China's AI Chokehold: The Critical Metal You've Never Heard Of
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China is tightening its grip on indium, a little-known but suddenly critical metal for manufacturing high-speed AI chips. Beijing's new restrictions on its processed form, indium phosphide, are creating a significant challenge for global tech, with China controlling 70% of the world's supply. This strategic move is impacting major players and has already caused prices to surge by 250%.
The restrictions aren't a formal ban but serve as a clear warning shot, as the US and its allies race to diversify their supply chains. This control over indium phosphide, vital for silicon photonics in AI data centers, highlights China's expanding toolkit of choke points in the global tech landscape, making it a central geopolitical battle for AI infrastructure.
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Transcript
China is tightening its grip on a little-known metal that's suddenly critical for AI. The metal is indium, and it's essential for manufacturing high-speed AI chips. Now, customs officials are demanding more information from buyers about where the metal is going and who's using it. This isn't a formal export ban yet, but it's a clear warning shot. China produces 70% of the world's indium. Its processed form, indium phosphide, is the backbone of silicon photonics, a technology that uses light instead of electricity to move data inside AI data centers. And since Beijing restricted indium phosphide exports in February, the price of a 6-inch wafer has skyrocketed 250% to $5,000. The impact is hitting major players. Nvidia invested $2 billion each in Coherent and Lumentum in March. Just a few weeks ago, Coherent flagged a shortage in an earnings call, and its CEO personally joined a US business delegation to raise the issue with Chinese officials. The second largest producer, AXT, says export permits are its biggest challenge. Meanwhile, Chinese firms like Yunnan Germanium are ramping up production fast. One just announced a $28 million expansion. But analysts say new plants take years to build. The US is trying ...
