중국, 핵심 소재 수출 규제 강화에 미국·일본, 칩 등급 광물 공급 확보 노력 가속화

The United States and Japan are racing to establish a new global supply chain for critical minerals, backing the initiative with fresh government subsidies and industry support. However, slow government-to-government negotiations and simmering geopolitical disputes threaten to blunt their progress.

China’s export controls on rare earths and other critical minerals have strained manufacturers across both nations throughout much of the year, forcing companies to navigate new licensing requirements, extended lead times, and elevated material costs for semiconductors, batteries, and defense hardware.

Beijing and Washington are scheduled to discuss extending their one-year trade truce ahead of its November expiration. Any breakdown in those talks could prompt China to tighten its export restrictions further, deepening the squeeze on global supply chains.

On August 31, the US Department of Defense announced a $174 million equity investment to help build a gallium production facility at Alcoa Corporation’s Wagerup refinery in Australia. The project is backed by Japan’s Sojitz Corporation and Export Finance Australia, aiming to supply 100 metric tons of the metal annually for radar, missile defense, and other military systems.

Separately, the US Department of Energy stated on August 20 that it would invest $500 million in seven projects to expand America’s processing of critical minerals and materials, alongside battery manufacturing and recycling capacity, through its Office of Critical Minerals and Energy Innovation. This follows a series of new rules and investment programs unveiled by the Trump administration over the summer to boost critical mineral supplies.

Chipmakers in the US and UK, which consume large volumes of rare earths and other critical minerals, report that they can still secure adequate supplies for now, albeit with heavier paperwork and higher prices. Many are bracing for the situation to potentially worsen.

“There there are always challenges with countries who want to control certain aspects of the supply chain,” Ian Croston, vice president of operations at Lumentum, a US-listed optical components maker, told Asia Times on August 26 on the sidelines of the Semiconductors to Systems Summit in London. “Have we seen issues with China? We have them all the time. We have to work around.”

When asked whether the export controls had brought extra paperwork and higher costs, Croston did not dispute it, describing it simply as part of doing business. He compared the export controls to Britain’s exit from the European Union and the tariffs introduced by the Trump administration.

He noted that Lumentum was prepared for any eventuality, emphasizing that such disruptions are common among governments worldwide and must be managed as they arise.

“You always need to understand your suppliers, where they’re coming from, and if they’re a valued supplier you will know what their constraints are and how we can manage the business,” he said. “It is about reducing friction.”

Lumentum Chief Executive Michael Hurlston warned in early July that the shortage of indium phosphide (InP)—the compound semiconductor material used in lasers for AI data centers—could ultimately become more severe than the current squeeze on memory chips. He stated that Lumentum and rival Coherent together cannot meet demand from Nvidia and other hyperscale customers, whose orders have shifted from hundreds of lasers to hundreds of millions.

Lumentum sources most of its indium phosphide substrates from Japan’s Sumitomo Electric and JX Advanced Metals, limiting its direct exposure to China’s export delays. In March, Nvidia moved to shore up supply by investing $2 billion each in Lumentum and Coherent, attaching purchase commitments and future access to capacity.

Beijing restricted indium exports since February 2025, driving prices from approximately $250 per kilogram to about $805 per kilogram last month. It also banned exports of gallium and germanium to the US in December 2024, a measure suspended in November 2025 as part of the one-year trade truce.

These bans have pushed Western warehouse prices to roughly $2,100 per kilogram for gallium and more than $6,000 per kilogram for germanium, compared with domestic Chinese prices of about $247 and $3,100 per kilogram, respectively.

Ian Croston, vice president of operations at Lumentum, and Iwan Davies, group technology director at IQE plc, were pictured at the summit. (Photo: Asia Times/ Jeff Pao)

“I know a lot of the export control processes are quite onerous now,” Iwan Davies told Asia Times. “For things like gallium and germanium, there’s a delay in getting some of those materials out of China, and indium phosphide is the same now. So whether you buy the metal or the compound, there’s still an issue in the supply chain at the moment.”

Davies noted that IQE obtains purified gallium and indium elements from a small number of globally renowned material suppliers to the semiconductor industry. He added that Beijing’s export curbs make it likely that supply will diversify into other regions over time, with IQE preparing for the risk of intensifying US-China tensions.

Outside China, the gallium, germanium, and indium supply chain runs through a small group of specialist suppliers: Vital Materials (China), a refiner of gallium, germanium, indium, and selenium and a major upstream source for Western semiconductor firms; AXT (US), a major supplier of gallium arsenide (GaAs) and indium phosphide (InP) substrates, though much of its crystal growth and mineral processing runs through joint ventures in China; Freiberger Compound Materials (Germany), one of the few non-Chinese suppliers of GaAs substrates for wireless and photonics uses; Sumitomo Electric and Sumitomo Chemical (Japan), major suppliers of GaAs and InP substrates and other electronic materials; and DOWA Electronics Materials (Japan), a supplier of high-purity gallium, indium, and compound semiconductor wafers.

Japan’s relationship with Beijing soured last November when Prime Minister Sanae Takaichi told parliament that a Chinese attack on Taiwan could pose an “existential threat” to Japan, prompting a furious response from Beijing. In January 2026, China moved to restrict exports of dual-use materials—including rare earths, gallium, germanium, graphite, and magnets—to Japan, explicitly tying the curbs to Tokyo’s stance on Taiwan.

China’s rare earth exports to Japan fell 51% year-on-year in the first half of 2026, more than three times the 16% drop in Beijing’s overall rare earth exports over the same period. Japan received no gallium or germanium from China in January or February, only a single gallium shipment in May, and then nothing again in June, when customs data also showed zero shipments of dysprosium, terbium, and yttrium.

Sayaka Tomihara, counselor for economic affairs at the Embassy of Japan in the UK, was interviewed during the same event. (Photo: Asia Times/ Jeff Pao)

“The situation is challenging,” said Tomihara. “Japanese firms are concerned with China’s export controls and also the situation in the Gulf concerning the oil supply. There are a lot of disruptions in the supply chain, and many of our industries are being forced to think about how they can diversify the portfolio to deal with the situation.”

To secure rare-earth supplies, she noted that recycling and deep-sea extraction are both long-term options Japan is exploring, though neither offers a near-term fix.

“There are private-to-private negotiations and also governmental efforts,” she said. “We’re doing that on a company-to-company basis, and we’re working with other like-minded countries to try to gain the capacity.”

She added that over the next six to 12 months, the Japanese government will collaborate with JOGMEC (Japan Organization for Metals and Energy Security), a state-backed agency that secures mineral and energy resources for Japan, on government-to-government efforts and on supporting private companies’ negotiations.

On August 20, Japan’s government proposed granting JOGMEC greater freedom to invest in critical mineral projects, allowing it to invest independently rather than only alongside a Japanese company, or with foreign partners when waiting for a Japanese partner would delay a project. JOGMEC already operates more than a dozen overseas offices and oversees over 30 resource projects across 15 countries.

Washington has organized much of the Western effort through Pax Silica, a coalition launched in December 2025 with the United Kingdom, Japan, South Korea, Singapore, Australia, and Israel to lock down supply chains for artificial intelligence, semiconductors, and critical minerals. Membership has since grown to 25 countries that have signed the Pax Silica Declaration, alongside a broader circle of observers and endorsement partners.

Taiwan has formally endorsed Pax Silica’s pri