China is increasing scrutiny of exports of indium, a little-known but strategically important metal used in advanced semiconductor manufacturing, raising concerns among global buyers that Beijing may be preparing to extend its export-control regime to another critical technology material.

China’s dominance over key minerals is becoming a powerful lever in the global technology race, particularly as countries compete to build artificial intelligence infrastructure and next-generation data centers.

The Asian giant accounts for nearly 70% of global indium production, giving it a commanding position in a market that is small in size but critical to emerging technologies. While indium has traditionally been used in flat-panel displays, touchscreens, and soldering applications, its importance has grown sharply because it serves as the raw material for indium phosphide, a semiconductor compound increasingly used in high-speed optical chips that enable data transmission inside AI data centers.

The concerns emerged more than a year after Beijing placed indium phosphide on its export-control list in February 2025, a move widely viewed as part of China’s broader response to Western restrictions on advanced semiconductor technology.

Now, industry participants say Chinese customs authorities appear to be paying closer attention to shipments of the underlying metal itself.

According to buyers familiar with the process cited by Reuters, Chinese customs officials have begun requesting more detailed information about export transactions, including end-user disclosures and destination details.

One European buyer told Reuters that for the first time this year, Chinese authorities requested information about the final users of indium shipments, including where those customers were located. A major North American buyer said export approvals that once took place on the same day are now taking several days, which the company attributed to more intensive scrutiny of documentation.

The buyer described the environment as “tense,” although it had not been asked to provide additional end-user information. So far, there is no evidence that shipments have been blocked, and the additional checks do not appear to be applied uniformly across all exporters and buyers. Two other market participants told Reuters they had heard reports of increased scrutiny but had not encountered it directly.

Still, the changes are generating unease in an industry that has become increasingly sensitive to geopolitical risks.

Many market participants view the collection of end-user information as a potentially significant signal because such disclosures are often used by governments to map supply chains, identify strategic dependencies, and assess vulnerabilities before introducing formal export restrictions.

One North American buyer said they suspected that the new reporting requirements were “a precursor to restrictions or outright bans on exports.”

The concerns spring from China’s use of critical mineral controls as a strategic policy tool. Over the past several years, Beijing has steadily expanded restrictions on materials deemed important to national security and advanced technology development, including gallium, germanium, graphite, and rare earth elements.

Unlike oil or natural gas, many of these specialty materials attract little public attention. However, they often occupy indispensable positions in technology supply chains where alternative suppliers are scarce.

Indium’s strategic relevance is growing because of the rapid expansion of AI infrastructure.

Modern AI data centers require sophisticated optical networking systems to move vast amounts of data between processors. Indium phosphide-based optical chips are viewed as a key enabling technology because they can transmit data at extremely high speeds while consuming less power than traditional alternatives.

This has turned what was once a niche industrial metal into a material of growing strategic importance.

The issue has already reached the highest levels of industry and government. Reuters reported that export restrictions involving indium phosphide became significant enough that the chief executive of Nvidia-backed optical chipmaker Coherent traveled to Beijing with President Donald Trump in May to raise concerns about the issue.

The United States has also begun treating indium as a strategic resource.

Earlier this year, the U.S. Defense Logistics Agency issued a request for proposals to acquire and stockpile up to 403 tons of indium over a three-year period. The move reflected growing recognition within Washington that dependence on irregular foreign suppliers for critical technology materials could pose national security risks.

Although indium currently remains outside China’s formal export-control framework, growing scrutiny at customs checkpoints is fueling speculation that Beijing may be assessing supply-chain dependencies and preparing additional measures should geopolitical tensions intensify.

If that happens, the effects could extend far beyond the relatively small indium market, potentially affecting optical networking equipment, AI infrastructure expansion plans, and the broader semiconductor supply chain that is increasingly powering the global digital economy.