China tightens indium export checks as AI demand increases

By Solomon Cefai

SINGAPORE, June 19 (Reuters) - China is stepping up scrutiny over exports of indium, leading some buyers to fear the niche metal, sought after for next-generation data centers, may be added to the export control regime that has become one of Beijing's most potent trade weapons.

China produces nearly 70% of the world's indium, a byproduct of zinc refining mostly used in displays and solder but also the raw material for making indium phosphide, used to make high-speed optical chips for AI data centers.

Beijing put indium phosphide on an export control list in February 2025 and the restrictions have become enough of a hurdle for next-generation data centers that the CEO of Nvidia-backed chipmaker Coherent traveled to Beijing with President Donald Trump in May to raise the issue.

While indium metal is not on the export control list, two buyers told Reuters about growing scrutiny over their purchases from Chinese customs. For the first time this year, a European buyer was asked to disclose information about end users, including where they were based.

A major buyer in North America said approvals had gone from same day to several days, which they attributed to more scrutiny of paperwork and described as "tense". This buyer had not been asked for extra information by customs.

China's Ministry of Commerce did not immediately respond to a request for comment on a public holiday.

All the buyers declined to be named owing to the sensitivity of the topic.

The extra due diligence is not uniform and two other buyers told Reuters they had heard of extra scrutiny but not faced it themselves. So far, Reuters has not identified any shipments that have been blocked.

Nonetheless there is some concern in the small industry that this is a prelude to tighter controls or the end-user disclosures which China, and other countries with export control regimes, use to chart global supply chains and chokepoints.

Indium has been identified as a potential vulnerability for the U.S., whose Defense Logistics Agency earlier this year released a request for proposals to stockpile up to 403 tons of the material over three years.

Another North American buyer said they suspected that the reporting requirements were "a precursor to restrictions or outright bans on exports."

(Reporting by Solomon Cefai; Editing by Sonali Paul)