China’s export of germanium and gallium halted in August due to export restrictions.
China's export of germanium and gallium halted in August due to export restrictions.
China’s Exports of Germanium and Gallium Plunge as Export Controls Take Effect
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BEIJING, Sept 20 (ANBLE) – Recent customs data from China reveals a significant decline in the country’s exports of germanium and gallium products in August. This drop comes after the implementation of new export controls imposed by Beijing on these two metals commonly used in chip manufacturing.
In July, China announced restrictions on the export of eight gallium and six germanium products effective from August 1st. This move can be seen as part of an ongoing trade war between Beijing and Washington over access to materials used in the production of high-tech microchips.
Under the new regulations, exporters of germanium and gallium products must obtain an export license for dual-use items and technologies, indicating potential military and civilian applications. However, these permit applications take approximately 45 working days to process, causing delays for exporters.
Consequently, China’s exports of germanium and gallium products in August were severely affected by these export controls. Customs data revealed that there were no exports of wrought germanium and gallium products during this period. In July, before the restrictions were implemented, exports of wrought germanium reached 8.63 metric tons, while exports of wrought gallium were at 5.15 tons.
The impact of the new controls is also reflected in the domestic market. The increased supply due to stockpiling and subdued demand resulted in a decrease in spot gallium prices. Data from the Shanghai Metals Market (SMM) shows that the spot price of gallium metal dropped by 9% in August to 1,655 yuan per kg.
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On the contrary, the spot price of germanium ingot increased slightly during the same period by 1% to 9,700 yuan per kg. This rise can be attributed to tightening supply. As a result, exporters of germanium products experienced a parallel increase in prices, while gallium traders faced a downward trend.
It is worth noting that, under the customs code for “germanium oxides and zirconium dioxide,” exports of 1,034 tons were reported in August. However, it remains uncertain whether these shipments consisted solely of zirconium dioxide or included some germanium oxide as well.
Despite the challenges posed by the export controls, China’s exports of wrought germanium have seen a year-on-year increase of 58% during the first eight months of 2023. In contrast, shipments of wrought gallium witnessed a significant decline of 58% over the same period, reaching only 22.72 tons.
The implementation of export controls on germanium and gallium products emphasizes the importance of these metals in the global supply chain of microchip production. As China continues to strengthen its control over the export of these materials, manufacturers worldwide may face supply shortages, impacting the production and pricing of high-tech devices.
While the restrictions may cause temporary disruptions, it also presents opportunities for other countries to diversify their sources of germanium and gallium. As the trade war between China and the United States escalates, it remains uncertain how long these export controls will continue and the resultant impact on the global microchip industry.