- China is restricting exports of germanium and gallium – key to making electronics and semiconductors – as its technology battle with the US and Europe escalates.
- Germanium is used in fiber optic products and night vision goggles, gallium is an important material for semiconductors.
- China produces 60% of germanium and 80% of gallium, according to the industry group Critical Raw Materials Alliance.
- However, analysts said the impact of the ban will be limited as other metal sources and substitute materials can be used.
Semiconductors are a key focus in the ongoing technology trade war between the US and China.
William_Potter | Stock | Getty Images
As the technology battle with the US and Europe escalates, China is restricting exports of two trace metals that are key to making electronics and semiconductors.
Germanium and gallium are the two metals in light.
But what and how important are they?
China and the US have been locked in an escalating technology trade war since 2019. The US has used a trade blacklist and broad export restrictions to cut China off from key technology components and semiconductors, or chips.
These critical pieces of technology have become a focal point in the battle between the two superpowers.
China has so far not retaliated much, but in May it named US chip company Micron as a “major security threat”. Now Beijing is looking to areas where it has some strength – metals and materials that go into electronics and semiconductors.
China’s Ministry of Commerce announced Monday that new regulations will require exporters of gallium and germanium to obtain permits to transport the metal. Beijing has introduced new laws on national security.
Germanium and gallium are metals that do not occur naturally. They are instead formed, usually as a byproduct of the refining of other metals.
Germanium, a silver-white metal, is a byproduct of zinc production. Its companion, the soft, silvery metal gallium, is a byproduct of the processing of bauxite and zinc ores.
Germanium has many uses, including in solar products and fiber optics. The metal is transparent to infrared radiation and can be used in military applications such as night vision goggles.
Solar panels containing germanium have applications in space.
Gallium is used to make gallium arsenide, a chemical compound that can make radio frequency chips for mobile phones and satellite communications, for example. That compound is also a key material in semiconductors.
China produces 60% of germanium and 80% of gallium, according to the industry group Critical Raw Materials Alliance.
Gallium arsenide is complicated to produce, and only a few companies in the world can do it. One is located in Europe and the others are in Japan and China, CRM Alliance says.
“It’s a warning shot, not a death blow,” Eurasia Group said in a Monday note.
“However, these latest measures are very limited in scope, and while the new rules require Chinese exporters to obtain a license first, there is no language banning shipments to certain countries or end users.”
The US and Europe do not import these goods in large quantities. In the year By 2022, the U.S. will receive $5 million in gallium metal and $220 million in gallium arsenide, according to government figures.
Germanium levels are high, with the country importing $60 million of the metal and the European Union importing $130 million into Germany by 2022, according to data from S&P Global Market Intelligence.
Other countries can also produce these metals. Belgium, Canada, Germany, Japan and Ukraine can produce Germanium. Japan, South Korea, Ukraine, Russia and Germany produce gallium.
There are also things that can be substituted for these metals.
China’s scale has allowed it to produce them at a lower cost than elsewhere, but Eurasia Group said Beijing’s measures “will have some impact on global supply given the scope.”
“It’s a shot in the arm to remind China that it has countermeasures and that China has retaliation options,” Eurasia Group said.