China locks down indium exports as chip demand climbs

China has tightened export controls on indium, a soft metal essential to manufacturing semiconductors, flat-panel displays, and certain solar cells. Reuters reports the new checks come as demand for AI accelerators and data-center chips continues to rise. Indium is used in indium tin oxide coatings that enable touchscreens and high-efficiency transistors; it shows up in nearly every chip fab process at scale.

The timing is not coincidental. Beijing has been methodically restricting access to materials where it holds structural leverage. China controls roughly 80 percent of global indium refining capacity, even though primary deposits exist elsewhere. The export licensing regime now in place gives Chinese authorities visibility into who is buying, how much, and for what declared purpose. It also creates a buffer: approvals can slow or stop without formal prohibition.

This move mirrors earlier restrictions on gallium and germanium, also semiconductor inputs. The pattern is clear. As Western governments pour subsidies into domestic chip manufacturing under the CHIPS Act and similar programs, China is tightening the chokepoints further upstream. Indium is harder to substitute than some other materials, and lead times for new refining capacity run in years, not quarters.

Separately, Reuters notes that Ukrainian drone manufacturers are now targeting buyers in Asia, particularly as tensions around Taiwan drive interest in battlefield-tested UAV designs. The connection is less about the metal itself and more about the broader supply-chain logic: hardware production increasingly sits at the intersection of industrial policy and security policy. Governments that want sovereign capability in chips or drones are learning the same lesson—access to materials, components, and manufacturing expertise cannot be assumed.

For anyone building or funding hardware companies, the risk is not hypothetical. Indium is not the only input on a restricted list, and export licenses are not automatically renewed. The bottleneck is no longer just about who can design a chip; it is about who can secure the materials to make it, and under what terms.