TSMC’s recent announcement that it would be exiting out of the GaN wafer foundry business by mid-2027 due to price pressure from Chinese rivals reflects how China’s dominance in raw materials is, in many ways, not just putting the pressure on, but causing foundries to rethink their presence in the GaN market.
Currently, China controls somewhere between 80%-98% of global primary gallium production, a near-monopoly that has signified a rubbing point for the US, who have pushed for greater sovereignty over precious raw materials like gallium for semiconductor manufacturing. According to the United States Geological Survey (USGS), global gallium production in 2024 was just 750 metric tonnes.
Following the US Energy Act of 2020, the country has reviewed and revised its methodology for evaluating what minerals are considered essential, and updated its critical minerals list (CML) no more than every three years. As a result of the 2022 analysis, gallium made the list.
Likewise, the European Union’s Critical Raw Materials Act necessitated assessing its own list triennially – which has only grown in size. 14 materials were identified in 2011, which is now 34 today. Gallium has been recognised since 2011, while newer materials like lithium and titanium (used for electric vehicle batteries) were added in 2020.
The US has not been alone in its focus on China’s control of the market. A 2023 G7 meeting called for ‘de-risking’ from economic competitors like China, as raw materials were recognised as a focus area for reducing supply chain reliance on China. To achieve this, Center for Strategic and International Studies (CSIS) recommended concrete steps could be taken:
- Investing in gallium extraction and refinement capabilities
- Collaborate with allies and partners to scale up gallium extraction and refinement
- Maintain a one-year gallium stockpile
- Enhance data collection and transparency in US gallium production and consumption
Two years on from that meeting, and trade tensions between the US and China have only worsened. These were exemplified by the US imposing strict tariffs, which at their height, reached a 145% levy on Chinese goods and a reciprocal 125% from China on US goods.
Just as the US (and other countries) are keenly aware of their reliance on China, so China is aware of their reliance on it. In August 2023, China implemented export restrictions on gallium and germanium, and more recently in December 2024, it banned the export of gallium, germanium, antimony and graphite – all key for manufacturing electronic components – to the US altogether. This came after the US’ decision to add 140 Chinese entities to the Bureau of Industry and Entity List, subsequently restricting their access to US tech and products.
The rest of the world has watched on anxiously, as a looming trade war between China, the world’s biggest manufacturer, and the US, the world’s biggest consumer, could spell disaster for businesses. According to J.P. Morgan Global Research, prior to the 90-day break announced by the US and China in May, the tariffs were estimated to reduce global GDP by a staggering 1% in April (this is taking into account a 10% universal tariff on countries and a 110% tariff on China).
As reported by the Financial Times, Japan warned China that its escalation of export controls on raw materials threatened electronics supply chains. Japan was especially concerned that the ban would entail its companies having to report its exports to the US, to China – such as gallium arsenide for optical communication lasers, or semiconductor chips for Apple’s iPhones.
Why is gallium so important?
The refinement of gallium into gallium arsenide (GaAs) and gallium nitride (GaN) is what makes gallium so important as a raw material – representing around 79% of gallium use, according to the USGS. While GaAs goes into optoelectronic applications like LEDs and lasers, alongside high-speed electronics like ICs and FETs, GaN is hugely important for high-performance power electronics.
This is due to its characteristics. GaN power transistors, for instance, boast higher switching frequencies, greater efficiency, thermal stability, and power density when compared with silicon. The GaN energy gap of 3.4 electron volts (eV) is much greater than silicon’s, at 1.1eV.
GaN is also smaller than silicon, has approximately 1,000 times faster mobility, and can be manufactured at a lower rate. For this reason, the adoption of GaN for use in power electronics has grown significantly: the U.S. Department of Energy reported that GaN-based power devices accounted for 45% of the total GaN semiconductor market in 2023; while the global GaN semiconductor market was valued at around $3.06 billion in 2024, according to Grand View Research.
Both governments and electronics companies have sat up and taken notice. In September 2024, the UK government bought a struggling factory from a US company, Coherent, in a bid to strengthen domestic manufacturing of GaAs semiconductors, at a cost of £20 million. And in 2021, it intervened when it bought a semiconductor factory, Newport Wafer Fab, in what Reuters wrote was an effort to prevent it from being sold to a Dutch firm owned by a Chinese company. The factory was renamed to Octric Semiconductors and recently received a boost in the form of £200 million in investment this year.
Earlier this year, STMicroelectronics and Innoscience signed a GaN technology development and manufacturing agreement to produce GaN-on-Si wafers, whereby Innoscience will make use of ST’s front-end manufacturing capacity outside of China, and in a similar vein, ST will make use of Innoscience’s front-end manufacturing capacity inside of China; the idea being that both companies will strengthen their offerings in the GaN market by leveraging this kind of supply chain flexibility.
