Tag: germanium

  • Critical Minerals and the CHIPS Act: How the US Is Trying to Build a Domestic Supply Chain

    The CHIPS and Science Act was signed into law in August 2022 to rebuild American semiconductor manufacturing. By 2025, the Trump administration had redirected at least $2 billion of its funding toward something the original legislation barely mentioned: critical minerals. The pivot tells you everything you need to know about where the actual bottleneck sits. You can build a semiconductor fab in Arizona — and the U.S. is building several — but if the neodymium magnets in the fab’s equipment, the gallium in the compound semiconductors, the germanium in the fiber optics, the cobalt in the tooling alloys, and the rare earth elements in the electric motors all come from China, then you’ve built a factory that runs on your adversary’s supply chain. The CHIPS Act started as a semiconductor bill. It’s becoming a critical minerals bill because the people implementing it realized the two problems are the same problem.

    The scale of the dependency

    China controls approximately 90 percent of global rare earth processing, 80 percent of gallium production, 98 percent of gallium metal output, 60 percent of germanium, and dominant shares of graphite, manganese, and cobalt refining. The United States has exactly one operational rare earth mine — MP Materials’ Mountain Pass facility in California — and until recently had zero domestic capacity to separate rare earth oxides into individual elements, zero capacity to produce rare earth metals from those oxides, and zero capacity to manufacture the neodymium-iron-boron permanent magnets that go into everything from F-35 fighter jets to MRI machines to wind turbine generators to EV motors. The U.S. mined the ore and shipped it to China for processing. That’s like growing wheat and sending it abroad to be turned into bread.

    When China imposed export controls on gallium and germanium in July 2023, exports dropped 97 percent in three months. European prices doubled. The demonstration was unambiguous: China could turn the valve on materials that the defense industrial base requires and the U.S. has no domestic alternative for. The semiconductor supply chain runs through a handful of chokepoints. The critical minerals supply chain runs through fewer. And unlike chips, where TSMC’s advantage is technological, China’s advantage in minerals processing is infrastructural — built over three decades of sustained investment that the U.S. chose not to match.

    What the government is actually doing

    The response since 2025 has been the most aggressive federal intervention in mining and materials processing since the Strategic Petroleum Reserve was established. The Department of Defense’s Office of Strategic Capital deployed over $4.5 billion in capital commitments by January 2026, closing six major critical mineral deals in a single year. The scale and structure of individual deals illustrate how far the government is willing to go.

    MP Materials — the Mountain Pass operator and sole U.S. rare earth miner — received a $400 million equity investment from the Pentagon plus a $150 million loan to build heavy rare earth separation capacity in California. The Pentagon also established a price floor of $110 per kilogram for neodymium-praseodymium oxide — effectively guaranteeing MP Materials a minimum revenue regardless of market fluctuations. That’s the government acting as both investor and customer, de-risking a market that private capital alone won’t enter because Chinese producers can dump prices below any Western competitor’s cost of production.

    Vulcan Elements and ReElement Technologies secured a $1.4 billion public-private partnership — $620 million in Pentagon loans, $50 million from the Department of Commerce under the CHIPS Act (with the government receiving an equivalent equity stake), and $550 million in private capital — to manufacture up to 10,000 metric tons of NdFeB magnet material domestically. USA Rare Earth announced a $1.6 billion debt and equity package with the government taking a 10 percent ownership stake. In Alaska, the Pentagon invested $35.6 million for a 10 percent stake in Trilogy Metals’ Upper Kobuk project. In Louisiana, Ucore Rare Metals received $18.4 million from the Army for a commercial-scale rare earth separation facility.

    The National Defense Stockpile, a strategic reserve created in 1939 and largely neglected for decades, received $2 billion in new funding through the One Big Beautiful Act. The Pentagon announced intent to procure up to $1 billion in stockpile materials, issuing requests for information on scandium, tungsten, graphite, samarium, dysprosium, and terbium — minerals for which the U.S. has known deposits but essentially zero commercial production capacity.

