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Germanium, gallium, and antimony are crucial to the semiconductor industry due to their unique electrical properties that make them essential for producing advanced electronic components. Germanium is used as a semiconductor material, particularly in high-speed electronics and fiber optics, due to its excellent ability to efficiently transmit electrical signals. Gallium, often used in the form of gallium arsenide, is vital for producing high-performance chips, LEDs, and solar cells because it can operate at higher frequencies and temperatures than silicon. Antimony is used in creating semiconducting alloys and compounds that improve the efficiency and performance of devices like diodes and infrared detectors. These materials are key to advancing the capabilities of modern electronics, making them indispensable in the production of next-generation technologies.
The prices of rare earth metals, essential for semiconductor manufacturing, have more than doubled in the past year following China's retaliation against U.S. semiconductor restrictions. Notably, China's export restrictions on metals like germanium and gallium have caused significant price hikes, with germanium seeing a 115% increase to $2,600 per kilogram, up from $1,200 in the first quarter of 2023. Gallium prices have also surged by 75%, rising from around $300 per kilogram at the beginning of 2024 to approximately $530 today. These price increases reflect China's strategic control over these critical materials in response to global trade tensions.
The situation is expected to worsen, with no signs of price relief on the horizon. Starting October 1, 2024, all rare earth metals in China will be effectively under state control, and the export of gallium and germanium has required a license since August 2023. China's tightening grip on these minerals is seen as a powerful tool to counter U.S. efforts to impede its advancement in semiconductor production. Currently, China dominates the global supply of these materials, producing 94% of the world's gallium and 73% of germanium in 2023, and its export volumes have reportedly dropped by up to 50% since the restrictions were imposed.
China's export restrictions on critical metals may impact US and European industries by causing supply shortages and driving up costs in the semiconductor and electronics sectors. These disruptions can slow production and raise consumer prices. Additionally, the restrictions may force companies to seek alternative, potentially more expensive, sources, straining global supply chains and weakening the competitive position of US and European industries.
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