Chip War Intensifies: China's curbs might prompt global niche-metal production surge

China's controls apply to eight gallium-related products and six germanium products

In a bid to gain an edge in its microchip war with the US, China announced on June 3 that it will control the exports of certain metals which are typically used in the semiconductor industry.

Under the new rules, exporters will need to go through procedures to obtain export licences, China's commerce ministry said in a statement.

What prompted the move

The curbs on exports come at a time when the US is considering adding new restrictions on the shipment of high-tech microchips to China. While niche metals are not extremely rare or expensive, China controls most of the trade for the two metals accounting for 94 percent of gallium supply and 83 percent of germanium, a European Union study on critical raw materials conducted in 2023 disclosed.

What are Niche Metals

China's controls apply to eight gallium-related products and six germanium products. The two metals are not naturally occurring but instead are created as a byproduct of refining raw materials like zinc and alumina.

Gallium is used to increase transmission speed and efficiency for devices used in communication via compound semiconductors such as TV and mobile phone screens and radars. Additionally, they are also used in renewable energy devices like solar panels.

Germanium is used in fiber-optic communication, night-vision goggles and space exploration, the metal is also used in satellites.

Also read: US set to restrict China's access to cloud computing

The Way Out

Over the years countries became dependent on China as it exported the two metals cheaply. Analysts feel that to meet the demand, suppliers across the globe are likely to restart their production of the two metals. Russia and Ukraine also have gallium production capacity, other countries which have existing capacity to meet the demand-supply gap include South Korea and Japan.

In North America, germanium is recovered alongside zinc, lead and other metals at Teck Resources Ltd.’s Trail smelter in British Columbia.

Mining projects such as the Kipushi zinc project expected to start up next year in the Democratic Republic of Congo could also produce germanium as a byproduct.

Additionally recycling and utilising existing factory-floor scrap could also account for some supply.