The US Department of Energy said<\/a> on August 20 that it would invest $500 million in seven projects to expand America\u2019s processing of critical minerals and materials, as well as battery manufacturing and recycling capacity, through its Office of Critical Minerals and Energy Innovation. Before this, the Trump administration had already unveiled<\/a> a series of new rules and investment programs over the summer to try to boost the supply of critical minerals.<\/p>\n Chipmakers in the US and UK, which consume large volumes of rare earths and other critical minerals, say they can still secure adequate supplies for now, albeit with heavier paperwork and higher prices. They are bracing for the situation potentially to worsen.<\/p>\n \u201cThere are always challenges with countries who want to control certain aspects of the supply chain,\u201d Ian Croston, vice president of operations at Lumentum, a US-listed optical components maker, told Asia Times in an interview on the sidelines of the Semiconductors to Systems Summit in London on August 26. \u201cHave we seen issues with China? We have them all the time. We have to work\u00a0around.\u201d<\/p>\n Asked whether the export controls had brought extra paperwork and higher costs, Croston did not dispute it, saying it was simply part of doing business, comparing the export controls to Britain\u2019s exit from the European Union and the tariffs introduced by the Trump administration.<\/p>\n He said Lumentum was prepared for any eventuality, noting that such disruptions are common among governments worldwide and must be managed as they arise.<\/p>\n \u201cYou always need to understand your suppliers, where they\u2019re coming from, and if they\u2019re a valued supplier you will know what their constraints are and how we can manage the business,\u201d he said. \u201cIt is about reducing friction.\u201d<\/p>\n Lumentum\u2019s Chief Executive Michael Hurlston said<\/a> 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 said 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.<\/p>\n Lumentum sources most of its indium phosphide substrates from Japan\u2019s Sumitomo Electric and JX Advanced Metals, limiting its direct exposure to China\u2019s export delays. Nvidia moved in March to shore up supply, investing $2 billion each in Lumentum and Coherent with purchase commitments and future access to capacity attached.<\/p>\n Beijing has restricted<\/a> indium exports since February 2025, driving prices from about $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 it suspended in November 2025 as part of the one-year trade truce.<\/p>\n The bans have driven 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,\u00a0respectively.<\/p>\n \u201cI know a lot of the export control processes are quite onerous now,\u201d Iwan Davies, group technology director at IQE plc, a Cardiff-based maker of compound semiconductor wafers, told Asia Times. \u201cFor things like gallium and germanium, there\u2019s 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\u2019s still an issue in the supply chain at the moment.\u201d<\/p>\n He said IQE obtains purified gallium and indium elements from a small number of globally renowned material suppliers to the semiconductor industry. He said Beijing\u2019s export curbs made it likely that supply would diversify into other regions over time, with IQE preparing for the risk of intensifying US-China tensions.<\/p>\n Outside China, the gallium, germanium and indium supply chain runs through a small group of specialist suppliers:<\/p>\n Vital Materials (China): a refiner of gallium, germanium, indium and selenium, and a major upstream source for Western semiconductor firms;<\/p>\n 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;<\/p>\n Freiberger Compound Materials (Germany): one of the few non-Chinese suppliers of GaAs substrates for wireless and photonics uses;<\/p>\n Sumitomo Electric and Sumitomo Chemical (Japan): major suppliers of GaAs and InP substrates and other electronic materials;<\/p>\n DOWA Electronics Materials (Japan): a supplier of high-purity gallium, indium and compound semiconductor wafers.<\/p>\n Japan\u2019s JOGMEC<\/p>\n Japan\u2019s relationship with Beijing soured<\/a> last November, when Prime Minister Sanae Takaichi told parliament that a Chinese attack on Taiwan could pose an \u201cexistential threat\u201d to Japan, prompting a furious response from Beijing. China moved in January 2026 to restrict exports of dual-use materials, including rare earths, gallium, germanium, graphite and magnets, to Japan, explicitly tying the curbs to Tokyo\u2019s stance on Taiwan.