China tightens indium export scrutiny amid AI chip fears

China Tightens Indium Export Controls Amid AI Chip Concerns

China is stepping up customs scrutiny over exports of indium, a metal essential for the optical chips powering artificial intelligence data centers, raising fears among buyers that Beijing may be preparing to fold the material into its expanding export control regime.

Growing Scrutiny on a Niche Metal

China accounts for nearly 70% of the global indium supply, a byproduct of zinc refining used primarily in displays and solder but increasingly critical as the base material for indium phosphide, which enables high-speed optical chips in AI data centers. While indium metal itself is not formally on China’s export control list, two buyers told Reuters that Chinese customs has intensified examination of their orders. For the first time this year, a European buyer was asked to disclose information about end users, including where they were based.reuters

Reuters reported on Thursday that no shipments have been halted so far, but industry participants fear the new disclosures could signal the start of stricter controls. Beijing placed indium phosphide on its export control list in February 2025, and those restrictions have already created bottlenecks for companies racing to build next-generation AI infrastructure.mining

Washington Moves to Secure Supply

The U.S. government has taken steps to reduce dependence on Chinese indium supplies. On June 15, the Department of Commerce’s CHIPS Program Office announced a letter of intent to provide up to $50 million in direct funding to Coherent to expand domestic indium phosphide production capacity. The announcement came days after Reuters reported that Coherent CEO Jim Anderson had traveled to Beijing with President Donald Trump’s delegation in May to raise concerns about Chinese export license delays for the material.nist

The White House said during the May summit that China agreed to address U.S. concerns over shortages of specific specialty materials, with indium flagged for the first time. However, analysts note that diplomatic assurances have not yet translated into smoother export approvals.reuters

A Broader Leverage Strategy

The indium moves fit within a pattern of Beijing using its dominance over critical mineral supply chains as a geopolitical tool. Since late 2024, China has imposed or threatened export restrictions on gallium, germanium, antimony, rare earths, and other strategic materials. Chinese exports of indium to the United States dropped by roughly 77% in the fourteen months following the February 2025 controls on indium phosphide.linkedin

While some of the most aggressive controls announced in late 2025 were temporarily suspended following diplomatic negotiations, restrictions on indium phosphide and other materials remain intact. The latest customs actions suggest Beijing is continuing to tighten its grip on the supply chains underpinning the global AI buildout.clarkhill