The People’s Republic of China recently announced
unspecified export controls on three dozen metals and minerals.
They are likely in response to the Netherlands placing export curbs
on chip production technologies like lithography.
The two minerals on the list making the most headlines in the media are gallium and germanium.
The names are familiar to those in the semiconductor industry.
In two previous videos, I talked about China's dominance in rare earths supply. Gallium
and germanium are not rare earths, but they nevertheless play vital roles in world technology.
This is a current event so things can still change. But today,
let's take a look at Gallium and Germanium and how we use it.
## Germanium
Germanium is a metalloid.
As the name implies, they are not metals but instead have
metall-ish properties. Other metalloids include boron, arsenic and silicon.
Author Zhang Zhouxiang of China Daily starts
his editorial by claiming that germanium is rarer than gold.
Believe what you want to believe. But what's that phrase the Gen-Z kids say now? "Calling cap"?
Anyway, I doubt the validity of this claim. Wikipedia quotes both Barbalace
and WebElements that germanium exists in 1.8 and 1.4 parts per million in the earth's crust.
Gold meanwhile exists in the earth's crust at 0.0011 and 0.0031 parts per million, respectively.
Germanium metal - the pure element - goes for about $1,500 per kilogram. More or less.
Germanium oxides - a precursor combination of metal and oxygen - go for about $700 per kilogram.
Gold on the other hand goes for $61,700 per kilogram - as
of this writing. And I certainly would prefer a gold bar over a germanium one.
## Germanium Supply
America has germanium-containing ores in Alaska, Washington and Tennessee same as China.
But ultimately, it is pointless to look at global "reserves" of germanium and
where they are. Yet another mistake that Mr. Zhang the China Daily editorial writer makes.
That is because Germanium - like Gallium, but we will talk about
that later - is not economically viable when mined on its own. As I have said,
the issue with these elements has always been about refinement.
Germanium is never found by itself in nature, instead manifesting in
trace amounts in ore minerals for other items like zinc-copper-lead ores. Because of this,
most germanium we have today comes as a byproduct of other procedures.
About 60% of the world supply comes from zinc refineries,
with 20% coming via the coal fly ash from coal burning power plants.
A lot of Germanium is also recycled. The US Geological Survey says that 60%
of the Germanium metal the US produces is recycled
again for later use. A good amount comes from decommissioned tanks.
In the 2012 to 2016 time period, China produced 80% of the world's germanium
supply. Finland does 10% and Russia about 5%. The US and Japan do about 2%.
America imports more than half of its Germanium supply. More than half of
those imports are from China. The rest comes from Belgium, Germany, and such.
Canada also hosts two refinement factories in British Columbia - run
by the Canadian mining giant Teck - and they
process the Germanium-containing zinc alloys mined out of Alaska.
## Germanium Demand
Germanium used to be quite significant in the semiconductor industry.
The first transistors were made from germanium before
the industry switched to silicon in the 1960s.
One estimate of end user markets for germanium goes like infrared systems 30%,
fiber optics 20% and polymer catalysts another
20%. The rest is split up between solar panels and smaller things like research.
For infrared systems, we use Germanium as an optical window and lens material since
infrared rays are transparent to the element. We can substitute it with zinc selenide,
zinc sulfide and germanium glass, but that does not work as well.
For fiber optics, germanium oxides are essential and it is the largest
use case specifically in the United States - 40% of demand. Germanium
Oxides are added to the silicon glass as dopants to minimize signal loss.
As the US continues its 5G rollout, that means more fiber optics. For example,
Verizon bought about 12.4 million miles of fiber from 2018 to 2020.
So far, there are no industrially competitive replacements. People
have experimented with fluorine, but it is not a good replacement.
For the polymer catalyst use case, we use germanium in the production of PET plastic
bottles. We use it as a catalyst so that the PET plastic does not discolor. This
isn't significant in America, but globally this is the single largest use case for germanium.
And finally solar panels, we use a germanium alloy as a substrate
layer for high-efficiency solar panels. They cost more compared to silicon-based
panels which makes them more suited for satellites, but that is expected to change.
Well, maybe. Silicon is a pretty formidable competitor.
As for the electronics space, it is a whole amalgam of small and random stuff. We use
germanium to help produce the scintillator crystals for PET scanners, Bismuth Germanium
Oxide or BGO. Did a video about that too. We use a germanium substrate for some LEDs.
There is some mention of silicon-germanium alloys today for radio frequency applications.
But on the whole, germanium is no longer used in semiconductors.
## Germanium Shortage?
There is a relevant and recent example of a significant Germanium shortage.
In January 2018, there was an explosion - coal dust or something - at one of Teck's
two refineries in Canada and that caused Germanium metal prices to
rise 35% from $1,250-$1,400 to $1,720-$1,800 for half a year.
I mean, that's about $500 a kilogram, that's not a lot. And even at that price, traders felt
the germanium market was over-supplied in light of the impending repairs of the Teck refinery.
The Germanium market on the whole is very small. In 2022,
the total value of the germanium consumed in America was about $39 million.
Teck is one of the world's leading suppliers
of Germanium and even so it makes up less than 2% of their revenue.
So all in all, I would expect that there is sufficient supply to shoulder
the Germanium burden in the case if China decides to disallow exports.
Which I think they won’t. Not by itself. Germanium is so widely used and provided
by so many different countries across the world that I think China only chose to put
this onto the list because America used to make Germanium transistors.
## Gallium
Gallium is a post-transition metal related to indium, tin, and aluminum.
Gallium is silvery blue and quite soft. Along with mercury, cesium, and rubidium - which doesn't
sound like a real thing - it is the only metal that takes a liquid form at room temperature.
