As tensions between world powers increase, almost monopoly position China has on gallium, a critical material used in semiconductors and batteries, has sounded alarm bells in Japan, raising concerns about the role control over resources can play in determining developments in global technology.
Key Takeaways
The Chinese dominance in the production of gallium is transforming both the semiconductor and battery industries in the world market.
Japan has expressed concerns over the strategic benefits that can be enjoyed by China in possession of such resources as gallium, germanium, and antimony.
This has created trade tensions as the U.S. sanctions against China give rise to competition in the global market, strategic raw materials markets.
The risk of supply chain interruptions is rather high, impacting such industries that are dependent on such critical aspects.
Gallium Ban & 140 Entities: US-China Tech Clash
The trade confrontation between the United States and China is intensifying before 2025. The Biden Administration was a study in inconsistency when it announced its third crackdown on Chinese ambitions in chip production, this one involving the addition of 140 new firms to its Entity List. Entities in this list have to get a license to sell to the listed companies, and this license is usually not granted.
In response to the recent constraints, Beijing banned the export of gallium and germanium, antimony, and other materials that are critical to advanced semiconductor manufacturing. In the past, gallium and germanium faced a partial ban in keeping with U.S. restrictions, where exporters were forced to obtain a license and make disclosures of intended recipients and end users.
In response to the higher restrictions on AI-related Chinese imports to the United States, another partial antimony ban was instituted in August 2024 in China. This most recent act is, however, unlike other previous actions: it puts a total export embargo on gallium, germanium, antimony, and other materials to the United States, and with effect as of today, and without licensing them. The enforcement of its details is not clear
The fact that the export ban is aimed toward military applications, as indicated through the official translations, is therefore expected, whereby more stringent anti-end-user / anti-end-use export checks will be involved in exportation processes, which would facilitate compliance.
The decision has caused tremors throughout the entire world semiconductor supply chain since these minerals are essential to a variety of high-tech intricacies. The restriction would likely increase prices, lead time, and shortage.
The competition for Strategic Raw Materials
In the highly dynamic environment of the world of technology, an obscure aspect has shot to prominence as a critical part of the war for dominance. This component is the strategic metal Gallium; control will be able to predetermine the leader in the semiconductor and battery market. With China holding a foothold over these precious resources, the world is holding its breath. Possession of these invaluable resources has led to the warning by Japan, which is the biggest consumer of Gallium, about an invisible war against it.
The war for vital raw materials has heated up globally since China’s export curbs were announced. Project Blue co-founder Jack Bedder highlighted the increased tensions brought on by these actions and foresaw more difficulties in obtaining vital materials. These views were mirrored by Peter Arkell, head of the Global Mining Association of China, who said that China’s actions were a “commercial war without winners” and they were a reasonable reaction to U.S. Sanctions.
The Impact of China’s Mineral Export Ban
The export restrictions China has on gallium, germanium, and antimony have interrupted those supply chains. The duration of the ban will be the determining factor in the shortages that will be experienced, since some countries and companies keep the reserves. A long disruption would stall the manufacture of semiconductors, including sensors, LEDs, memory, and optoelectronics.
The availability of alternative sources of the supply of antimony is limited, with Russia and Tajikistan supplying around a third of the world's supply. The process of setting up new supply lines will be time-consuming, resulting in long lead times and uncertainty.
Scholars are polarized. Tim Worstall reasoned that the refining capacity is cramped, but the minerals are plentiful, and new plants can address the situation. Others, such as Markus Roas of Indium Corporation, predicted that U.S. firms would merely have weeks of gallium and germanium remaining even prior to hitting the full ban.
The economic effect can be seen already. Since the partial ban of antimony in August, the price has more than twice, on the order of 39,000 per metric ton. According to analysts, the supply hoarding is due to military demand, and it has started to throttle the U.S. and European defense industries. The U.S. Antimony Chairman said dropping reserves in China and other mineral deposits are making world prices reach unheard levels.
Domestic manufacturing can provide little respite Stibnite mine in Idaho would only cover one-third of American demand. The lack of alternative sources will continue to cause shortages, leading to increased costs of consumer products such as smartphones, computers, and automotive electronics.
Manufacturers with narrow margins may end up passing the cost on to customers or reducing their profits. Having had their capital reduced by the 2023 downturn, other companies may be unable to invest in alternative materials or new R&D.
Nevertheless, the ban is enhancing the activities to diversify the supply. To ensure that raw materials are not obtained in conflict zones, the U.S. is financing the Idaho project and is seeking trade agreements that allow raw materials in the international market.
Frequently Asked Questions (FAQs)
1. Is China banning exports of Gallium to the US?
China announced an official ban on the export of Gallium and germanium to the United States in December 2024.
2. What are gallium, germanium antimony used for?
These two elements play a crucial role in the manufacturing of high-tech products, including batteries for smartphones and computers, to military defense systems.
3. Can China Catch up in semiconductors?
Chinese catch-up is uneven across subsectors of semiconductors: In the design of logic chips, such as artificial intelligence (AI) interventions or mobile devices, Chinese firms still lag behind global leaders, but perhaps by only two years.
