As the global construction boom for AI data centers continues, the price of indium, a key material for fiber optics, is skyrocketing.
According to recent data from the China Nonferrous Metals Industry Association, indium prices have risen by approximately 60% over the past six months, as reported by Taiwan's United Daily News on August 3. While prices for other metals used in data centers, such as copper, aluminum, tin, and tantalum, have also surged, indium is drawing particular attention due to expectations of even steeper price increases in the future.
Michael Hurst, CEO of U.S. fiber optics company Lumentum, recently identified indium phosphide (InP), a compound of indium, as a potential bottleneck for future AI infrastructure during an AI-related event.
Indium phosphide is a critical material used in optical transceivers, which facilitate ultra-fast data transmission between servers within AI data centers. As the demand for high-performance AI server clusters grows, the need for faster fiber optic networks increases, thereby driving up the demand for indium as well.
Notably, indium is a mineral that China dominates in the global supply chain. Additionally, it is among the items that China has placed export controls on. Since China imposed export restrictions in February of last year, the price of indium has continued to rise. The international price of indium, which was $354 per kilogram at the end of December 2024, surged to $812 by the end of last month, marking an increase of over 130% in just a year and a half.
Indium is not mined independently like typical metals; it is primarily produced as a byproduct during the smelting of zinc, lead, and tin ores. China is the world's largest producer of indium, accounting for about 70% of global production, while South Korea ranks second with approximately 15%.
With the supply of indium expected to remain constrained, demand is projected to rise sharply. Market research firms estimate that the global indium phosphide wafer market will grow from $200 million in 2025 to $700 million by 2035.
Meanwhile, data from the China Nonferrous Metals Industry Association indicates that the price of tin has increased by about 40% over the past six months, while tantalum prices have skyrocketed by 158%.
* This article has been translated by AI.
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