Sinolink: Indium export inspection strengthened, reshaping global supply pattern of indium phosphide.

Sinolink released a research report stating that the strengthening of export inspections will further enhance the strategic metal properties of the indium industry chain. The global indium supply pattern is difficult to change in the short term, and China's dominant position in the primary indium and high-purity indium segments is further highlighted. Resource supply rigidity, high-purity indium purification barriers, and strengthened export inspections collectively constitute global supply constraints. Companies with resource security, high-purity indium purification capabilities, and advantages in extending the industrial chain are expected to continue to benefit. Sinolink's main points are as follows: Indium Supply: Zinc-tin companion attributes determine supply rigidity Indium is a typical companion metal, mainly derived from by-product recovery in zinc and tin smelting processes and does not have independent mine expansion logic. Indium supply depends on the scale of primary metal smelting, raw material grade, and recovery processes, cannot rely on rising indium prices to quickly release additional supply. The companion attributes mean that indium naturally has low supply elasticity, and global supply growth depends more on improving recovery rates and expanding smelting systems rather than on independent resource development. Chinese Supply: High-purity indium constitutes a global core bottleneck China controls the core supply links of the global indium industry chain, with refined indium supply accounting for about 70% globally and high-purity indium supply accounting for even higher. For compounds such as indium phosphide semiconductor materials, high-purity indium is the key link that truly determines supply capability. The production of indium phosphide requires 7N high-purity indium, and refined indium needs to undergo multiple rounds of impurity removal, purification, and customer certification to meet requirements. Overseas Supply Boost: Short-term effective incremental increases are difficult to achieve Overseas supplemental indium supply mainly depends on the recovery of recycled indium and increasing indium recovery capabilities in existing smelting systems. Recycled indium mainly comes from ITO target recovery, and due to impurities such as tin in the raw materials, it is difficult to purify to 7N high-purity indium, making it challenging to directly meet the requirements of the indium phosphide industry. At the same time, overseas new indium recovery and purification capabilities need to go through multiple steps such as permit approval, process restructuring, equipment installation, ramp-up debugging, and customer certification, making supply release more of a medium to long-term variable. The current export inspections have extended from indium phosphide to indium metal raw materials, further reducing the stability of overseas supply chains, and the value of high-purity indium supply is expected to continue to rise. Domestic Industry Chain: Resource advantages extend to material advantages The strengthening of indium export inspections does not mean that the value of the domestic industry chain is damaged. China has formed a relatively complete ITO target, display materials, indium phosphide, and optoelectronic chip industry system, with strong indium resource digestion capabilities. With the tightening of overseas high-purity indium and indium phosphide supply, the domestic industry chain is expected to take on more value increments in materials and device sectors. More indium resources are left for deep processing in China, which helps to promote the upgrading of the industrial chain from raw material exports to high-value-added materials and device exports. Indium Phosphide: Domestic indium phosphide enterprises are expected to achieve increasing quantities and prices According to Reuters, China and Japan together account for 85% of global indium phosphide supply. With China's export control on indium phosphide in February 2025, overseas indium phosphide supply is affected. With this further restriction on the export of high-purity indium from China, the supply of indium phosphide in Japan may further shrink, leading to ongoing tightness in overseas indium phosphide supply and possibly rapid price increases. Domestic indium phosphide enterprises are expected to achieve increasing quantities and prices. Risk Warning Export inspection enforcement is less than expected; breakthroughs in overseas recycled indium purification technology; overseas zinc, tin smelting plants put indium recovery production lines into operation faster than expected; domestic high-purity indium and indium phosphide production capacity ramp-up is less than expected; indium price fluctuation risks; geopolitical and trade policy change risks.