Gallium and Germanium Prices Surge as Western Supply Lags Demand

The West continues to grapple with the economic fallout from Beijing’s 2023 export curbs on gallium and germanium. Three years into the restrictions, prices have climbed to nine or ten times their 2023 levels, forcing industries in chipmaking, clean energy, and defense to absorb significant cost increases. While Western companies have responded by stockpiling materials and seeking alternative suppliers, the decisive shift toward domestic production is only now beginning to take shape.

Demand for these niche metals is accelerating due to the expansion of artificial intelligence infrastructure, fiber-optic networks, and infrared imaging systems. S&P Global estimates indicate that global gallium demand will grow by approximately 12% annually through 2030, starting from a baseline of 1,000 metric tons in 2025. Germanium demand is projected to rise by 3.3% per year over the same period, from an estimated 343 tons in 2025. Despite this growth, China retains a dominant position in the supply chain, accounting for 98.9% of primary gallium supply and 68.6% of germanium supply in 2025, according to Project Blue.

Manufacturers Face Tight Supply Constraints

Companies producing infrared optics for defense and thermal imaging systems have experienced the most acute supply shortages. Jessica DeGroote Nelson, senior vice president of precision optics at Edmund Optics, stated that there is no direct one-to-one substitute for germanium, meaning alternatives require costly redesigns of existing systems. While some manufacturers have successfully reduced germanium usage by half over the past 18 months by switching to Western suppliers and raising prices, availability remains the primary bottleneck rather than customer willingness to pay.

Lattice Materials, a US-based producer of crystals for military displays, reports that supply conditions are unlikely to improve in the near term. President Travis Wood noted that data points indicate prices will remain at current high levels or continue to trend upward. To secure supply, some customers are purchasing germanium before their product designs are even finalized, a strategy that highlights the severity of the scarcity. The company is also focusing on recycling efforts to recover germanium from waste streams, reducing reliance on primary mining.

Substitution Strategies Remain Technically Complex

Efforts to replace gallium and germanium with other materials face significant technical hurdles. In semiconductor applications, indium phosphide is gradually displacing gallium arsenide, while zinc selenide, zinc sulfide, silicon, and chalcogenide glass are gaining traction in infrared applications as alternatives to germanium. However, industry insiders note that these substitutions require costly technological adjustments and lengthy development timelines. Because gallium and germanium are primarily byproducts of alumina and zinc processing, creating new supply chains is complex and time-consuming.

Western producers are accelerating their efforts to close the supply gap. Belgium’s Umicore has partnered with STL, a unit of Gécamines, to enhance germanium recovery from mining waste in the Democratic Republic of the Congo. In Greece, METLEN has initiated pilot-scale production, signaling a broader trend of new projects aimed at breaking China’s stranglehold on these critical markets. These initiatives represent the first major steps toward reducing dependence on Chinese exports, though they are not yet sufficient to meet rising global demand.

New Projects Aim to Boost Output

The race to build new supply capacity is intensifying as producers struggle to keep pace with demand. Several Western production projects announced in recent months are designed to finally reduce reliance on Chinese exports. However, the scale of these new initiatives is currently insufficient to offset the growing demand driven by AI and defense sectors. Industry participants warn that without accelerated investment and faster deployment of new facilities, the West will continue to face price volatility and supply interruptions in the years ahead.