A worker tests semiconductor chips in a factory in Yancheng, East China's Jiangsu Province, on April 14, 2023. Photo: VCG

Shares related to germanium and gallium concepts soared in Chinese stock market on Tuesday trading, with Yunnan Germanium, Yunnan Chihong Zinc & Germanium Co, and Yunnan Luoping Zinc & Electricity all hitting their daily limit.

The surge in prices comes after the Ministry of Commerce and the General Administration of Customs announced that they will implement export controls on germanium and gallium, both used in the making of semiconductors and other electronic components starting from August 1.

During the early trading session, the third-generation semiconductor sector also experienced a rapid rise, with Optics Technology Holding Co hitting the daily limit and Focus Lightings Tech Co surging over 10 percent. 

Both germanium and gallium are key materials in the making of semiconductors and other electronics. 

Germanium is known as the "new staple of the semiconductor industry" and is used in integrated circuits, LEDs, and photovoltaic panels to enhance the transmission speed and efficiency.

Data shows that the globally confirmed reserves of germanium amount to only 279,300 tons, with China possessing 190,000 tons, accounting for approximately 68 percent, chinastarmarket.cn reported.

Data from the US Geological Survey showed that China's share of global gallium production has continued to increase and has exceeded 90 percent of the world’s total as of 2021. In addition to China, countries such as Russia, Japan, and South Korea also have production capabilities for gallium.

Germanium is an important strategic resource for high-tech industries, with products mainly including solar energy, infrared, detector-grade germanium single crystals, and fiber-grade germanium tetrachloride. 

According to data from the United States Geological Survey, China accounts for 41 percent of global germanium resources, while the US accounts for 45 percent. In terms of global germanium supply, China holds a 68 percent share, while Russia holds 5 percent.

A research paper from West Securities pointed out that in terms of China's production share, the export control will have the greatest impact on compound semiconductors containing germanium, and related domestic industries are expected to both benefit.