Exports dropped to zero in August after China imposed export controls on germanium and gallium products. However, the Chinese government said that some companies have obtained export licenses for these metals, which are an important part of the technology industry. In July, China’s Ministry of Commerce announced that from August 1, exporters of gallium and germanium and their compounds would need to apply for a license from the Ministry of Commerce if they wanted to start or continue shipping them out of the country.
Although the agency claimed that the move was to "safeguard national security and interests," it is generally believed that the export controls are tit-for-tat retaliation for the United States' continued tightening of export restrictions on artificial intelligence chips to China.
China is the world's largest producer of gallium and germanium, accounting for about 94% of the world's supply and 83% of the latter, thanks to its lower production costs. While gallium and germanium are not rare, they are expensive to mine for some countries and are sold cheaply in China by comparison.
Reuters reported that in the first eight months of 2023, China exported 36.48 tons of germanium, while the export volume of gallium during the same period was 22.72 tons. Before the restrictions were introduced, exports increased significantly in July, with germanium exports of 8.63 tons and gallium exports of 5.15 tons. In August, China did not sell any of these elements on the international market.
However, China appears willing to allow these metals to be exported. China's Ministry of Commerce spokesman He Yadong said at a press conference that several companies applied for licenses to export gallium and germanium in mid-August. These licenses apply to dual-use items and technology, that is, items and technology that have potential military and civilian uses. Some export license applications have been approved and more are still under review.
Analysis points out that China's introduction of these restrictions may have little effect and have negative implications for related industries, because there are alternative sources around the world. The price of gallium in China has fallen by 20% since July due to increased inventories. On the one hand, China is grappling with weak domestic demand, a housing crisis and the largest export decline in more than three years.
Germanium is widely used in fiber optic communications, night vision goggles, space exploration satellites, solar panels, LCD backlights and other products. Likewise, gallium is an important part of the semiconductor industry, used in wireless communications, phones, light-emitting diodes, and more.