China’s intention to introduce restrictions on gallium exports has forced customers of the world’s largest buyer of gallium to stock up on this metal, Reuters and Agerpres report.

Germany’s Freiberger Compound Materials relies almost entirely on Chinese suppliers of gallium, which is needed to make wafers that are used in radio amplifiers in mobile phones and other electronic equipment.

As it consumes about 10% of the world’s gallium production, the German company found itself at the center of the storm after the Chinese authorities unexpectedly announced that they would introduce controls on exports of gallium and germanium from August 1.

“My clients are not relaxed at all. Many orders have been placed to increase stock levels. The industry is on a knife’s edge,” said Freiberger Compound Materials CEO Michael Hartz.

How China became the world’s largest producer of gallium

Chinese gallium producers have driven most competitors out of the market by undercutting them with lower prices over the past decade.

Freiberger, which has annual sales of 70-80 million euros and a 65 percent market share for gallium arsenide, which is used in power amplifiers for smartphones, competes with Japanese maker Sumitomo Electric and several Chinese producers.

The German company, which traces its origins to an electronics factory in the former GDR, has several months’ worth of gallium in stock because it has long anticipated a trade crisis and cannot do anything to protect itself, Michael Hartz said.

Automakers are also questioning whether they can continue to rely on the metal, which is considered key to electric vehicles.

Concerns about China’s latest moves

Michael Hartz said his Chinese suppliers have provided Beijing authorities with the necessary data to obtain export licenses. These suppliers estimated that supplies would stop on August 1, when the new export control measures take effect, and resume a month later, after licensing requests are processed.

Hartz doesn’t think China will disrupt the gallium trade in the coming years because it would hurt its own electronics industry.

Director Freiberger added that he believed the Chinese authorities’ decision was repressive because the largest manufacturers of the power amplifiers that boost radio signals so smartphones can communicate with radio towers are based in the US.

Freiberger consumes several tens of tons of gallium per year, making this metal its most important expense.