Gallium is a very special metal. Its physicochemical properties make it ideal for combining with other metals for the purpose of manufacturing a special type of integrated circuit called wide band gap semiconductors. These chips have three properties that make them very valuable for intervening in the manufacture of advanced military equipment: They support higher voltages, temperatures and frequencies than conventional silicon integrated circuits.
During the 1970s the US Defense Advanced Research Projects Agency (DARPA) devoted many resources to the development of semiconductors involving gallium due to its potential in military technology projects. gallium arsenide (GaAs) played a fundamental role in the development of the global positioning system (GPS), and also in the development of radars and precision weapons.
Gallium nitride (GaN), also supported by DARPA, is currently being used to build next-generation radars that can accurately identify smaller, faster, and more numerous objects at greater distances. Each of these radars incorporates several thousand chips that use gallium. All of this leads us to one obvious conclusion: Gallium is an essential metal for the United States. But the United States is not the only military superpower on the planet.
China is using strategic metals as a geopolitical tool
On July 3, 2023, the Chinese Ministry of Commerce announced that it was preparing to impose new restrictions which would condition the export of gallium and other metals. These measures finally came into force on August 1, 2023. A priori, the fact that a country makes it difficult to export one or more of the metals it produces does not have to trigger a global catharsis, but in this scenario there is one fact that we cannot ignore: China monopolizes the production of gallium. In fact, until 2022 it accounted for 98% of the world's crude gallium.
For the country led by Xi Jinping, this metal has a strategic value comparable to that which it has for the United States due to its potential in military applications. But, in addition, the control of the export of gallium allows China to respond a the sanctions to which the US The US and its allies are putting this Asian country under pressure in the semiconductor industry. In any case, Xi Jinping's government is sending a very strong message to the US and its allies: China is willing to use the strategic metals whose production it controls as a geopolitical tool.
Controlling gallium exports allows China to respond to sanctions from the US and its allies
The thirteen months since the export restrictions on gallium came into force have had serious consequences. The most obvious is that the global supply chain linked to the electronics and defence industry has been profoundly altered. And, as we explained just a week ago, the price of gallium and germaniumwhich is another chemical element that also has great strategic importance, has skyrocketed.
In practice, the cost of germanium has increased from $1,200 per kg in the first quarter of 2023 to $2,600 per kg in the third quarter of 2024. The price of gallium has risen somewhat less, but the difference is also significantIn fact, its cost has increased from around $300 per kg in early 2024 to around $530 per kg today. Since August 1, 2023, Chinese producers must obtain an export license if they want to take gallium, germanium and their derivatives out of China.
In this situation, the US has not sat back. It cannot afford to do so. Control of gallium has already contributed to China's military developmentThe Biden administration's goal is to reduce the risks of China's control of the supply chain and protect its own supply chains by minimizing its dependence on the country ruled by Xi Jinping. However, achieving this under the current circumstances is not easy.
The first step the US has taken is to invest in its gallium extraction and refining capacity within its own borders. In addition, it is cooperating with its allies to increase the extraction and refining capacity of this metal abroad. But there is more. The US is promoting the development of technologies that will enable Recycle gallium to relieve the pressure that the global supply chain is being subjected to. And finally, the Joe Biden Government promotes the maintenance of a minimum one-year reserve of gallium specifically for the defence industry. We will see what happens in the coming months in this area, but it looks interesting.
Image | TSMC
More information | Financial Times | CSIS
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