Supply security over cost: Google leads CSP charge to diversify InP substrate sourcing

China’s recent partial easing of InP substrate export controls offers only temporary relief; hyperscalers like Google are already locked into a strategic pivot toward supply-chain sovereignty over cost. Technically, InP underpins >1.6T optical engines and silicon photonics integration—its crystal quality directly dictates laser yield and co-packaged optics roadmaps. Compliance-wise, even at a 30% premium, U.S. CSPs are fast-tracking Japanese (Sumitomo) and European (Freiberger) alternatives to de-risk operations. TSMC is quietly securing InP epitaxy via its silicon photonics ecosystem, while Intel may accelerate heterogeneous bonding to bypass bulk substrates altogether. Over the next 18 months, InP will evolve from a commodity material into a geopolitical chokepoint, triggering mandatory dual-sourcing mandates and accelerating commercialization of substrate-free photonic integration techniques.