Impact of China’s Export Restrictions on Gallium and Semiconductor Companies
Introduction
China’s decision to restrict exports of gallium and germanium has raised global concerns about the stability of supply chains for critical materials used in semiconductors, defense technologies, and clean energy solutions. This move is a response to the U.S.’s export controls on Chinese semiconductor technology, intensifying the geopolitical race in advanced technologies. Gallium is vital for gallium nitride (GaN) and gallium arsenide (GaAs) chips, which are used in high-performance computing, RF communication, power electronics, and defense systems. (See China hits back at U.S. with export ban on rare minerals)
Overview of China’s Export Restrictions
In response to U.S. export controls targeting China’s semiconductor industry, China has implemented its own set of export restrictions, which include key materials like gallium, germanium, and antimony. These materials are crucial for the production of semiconductor chips, electric vehicles, solar panels, and various military technologies. China dominates the global production of gallium and germanium, which are used in gallium nitride (GaN) and gallium arsenide (GaAs) semiconductors.
The restrictions have already begun to disrupt global supply chains, with gallium in particular facing significant shortages. China controls about 80% of the world’s gallium production, mainly sourced as a byproduct of aluminum production. As a result, the supply of these critical materials is now under greater scrutiny, potentially threatening key players in the semiconductor and tech industries.
Impact on Major Chip Companies
Several semiconductor companies are at risk from these restrictions. Some companies are better prepared for the supply chain disruptions, while others are more vulnerable:
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Wolfspeed (formerly Cree)
Wolfspeed manufactures GaN and silicon carbide (SiC) semiconductors used in electric vehicles, renewable energy, and RF communications. Given its heavy reliance on gallium, Wolfspeed faces a significant challenge due to the export restrictions. The company is exploring alternatives, such as securing gallium from other global sources and increasing recycling efforts. However, as of now, the full impact of China’s actions on Wolfspeed remains to be seen. GlobeNewswire -
Qorvo
Specializing in GaAs and GaN RF solutions for mobile devices, 5G networks, and defense radar systems, Qorvo also faces risks due to gallium supply constraints. Like Wolfspeed, Qorvo has not disclosed detailed mitigation strategies but is likely investigating alternative sources or methods to offset the risks of gallium shortages. -
Infineon Technologies
Infineon manufactures GaN-based power devices and RF components for automotive and industrial applications. While the company is affected by the global gallium supply disruptions, it has a diversified supply chain across Europe and Asia, which may help reduce the immediate impact. However, like others, Infineon will still face challenges as gallium supply becomes more constrained . -
Raytheon Technologies
Raytheon, which uses GaN chips for military applications, is actively investigating alternatives to gallium-based semiconductors. Their research into synthetic diamond and aluminum nitride materials is part of a long-term strategy to reduce dependency on gallium . -
Navitas Semiconductor
Navitas specializes in GaN-based power management chips. Its strong positioning in the market is partly due to its forward-thinking supply chain strategies. Navitas claims to have a stable supply of gallium by sourcing from multiple global suppliers, not solely dependent on China. This approach is a key factor in mitigating the immediate risks posed by China’s export restrictions. Gallium is a byproduct of aluminum and zinc refining, processes that are not exclusively tied to China, which further reduces Navitas’ dependency on Chinese sources. Navitas’ approach has helped them avoid disruptions, and their stockpiled gallium ensures they can maintain customer deliveries despite the geopolitical challenges Semiconductor Today, MarketScreener - Other Companies Using Gallium in Their Products
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Nvidia (NVDA): Although Nvidia does not manufacture GaN or GaAs chips directly, its products, including high-performance GPUs and AI accelerators, benefit indirectly from gallium-based technologies used in power management and RF components. Nvidia works with other companies that use GaN chips to optimize power conversion in data centers .
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Dell Technologies: Dell also does not manufacture GaN chips but integrates GaN technology into its products. For example, Dell uses Navitas Semiconductor’s GaNFast ICs in its laptop chargers and data center servers. Navitas Semiconductor
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AMD (Advanced Micro Devices): Like Nvidia, AMD does not produce GaN or GaAs chips. However, its high-performance processors may benefit from GaN-based power management technologies used in systems where its chips are deployed. MarketScreener
Mitigation Strategies and Long-Term Outlook
As the situation evolves, many companies are shifting focus toward securing alternative sources of gallium or increasing the use of recycling to ensure a more resilient supply chain. However, diversifying sources or developing new materials will take time and substantial investment. The development of synthetic materials or alternative semiconductor technologies, as seen in Raytheon’s work, may offer longer-term solutions, but these are still in their early stages.
In the short term, the restrictions are expected to result in higher costs and delayed production timelines. While some companies appear well-prepared, others may face more immediate disruptions. The broader tech and semiconductor industries will likely experience higher costs, and potentially reduced availability of certain high-performance products, as supply chains adjust to these new realities.
