China’s new export control regulations for gallium have caused prices for the metal used in semiconductors to reach a 10-month high. Chinese producers of gallium now require official permission to export the metal as per the rules effective from August 1st. While some exporters have submitted applications for approval, the process is expected to be lengthy, resulting in a potential supply shortage in the global market even after approval is granted. Since China announced these restrictions in July, the price of gallium has surged by over 50%, indicating a tightening market.

The control measures on gallium, along with another metal called germanium, are believed to be part of China’s response to Western countries’ attempts to limit China’s dominance in the semiconductor industry. China currently refines around 94% of the world’s gallium. The curbs have alarmed global buyers and garnered reactions from US officials. The increased prices and restricted supply have prompted concerns regarding dependence on China for critical minerals.

Notably, gallium is not solely used in semiconductor production; it also finds applications in Navy radar systems for air and missile defense, as well as ground-based radar systems used by the Army and Marines to detect a range of threats. Prior to the export curbs, China would export approximately 80 to 90 tons of gallium metal and 50 tons of gallium oxide annually, while its domestic production stood at around 700 tons of gallium metal per year, according to estimates from the Shanghai Metals Market.

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