DailySandIn August 2023, China announced export controls on gallium and germanium — two obscure elements that most people had never heard of. Within weeks, spot prices for gallium spiked 30% and European semiconductor manufacturers began emergency stockpiling. The response wasn't panic. It was recognition: the global chip industry had built itself on a supply chain with a single point of failure.
Two years on, that vulnerability has only deepened.
What Gallium and Germanium Actually Do
Neither element is glamorous. You won't find them in investor presentations or technology press cycles. But both are indispensable in ways that no current substitute can match.
Gallium is the base material for gallium nitride (GaN) and gallium arsenide (GaAs) — compound semiconductors that power the RF chips in every 5G base station, the power management chips in electric vehicles, and increasingly the high-frequency logic circuits in advanced AI accelerators. TSMC and Intel use GaN in power delivery systems for their most advanced nodes. Qualcomm's entire mobile RF business depends on GaAs. Gallium is also a critical input for VCSEL lasers — the optical interconnects inside every modern data center.
Germanium is equally embedded. It is a key substrate material for fiber-optic systems and is used in multi-junction solar cells for satellites. More critically for AI infrastructure, germanium is an essential dopant in advanced silicon-germanium (SiGe) transistors used in high-speed analog chips and certain RF amplifiers. The compound germanium dioxide is also a critical component in polyester fiber production — unrelated to chips, but relevant to why germanium supply chains are intertwined with broader industrial demand.
The Supply Concentration Problem
China produces approximately 80% of the world's refined gallium and around 60% of refined germanium. These are not estimates — they come from the U.S. Geological Survey's 2025 Mineral Commodity Summaries, which classifies both elements as critical minerals with "high supply risk."
The reason for China's dominance is structural, not conspiratorial. Gallium is a byproduct of aluminum smelting — specifically, of processing bauxite ore into alumina. China operates the world's largest aluminum industry, and gallium recovery is economically viable only at scale. Similarly, germanium is primarily a byproduct of zinc smelting and coal combustion ash processing. China's vast zinc and coal industries make it the default global supplier.
The United States produced zero primary gallium in 2024. The European Union produced approximately 35 tonnes — a fraction of its annual consumption. Japan and South Korea, both major chip manufacturers, import nearly all of their gallium and germanium from China.
The 2023 Export Controls and Their Effect
China's August 2023 controls required export licenses for gallium and germanium compounds — a mechanism that allowed Chinese authorities to approve, delay, or deny shipments on a case-by-case basis. This is a more powerful tool than a blanket ban: it creates uncertainty rather than scarcity, forcing buyers to maintain larger safety stocks and accept unpredictable lead times.
The immediate market effect was significant. Gallium prices, which had traded around $220 per kilogram in early 2023, reached over $300 per kilogram by September. German chipmaker Siltronic and Belgian chemical company Umicore — both major gallium users — disclosed in earnings calls that they were accelerating efforts to diversify supply.
By 2025, license approvals had slowed measurably. Data from China's General Administration of Customs showed a 40% decline in gallium exports in the 12 months following the controls compared to the prior year. Germanium exports fell by a similar magnitude.
The AI Infrastructure Connection
The link between gallium/germanium and AI is less obvious than, say, the connection between lithium and electric vehicles, but it is equally direct.
Modern AI training clusters — the hyperscale GPU farms operated by Google, Microsoft, Amazon, and Meta — consume enormous amounts of power. Managing that power efficiently at the chip level requires advanced GaN power devices. As Nvidia scales its Blackwell and future GPU architectures to higher thermal design power (TDP) ratings, the power management subsystems around those GPUs become more demanding, not less. GaN is the only semiconductor technology currently capable of delivering the switching efficiency required at those power levels.
Separately, the optical interconnects that link GPUs within a training cluster — and link clusters across a data center — rely on VCSEL lasers. Those lasers require gallium arsenide substrates. As AI clusters scale from single racks to multi-building campuses, interconnect bandwidth grows proportionally, and so does gallium demand.
Germanium's role is more indirect but still significant. SiGe transistors are used in the high-speed SerDes (serializer/deserializer) circuits that move data between chips at multi-hundred-gigabit speeds. As GPU memory bandwidth requirements push interconnect speeds higher, SiGe demand grows alongside them.
What's Being Done — and What Isn't
The U.S. Department of Defense has funded research into alternative gallium production methods, including recovery from domestic bauxite residues and coal combustion byproducts. The National Renewable Energy Laboratory has demonstrated gallium recovery from domestic aluminum processing streams, but at costs roughly three times higher than Chinese production.
The EU Critical Raw Materials Act, adopted in 2024, targets 10% domestic production and 40% domestic processing of critical minerals by 2030. For gallium, this would require building roughly 10 new recovery facilities across Europe — a capital-intensive and slow process.
Canada and Australia both have identified gallium-bearing bauxite deposits, but developing new recovery capacity from scratch takes 5–7 years even under favorable permitting conditions.
In the near term, the practical response from the chip industry has been two-fold: strategic stockpiling (several major chip companies now maintain 6–12 month supply reserves of gallium compounds) and accelerated materials research into gallium-free alternatives for specific applications. Silicon carbide (SiC), for example, can substitute for GaN in some power electronics applications, though not at equivalent performance levels for RF.
The Price Signal to Watch
Gallium spot prices are published by Asian Metal, a commodity data provider. As of early 2026, prices have stabilized in the $280–$320 per kilogram range — elevated relative to 2022 levels but below the 2023 peak. The key leading indicator to watch is China's monthly export license approval rate, published with a lag by China's customs authority.
Any decline in approvals — particularly if timed around geopolitical friction points such as Taiwan Strait tensions or U.S. semiconductor equipment export control expansions — will flow through to spot prices within 60–90 days and ultimately to chip component costs within 6–12 months.
For investors tracking AI infrastructure stocks, gallium and germanium prices are not a rounding error. They are a leading indicator of cost pressure on the power management and interconnect components that every AI data center depends on.
Further Reading
- Today's critical minerals digest — the latest news on gallium, germanium, and rare earth supply chains
- AI infrastructure topics — how supply chain developments affect AI buildout
- Semiconductor topics — TSMC, Intel, and the chip supply chain