Geopolitical risks from the Middle East and China's export controls on strategic minerals are converging to heighten tensions in the global semiconductor supply chain. With prices of gallium, a key raw material for compound semiconductors, rising sharply in recent days and uncertainty growing over the supply of industrial gases essential to semiconductor processes, Korea's chip industry is closely monitoring the situation.
According to related industries and foreign media on the 17th, the price of gallium (Ga) has recently climbed to around $2,000 per kg based on some small-lot transaction. That is more than double compared with early last year. The rise is seen as the result of China tightening export controls on strategic minerals such as gallium since the end of 2024, deepening a global supply-demand imbalance.
Gallium is a core material for compound semiconductors, known as next-generation semiconductors. Compound semiconductors, made by combining two or more elements, operate stably even in high-temperature environments and offer higher power efficiency than conventional silicon (Si) semiconductors, expanding their use in electric vehicle (EV) Power Semiconductor, 5·6G (5th and 6th generation mobile communications) equipment, and data center power supplies.
Conflicts in the Middle East are further fueling concerns over the semiconductor materials supply chain. Gallium is mostly produced as a byproduct during aluminum refining, and some analysts say recent energy supply disruptions in the Middle East that affect aluminum production could add to the burden.
On the London Metal Exchange (LME), aluminum prices rose to $3,418 per ton (t), the highest level in about four years. Some aluminum smelters in the Middle East have reportedly suffered production setbacks due to gas supply issues.
The supply of industrial gases essential for lithography and thermal management processes has also emerged as a key factor. Helium is a rare gas with no clear substitute at present, and Qatar is a key supplier, accounting for about one-third of global production. If the Middle East situation worsens, concerns are growing that it could affect global semiconductor production.
Korea's chip industry is also responding. Samsung Electronics and SK hynix are said to be expanding recycling technologies for rare gases used in their own processes and reviewing measures to manage inventories of critical materials more tightly as part of efforts to address supply chain risks.
Compound semiconductor corporations are also responding to rising cost pressures. Domestic corporations such as RFHIC and Wavice produce gallium-based gallium nitride (GaN) semiconductors, and there are concerns that higher material prices could affect manufacturing expense.
Within the industry, there are also views that the current supply chain instability will be difficult to resolve in the short term. Some corporations are reportedly preparing response strategies such as increasing inventories of critical materials and diversifying their suppliers.
An industry official said, "Recently, prices of metals for semiconductor equipment, including tungsten and molybdenum, are also trending upward," and noted, "If instability in the supply chain for critical materials becomes prolonged, it could affect the overall expense structure of the semiconductor industry."