Effects of China Mineral Ban on Semiconductor Supply Chains and India!

Given growing trade tensions between the two nations, China has prohibited the sale of the minerals gallium and germanium to the United States. Due to their use in computer chips, military equipment like night-vision goggles, and the renewable energy sector, which are crucial for producing solar cells and electric cars, the minerals have significant economic worth. These issues are highly delicate to the United States and the European Union.

Effect of Semiconductor Supply and Mineral Ban on India

Supply Chain Diversification: Due to China's export restrictions, India may see a chance to diversify its supply networks. For gallium and germanium, Indian producers might look for alternate supplies, which could result in more imports from other nations or even domestic production projects.

Cooperation with Other Countries: As these nations seek to establish their supply chains for vital minerals, India might deepen its relations with nations like Canada, Australia, and Japan. Joint ventures for the mining or processing of these materials may result from cooperative efforts.

Impact on Technology Sectors: The worldwide scarcity of semiconductor materials may pose problems for sectors that depend on them, including electric vehicles (EVs) and renewable energy technologies. India's aspirations in these areas may be slowed considerably unless alternate sources are promptly found.

Increasing Domestic Production: The circumstances might persuade India to invest in essential mineral processing and its semiconductor capacity. To encourage domestic production of electronics and semiconductors, the Indian government has previously been supporting programs like the PLI (Production-Linked Incentive) plan.

Impact of the Semiconductor Market

The semiconductor industry is anticipated to see shortages and higher pricing of gallium and germanium due to China's export prohibition, which may cause production schedule delays for a number of electronic items. The semiconductor industry may change over time due to companies searching for substitutes or increasing their R&D expenditures for new materials or technologies that do not depend on these vital minerals. As businesses adapt to new supply chain realities, the semiconductor market may become volatile, changing the cost and accessibility of chips used in consumer devices, automotive applications, and military technologies.

Expected Changes Due to China's US Mineral Ban Hits EV, Military Tech and Semiconductor Supply Chains

Building more robust supply chains to endure geopolitical tensions and interruptions will probably be a top priority for the US and India. There will be an effort to improve both nations' domestic capacities, especially in producing semiconductors and processing vital minerals. Due to the current trade disputes, new alliances or trade agreements centered on technology and resource sharing may result from countries realigning their commercial connections based on access to critical resources. Innovation in the tech sector could be stimulated by increased research investment, resulting in discoveries of substitute materials or techniques that lessen dependency on gallium and germanium.

Increasing extraction from so-called secondary sources, which mainly entails recycling outdated electronics and other stuff that has outlived its useful life, would be an alternative. Although secondary supply is not officially measured, some reports suggest that secondary sources account for no more than 10% of the gallium supply. In the case of germanium, this percentage rises to 30%.

Nevertheless, there are significant obstacles to expanding these minerals' secondary output. Since minerals are typically mixed with other components in electronics like computer chips, the recovery procedure through recycling is quite complicated. Because of this, it is challenging to isolate the minerals. As a result, the Chinese embargo causes a significant disruption in the supply chain for these minerals. Since the recovery yield is still poor and the cost is not competitive, the secondary supply (recycling) cannot temporarily compensate for the decreased primary supply. Long-term technological developments in this recovery process may lower the price and boost the supply of both minerals, hence decreasing reliance on Chinese mineral ores.