China Introduces Export Controls on Gallium & Germanium Products
05-07-2023 | By Robin Mitchell
As the West continues to tighten controls over exports of semiconductors, China has just fired a broadside attack with its introduction of export controls over Gallium and Germanium, two critical rare-earth metals used to manufacture semiconductors. These are materials that have properties between conductors (which allow electricity to flow easily) and insulators (which do not allow electricity to flow). Semiconductors are used in many electronic devices because their conductive properties can be manipulated to control electric current.
China, a dominant player in the global supply of these critical metals, produces 60% of the world's germanium and 80% of the world's gallium1. This move by China to restrict exports of these metals could have far-reaching implications for the global electronics industry.
In this article, we ask, what role do these materials play in the manufacture of semiconductors, what rules have been brought forward by China, and what does this mean for the West?
What roles do germanium and gallium play in semiconductors?
Arguably, the most famous semiconductor material in active use is silicon, and its wide availability combined with simplistic processes make it a low-cost and easy material to work with. But while silicon has numerous benefits when designing logic devices (including CPUs, memory, and controllers), it is far from an ideal material for high frequency, high power, or optical applications.
The reason for this comes down to its small bandgap of 1.12eV, which makes it difficult to efficiently produce visible light. Additionally, the relatively low dielectric breakdown means that trying to go beyond a few hundred volts results in a failure of the semiconductor material, which is why high-voltage devices commonly use hybrid technologies (such as insulated gate transistors). Dielectric breakdown is a process that occurs when an electrical insulating material, subjected to a high enough voltage, suddenly becomes a conductor, allowing current to flow freely. This can lead to device failure. Finally, the low thermal conductivity of silicon makes it difficult to extract waste heat in high-power devices, thereby making them physically large.
In semiconductors, the bandgap refers to the energy difference between the top of the valence band (where electrons are present) and the bottom of the conduction band (where electrons can move freely). The size of the bandgap affects the electrical and optical properties of the semiconductor.
In contrast to silicon, germanium and gallium offer engineers unique semiconductor properties that have seen them dominate unique industries. For example, gallium’s bandgap of 2.24eV makes it ideal for use in high-efficiency LEDs, and its higher dielectric breakdown allows for greater operating voltages. This also correlates to improved performance at higher frequencies, which is why Gallium Arsenide is commonly found in radio and microwave applications.
Germanium is commonly found in infrared applications, including thermal cameras and fibre optics, but is also used in LEDs and solar cells. Thanks to its higher electron mobility compared to silicon, it too can be used for high-frequency electronics, making it ideal for microwave and radio applications. But germanium can also be alloyed with silicon to change its properties, thereby allowing for unique transistor technologies targeted at niche (but critical) applications. Electron mobility is a measure of how quickly an electron can move through a metal or semiconductor when pulled by an electric field. Higher electron mobility means the semiconductor can conduct current more effectively.
Germanium, for instance, is a key component in the production of fibre optic cables and infrared optics, while gallium is used in the creation of semiconductors and light-emitting diodes (LEDs)2. These metals are also used in the production of solar panels and other high-tech devices3.
As such, while silicon may dominate logic devices, germanium and gallium are essential components for optical, power, and wireless applications. Considering that almost all modern electronic devices contain some optical or radio component (whether it be a screen or power indicator), without gallium and germanium, these devices would not be able to operate.
China introduces export controls to gallium and germanium
Over the past few years, the West has been confident in its position regarding semiconductors, and to try and prevent potentially hostile nations from catching up, the West has introduced numerous export controls over next-generation semiconductors and the equipment used to manufacture them. This has seen nations such as China struggling to access cutting-edge technologies, thereby hindering their ability to develop emerging technologies such as AI. Export controls are measures taken by a country to regulate the shipment or transfer of certain goods and technology to other countries. They are often used for national security reasons, to prevent certain technologies from falling into the wrong hands.
It seemed that for a long time, China had little power with regard to Western export controls. Despite having access to massive amounts of capital, China was unable to purchase systems from ASML, order next-gen parts from TSMC, and even struggle to develop its own internal industry, which was found to be ripe with corruption and incompetence.
