The Chinese government has recently announced without prior warning that it will control exports of gallium and germanium metals. The announcement has received extensive media coverage, with particular emphasis on touting it as China's counterattack against various restrictions by the US, Japan and Europe on its semiconductor industry.
Gallium and germanium are both important materials in the semiconductor industry, and China accounts for over 80% of global gallium production, making it a critical player in the market. The entire supply chain is beginning to feel a tense atmosphere following the export control announcement, with concerns about the possible impact on the materials supply.
Among compound semiconductors, gallium arsenide (GaAs), gallium phosphide (GaP) and gallium nitride (GaN) all require the use of gallium (Ga) metal, and related products include RF power amplifiers for 5G mobile phones, wide bandgap power components, LEDs, semiconductor lasers and other electronic and optoelectronic components. Accordingly, the impact of the gallium export control will hardly be insignificant.
The impact of gallium on the supply chain can be divided into two categories: substrates and epitaxial layers. Substrates usually have a thickness of 500 microns, while epitaxial layers have a thickness ranging from tens of microns to even below 10 microns.
While GaP substrates are used in smaller volumes and GaN requires no substrate, GaAs is the segment absorbing the bulk of substrate supply. Currently, Sumitomo in Japan, AXT of the US, and Germany's Freiberger are the three major suppliers and have dominated the global GaAs substrate market for over 30 years. It is a stable and mature market with an annual output value of around US$300 million.
Over the past decade, China's "red supply chain" has started to enter the GaAs substrate market, and their substrate products have been used by Taiwan's wafer foundry houses and LED manufacturers thanks to competitive quality and pricing. Once China starts to control gallium exports, the above-mentioned three GaAs substrate suppliers will be affected in the short term, but the impact on the overall supply chain will not be significant as it is not difficult for Chinese suppliers to expand their GaAs substrate production capacity.
In terms of gallium metal in the epitaxial supply chain, the influence that China can exert is even weaker. This is because almost all related epitaxial layers are completed by metal organic chemical vapor deposition (MOCVD), and the main chemical involved in the reaction is trimethylgallium (TMG), which is mainly supplied from Europe, the US and Japan .
If China controls the export of gallium, it is China's thousands of MOCVD machines and its entire compound semiconductor industry will bear the brunt of the consequent impact.
After talking about gallium, let's take a look at the supply chain of GaN.
Yole's recent report indicates that China's Innoscience saw its first-quarter 2023 production value of GaN devices surpass those of US-based peers such as PI, EPC, and Navitas, for the first time ever. Innosicence operates its own 8-inch wafer fab and offers a range of high-voltage and medium-low-voltage devices. It competes with the aforementioned U.S. companies, which utilize 6-inch wafer foundry services, in an IDM approach, and the outcome is evident. In the past, some wafer foundries introduced gallium nitride devices to create new business opportunities for their aging 6-inch fabs. However, after more than a decade, these 6-inch fabs have struggled to improve yield and cost performances, resulting in the biggest bottleneck in the GaN sector today: high prices and limited market expansion.
Innoscience's business model involves significant capital investment in the early stage, but its future operations will get better and better. We can wait and see.
GaN is an exceptional semiconductor material, not only due to its wide bandgap characteristics but also because it possesses a unique quality that other semiconductor materials lack. In general semiconductors, for every electron generated, there is a corresponding positively charged ion created. When we want more electrons or current within a device, there are more positive ions present, leading to increased electron scattering, which in turn will reduce the electron mobility and ultimately limit the increase in current.
The electrons in GaN devices are generated from the crystal's polarization and the stress between the epitaxial layers. Accordingly, there are no positive ions present. Even with a high electron concentration, the electrons can maintain a significant level of mobility. This characteristic significantly improves the conductivity and switching speed of the device, which are two crucial features in power conversion systems.
In a previous article, I compared these two features of GaN devices to silicon-based devices. In 650V devices, GaN has a 10x advantage over silicon devices. In 100V devices, this advantage reduces to 3x, and in 30V devices, it still maintains a 30% advantage. Therefore, GaN devices should be widely used in power conversion systems. However, the biggest obstacle today is the cost. To be highly competitive, the cost of GaN needs to be lowered by half. This can be achieved by using 8-inch wafer fabs in the supply chain and increasing the epitaxial capacity per MOCVD machine.
The Chinese government's decision to impose export controls on gallium has been made after careful consideration. On the one hand, it can majestically respond to sanctions imposed by Western countries and Japan, and on the other hand, it will not cause much negative impact on the industry supply chain. After all, China has a comprehensive strategic deployment in the compound semiconductor industry.
Author's Bio:
Ian Chan is currently chief technology officer and managing director at Cyntec, a maker of miniaturized magnetic and passive components, as well as power and RF modules. He previously served as a professor and chief of the Department of Electrical Engineering at Taiwan's National Central University. Later, he held positions as Deputy Director and General Director of the Electronic and Optoelectronic System Research Laboratories at the Industrial Technology Research Institute (ITRI). Since 2013, he has been involved in the industrial sector, holding various roles including CEO at Episil Holding and chief strategy officer at Hermes-Epitek.
