China tightens indium export checks as AI demand increases

• China already placed indium phosphide on export controls in February 2025, prompting Nvidia-backed Coherent's CEO to travel with President Trump to Beijing in May to address the restrictions
• European buyers are being asked to disclose end-user information for the first time, while North American buyers report approval times increasing from same-day to several days
• The U.S. Defense Logistics Agency requested proposals to stockpile up to 403 tons of indium over three years, identifying it as a potential vulnerability given China's market dominance

Summary: China Tightens Indium Export Checks Amid AI Demand

Key Development: China is increasing scrutiny of indium exports, raising concerns the strategic metal may be added to Beijing's export control regime. While not yet on the restricted list, buyers report growing customs oversight as of June 2025.

Critical Facts:

• China controls nearly 70% of global indium production, a zinc refining byproduct
• Indium phosphide, derived from indium, is essential for high-speed optical chips used in AI data centers
• China placed indium phosphide on its export control list in February 2025

Buyer Impact:

• European buyer required to disclose end-user information for the first time in 2025
• North American purchaser reports approval times extended from same-day to several days, describing situation as "tense"
• Scrutiny remains inconsistent—some buyers report no changes while others face heightened requirements
• No shipments confirmed blocked to date

Strategic Significance:

• Restrictions severe enough that Coherent's CEO (Nvidia-backed chipmaker) traveled to Beijing with President Trump in May to address the issue
• U.S. Defense Logistics Agency issued request earlier in 2025 to stockpile up to 403 tons of indium over three years, recognizing potential vulnerability
• Industry participants view increased checks as potential precursor to tighter controls or export bans

Market Implications: The tightening export environment threatens supply chains for next-generation AI data centers at a time of surging demand. Given China's dominant market position and indium's critical role in advanced computing infrastructure, further restrictions could significantly impact U.S. and Western technology development while strengthening Beijing's leverage in ongoing tech trade disputes.