China keeps tight InP export controls despite Trump-Xi talks

China’s sustained export controls on indium phosphide (InP) substrates signal a strategic recalibration of critical photonic materials as geopolitical leverage. Technically, this disrupts 400G/800G optical transceiver supply chains, particularly constraining overseas access to InP-based lasers essential for silicon photonics, thereby accelerating Western R&D into GaAs alternatives and heterogeneous integration. Compliance burdens have surged: multinationals now maintain dual-track supply chains, extending inventory cycles by over 30% amid unpredictable licensing delays. Strategically, the U.S. may counter with expanded restrictions on InP epitaxy tools under CHIPS Act extensions, while Japanese and Korean firms scale 6-inch InP production to capture market gaps. Over the next 12–24 months, a 'material schism' will crystallize—China consolidating vertical integration from substrates to devices, while the West pivots to hybrid photonic architectures—deepening technological fragmentation and intensifying the battle for standard-setting dominance.