China restricts indium exports despite AI demand
China is intensifying its oversight of indium exports, prompting concerns among buyers that this specialised metal, essential for next-generation data centers, could be incorporated into the export control framework that has emerged as a significant tool in Beijing’s trade strategy. China accounts for approximately 70% of global indium production, a byproduct of zinc refining. This metal is primarily utilised in displays and solder, but it also serves as the essential raw material for the production of indium phosphide, which is integral to the manufacture of high-speed optical chips for AI data centers. In February 2025, Beijing included indium phosphide on its export control list, creating significant obstacles for next-generation data centers. This situation prompted the CEO of Nvidia-backed chipmaker Coherent to accompany President Donald Trump on a visit to Beijing in May to address the matter.
Although indium metal is not included in the export control list, two buyers informed of increasing scrutiny regarding their acquisitions from Chinese customs. For the first time this year, a European buyer was requested to provide information regarding end users, including their geographical locations. A significant purchaser in North America indicated that approvals have shifted from same-day processing to several days, attributing this change to increased scrutiny of documentation, which they characterised as “tense”. This buyer had not been requested to provide additional information by customs.
China’s Ministry of Commerce has yet to provide a response to a request for comment, coinciding with a public holiday. All the buyers opted for anonymity due to the sensitive nature of the topic. The additional due diligence is not consistent, as two other buyers informed that while they had heard of increased scrutiny, they had not personally encountered it. Nonetheless, there exists a degree of apprehension within the small industry that this may signal the onset of stricter regulations or end-user disclosures, akin to those employed by China and other nations with export control frameworks, to map out global supply chains and identify chokepoints.
Indium has emerged as a potential vulnerability for the United States, as evidenced by the Defence Logistics Agency’s request for proposals earlier this year to stockpile up to 403 tonnes of the material over a three-year period. Another North American buyer expressed suspicion that the reporting requirements were “a precursor to restrictions or outright bans on exports.”