However, the West may have pushed China too far, as China has recognised its true position in the semiconductor industry and launched its counter-offensive. Does this attack restrict Chinese technology? Does it restrict Chinese customers from working with the US? Does this attack prevent Chinese parts from being sold? Nope, China attacked the one thing that the West hoped they would never do; raw materials.
China's decision to impose export controls on gallium and germanium is a strategic move that could potentially disrupt the global supply chain for these critical metals4. This could have significant implications for industries that rely heavily on these metals, including the semiconductor and solar panel industries.
Recognising that the entirety of the semiconductor industry is dependent on materials such as gallium and germanium, China has finally decided to introduce export controls that, when enforced on the 1st of August, will require an export license for 16 gallium and germanium-containing products. This license will be issued by the Chinese government and will consider the national security risk of releasing said products. The 16 products include gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide, indium gallium arsenide, germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride and zinc germanium phosphide.
While there are multiple sources of these rare earth elements around the world, China is responsible for over 60% of the world’s germanium and 80% of the world’s gallium. With numbers this high, China is in a prime position to severely impact the semiconductor market, whether it is through high taxation or outright banning sales. However, as China has control over these materials internally, it is also in a prime position to undercut Western suppliers of parts, including LEDs and power products.
In fact, China's control over these critical metals gives it a significant advantage in the global market. With the ability to control the supply and price of these metals, China could potentially influence the global electronics industry4.
To make matters worse, these two metals are but only a few of the many rare earth metals in China’s control. As such, it is possible for China to disrupt far more than just optical and power markets; magnetics, passives, and even logic devices could all suffer from additional export controls. Rare earth metals are a set of 17 elements in the periodic table that are important in the manufacture of a wide range of high-tech products, including semiconductors, batteries, and military equipment.
What does this mean for the West?
Undoubtedly, these export controls will be weaponised against the West, meaning that electronic devices are going to become more expensive. Furthermore, it may result in longer supply chains, which will impact production times and component availability. If the controls are severe enough, it could even see some companies close down product lines if they are unable to source the rare earth minerals needed.
Of course, there are other countries that have access to such raw materials, but unfortunately, they are either in geographically unstable locations with questionable human rights practices (such as the DRC) or in Russia, which is currently having a war against Ukraine and its allies. This means that while the West has access to technology, its opponents have access to its resources.
The West could potentially mitigate the impact of China's export controls by diversifying its supply chain and investing in alternative sources of these metals. However, this would require significant investment and time, and there is no guarantee that these efforts would be successful in the long term6.
So, what can be done? Well, the West only has two viable options; open up new mines in Western allied nations, or make peace with China.
Opening up new mines takes time and has a devastating effect on the environment. Even if new mines are designed to have minimal impact on the environment, high labour costs and red tape will see the price of these rare minerals skyrocket, thereby significantly increasing the price of electronics.
If the cost of electronics spirals out of control too fast, it is possible that Chinese products will start to undercut Western products, as while they may not have access to next-generation silicon devices, they can cheaply produce TVs, smartphone screens, radio systems, and power devices. These electronics could be banned by the West, but such action would make both China and Western citizens irate (why should Western citizens be barred from purchasing Chinese goods during a cost of living crisis).
Making peace with China is the only viable alternative and might be a better option for the West going into the future. It is clear that both China and the West are dependent on each other, and while the two may have different ideologies, China is far less of a military threat compared to other nations (such as Iran, North Korea, and Russia).
Despite all the media hype surrounding Taiwan and the South China Sea, China is remarkably docile when it comes to military actions. Spy balloons and artificial islands may sound bad, but considering that Russia is close to losing a war against Ukraine that has seen casualty numbers in the hundreds of thousands, a few balloons and a few piles of sand in the middle of the ocean hardly seem threatening.
If anything, the real danger that China poses is via hardware sold to Western nations, IP theft, and industrial espionage, which can all be solved far more discretely. So long as the West never relies on Chinese hardware, and can educate other nations on the dangers of making deals with China, the influence that China has can be controlled.
Should engineers worry about these export controls? Yes, absolutely. Can anything be done about it? Probably not. What’s going to happen? For now, only time will tell.