The indium chokepoint

You cannot open an indium mine. The metal comes out only as a byproduct of smelting zinc, so there is no way to simply out-produce the country that controls it — and China refines about 70% of the world's supply. In June, buyers began reporting that shipments once cleared in a day now sit in customs for several, and that for the first time they were asked to name the end-customer and where it sits. That is on top of controls China placed in February 2025 on indium phosphide, the crystal substrate that the shipments feed.

Indium phosphide matters because its lasers drive the 800-gigabit and 1.6-terabit optical transceivers that carry data between GPU racks — the plumbing of every large AI cluster, where light has replaced copper at cluster scale. There is no drop-in substitute at those speeds. Since the February controls, the price of a six-inch indium-phosphide wafer has roughly tripled to about $5,000, and AXT, one of the few non-Chinese substrate makers, is sitting on more than $60 million in back-orders. Industry sources read the new customs friction as a warning sign rather than a confirmed ban — but the direction of travel is what has buyers alarmed.

The tell that China can throttle this at will: the Nvidia-backed optics maker Coherent sent its CEO to Beijing on the US business delegation for Trump's May trip, in part to lobby over license delays for a metal most people have never heard of. The American counter is a Defense Logistics Agency tender to stockpile up to 403 tons of indium over three years. A stockpile buys time, not supply — it cannot offset a sustained shortfall in the material every hyperscaler's buildout quietly runs on.