China has intensified scrutiny over indium exports, raising concerns that the critical metal for AI-era optical chips could face formal restrictions. According to reports from Business Standard, Beijing has already placed indium phosphide on an export control list in February 2025, with restrictions becoming significant enough to prompt the CEO of Nvidia-backed chipmaker Coherent to travel to Beijing with President Donald Trump in May 2026 to address the issue. While indium metal itself is not currently on the export control list, the increased scrutiny is creating uncertainty in the market. The latest developments suggest these enhanced checks may be added to Beijing's export control regime as feared by prominent buyers, as reported by QOSHE.
The enhanced scrutiny is manifesting in practical ways for international buyers, with wafer prices up 250% since early 2025 according to latest reports. As reported by Reuters, a European buyer was asked for the first time this year to disclose information about end users, including their location, marking a significant shift in China's approach to indium exports. A major North American buyer reported that approvals have slowed from same-day processing to several days, which they attributed to increased scrutiny of paperwork and described as creating a tense environment. Chinese authorities have been demanding additional information about end-customers and their locations, according to several buyers who have flagged these practices to Reuters. However, not all buyers have experienced these changes, with two other buyers telling Reuters they had heard of extra scrutiny but not faced it themselves. The enhanced due diligence is not applied uniformly across all buyers, with some experiencing increased scrutiny while others have not, creating an uneven enforcement environment.
China's dominance in indium production makes these developments particularly significant for global supply chains. According to Business Standard reports, China produces nearly 70% of the world's indium, which is primarily a byproduct of zinc refining used in displays and solder but also serves as the raw material for making indium phosphide used in high-speed optical chips for AI data centers. The metal has been identified as a potential vulnerability for the U.S., whose Defense Logistics Agency released a request for proposals earlier this year to stockpile up to 403 tons of indium over three years. As reported by QOSHE, indium is described as an important niche metal highly valuable for next generation data centers and a raw material for making indium phosphide. The increased scrutiny comes as China has leveraged its dominant market position in critical minerals and rare earth elements over the past year and a half to curb exports or tighten controls of key materials crucial for magnet manufacturing and defense industries.
Despite the lack of confirmed shipment blocks, there is growing concern within the small indium industry about the direction of these developments. As reported by Reuters, buyers suspect that the reporting requirements represent a precursor to restrictions or outright bans on exports. The extra due diligence is not uniform across all buyers, with some experiencing increased scrutiny while others have not, creating an uneven enforcement environment. These concerns come in the week when G7 leaders formed a critical minerals alliance, pledging to boost critical mineral production and cooperation to counter China's dominance in the sector. The latest developments come as the world witnesses a boom in AI expansion, making indium's strategic importance for next-generation data centers even more critical. China's Ministry of Commerce did not respond to a request for comment due to a public holiday, with all buyers speaking on condition of anonymity because of the sensitivity of the matter.
