Imagine the following scene in 2028.
A US Navy destroyer in the South China Sea activates its new high-power laser weapon to neutralize an incoming swarm of drones. The system lights up… then suddenly loses power. Not because of a technical failure. Not because of jamming.
But because the gallium nitride chips inside the weapon depend on a material of which China controls 98 % of the global supply — and Beijing has just turned the tap.
This scenario is no longer science fiction.
Last month, China expanded its export licensing requirements on gallium and germanium for the third time in eighteen months. At the same time, a classified DoD supply chain assessment that reached our desk lists over 70 % of America’s next-generation defense programs as having “single-point failure risk” linked to these two metals.
What really stopped us cold is how little attention this is getting outside a very small circle of specialists. While the market obsesses over rare earth magnets and lithium, the real hidden choke point for directed-energy weapons, advanced radars, hypersonic guidance systems and next-gen semiconductors is quietly sitting in plain sight.
And almost no one is positioned for what comes next.
The strategic reality
Gallium and germanium are the invisible enablers of modern warfare and advanced technology:
Gallium nitride (GaN) → radars AESA, electronic warfare, directed energy weapons, 5G/6G base stations, EV power electronics
Germanium → infrared optics, night vision, fiber optics, satellite solar cells
Without reliable access to refined gallium and germanium, the entire next generation of American and European weapons systems is at risk.
China doesn’t just dominate production — it has repeatedly shown it is ready to use this leverage. Each new restriction sends a clear message: in a real crisis, the West’s technological superiority could be throttled at the source.
The response is finally waking up
The US and Europe are no longer watching from the sidelines:
The Pentagon has activated Defense Production Act funding specifically for gallium and germanium
The EU Critical Raw Materials Act now classifies both metals as “strategic”
Several small and mid-cap companies in the US, Canada, Australia and Europe are suddenly receiving government-backed contracts, offtake agreements and grants to build domestic refining and recycling capacity
But here is the key point most investors miss: building refining capacity takes years, recycling is still in its infancy, and substitution is extremely difficult. The window for early positioning is still wide open.
For Macro Notes Premium subscribers, we deliver the full actionable package:
Complete mapping of the gallium/germanium supply chain and the companies that control each critical step
Ranked list of the most interesting public and private plays (small/mid caps in refining, recycling, substitution and mining)
Precise timeline of DoD/EU funding rounds, new projects and first commercial milestones through 2029
Valuation framework, sizing recommendations and risk mitigation strategy
Downloadable tracker with all active projects and contracts
This is exactly the type of asymmetric macro opportunity we love at Macro Notes: a real strategic vulnerability, government money already flowing, and a market that is still almost entirely ignored by generalist investors.