China’s Gallium and Germanium Ban Could Cost US Economy $3.4 Billion
The United States could face economic losses of up to $3.4 billion if China enforces a total ban on exports of gallium and germanium, according to a recent report by the United States Geological Survey (USGS).
In 2023, China introduced export licensing controls on materials containing these critical minerals, requiring state approval for shipments and paving the way for stricter restrictions. Starting August 1, Beijing implemented limits on eight gallium and six germanium products, marking a significant escalation in the ongoing tech resource dispute between China and the US. These minerals are vital for manufacturing high-tech microchips, making them central to the geopolitical struggle.
China currently dominates global supply, producing 60% of the world’s germanium. This mineral is crucial for applications such as fiber optic cables, solar panels, and infrared technology. Earlier this year, speculation about potential state purchasing drove germanium prices in China to record highs.
The USGS report highlights that a full ban would hit the semiconductor device manufacturing sector hardest, accounting for over 40% of the economic losses. Downstream industries reliant on semiconductors would also face significant setbacks.
Additionally, the report projects a sharp rise in mineral prices: gallium could surge by over 150%, while germanium prices could jump by 26%.
“Losing access to critical minerals that constitute a small fraction of the value of products like semiconductors and LEDs can result in billions of dollars in economic losses,” explained Nedal Nassar, the report’s lead author.
This situation underscores the broader vulnerabilities in global supply chains and the critical need for diversifying mineral sources to mitigate economic risks.
