GaN Gone?

On July 3^rd, China announced that it was impose restrictions on the export of gallium, germanium and a range of other compounds that used the materials. It is an escalation of the current trade war between China and the US, which has escalated over the past eight years. Recently, President Biden place a ban on the sale of advanced chips and semiconductor manufacturing equipment. The ban also affected allies of the US who supply China. There were several reasons given for implementing the ban, ranging from national security to China’s human rights record. The US is currently considering whether to extend the ban to include advanced chips from Nvidia, AMD and Intel. The US administration again cited the threat to national security and Chinese oppression of dissidents and minorities.

China has not taken the sanctions lying down, and initially banned products from US memory manufacturer Micron. Then on July 3^rd, it announced that Chinese companies must now apply for a government license to export 38 products, that include gallium, germanium and compounds that use the metals, such as gallium nitride and gallium arsenide. These compounds are widely used by the technology industry, and not only for power semiconductors. Germanium is used for fibre-optics, solar panels, LEDs and military thermal imaging cameras. Gallium is often used in 5G base stations, radar systems, wireless communications and lasers.

According to the Critical Raw Materials Alliance, China is responsible for 80% of the global gallium supply and 60% of worldwide germanium supply. The ban, which is due to come into effect on August 1^st this year, initially seems to be another blow to the global supply chain, which has not recovered fully since the COVID 19 pandemic. Those figures look bad for the industry, but things may not be as bad as they first appear. Neither of the two metals are especially rare. Although germanium ores are not abundant in the earth’s crust, the metal itself can be produced as a by-product of zinc production. Zinc is extracted in around 50 countries and the biggest producers are Canada, Australia, China, Peru and the US. Gallium is also found in zinc ores, but is normally produced when bauxite is processed to manufacture aluminium.

It may take a bit of time for markets to readjust, but no semiconductor manufacturers appear too worried, so far. Reuters contacted users of the metals and the replies from the power industry seemed to be reassuring. NXP expects no material impact on its business, while Microchip found the same after its initial assessment, Navitas did not expect any adverse effects, and added that significant sources of gallium were available worldwide. Finally, Infineon replied that most of its supplies already come from outside of China.

If those assessments are accurate, it may be that China prime reason for the ban was to safeguard its supply of the metals for its own semiconductor industry.