There’s a material most people have never heard of that sits at the heart of every AI data center on the planet. Indium phosphide, a compound semiconductor used in the optical transceivers that shuttle data at the speed of light, has become the latest flashpoint in the US-China tech cold war. And the supply is drying up fast.
Coherent Corp. CEO Jim Anderson brought this problem directly to Chinese officials during a US business delegation to China in June 2026, pressing for faster approval of export licenses that have been stalling shipments of the critical material.
The chokepoint nobody saw coming
China placed export controls on indium and related compounds back in February 2025. The impact has been staggering. Global exports of indium have dropped by roughly two-thirds since the controls took effect. Shipments to the US specifically have fallen by 77%.
Indium phosphide is the backbone of high-speed optical components. These are the parts that allow data to travel between servers, switches, and storage systems inside the massive facilities that train and run AI models.
