Key changes in the chip market - China cuts off access to gallium and germanium❗

9:24 AM 31 July 2023

The semiconductor war continues, with the US and China outdoing each other in introducing export restrictions aimed primarily at the two countries' new technology sectors. From 1 August (i.e. tomorrow), new export restrictions will come into force in China, which will make it more difficult to access the key elements for the semiconductor market - gallium and germanium.

What will change? 

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

According to new recommendations from the Chinese government, any exporter of these elements will from now on have to obtain special trade approval for the transport of these elements, including details of the other party to the transaction (end user) and the production destination of the elements.

While such trade connections will still be possible, market access to key components will be significantly impaired, which may affect the margins of companies in this sector and the revenues themselves. 

The global semiconductor market is diversifying

The US-China trade conflict has wide-ranging implications, one of which is the ongoing geographical diversification of the chip sector. 

The US is now seeking to encourage entrepreneurs to locate their ventures within the State, aided by the introduction of the CHIPS and Science Act, bringing nearly $52bn into the chip market, of which $39bn is to be a fund to encourage companies to concentrate innovation within the US. 

In the Eurozone itself, innovation incentive packages have also been introduced in this area. Worth €43bn, the incentives are expected to increase EU's share of the semiconductor market to 20% (by 2030). China's export restrictions on gallium and germanium have worried the EU, which is now pressing European companies to increase production of other components, including those related to aluminium and zinc. 

What are gallium and germanium?

Source: Tellimer Research

Both elements are key components in the production of smartphones, laptops, solar panels and military infrastructure. Germanium primarily has anti-radiation properties, making it an important component for the space industry. The element also exhibits good electrical and thermal conductivity in integrated circuits. Gallium itself is used in energy-intensive semiconductors used in the LED installation sector, among others. 

Both elements are officially recognised in the EU and the US as key elements for global chip production. According to official CRMA data, China accounts for 80% of gallium supply and 60% of germanium supply respectively (in Europe, only one facility is capable of producing gallium with adequate chemical purity). 

China is a key market

According to the Semiconductor Industry Association, China accounted for US$180 billion worth of orders in the semiconductor market last year, or nearly a third of the global semiconductor trade value (US$574.1 billion). Further trade restrictions are strongly affecting companies in the sector that have a large share of their revenues from China. In the US, these are primarily Nvidia (NVDA.US), Qualcomm (QCOM.US) and Intel (INTC.US). Source: FactSet

Xtb logo

Join over 1 000 000 XTB Group Clients from around the world

The financial instruments we offer, especially CFDs, can be highly risky. Fractional Shares (FS) is an acquired from XTB fiduciary right to fractional parts of stocks and ETFs. FS are not a separate financial instrument. The limited corporate rights are associated with FS.
This page was not created for investors residing in Brazil. This brokerage is not authorized by the Comissão de Valores Mobiliários (CVM) or the Brazilian Central Bank (BCB). The content of this page should not be characterized as an investment offer in Brazil or for investors residing in that country.
Losses can exceed deposits

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
userBranchSymbol cc 2 March 2024
test_cookie cc 25 January 2024
adobe_unique_id cc 1 March 2025
__hssc cc 8 September 2022
SESSID cc 2 March 2024
__cf_bm cc 8 September 2022
intercom-id-iojaybix cc 26 November 2024
intercom-session-iojaybix cc 8 March 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
_gid cc 9 September 2022
_gat_UA-98728395-1 cc 8 September 2022
_gat_UA-121192761-1 cc 8 September 2022
_gcl_au cc 30 May 2024
_ga_CBPL72L2EC cc 1 March 2026
_ga cc 1 March 2026
__hstc cc 7 March 2023

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
MUID cc 26 March 2025
_omappvp cc 11 February 2035
_omappvs cc 1 March 2024
_uetsid cc 2 March 2024
_uetvid cc 26 March 2025
_fbp cc 30 May 2024
fr cc 7 December 2022
_ttp cc 26 March 2025
_tt_enable_cookie cc 26 March 2025
_ttp cc 26 March 2025
hubspotutk cc 7 March 2023

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence