China strategically slows exports of critical materials used in semiconductor fabrication to Taiwan — germanium and quartz exports to the region also threaten optical and robotics supply chain

China is slowing or restricting shipments of materials based on germanium and quartz to Taiwan, which creates supply constraints for multiple industries on the island, according to Nikkei. Companies are reporting problems obtaining germanium- and quartz-based materials as well as permanent magnets from Chinese suppliers as customs procedures extend delivery times. In some cases, Taiwanese manufacturers lose orders while waiting for clearance.

China imposed export controls on germanium in 2023 and on quartz (SiO₂) in late 2024. At one point, China even restricted exports of gallium and germanium to the U.S., but later lifted the ban and imposed an export control regime. Under the regime, the exporter must disclose the customer and intended use by the end user, which enables Chinese authorities to essentially view, and to some degree, control the whole supply chain. China's Ministry of Commerce can approve, reject, or effectively delay the shipment while reviewing it, which is apparently what it does these days.

The Nikkei story strongly suggests that the delays are selective rather than a blanket slowdown of all germanium, quartz, and magnet exports to Taiwan. Germanium, quartz, and magnets can be used widely across many industries. Yet, the report specifically pins germanium and quartz to optics/photonics and semiconductor manufacturing, and permanent neodymium magnets to the aerospace industry that produces high-performance motors for robotics.

While the report does not determine exactly how granular the targeting is, Nikkei's sources specifically come from optical technology, semiconductor equipment, and aerospace companies. Another thing to note is that all of Nikkei's sources come from Taiwan, indicating that China targets select verticals of the island, not the same verticals globally.

In general, the situation looks less like 'no germanium/quartz/magnets for Taiwan' and more like selective friction applied through China's dual-use export-control regime. The particularly interesting part is that Beijing may not need a Taiwan-specific embargo: by examining the material, buyer, end user, and shipment, authorities can potentially slow strategically sensitive supply chains (think optical connectivity for data centers) while allowing less sensitive trade to continue.

Germanium

Germanium is widely used in infrared optics (Ge), silicon photonics (Ge), photodetectors (Ge), and optical fiber (GeO₂). China controls about 63% of the global germanium — both elemental and dioxide — supply, whereas all other countries — led by Belgium, Canada, and Japan — control 37% of the market, according to InvestInGermanium.com. The U.S. mostly gets germanium and germanium dioxide from Belgium and Canada, according to Introl.com. Meanwhile, Belgium and Japan also import germanium from China, which highlights that the world still largely depends on China when it comes to germanium supply.

While infrared optics is certainly a concern for state security as it is used for night-vision equipment, aerospace sensors, and military systems, it looks like China is more concerned about optical connectivity that is crucial for AI data centers.

In silicon photonics, germanium is mainly used to make photodetectors. Silicon cannot efficiently detect light at the ~1.3 µm and 1.55 µm wavelengths commonly used for optical communications, but germanium can. By integrating germanium with silicon waveguides, manufacturers can build high-speed Ge-on-Si photodiodes that convert optical signals into electrical ones. These detectors are used in optical transceivers and data-center interconnects and could play an important role in co-packaged optics (CPO).

Equally important, germanium dioxide is crucial for optical fiber manufacturing. Adding GeO₂ to silica raises its refractive index and enables manufacturers to form a higher-index fiber core surrounded by lower-index silica cladding in a bid to confine light inside the fiber. Germanium doping also increases silica's photosensitivity, which enables fabrication of fiber Bragg gratings used for wavelength filtering, optical communications, lasers, and sensing.

China's dominant position in germanium gives the country potential leverage over multiple layers of the optical connectivity supply chain, from silicon photonics photodetectors all the way to the optical fiber itself. If restrictions cover the appropriate germanium products and persist long enough, they could increase lead times and constrain production across several optical-interconnect segments simultaneously.

However, none of the optical connectivity applications depend exclusively on China. Germanium can come from non-Chinese producers, recycling, inventories, and alternative supply chains, and not every optical fiber necessarily has the same germanium requirements. In fact, the refractive-index difference can also be engineered with other dopants, eliminating the need for germanium or its dioxide completely. Furthermore, the report states that China is slowing clearances for Taiwanese companies, which does not automatically mean it is slowing down clearances for companies based in other countries. Of course, increasing the lead times for Taiwan-based companies can impact multiple optical initiatives, though the actual effect remains to be seen.

Quartz

China produces large volumes of silica sands and quartz sands for glass, construction, fiber optics, semiconductors, and other industrial uses. Quartz (SiO₂) is used very widely in the semiconductor industry both as a component of chipmaking tools and as the base for silicon wafers. Meanwhile, the Nikkei report does not give enough technical specifications of SiO₂ to determine which applications the restrictions target.

It should be noted that semiconductor wafers require high-purity quartz with no impurities (≥99.99% SiO2), and China is not the leading producer of HPQ, so it can hardly use its exports as leverage. This potentially brings us back to the optical connectivity market.

High-purity fused silica (SiO₂), produced from quartz or synthetic silica feedstocks, is the primary glass material used to make most optical fibers as it combines very low optical loss at telecom wavelengths with excellent thermal and mechanical stability as well as chemical resistance. Both the fiber core and cladding are typically silica-based, but their refractive indices are deliberately made slightly different to keep light confined inside the core. A common approach is to dope the SiO₂ core with germanium dioxide (GeO₂) to raise its refractive index, while the surrounding cladding remains mostly SiO₂ with a lower refractive index.

Meanwhile, optical fiber is commonly produced from synthetic ultra-high-purity silica, not from natural crystalline quartz. Manufacturers typically create the fiber preform by chemical vapor deposition using precursors such as SiCl₄, which is oxidized to form extremely pure SiO₂. Then, dopants like GeO₂ can be used to modify the core's refractive index.

That said, China's quartz restrictions can disrupt parts of the optical-component supply chain, but the Nikkei report does not demonstrate that they threaten optical fiber production itself. In fact, germanium/GeO₂ restrictions could be a more direct concern for Ge-doped fiber cores than quartz in general.

Neodymium

While China holds a dominant share of the neodymium production, it does not export control the rare earth material itself, as its real leverage is in processing and refining. NdFeB (neodymium-iron-boron) permanent magnets are used in a wide range of applications, but high-performance grades for aerospace and robotics often contain terbium or dysprosium to increase coercivity and maintain their magnetic properties at high temperatures. China's export controls do not limit neodymium itself or permanent magnets, but NdFeB permanent magnets or magnetic powders containing terbium or dysprosium.

While permanent magnets can be used in HDDs as well as various pumps or motors used in data centers, these applications do not need permanent magnets containing terbium or dysprosium, so it doesn't seem this regulation has anything to do with AI data centers. Yet, it has a lot to do with emerging applications in the aerospace and robotics realms, so slowing down rivals helps China to establish or maintain its lead, as finding cost-effective alternatives to Chinese permanent magnets is not an easy task. Then again, the report only covers companies from Taiwan, and we have no idea how it impacts companies based elsewhere.

A potential play for leverage

Rather than imposing a blanket ban, Beijing appears to be using its dual-use export-control regime to selectively delay shipments based on materials, customers, and end uses to gain leverage over strategically important industries. The biggest potential impact could be on optical connectivity, where China's dominance in germanium supply gives it influence over both silicon-photonics photodetectors and Ge-doped optical fiber.

However, while the effect of the curbs on Taiwanese industries may be significant, what remains unclear is the impact of China's restrictions on the global market.