And Renesas hedged their own bets when they decided to halt production of SiC power chips in May of this year and focus entirely on GaN, a move marked by its decision to disband its SiC team at its Takasaki facility in Japan. This was reportedly due to a slowed EV market and an over-excess of SiC chips made by Chinese manufacturers.
However, not all bets have paid dividends: in 2023, Samsung announced as part of its foundry vision plans to begin services for 8-inch GaN power semiconductors from 2025 – although it appears this has not yet been realised.
Furthermore, TSMC’s plans to phase out its foundry business will directly affect Navitas, whose plans to produce 100V GaN products on 200mm silicon wafers in the first half of 2026, will force it to transition from its current GaN-on-Si foundry supplier TSMC to Powerchip.
What’s causing complexity in the GaN market?
China’s control of the gallium supply chain, coupled with tense relations with the US and the possibility of a trade war, has forced companies operating in this market to navigate increased complexity. Trade wars are not good for business, which depends upon certainty.
The USGS has predicted that China’s ban on raw material exports to the US will result in a $3.1 billion hit to the US economy; something the US is not likely to take lightly.
This comes at a time where the US has made its intentions clear with the announcement of Trump’s tariffs on the 2nd April, 2025: it will prioritise domestic manufacturing, above all else. The US Chips Act, which came into law in 2023 under Biden’s administration, sought to promote development of domestic GaN epitaxy and fabrication capacity, reduce its reliance on Asia and balance supply chains. Trump’s tariffs arguably take this one step further.
However, what the US is seeking to achieve – to manufacture its own advanced semiconductor chips – is being widely regarded as a long-term goal, and not one that can be achieved in a few short years.
This is predominantly due to the investment and infrastructure required to build semiconductor fabs: according to the CSIS, a fab cost approximately $50 million to build in 1983. Today, this could cost around $20-$30 billion. This is also compounded by the lack of available labour, both in the form of construction workers and semiconductor engineers. Simply put, the money and people needed to turn this ambition into a reality is not there.
The US has tried to build resilience in the gallium supply chain by ramping up its domestic mining of gallium. This includes Ares Strategic Mining, which received an $11 million loan from the Utah State Legislature and the Utah Community Impact Board this year to increase production at its Lost Sheep Mine, in Utah. Furthermore, in 2023, American Elements announced it would expand its Salt Lake City facility to scale gallium and germanium production. In a direct acknowledgement of what these raw materials would be used for, CEO Michael Silver said in the announcement “US domestic supply will not be impacted by this short-sighted decision of China”, referring more specifically to its ban on exports.
Rio Tinto and Indium showed a novel approach by successfully managing to extract gallium from bauxite tailings waste as part of an ongoing research and development project, whereby both partners aim to produce commercial quantities of gallium. The next phase of the project will assess the extraction techniques needed to produce larger quantities at pilot scale and if successful, will result in Rio Tinto building a demonstration plant in Quebec, with capacity expected at 3.5 tonnes of gallium per year. This project remains in its early stages.
A short-term response from US buyers of raw materials has been to purchase Chinese exports of gallium through other countries; a loophole that is technically legal. As reported by Reuters, according to US customs data, the US imported 3,834 metric tonnes of antimony oxides from Thailand and Mexico between December 2024 and April 2025, a figure that is greater than the last three years combined.
Looking ahead
Outside of the US, Greek energy and metal company Metlen has invested $320 million in a project, which will oversee it become Europe’s first commercial-scale gallium producer since 2016, according to the Minor Metals Trade Association (MMTA). Initial production is expected to begin in 2027 before increasing to full capacity of 50 tonnes per year in 2028.
Elsewhere, in Singapore, the National Semiconductor Translation and Innovation Centre for Gallium Nitride (NSTIC (GaN)) was recently opened this year. It represents Singapore’s first national facility dedicated to GaN semiconductors and is hoped to allow Singaporean companies to compete in markets such as 5G and 6G communications, radar, and satellite.
It will provide 6-inch GaN-on-SiC and 8-inch GaN-on-SiC wafer fabrication lines, and advanced technology with gate lengths below 0.1 micrometres and operation frequencies above 100GHz. From mid-2026, it will begin offering commercial foundry services for prototyping and fabrication in a deliberate move to reduce reliance on facilities based overseas.
However, current market statistics show China’s continued dominance over the entire gallium supply chain, which may only be challenged if countries continue to invest serious money in creating their own gallium extraction capabilities. Governments can support projects through providing loans to help them along in their early phases.
Ultimately, existing dependence on China for raw gallium means that any further controls on exports – as evidenced by China’s restrictions imposed in 2023, which triggered price surges, and then in 2024 against the US – or political shifts could send shocks through the supply chain. For the supply chain to be truly resilient, countries need to put their money where their mouths are.