    The permitting acceleration is the other half. A March 2025 executive order expanded Defense Production Act authorities, reduced approval requirements, and directed streamlined permitting for mineral projects. The Department of the Interior published a new Critical Minerals List in November 2025, expanded from 50 to include additional materials based on updated methodology. In January 2026, Section 232 tariff actions targeted processed critical minerals alongside semiconductors — not yet imposing duties on minerals, but establishing monitoring frameworks and requiring Commerce to report on whether future restrictions are warranted.

    Why it might not work fast enough

    The money is real. The policy intent is clear. The problem is time. The average timeline from mineral discovery to production in the United States is 17 to 29 years. Environmental review, permitting, judicial challenge, construction, commissioning, and ramp-up each take years. China didn’t build its mineral processing dominance through a single piece of legislation. It built it through three decades of sustained investment, deliberately subsidized production, environmental shortcuts that no Western democracy would permit, and strategic acquisition of mining assets worldwide — an estimated $57 billion invested in copper, cobalt, nickel, lithium, and rare earth mines and processing facilities from 2000 to 2021.

    The CHIPS Act-funded investments will take years to produce operational output. Vulcan Elements’ 10,000-ton magnet facility hasn’t been built yet. MP Materials’ heavy rare earth separation capacity is under development. The Thacker Pass lithium project in Nevada — the largest lithium deposit in the U.S. — had its Department of Energy loan restructured in October 2025 to include debt service deferrals, which tells you the economics remain fragile. The Pentagon’s price floor mechanism for rare earths is an admission that the market alone won’t sustain domestic production against Chinese competitors who operate at lower cost, lower environmental standards, and with direct state subsidy.

    There’s also a geographic diversification play that acknowledges the U.S. can’t do everything domestically. MP Materials announced a joint venture with the Pentagon and Saudi Arabia’s Ma’aden to build a rare earth refinery in Saudi Arabia — expanding non-Chinese separation capacity outside U.S. borders but within allied supply chains. The Export-Import Bank’s Supply Chain Resiliency Initiative finances upstream projects in allied countries where U.S. manufacturers have signed offtake agreements. The strategy is “friend-shoring” — building mineral processing capacity in countries that won’t weaponize it against the U.S. — because building it all domestically would take longer than the threat allows.

    The honest assessment

    The U.S. went from zero critical mineral strategy to $4.5 billion in deployed capital in roughly 18 months. That’s fast by government standards. It’s not fast by supply chain standards. China’s rare earth monopoly wasn’t built in 18 months, and it won’t be unwound in 18 months. The investments are necessary. They are not sufficient. And the fundamental constraint — that opening a mine in the U.S. takes longer than a presidential term — means the strategy requires continuity across administrations, which is the one thing American mineral policy has never had.

    The CHIPS Act’s evolution from semiconductor legislation to critical mineral funding vehicle is the clearest illustration of a lesson the copper shortage, the helium crisis, and the gallium export controls all teach independently: the energy transition, the AI buildout, and the defense industrial base all depend on the same materials, sourced from the same places, processed through the same chokepoints. We cover the full critical minerals landscape — from neodymium magnet manufacturing to China’s processing monopoly to the CHIPS Act response — across our Rare Earth Elements course, where the question isn’t whether the U.S. has the money to build a domestic supply chain but whether it has the time.

