China’s Curbs on Export of Germanium & Gallium Soring Price Globally

The USA and China, are the largest economies in the world with a bilateral trade value of more than $500 billion in 2023. With their immense potential for manufacturing processes, they dominate the global export market, benefitting the export and import businesses globally.

However, this billion-dollar trade has been strained in the last few years by geo-political challenges and the guarding of the interest of the domestic market. This has led to a trade war of tariffs, sanctions, and countermeasures. For instance, the USA imposed sanctions on Chinese chip companies, leading to shortages and price increases. In response, China introduced curbs on the export of gallium and germanium, the two key materials for semiconductor production, leading to a decline in the export of germanium by USD 1,197 thousand in Q1 of 2024, compared to Q1 of 2024. 

This blog makes it easier to understand the effect on various industries, from smartphones and computers to automobiles and artificial intelligence.

China Restrict Exports of Germanium and Gallium

China in a retaliatory step restricted the export of key materials for semiconductors after the USA imposed sanctions on Chinese Goods. This curb on supply may badly affect several countries whose businesses rely on imports. Here’s a quick trade analysis of China’s export of Germanium –

From Q1 of 2023 to Q2 of 2024, China’s total export of Germanium stood at USD 65,311 thousand. Among the top partners, Germany, Belgium, Russia, and Japan’s trade value stood at USD 2.4, 2.1, 1.7, and 1 million in Q2 of 2024. Interestingly, China’s exports decreased with Germany and Belgium and increased simultaneously with Russia and Japan in Q2 of 2024 compared to Q1 of 2024.

How Much Gallium Does China Export?

Gallium is known worldwide for its properties that help high electron mobility and superior performance in the semiconductor industry. Further, It’s crucial for modern electronic devices. And, China dominates the global gallium market with its manufacturing power. This dominance poses a potential risk to the semiconductor industry, especially in regions like Europe and the USA. Let’s take a quick view of China’s exports –

China’s gallium export quantity from 2019 H1 to 2024 H1 shows a significant decline of 33,000 kg. This decline in supply was caused by sanctions imposed by the USA and EU on Chinese chip manufacturing companies.

In 2024 H1, the export value of gallium in kg increased by 25% compared to the   H2 of 2023. The increase in supply indicates the step-wise removal of curbs. Once the curb is completely removed, the importers and businesses from the USA and the EU will get the direct benefit which further help them to increase their profit.

What Will Be the Implication for China’s Export Control for Germanium and Gallium?

China’s control over the export of key materials required for the semiconductor industry has increased the price of associated products. This makes it difficult for the importers and businesses from the USA and the EU to diversify their supply China dependency toward reliable partners. Here are some common challenges occurring due to China’s curbs –

Rise In Cost –
 Since China has restricted the supply of rare earth materials, the global price of semiconductors and its chips increased by twofold. This makes the importers buy the same products at a higher price, increasing the cost of goods and many more.

Disrupted Supply Chain –

The bilateral trade war between China and the USA caused the world led to a supply chain disruption. This affects the exporters and importers with a lack of availability of resources, delays in cargo time, long routes etc.

How can Your Business ensure a stable supply of gallium & germanium in the long term?

In this dynamic market, identifying a reliable partner becomes crucial for business operations. Especially when China controls the export of key materials for semiconductors. Here’s the that you can implement –

Diversify Production Units –

Companies must identify the regions rich in gallium and germanium resources, and establish connections for strategic partnership for all weather supply.

Internal corporation –

Countries and businesses across the region must constructively work to establish international agreements. So, that they can promote fair trade practices and reduce reliance on any single nation for critical materials.

Identifying reliable suppliers for key materials used in the semiconductor industry becomes crucial for businesses to be competitive in this dynamic market. Hence, constructive work at the international level for trade negotiations and strategic partnerships. Doing this can present the solution for unilateral restrictions on goods supply.