<\/p>\n China\u2019s rare earth exports to Japan fell<\/a> 51% year-on-year in the first half of 2026, more than three times the 16% drop in Beijing\u2019s 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<\/a> zero shipments of dysprosium, terbium and yttrium. <\/p>\n \u201cThe situation is challenging,\u201d said Sayaka Tomihara, counselor for economic affairs at the Embassy of Japan in the UK, in an interview during the same event. \u201cJapanese firms are concerned with China\u2019s 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.\u201d<\/p>\n To secure rare-earth supply, she said, recycling and deep-sea extraction are both long-term options Japan is exploring, but neither offers a near-term fix.<\/p>\n \u201cThere are private-to-private negotiations and also governmental efforts,\u201d \u00a0she said. \u201cWe\u2019re doing that on a company-to-company basis, and we\u2019re working with other like-minded countries to try to gain the capacity.\u201d<\/p>\n She added that over the next six to 12 months, the Japanese government will work 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\u2019 negotiations.<\/p>\n On August 20, Japan\u2019s government proposed<\/a> giving 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 runs more than a dozen overseas offices and over 30 resource projects in 15 countries.<\/p>\n US-led Pax Silica<\/p>\n Washington has organized much of the Western effort through Pax Silica, a coalition it 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.<\/p>\n Taiwan has formally endorsed Pax Silica\u2019s principles through a separate joint statement<\/a> on economic security cooperation with Washington, without joining as a full signatory, while rare-earth-rich Canada<\/a> and Estonia are designated observers.<\/p>\n Semiconductor executives said that building a Western rare-earth supply chain outside China is easier said than done, given each country\u2019s own trade interests.<\/p>\n \u201cCanada has probably the second-largest reserves of critical minerals and rare earth elements, with the potential to become a major supplier,\u201d said Paul Slaby, managing director of Canada\u2019s Semiconductor Council. \u201cIt\u2019s underdeveloped, though, and needs substantial investment to access and process.\u201d<\/p>\n \u201cThere\u2019s a need for a consolidator to manage demand,\u201d he said. \u201cElements like gallium aren\u2019t mined directly but extracted as a byproduct of processing metals like aluminum.\u201d<\/p>\n Slaby said a resilient, China-independent supply chain could be built in five to 10 years with full cooperation, capital and political will. However, he added that trade frictions, such as the US-Canada tariff dispute, could weaken the West\u2019s rare earth alliance and slow its progress.<\/p>\n US President Donald Trump\u2019s trade war with Canada has deepened<\/a>, with Washington imposing 50% tariffs on Canadian goods last month. In response, Ontario\u2019s premier has threatened to cut off critical mineral exports to the US.<\/p>\n Feras Alkhalil, vice president of research and development at Pragmatic Semiconductor, a UK-based flexible-chip maker, said chipmakers have another route around China\u2019s export controls: switching to new materials or changing manufacturing approaches altogether. He said the same function can often be delivered using alternative materials or processes that sidestep supply constraints.<\/p>\n He said Pragmatic works with equipment makers and academic groups on UK and European research to develop such alternatives, but\u00a0switching an established\u00a0process may take three to five years.<\/p>\n Read: Cheap Chinese AI tokens collide with deepening Sino-US bloc split<\/a><\/p>\n![\"\"](\"https:\/\/www.europesays.com\/japan\/wp-content\/uploads\/2026\/09\/critical-minerals01.jpg\")
Ian Croston, vice president of operations at Lumentum (left) and Iwan Davies, group technology director at IQE plc (right) Photo: Asia Times\/ Jeff Pao<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/japan\/wp-content\/uploads\/2026\/09\/IMG_0810.jpg\")
Sayaka Tomihara, counselor for economic affairs at the Embassy of Japan in the UK Photo: Asia Times\/ Jeff Pao<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/japan\/wp-content\/uploads\/2026\/09\/critical-minerals02.jpg\")
Paul Slaby, managing director of Canada\u2019s Semiconductor Council (left) and Feras Alkhalil, vice president of research and development at Pragmatic Semiconductor, a UK-based flexible-chip maker (right) Photo: Asia Times\/ Jeff Pao<\/p>\n