Buzz
Units worldwide are fervently rushing to place orders for 'volatile' gallium rooms, with significant fluctuations anticipated in the future.
One of the significant changes humanity is witnessing currently is the electric vehicle revolution. Previously, the media often portrayed electric cars as a new consumer trend, but in reality, electric cars are a crucial step forward in environmental protection.
Many countries and regions are planning to introduce electric vehicles into public transportation as soon as possible. Examples include the European Union, which has approved a policy to ban the sale of internal combustion engine cars from 2035, and California in the United States, which is also discussing similar plans to the European Union.
At first glance, many people may think electric cars are similar to gasoline cars, but in reality, to create an optimal and efficient electric vehicle, manufacturers have to redesign or create many components, with the most important being the charging system and battery.
MELTING IN THE PALM, GRASPING THE 'HEART' OF ELECTRIC VEHICLES
While electric motor advancements may progress rapidly, conversely, batteries and charging systems are not developing at the same pace. The technology of lithium-ion batteries made its commercial debut on a Sony product in 1991 after approximately 20 years of research; since then, the fundamental technology of this battery type has not seen significant advancements.
Hence, current electric vehicle manufacturers are vigorously searching for solutions that can help optimize and lighten electric cars, thereby reducing production costs. Surprisingly, Gallium could assist manufacturers in alleviating their headaches.
Gallium is a type of metal that constitutes only 0.0019% of the Earth's crust, with an intriguing physical property of melting at 29 degrees Celsius, enabling it to liquefy right in one's hand. Gallium Nitride (GaN) is a semiconductor, meaning it can conduct or insulate depending on conditions.
Gallium Nitride is a crucial material for electric vehicles. This compound is used to convert the alternating current used by electric motors and the direct current supplied by the battery, or to regulate the voltage - for example, from 240 volts at level 2 charging to 400 or 800 volts for the battery, or down to 12 volts for lights, heated seats, and more.
Compared to the widely used silicon semiconductors, Gallium Nitride, through research, has shown the ability to operate 20 times faster, conduct three times the current, and shorten charging time by three times, all while being only half the size and weight. Due to these characteristics, Gallium Nitride is becoming the research focus for many manufacturers, seen as the future of electric vehicles.
However, the world's leading gallium supplier recently made a move that has left units researching gallium applications scratching their heads.
THE RACE FOR GALI SUPPLY
In reality, gallium is almost nonexistent in nature. It is often found in zinc ores or bauxite (aluminum ore) in very small quantities. Industrially produced gallium is also a byproduct in the aluminum manufacturing process. According to the Critical Raw Materials Alliance (CRMA), an organization of companies and trade associations in the field of raw materials categorized as 'critical' by the European Commission, China supplies about 80% of the world's gallium. Apart from companies in China, CRMA states that only a few companies in Europe and some in Japan have the capability to produce gallium with the required purity.
According to China's customs data, the country exported 94 tons of gallium in 2022, a 25% increase from 2021. Major importing countries for Chinese gallium include Japan, Germany, and the Netherlands.
As reported by Reuters, China recently decided to tighten control and restrict the export of gallium. This decision will take effect from August 1st. The Chinese Ministry of Commerce stated that controlling gallium exports is an action to preserve national security. According to Reuters, companies researching or using gallium are now racing to ensure a stable supply of this metal. There are concerns that following gallium, rare earth elements will be the next to face export restrictions.
Immediately after the Chinese government announced the decision, the price of gallium surged. According to Fastmarkets on 7/7, the price of one kilogram of gallium was $326 (equivalent to over 7.7 million VND), an increase of $43 (around 1 million VND) from the previous week.
In the past, many car manufacturers faced challenges due to a shortage of rare earth elements. This was because several rare earth elements were utilized in semiconductor chips, a critical component for controlling electronic devices. Ford, for instance, had around 45,000 vehicles waiting for semiconductor chips, while General Motors faced a staggering 95,000 units backlog.
According to Alastair Neill, the Director of the Critical Minerals Institute, automotive manufacturers are exploring the development of new-generation electric vehicles that may consider using silicon carbide (SiC). Despite gallium nitride having a 30% better performance than silicon carbide, in this context, the production cost is still a significant factor.
In reality, units within the automotive manufacturing industry are also evaluating coping strategies. In a conversation with Reuters, a Japanese supplier mentioned considering both silicon carbide and gallium nitride for semiconductor production.
Alastair Neill also added, '[The units] need to explore other options, but replacing gallium nitride is not an easy task. Finding an alternative solution takes a considerable amount of time.'
