China imposes export curbs on gallium, germanium, to raise chip prices in short term

New Delhi, 4th July 2023: The United States and some European countries have placed limits and taken other strategic measures to limit China’s expanding dominance and influence over the semiconductor industry.

Beijing appears to have retaliated by restricting the shipment of two essential rare elements required for microchip fabrication. This might disrupt the chip supply chain and drive up the prices of semiconductors and end goods in the short run.

Satya Gupta, President, VLSI society, “Gallium and germanium are two very important materials for semiconductors chips and key ingredients for technologies like GaN and SiGe, which are critical for power electronics chips, Radio Frequency chips, wireless communication and very high speed signalling. Applications like Electric Vehicles, data centres, 5G, Radar, GPS, wireless communication are critically dependent on chips made using these materials.”

According to industry experts, China supplies more than 90% of gallium and 80% of germanium. As a result, the free flow of commerce for certain metals may be slowed, driving up demand with controlled supply and therefore the costs for the components that use these metals.

Prabhu Ram, Head of Industry Intelligence Group (IIG) at CyberMedia Research (CMR), “Both gallium and germanium are essential metals. The costs associated with refining and manufacturing them could potentially pose some supply chain risks.”