Gallium shortage threatens the $4.4 trillion AI revolution
Gallium is an indispensable technology metal that is essential for advances in artificial intelligence (AI), communication systems, and other future technologies. Without gallium, high-performance AI chips, high-speed 5G networks, and military communication systems would not be feasible. Companies such as NVIDIA, which are at the forefront of AI chip production, rely on a stable supply of gallium.
A McKinsey study estimates that generative AI models could enable annual productivity gains of up to $4.4 trillion. However, this progress depends on the availability of critical commodities. In particular, the resource war between China and the USA calls the supply of gallium into question—a bottleneck would have dramatic consequences for the technology sector and the global economy.
Gallium as a driver of innovation and technology
Gallium is used in cutting-edge semiconductor materials such as gallium arsenide (GaAs) and gallium nitride (GaN). These materials form the basis for high-performance chips. The German semiconductor manufacturer Infineon recently achieved a breakthrough by producing GaN chips on 300 mm wafers, significantly increasing production efficiency. This could make mass production of these powerful chips a reality, which is likely to further drive demand for gallium.
Gallium is also indispensable in other key technologies. While LiDAR systems rely on germanium, radar systems and the communications infrastructure of autonomous vehicles depend directly on gallium. Likewise, the expansion of modern 5G networks requires a continuous supply of this metal.
The resource war over gallium
China’s dominant position in gallium production is a geopolitical flashpoint. The country controls 98% of global primary production and therefore exerts decisive influence over global supply chains. In 2024, China introduced export restrictions on gallium and germanium—a direct response to US trade restrictions.
Rising prices and investment opportunities
These geopolitical tensions are having a significant impact on gallium prices. Since 2021, prices have risen by 250%, and further price increases are expected if the resource war escalates. Technology-intensive industries in particular are facing challenges, while new opportunities are emerging for investors.
In view of rising demand and increasingly scarce resources, gallium is becoming ever more important as a strategic investment. Long-term value stability and high technological relevance make this metal an attractive investment option.