AI Data Centre Material Indium Phosphide Faces Price Spike Amid China Supply Crunch
The swift expansion of artificial intelligence infrastructure is creating an extraordinary demand for indium phosphide (InP), which is crucial for high-speed data transfer in data centers. In China, prices have skyrocketed, with two-inch InP substrates climbing to 880 yuan (US$130.54) per wafer in June, up from 500 yuan at the end of 2025, while three-inch wafers have risen to approximately 3,200 yuan from 1,800 yuan. On Monday, Wind's InP index increased by 4.2%, surpassing other technology sectors. Economic Daily News reports that further price increases of up to 10% are expected in Q4. Additionally, JX Advanced Metals in Japan is also significantly raising prices, underscoring InP's vital importance in AI data centers and supply chain challenges.
Key facts
- Indium phosphide (InP) is used to make lasers that convert electrical signals into light for fibre-optic data transmission.
- China is a major producer of InP, and prices have climbed sharply.
- Two-inch InP substrates surged to as much as 880 yuan (US$130.54) per wafer in June from as little as 500 yuan at the end of 2025.
- Three-inch wafers rose to about 3,200 yuan from about 1,800 yuan over the same period.
- The InP index compiled by Wind gained 4.2 per cent on Monday, steeper than lithography and semiconductor materials segments.
- The industry is considering further price hikes of up to 10 per cent in the fourth quarter of the year, according to Economic Daily News.
- JX Advanced Metals, a Japanese InP substrate producer, is introducing price revisions that could raise prices to two to three times previous levels.
- JPMorgan reported that customer inquiries for InP continue to exceed planned production capacity expansion.
Entities
Institutions
- Nomura
- Wind
- Economic Daily News
- JX Advanced Metals
- JPMorgan
Locations
- China
- Japan
- Taiwan