China Tightens Export Scrutiny On Indium, Raising Fears Of Supply Chain Restrictions For AI Chips

China has increased regulatory scrutiny over exports of indium, raising concerns among international buyers that the niche metal could eventually be added to Beijing’s export control regime, which is already used as a strategic trade lever.

According to a report by Reuters, the development has sparked anxiety in global supply chains tied to advanced technologies.

China accounts for nearly 70% of global indium production. The metal is a byproduct of zinc refining and is primarily used in displays and soldering applications.

However, its strategic importance has grown as it is also a key raw material for indium phosphide, a compound used in high-speed optical chips that power AI-driven data centres and next-generation computing infrastructure.

Beijing had already placed indium phosphide on its export control list in February 2025. The restriction has reportedly become a significant hurdle for companies developing advanced data centre technologies.

The issue was serious enough that the CEO of Nvidia-backed chipmaker Coherent raised concerns during a visit to Beijing alongside President Donald Trump in May.

While indium metal itself is not currently under export restrictions, Reuters reported that buyers are facing heightened customs scrutiny.

Some purchasers said approvals that previously took a single day are now taking several days due to increased checks and documentation requirements.

For the first time this year, a European buyer was reportedly asked to disclose detailed end-user information, including the destination country.

A North American buyer described the process as “tense,” although they did not face additional documentation demands.

China’s Ministry of Commerce did not respond to requests for comment due to a public holiday.

The increased scrutiny is not uniform across all transactions. While some buyers have faced stricter checks, others report no change in their experience. So far, no confirmed shipment blockages have been identified.

However, industry participants remain concerned that these steps could signal a prelude to tighter export controls or mandatory end-user disclosure requirements.

Such measures are commonly used by countries to track global supply chains and identify strategic chokepoints.

Indium is already considered a potential strategic vulnerability, particularly for the United States. Earlier this year, the US Defense Logistics Agency issued a proposal to stockpile up to 403 tons of the metal over three years.

Some North American buyers believe the current reporting requirements may be an early indicator of future restrictions or even a potential export ban, given China’s increasing use of resource controls in trade policy.