Gallium Prices

Gallium Price Forecast

As our dependence on technology continues to grow, the demand for gallium will continue to increase. Many popular and vital products already use this critical metal. At the same time, new technologies keep getting developed that require gallium, such as 5G cellular technology which uses gallium arsenide chipsets. These are energy-efficient and produce little heat meaning 5G base stations don’t need as much power or air conditioning as silicon chipsets.

As the semiconductor industry shifts from silicon to gallium, China and its chipmaker Huawei are preparing to take the lead position. They aim to dominate the market in products made with gallium-based chips for years to come. Huawei has already filed for 2,000 patents related to gallium, which is more than any other company.

In addition to its use in 5G base station chipsets, gallium nitride is used in military radar, lasers, and satellites. This makes it one of 35 elements the US government, alongside Europe, calls a national security concern. With China so heavily controlling production (95%), there are growing concerns about how US and EU based companies will gain access to gallium in the coming years.

It is estimated (Source: Fraunhofer Institute) that in Europe alone, by 2030, we will be consuming 7 to 26 times more gallium than we are currently consuming.

For further context let’s look at Austria, a population of 9 million, one of the smaller countries in Europe. According to the Austrian Federal Ministry of Agriculture, Regions and Tourism, Austria will need four and a half times the current global gallium production for the planned expansion to renewable energies.

We already mentioned that with 95%, China dominates the supply. But here’s where it gets even more interesting regarding China. It took them a generation to become the dominant market leader in gallium. While the US, EU, and other nations are now taking action to wean dependence off China, creating sustainable new supply sources will take 10 to 15 years.

More importantly, it’ll take a decade at least to foster the engineering expertise and human capital needed. Since the late 1980s, the human capital and engineering expertise has been depleted, particularly in the US. For context, China has 39 universities graduating with degrees in critical minerals, and the US has only a handful. China has been graduating 200 metallurgists a week every week for the past 30 years, while the US has maybe 200 a year. The industry estimates are that China has 400,000 people working in Rare Earths and technology metals, and the US has 400.

Without question, it will take Europe, the US, and other countries a generation to catch up, if they do at all. In the meantime, we in the West must wait in line for what China will export after they have satisfied their domestic quotas. To add insult to injury, China made good on their “export ban” threats when they stopped exporting gallium (and germanium) to the US, Europe, and Japan in August 2023. This is believed to be a clear reaction to the US’s ban on shipping advanced semiconductor manufacturing equipment into China. The gallium price  increased over 20% in the months following China’s export ban.

Given the importance of gallium to countries’ economies and the supply dependence on China for the foreseeable future, it’s forecast that the price of this rare element will come under even more pressure in the coming months and years … and hence rise substantially over the medium term.