(Yicai Global) July 4 -- Shares of leading Chinese gallium and germanium producers jumped after China said it will control exports of the two key metals used in making semiconductors from next month.

Yunnan Lincang Xinyuan Germanium Industry [SHE: 002428] soared by the exchange-imposed 10 percent daily trading limit to close at CNY13.09 (USD1.81), while Yunnan Chihong Zinc and Germanium [SHA: 600497] gained 6.1 percent to CNY5.40 (75 US cents).

Fuda Alloy Materials [SHA: 603045] also surged by the 10 percent limit to CNY16.69. The firm does not produce gallium at the moment, but is in talks to acquire Coalmine Aluminum Sanmenxia, a leading Chinese producer.

Gallium-related items, including gallium nitride, gallium arsenide, and indium gallium arsenide, and germanium-related products such as zinc germanium phosphide, germanium epitaxial growth substrate, and germanium dioxide, will need special export licenses, the Ministry of Commerce and the General Administration of Customs said yesterday.

Gallium and germanium firms that export these items without permits after Aug. 1 will face administrative penalties or criminally liability, the two authorities noted.

Gallium is a rare silver-white metal. Gallium nitride is one of the most used third-generation semiconductor materials in fifth-generation base stations, vehicle charging piles, and consumer electronics. It has high-frequency, high-efficiency, and high-power capabilities. Last year, 300 tons were produced worldwide, with China accounting for 290 tons.

Germanium is another excellent semiconductor, mostly used in semiconductors, aerospace measurement and control, nuclear physics detectors, fiber-optic communications, infrared optics, solar cells, chemical catalysts, and biomedicine. China is the world’s largest producer and exporter of germanium, accounting for about 70 percent of the total.

“We are waiting for policy details and we are unable to assess how much the export ban will influence our business,” a staffer at Yunnan Germanium said. Only a quarter of the company’s germanium products were exported in recent years, the person added, noting that price increases will depend on the market reaction.

Yunnan Germanium has an annual production capacity of 60 tons of germanium products, with a half share of China’s market and a third of the world’s. The staffer also said that the firm has been expanding its market, and its production capacity has not yet reached full capacity.

Lincang Xinyuan Germanium holds nearly 70 percent of China’s germanium ore resources and 40 percent of global production.

Editor: Futura Costaglione