It melts in your hand, though you shouldn't put it into your mouth. Gallium is not toxic
to the human body but can cause throat irritation, vomiting, blockages, and ridicule by your peers.
At about 18-19 parts per million in the earth's crust, gallium is rarer than copper,
cerium, or lithium but more common than germanium, lead, uranium, and mercury.
And certainly way more common than gold. I still would rather take the gold bar.
But again, it is not about "rareness" as measured by parts per million,
but refinement. Like Germanium, gallium is mostly found in trace amounts alongside other
things. Ores with gallium include bauxite, zinc ores, and coals.
So like Germanium, Gallium is not commercially viable on its
own so we get it as a byproduct as we process these other things.
We extract aluminium from bauxite using acids as part of the Bayer process. After you churn
through those acids several times, we have something left behind called Bayer liquor.
This liquor has a high concentration of gallium. Don't drink it. So we can then process that using
a variety of methods like solvent extraction or ion exchange or fractional precipitation.
Bayer liquor provides 90% of the world's raw gallium
but we can also pull it out of burnt coal ash.
## Gallium Supply
The gallium market is split into two segments, the low and high quality markets.
Despite the name, Low quality gallium is still quite pure - 99.99% pure. High
quality gallium on the other hand are more about wafers,
which need purity levels with many more 9s. Sometimes 6 or 7 digit places of 9s.
They are far more valuable in this form - about $500 per kilogram compared to $100 per kilogram.
The world leader in both is again China. China produces the most aluminium in the world.
They also have the most coal-fired plants
in the world. So it makes sense they produce the most gallium.
As quoted in the media, China has 90% market share, including 93% of the low quality refinement
market. They produce a staggering 750,000 kilograms of low quality gallium each year.
Most high quality Gallium wafers are produced in China, Japan,
Canada, and the United States. The United States imports all of its gallium - mostly
from China but France and Japan are also significant exporters.
There is no domestic supply of it, though we could conceivably recycle scrap.
The world's biggest consumer of gallium is not the United States
but Japan - taking up 40% of world production. Mitsubishi Chemical,
Sciocs, and Sumitomo Electric use it to produce and export gallium compound wafers.
75% of their raw gallium in turn comes from China.
## Gallium Integrated Circuits
Unlike Germanium, most of the world's Gallium production is for electronic
usage - integrated circuits and optoelectronics.
In 2018 in the United States, integrated circuits
consumed 73% of the whole gallium market by volume - about 10,800 kilograms of the
15,000 kilograms total. Optoelectronics - LEDs and solar panels - run a distant second.
There are two big compounds - Gallium Arsenide and Gallium Nitride.
When it comes to Arsenide, it is more resistant to radiation, so the stuff is well suited for
radio frequency applications - power amplifiers for mobile phones or communications units for
telecom. This is a $9 billion market and consumes about 33-35% of the whole Gallium Arsenide market.
Now, Gallium Nitride. I did a video about this before. Go check that out.
These are critical ingredients in power electronics like chargers. Gallium nitride
and other wide bandgap semiconductors outperform traditional silicon in certain
power applications because of its higher tolerance of temperatures and voltages.
Gallium nitride power semiconductors are not as suited for large scale,
higher voltage systems - EVs, wind mills, etc. Silicon carbide has the edge there.
But they are great for smaller and medium items like medical equipment and consumer electronics.
I am using a little GaN wall charger right now and love it. It is so small and cute,
yet does better than my old massive Apple power brick.
## Optoelectronics
Gallium is a critical ingredient in optoelectronics - LEDs, solar cells, and lasers.
LEDs do more than just provide the light for your rooms. They
are incorporated in basically every screen for notebooks, smartphones, and televisions.
We use many gallium-based compounds like Aluminium Gallium Indium phosphide, Indium Gallium Nitride,
Gallium Arsenide, Gallium Arsenide Phosphate and Gallium Nitride to produce the various colors in
your LEDs. For instance, Gallium Nitride is a critical ingredient for blue LEDs.
Another growing use case is for laser diodes for commercial Lidar systems. Laser diodes are
like LEDs but with extra modifications to create a more coherent light beam.
Three 3D-sensing diodes made from Gallium Arsenide
go into your iPhone X and other mobile phones to help FaceID work.
We might be able to replace these with Indium Phosphide, but Indium
is another one of those rare compounds too. Robbing Peter to pay Paul situation.
As for substitutes, I don't think there are good substitutes for these ingredients within
the LED itself. OLEDs can do similar jobs and are made from organic compounds. But of course,
swapping those two isn't always feasible for systems.
I believe that export controls on the gallium compounds will have big
effects on certain components within the optoelectronics supply chain - affecting
the larger electronics supply chain too. That being said,
supply is diversified - and can be brought online wherever we make aluminum or burn coal.
## Conclusion
After doing a few hours reading and reflection on this, I feel that these Gallium and Germanium
export controls are more a public relations move rather than an economically impactful one.
Export controls might not ultimately turn into outright export bans. The government is
putting in the foundations for such a ban, but that does not mean one is inevitable.
If it does, then such a ban on these two minerals via the controls will ultimately end up in not
much more than some delayed shipments and higher - but not crazy higher - commodity prices.
Gallium and germanium are different than the rare earths. There are other places
producing and refining this around the world.
When prices get high enough, production can start up again and enter the market.
Note that this is assuming all things being equal. There are a bunch more minerals in the
controls which are not mentioned in this video. A full and complete ban
on all of these minerals at the same time can have unpredictable outcomes.
China knows all this, of course. What they are doing is making a statement that China
believes that its raw materials are as important to the American silicon
industry as the lithography machines are. I am starting to wonder if they are right.