【World Express】Global Gallium Supply Tightens: China Holds a Key Advantage in the Semiconductor Supply Chain

      The global compound semiconductor supply chain is currently facing a critical raw material supply crisis. Prices of key metals and specialty chemicals have surged significantly. Combined with export controls, escalating conflicts in the Middle East, a sharp rise in downstream demand, rigid production capacity, and increasing costs associated with low-carbon transition, multiple factors are resonating simultaneously. As a result, supply chain uncertainty has further intensified, placing substantial pressure on downstream chip manufacturing and end-use industries.

      This round of price increases is not driven by a single factor, but rather by the combined effects of supply-demand imbalance, geopolitical tensions, and industrial cycles, making it a core pain point affecting the global semiconductor industry.

      According to industry sources, prices of high-temperature metals required for compound semiconductor equipment—such as tungsten, tantalum, and molybdenum—have doubled in recent weeks, while some specialty chemicals have seen price increases of up to 300%.

      Among them, gallium, a key raw material for compound semiconductors such as GaAs and GaN, has experienced particularly rapid price growth. Market data shows that in early March 2026, gallium was quoted at approximately $2,100 per kilogram, representing a 123% increase compared to early 2025.

      As the “new grain of the semiconductor industry,” gallium is almost entirely produced as a byproduct of aluminum refining. Its supply stability is therefore tightly linked to the aluminum industry, and fluctuations in aluminum production further exacerbate the tight supply of gallium.

      Notably, the surge in gallium prices is driven by multiple shocks, including export controls, Middle East conflicts, rigid supply capacity, and strategic resource positioning.

      It is reported that over 90% of global gallium refining capacity is concentrated in China, while China accounts for approximately 80%–85% of global gallium reserves, giving it a dominant position. China’s export controls on gallium-related items are essentially aimed at safeguarding national resource security and securing development space for domestic industries, which has directly tightened the global supply landscape. Meanwhile, ongoing conflicts such as those in Iran have further disrupted critical links in the supply chain.

      The Middle East conflict has not only impacted energy supply but has also directly affected aluminum production. Qatar Energy has suspended the production of aluminum and helium, while major smelters such as Aluminum Bahrain and Qatar Aluminium (a subsidiary of Norsk Hydro) have declared force majeure due to natural gas supply disruptions.

      This has driven aluminum prices on the London Metal Exchange to a four-year high of $3,418 per ton, indirectly constraining gallium output.

      In addition, as a byproduct of aluminum refining, gallium lacks independent large-scale mining value, and there are no alternative extraction pathways globally. This results in extremely low supply elasticity.

      Coupled with cautious capacity expansion by manufacturers during the semiconductor downturn over the past two years, existing production capacity is unable to meet the current surge in demand, further amplifying price increases.

      At the same time, major demand countries such as the United States have long relied on imports without establishing domestic production reserves, further weakening the resilience of global gallium supply and driving prices higher.

      The tight supply of raw materials has already been transmitted downstream. GaN and GaAs, as core materials for compound semiconductors, are widely used in consumer electronics and communications, including PC power supplies, laptop chargers, WiFi 7 RF front-ends, routers, and network adapters.

      Meanwhile, shortages of InP substrates used in high-frequency optics and telecommunications components have become increasingly severe. Due to high technical barriers and overseas technology restrictions, China’s reliance on imports exceeds 90%. The shortage is unlikely to ease in the short term, further constraining the production of high-frequency, high-speed devices and integrated circuits.

      More critically, helium—an indispensable material in semiconductor manufacturing—is also facing potential supply disruptions.

      According to the US Geological Survey, Qatar accounts for over one-third of global helium supply, while countries like South Korea rely on Qatar for nearly 80% of their high-purity helium imports.

      Following the outbreak of conflict in the Middle East, leading chip manufacturers such as Samsung have begun closely monitoring helium inventories. Since helium has no substitute in semiconductor processes such as lithography and thermal management, and supply chain disruptions require 4–6 months to recover, shortages directly threaten the normal operation of wafer fabs.

      At the same time, the effective closure of the Strait of Hormuz has increased logistics risks, further exacerbating raw material transportation challenges.

      The strait handles one-fifth of global oil transport and one-quarter of liquefied natural gas trade. Disruptions not only increase logistics costs but may also delay the supply of critical chemicals.

      Additionally, the price surge of tungsten, tantalum, and molybdenum is driven by concentrated global resource distribution, rising mining costs, and explosive demand from downstream sectors such as new energy vehicles, AI data centers, and photovoltaic energy storage. Combined with rising global energy prices and increased compliance costs from carbon reduction efforts, prices have doubled in a short period.

      In response to the supply chain crisis, global compound semiconductor manufacturers have initiated emergency measures. They are moving away from just-in-time inventory models, increasing stockpiles of key raw materials, and qualifying multiple suppliers to build diversified supply systems.

      Companies have indicated that ensuring supply security takes priority, even at the risk of future price declines, in order to avoid production disruptions.

      Industry analysis suggests that this surge in raw material prices and supply shortages reflects structural issues: high concentration in the supply chain, weak resilience, supply-demand mismatch, and cyclical industry effects.

      The rapid growth in demand from AI, electric vehicles, and 5G communications contrasts with the long lead times and low elasticity of upstream material production. Combined with geopolitical conflicts, export controls, and rising low-carbon transition costs, these factors have collectively triggered the current price surge.

      Notably, this price increase has already spread to downstream components such as mobile memory chips, creating a chain reaction across the entire industry.

      Driven by the surge in AI server demand, supply-demand imbalance in the global memory market has intensified. Since 2026, mobile memory prices have entered an upward cycle. The price of mainstream DDR4 8Gb chips has surged from $3.2 at its 2025 low to $15, an increase of 369%, while DDR4 16GB 3200 chips have risen over 500% in six months.

      As a core component in smartphones, memory now accounts for over 20% of the BOM (bill of materials), up from 10%–15%, and exceeds 40% in some mid-to-low-end models, significantly increasing manufacturing costs.

      The impact has already reached the end market. OPPO announced price adjustments for some products starting March 16, 2026, while Honor, Xiaomi, and vivo have followed by raising prices or removing memory subsidies.

      Some high-end flagship models have increased by 2,000–3,000 RMB, while mid- and low-end devices have seen cost increases of several hundred RMB per unit, leaving the budget smartphone segment with almost no profit margin.

      Industry forecasts indicate that rising prices of memory chips and related components will persist throughout 2026, with shortages likely continuing until the second half of 2027.

      This may lead to a decline in global smartphone shipments in 2026, reaching a ten-year low, while accelerating industry consolidation, squeezing smaller manufacturers, and pushing companies toward premiumization and diversified supply chain strategies.

      Looking ahead, as geopolitical tensions, energy supply, and global capacity distribution continue to evolve, the semiconductor supply chain will remain volatile. Building stable and diversified supply systems and reducing dependence on imported critical raw materials will be key challenges—not only for compound semiconductors but also for the broader consumer electronics industry seeking to overcome cost pressures.