China's Ministry of Commerce and General Administration of Customs jointly announced an export licensing regime covering eight gallium-related items (including gallium metal, gallium arsenide, gallium nitride wafers and ingots) and six germanium- related items (including germanium metal, germanium oxide, germanium tetrachloride). Effective 1 August 2023, exporters must obtain a dual-use-item licence from MOFCOM citing the end-user and end-use, with licences granted at MOFCOM's discretion. The measure was framed as protecting national security and interests, though the timing immediately followed the Dutch ASML DUV controls and US chip-equipment escalations.

Analyst notesShow

Mechanism

Items covered (per MOFCOM Announcement No. 23):

Gallium: gallium metal, gallium antimonide, gallium arsenide

(GaAs), gallium nitride (GaN), indium gallium arsenide, gallium phosphide, gallium selenide, gallium oxide.

Germanium: germanium metal, germanium epitaxial growth

substrate, germanium ingots, germanium dioxide, zone-refined germanium ingots, germanium tetrachloride.

Mechanism is licensing, not an outright ban — exporters must apply, licences may be granted, denied, or delayed. In practice the Aug-Dec 2023 period saw zero outbound shipments for two months (no licences issued), then a slow trickle.

Why severity 4

China supplied ~80% of global primary gallium and ~60% of germanium in 2022 (USGS Mineral Commodity Summaries). These are strategic materials for compound-semiconductor (GaN power devices, GaAs RF), defence-grade infrared (germanium optics), and fibre-optic networks. The licensing regime caused immediate price spikes (germanium +40% within 90 days, gallium +25%) and forced Western buyers to draw down strategic stocks.

Severity is bounded below 5 because: (a) the rest of the world holds 1-3 years of inventory or refining capacity; (b) gallium is a by-product of bauxite/aluminium, so non-Chinese supply can ramp on a multi-year horizon; (c) the licences exist — it's slowdown and uncertainty, not zero.

It would tilt to severity 5 if (and the December 2024 ban did exactly this for the US specifically — separate filing).

Downstream implications

US Defense Logistics Agency announced strategic stockpile

purchases for both metals in the months following.

EU launched a domestic germanium recycling push under the

Critical Raw Materials Act framework (separate filing).

Bourns, Wolfspeed, Macom (compound-semi makers) telegraphed

multi-quarter inventory buys.

This is the template MOFCOM used for subsequent expansions

(graphite, antimony, then the December 2024 broad escalation).

Open questions

Severity should be quant-recomputed once OECD bilateral

HS-code-72/81 trade data is integrated.

Track licence approval latency over time as a leading indicator

of bilateral tension — currently anecdotal.

Sources

Primary: MOFCOM Announcement No. 23 of 2023 (English summary) · General Administration of Customs cross-reference

Secondary: Reuters coverage · CSIS — "China's Gallium and Germanium Export Restrictions"

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