nassar said.
The U.S., however, does have the potential to produce gallium and already produces significant quantities of germanium.
More information on the markets and potential sources of gallium can be read at "US looks for domestic gallium sources" and on germanium can be read "Germanium: the OG Digital Age metalloid" in the Critical Minerals Alliances 2024 magazine published by Data Mine North.
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.
Reader Comments(0)