  • Gallium and Germanium: China’s Newest Export Control Weapons and Why Chips Need Them

    In July 2023, China’s Ministry of Commerce announced export controls on gallium and germanium—two metals most people have never heard of, both of which are essential to semiconductor manufacturing, fiber optics, infrared optics, solar cells, and military hardware. Exporters were required to apply for licenses, disclose end-use information, and identify the final destination of every shipment. The result was immediate: Chinese gallium exports dropped from 6,876 kilograms in July 2023 to 227 kilograms in October 2023. Germanium fell from 7,965 kilograms to 590 kilograms in the same period. European prices for both metals nearly doubled within a year. By May 2025, the Rotterdam price of gallium had hit $687 per kilogram—an increase of over 150 percent from pre-control levels. Meanwhile, gallium prices inside China fell, because domestic oversupply had nowhere to go. Beijing was sitting on cheap material it refused to sell, watching the rest of the world scramble.

    In December 2024, China escalated to an outright ban on gallium and germanium exports to the United States, along with antimony and superhard materials—a direct retaliation for the Biden administration adding 140 Chinese semiconductor companies to the Entity List. The ban was suspended in November 2025 as part of bilateral trade negotiations, with general licenses issued through November 2026. But the legal framework remains intact. The controls can be reactivated at any time. The message was delivered: China controls 98 percent of global gallium production and 60 percent of germanium, and it’s willing to use that leverage the same way OPEC uses oil—as a strategic instrument with a valve.

    What gallium and germanium actually do

    These aren’t rare earth elements—they’re critical minerals with their own supply chain vulnerabilities and their own reasons for mattering.

    Gallium’s primary semiconductor application is gallium nitride (GaN), a wide-bandgap material that handles higher voltages, operates at higher temperatures, and switches faster than silicon. GaN-based chips are more efficient and more durable than their silicon equivalents, which is why they’re displacing silicon in power electronics, fast chargers, 5G base stations, radar systems, and military communications hardware. Gallium arsenide (GaAs) is the backbone of radio-frequency chips in smartphones—the components that connect your phone to a cell tower use gallium, not silicon. Every 5G phone on earth contains gallium-based semiconductors. LED lighting runs on gallium compounds. The photovoltaic industry uses gallium in high-efficiency multijunction solar cells for spacecraft and concentrated solar installations.

    Germanium’s niche is narrower but equally non-substitutable. Its high electron mobility makes it essential for high-speed transistors. It’s the material of choice for infrared optical components—night vision goggles, thermal imaging cameras, missile guidance systems, satellite sensors. Fiber-optic cables use germanium-doped silica to minimize signal loss over long distances, which means the physical infrastructure of the internet—the glass cables that carry data between continents—depends on a material that one country dominates. An F-35 fighter jet’s infrared targeting system, the fiber-optic backbone connecting data centers, and the night vision goggles worn by infantry all share a supply chain vulnerability that runs through Beijing.

    How China got here

    Gallium doesn’t occur in nature as a primary ore. It’s a byproduct of aluminum smelting—extracted from bauxite processing residues at concentrations so low that recovery is only economical if you’re already running an aluminum smelter at scale. China produces more aluminum than any other country on earth, which means it generates more gallium-bearing waste streams, which means it dominates gallium production not because it set out to corner the market but because it cornered the upstream industry that gallium falls out of. The same pattern: whoever processes the most bauxite gets the most gallium, and China processes the most bauxite.

    Germanium is slightly more distributed—China controls 60 percent rather than 98 percent—but the refining infrastructure is similarly concentrated. Global annual demand for gallium is below 700 metric tons, a fraction of markets like copper (25.9 million tons) or nickel (3.1 million tons). The small market size is itself a strategic advantage for Beijing: it’s easier to manipulate a 700-ton market than a 25-million-ton market. Small disruptions in supply produce large price swings, which gives China leverage that’s disproportionate to the tonnage involved.

    The controls weren’t random. They were calibrated responses to specific American actions. The August 2023 licensing requirement answered the initial rounds of U.S. chip export controls. The December 2024 ban answered the Entity List expansion. The November 2025 suspension was part of a broader negotiated pause. Each escalation was timed, proportional, and reversible—designed to demonstrate capability without triggering a full decoupling. China has been explicit that the controls are not permanent policy. They’re a deterrent. The message: if you restrict our access to advanced chips and lithography equipment, we restrict your access to the materials those chips are made from.

