In this week's Innovation Lightbulb newsletter, we look at U.S. import data regarding gallium and germanium.
Earlier this month, China announced the future implementation of export controls on the minerals gallium and germanium, set to take effect on August 1, 2023. Classified as critical minerals by the United States Geological Survey (USGS), gallium and germanium are essential in the manufacturing and production of semiconductors and advanced electronics. With the most recent USGS data showing China accounts for 98 percent of global raw gallium production and 67 percent of raw germanium production, what effect could these export controls have on U.S. chip supply chain resiliency in chip-making?
Despite China's lofty production numbers, most of its output is geared towards its own domestic consumption, meaning it does not have a monopoly on the global supply chain for these minerals. As detailed in recent analysis from the Defense-Industrial Initiatives Group at CSIS, other allied countries such as Japan, Germany, and Australia have the production capabilities to offset long-term gallium supply chain disruptions, rendering the export controls "mostly symbolic." Looking to U.S. import data and mineral production further illuminates the effect of these controls.
While silicon-based semiconductor wafers are the most widely used in chip manufacturing today, gallium is the critical component of gallium nitride (GaN) and gallium arsenide (GaAs) wafers. Gallium-based wafers have higher electron mobility than silicon wafers and are especially useful in analog integrated circuits and optoelectronics.
As shown in the chart above, China only accounted for just under 4 percent of total U.S. gallium imports in 2020, since over 95 percent of gallium consumption in the United States is in the form of GaAS wafers manufactured in other countries, primarily Germany, Taiwan, and Japan. China, however, is the primary supplier of the raw gallium used to make these wafers. In the case of Germany, China supplies upwards of 55 percent of its raw gallium imports.
Now let's look at germanium. Germanium was the basis of the first-ever bipolar transistor developed over 70 years ago at Bell Labs. Germanium has remained a vital component of chipmaking and a key material in fabricating fiberoptic cables and solar panels. More recently, chipmakers are examining germanium as a faster circuit current-carrying channel than silicon.
Recent import data from the USGS indicates that U.S. reliance on Chinese-supplied germanium is significant—49 percent in 2021. However, this dependence is decreasing year-over-year. In 2019, China accounted for just over 60 percent of total U.S. germanium imports for consumption, as shown in the chart above.
But opportunities for a larger degree of domestic sourcing exist. The United States has extensive germanium reserves in Alaska, Washington, and Tennessee. Nyrstar, a global producer of minerals and metals, is considering expanding its zinc smelting plant in Clarksville, Tennesee, to include the production of both gallium and germanium. The company claims the plant could meet 80 percent of annual U.S. demand for both materials. Red Dog Operations, located in Northwest Alaska, is one of the largest zinc mines in the world, and has known concentrations of both gallium and germanium. The mine reportedly has the capacity to meet the U.S. consumption needs of gallium metal.
The full impact of these controls remains to be seen. However, amid a fierce geopolitical and technological rivalry, it is clear that the U.S. and China will only continue their attempts to solidify their chokeholds on segments of the chip supply chain. In the meantime, U.S. and allied countries must continue the important work of increasing their resiliency and cooperation in strategic supply chains like critical minerals.
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