Following trade restrictions imposed by China in August 2023 germanium, indium, and gallium prices rallied to almost record levels. 

Germanium metal prices on a delivered USA basis averaged US$1,780/kg in June after reports of stockpiling activities by the Chinese government were revealed to be the main driver for the significant rally. The National Food and Strategic Reserves Administration is believed to have stockpiled 100t of germanium. Project Blue estimates that this accounts for more than 60% of the world’s annual germanium consumption, largely underpinned by electronic and technology applications. 

Germanium spot prices have been climbing since November 2022 when they dipped to US$1,055/kg, significantly below the historical averages over the past decade. As such, prices have risen by 68.7% in less than two years and 27% since the export restrictions took effect in August 2023. 

Gallium and indium, which together with germanium are key critical materials in semiconductors, have also seen recent price hikes in June, rising to US$330/kg (5N purity basis) and US$393/kg, respectively. However, it is yet to be determined whether this is related to stockpiling activities. 

The semiconductor market declined in 2023, following higher than expected demand in 2022 due to work-from-home related trends. This strained the world of its chip supply, causing governments and consumers to review supply chains. The current outlook for semiconductors applications indicates a return to growth in demand and high-end chip maker Taiwan Semiconductor Manufacturing Company (TSMC) saw a significant increase in orders from China in Q2 for high-performance computing (HPC) applications. 

Geopolitical tensions have risen as countries establish and secure reliable supply chains for high-end microchips by bolstering domestic production. This is evident in numerous countries through policies and proposed investment opportunities such as the USA’s Chips and Science Act, the EU’s Chips Act, China’s third round of state-backed investment fund, and South Korea’s proposed US$470Bn semiconductor park. Legislation and investments around the world have reached over US$500Bn in total proposed funding to meet future demand.  

The outlook for germanium and other minor metals is poised to be influenced several geopolitical narratives taking shape, as semiconductors and its raw materials supply chains are put under the lens.