    The rerouting problem

    The ban is leakier than it looks. Stimson Center analysis of Chinese customs data found that in 2024, the quantity of germanium exported to the United States fell by approximately 5,900 kilograms—almost exactly the amount by which germanium exports to Belgium increased (6,150 kilograms). The combined total to both countries was essentially flat across 2023 and 2024. The material appears to be flowing through third-country intermediaries that reimport it to the United States without Chinese end-use restrictions applying.

    For gallium, the picture is more complicated because Canada and Germany have secondary gallium production from their own aluminum smelting operations, making it harder to distinguish genuine non-Chinese supply from rerouted Chinese material. The U.S. Census Bureau records imports by the country that produced the material unless it underwent “substantial transformation” in a third country—a classification that creates ambiguity about whether Belgian-processed germanium originally sourced from China counts as Belgian germanium.

    The rerouting doesn’t eliminate the vulnerability. It adds cost, uncertainty, and transit time. It creates a supply chain that depends on Beijing’s tolerance of the workaround, which can be withdrawn. And it doesn’t address the fundamental concentration: if China decided to enforce end-use controls across all destinations—not just the United States—the third-country channels would close.

    What the West is building

    The response has been faster than for rare earths but still measured in years rather than months.

    MTM Critical Metals is building a facility in Texas to extract gallium from industrial scrap, scheduled to begin operations in early 2026—an unusually fast timeline for critical mineral projects. The company is reportedly negotiating binding agreements with Indium Corporation that include minimum price floors designed specifically to protect against Chinese market manipulation. Canada’s 5N Plus and Germany’s PPM Pure Metals have secondary production from domestic aluminum operations. Japan has invested in recycling infrastructure to reduce import dependence.

    The EU’s Critical Raw Materials Act targets reducing dependency on single-source suppliers. The CHIPS Act allocated funding for domestic semiconductor material infrastructure. But the structural problem is the same one that affects rare earth diversification: building new supply takes years, the markets are small enough that Chinese pricing can undercut new entrants at will, and the byproduct economics mean you can’t produce gallium at scale without producing aluminum at scale, which means diversifying gallium supply requires diversifying an entire upstream industry.

    Gallium prices inside China are lower than international prices because the domestic surplus can’t be exported. If China eventually lifts all controls, the price crash could make every Western diversification project uneconomic overnight—the same dynamic that has killed rare earth mining ventures outside China for two decades. Beijing doesn’t need to maintain the export ban permanently. It just needs the threat of reimposing it, combined with the ability to flood the market with cheap material if Western alternatives get too close to viability. The weapon isn’t the embargo. It’s the optionality.

    What it tells you about the next decade

    Gallium and germanium are test cases for a broader pattern. China identified that its dominance of bauxite processing gave it accidental control of a small but critical material, weaponized that control in response to American technology restrictions, calibrated the escalation to demonstrate capability without provoking full decoupling, and then suspended the controls as a negotiating chip—while keeping the legal framework active for reimposition. Every element in the critical minerals portfolio—antimony, graphite, rare earth processing technology, medium and heavy rare earths—has been subject to the same playbook in sequence since 2023.

    The progression: rare earth processing dominance (established over decades) → gallium and germanium controls (2023) → antimony controls (2024) → rare earth processing equipment and technology controls (October 2025, suspended November 2025). Each step expands the scope. Each suspension is temporary and conditional. The architecture for comprehensive export controls across the entire critical minerals supply chain is built. It’s just not fully activated—yet.

    We cover gallium and germanium alongside the helium shortage, rare earth recycling, and the full landscape of critical materials that underpin modern technology across our Rare Earth Elements course—including why the most strategically important metals in the semiconductor supply chain are ones most people can’t name, produced as byproducts of industries most people don’t think about, and controlled by a country that knows exactly what it has.