The cold war between the United States and China seems not only to eat itself, but will cause quite serious issues for companies that make semiconductor components on a global scale.
Around the end of last year, the Chinese government began imposing export restrictions on rare earth materials such as Gallium and Germanium. Germanium is particularly used in the manufacture of optical fiber cables and also modern processing chips.
Gallium is used as an electrical conductor, and its use is increasing as GaN chargers are widely used to rapidly charge electronic devices. In fact, in computers, Galium is used in the LED bulbs that are used for screen displays that are used today.
The results of these restrictions can be seen today, where every time these materials are marketed to the international market, they need to go through a government approval process, which usually takes 30 to 80 days before they are approved.
In addition to that, the prices of germanium and gallium materials are also seen to increase. One kilogram of germanium showed a price increase from $1200 per kilogram to 2600 per kilogram. Gallium, on the other hand, was previously sold at a price of $300 per kilogram before, and is now sold at a price of $530 per kilogram.
Further complicating the situation for all is that China is seen as the largest source of these two rare earths. 60 percent of the germanium supply is located there, and from 80 to 98 percent of global gallium resources come from China.
In the meantime, the Chinese government is also seen to have started collecting supplies of these rare earths for their own use and that of local chip-making companies. There are reports saying that it is for the purpose of speeding up the production of chips and their semiconductor components to preserve the technology's dependence on local companies only.
It is expected that makers of semiconductor chips and components will have to pay high prices for these materials for now, until the Chinese government reopens their exports.