Gallium, a critical rare metal used in semiconductors, LED technology, and high-frequency radio communications, has become an increasingly valuable resource in global supply chains. The demand for gallium has risen sharply in recent years due to its essential role in 5G infrastructure, satellite communications, and advanced computing applications. One of the primary drivers of this demand surge has been SpaceX’s Starlink project, which aims to deploy thousands of low-Earth orbit (LEO) satellites to provide high-speed internet globally.

By 2024, Starlink had launched over 5,500 satellites, with plans to expand to 42,000 satellites by 2030. These satellites rely on gallium arsenide (GaAs) solar panels and radio frequency components, significantly increasing the global demand for gallium. As a result, countries such as China, Germany, and Japan have increased their gallium extraction and refining capabilities, leading to a notable rise in global gallium supply.

This case study explores how the growing demand from Starlink has influenced the supply of gallium, analyzing price elasticity, production scalability, geopolitical concerns, and long-term market implications.

How Starlink Has Increased Demand for Gallium

The commercial satellite industry has undergone rapid expansion, with Starlink leading the way in internet-based satellite communications. Unlike traditional satellite models, which relied on large geostationary satellites, Starlink’s approach involves deploying thousands of smaller satellites that require lighter, energy-efficient materials. Gallium-based semiconductors are ideal for satellite technology because they operate efficiently in extreme temperatures and have higher performance in power conversion than silicon alternatives.

By 2023, global gallium consumption had reached 750 metric tons, an increase of 60% from 2018, with Starlink and other satellite providers accounting for over 20% of this demand. The use of gallium arsenide (GaAs) solar cells in Starlink satellites has become a key factor influencing supply chain strategies. Gallium-based components provide higher energy efficiency and durability compared to traditional silicon-based materials, making them essential for LEO satellites that require compact, long-lasting power solutions.

The demand surge from Starlink and other space programs, including Amazon’s Project Kuiper and China’s Guowang satellite network, has placed upward pressure on gallium prices. Between 2020 and 2024, gallium prices increased by over 40%, reflecting supply constraints and geopolitical risks associated with gallium production.

The Price Elasticity of Gallium Supply

Gallium supply is considered relatively inelastic in the short term, as its extraction is dependent on aluminum and zinc production. Unlike primary metals such as copper or iron, gallium is obtained as a byproduct of refining bauxite (for aluminum) and sphalerite (for zinc), meaning that its availability is closely linked to the output of these base metals.

By 2024, China controlled approximately 80% of global gallium production, making it the dominant player in the supply chain. The Chinese government has implemented export restrictions on critical materials, including gallium, citing national security concerns and trade disputes with Western economies. In July 2023, China imposed export controls on gallium and germanium, significantly disrupting supply chains and causing a temporary price spike of 25%.

Despite supply constraints, gallium refining capacity has expanded in response to rising demand. Germany, Japan, and Canada have invested in gallium recycling and alternative sourcing strategies, helping increase supply elasticity over the long term. By 2024, global gallium production had risen to 900 metric tons, an increase of 20% from pre-2020 levels, demonstrating that long-term supply adjustments are possible in response to sustained price increases.

Geopolitical Risks and Supply Chain Vulnerabilities

Gallium’s supply chain is highly concentrated, creating significant geopolitical risks for dependent industries. China’s dominance in gallium refining has given it leverage in trade negotiations, particularly in disputes with the United States and European Union over semiconductor technology.

In response to China’s export restrictions, the U.S. and EU have accelerated domestic production efforts through public and private sector investments. The U.S. CHIPS Act of 2022 allocated over $52 billion to semiconductor manufacturing, including funding for rare metal refining projects. Similarly, the European Union’s Critical Raw Materials Act has outlined strategies to reduce reliance on Chinese suppliers by 2027, including investment in gallium extraction facilities in Sweden and Finland.

Despite these efforts, the transition to more diversified supply chains remains slow, as gallium refining requires specialized technology, significant capital investment, and regulatory approvals. Until alternative supply sources become fully operational, China’s control over gallium exports will continue to impact pricing and availability, particularly for industries that rely on high-performance semiconductor materials.

Long-Term Market Outlook: Will Gallium Supply Meet Future Demand?

As satellite communication networks continue to expand, gallium demand is expected to rise further in the coming decade. SpaceX’s Starlink, Amazon’s Project Kuiper, and China’s Guowang project are collectively expected to deploy over 50,000 LEO satellites by 2035, significantly increasing demand for gallium-based semiconductors.

In addition to space applications, gallium is becoming increasingly important in electric vehicles (EVs), 5G infrastructure, and military defense systems. The growing use of gallium nitride (GaN) in high-efficiency power electronics is expected to further strain supply chains, leading to continued price volatility unless alternative sources are developed.

To meet future demand, countries and private companies must invest in recycling programs, secondary sourcing, and alternative semiconductor materials. Companies such as TSMC and Intel have begun exploring gallium-free semiconductor technologies, but widespread adoption of these alternatives remains years away from full-scale implementation.

If alternative supply solutions are not established soon, industries reliant on gallium may face production slowdowns, affecting semiconductor availability, satellite deployment schedules, and global tech infrastructure growth. Balancing supply chain security with demand-driven expansion will be critical in ensuring stable gallium availability for high-tech industries in the years ahead.