Critical-Mineral Restrictions Reveal Hidden Risk

Headlines about China resuming export controls on the critical mineral gallium may not catch investors’ eyes, but such controls could have a large effect on portfolios.¹ While gallium receives far less attention than advanced chips, it plays an essential role in compound semiconductors used in applications such as radar, 5G infrastructure, military electronics, electronic-vehicle (EV) charging and medical imaging, where silicon cannot always meet the required performance.

These applications span multiple Global Industry Classification Standard (GICS®)² sectors, meaning a disruption to a single upstream input has the potential to affect holdings across seemingly unrelated parts of a portfolio. With China accounting for around 99% of primary gallium production, and the metal’s growing use, investors may have increased exposure to gallium-related supply-chain concentration without realizing that dependency.

Gallium enters the semiconductor supply chain well beyond the direct supplier relationships that investors typically monitor. Our analysis of MSCI Supply Chain Intelligence data shows that China dependency is consistently higher at the indirect supplier level than at the direct supplier level across semiconductor-dependent industries, as illustrated below. Gallium extends this dependency further upstream, illustrating how critical inputs can sit beyond the supplier tiers that are visible through conventional supply-chain analysis. Many gallium-dependent industries already exhibit high China dependency through indirect supplier networks.

Unlike many critical minerals, gallium is not mined independently but mostly recovered as a byproduct of alumina refining, meaning supply depends on both refining capacity and the extraction technologies installed alongside it. China dominates both (announced projects outside China account for less than a quarter of current global production), and its export controls extend to the technologies required for extraction.

As semiconductor-enabled technologies become more widely adopted, understanding these unseen upstream dependencies may become increasingly relevant to assessing supply-chain risk, particularly for energy-transition investors as gallium nitride use expands in EV charging, renewable energy and power electronics.

1 Aidan Powers-Riggs, Brian Hart and Matthew P. Funaiole, “The U.S.-China Trade Truce Has Not Solved the Gallium Problem,” Center for Strategic & International Studies (CSIS), May 11, 2026.

2 GICS is the global industry-classification standard jointly developed by MSCI and S&P Dow Jones Indices.