Posteo

US $AI infrastructure depends on a material China largely controls. The $AI race is usually all about computing power, GPUs and the models trained on them. But computing is only half the system. $AI chips perform calculations. The communication layer allows thousands of these chips to exchange data and produce results together. That layer depends on a critical material called indium phosphide (InP). China produces around 70% of the world’s indium and has restricted its exports since February 2025. They have since fallen by roughly two-thirds globally and 77% to the US. The impact is now visible in its prices, reaching their highest level since 2006; up by 250%. Lumentum, which makes the components used to connect $AI chips, has reportedly quadrupled production but is still sold out through 2028 due to limited access to InP. The US may lead the compute layer through advanced chips and software. But a critical material behind the communication layer remains heavily dependent on China. The $AI race will not be decided only by who makes the best chips, but also by who controls the materials connecting them.