China eases InP substrate exports, lifting compound semiconductor supply

China’s relaxation of InP substrate exports signals strategic control over critical materials, not mere supply relief. As a cornerstone for 6G and high-speed optical modules, InP availability accelerates heterogeneous integration with silicon photonics, pressuring Western rivals to fast-track alternative substrates. Taiwan, China-based firms like VPEC and GCS gain short-term cost reprieve but face rising compliance burdens due to persistent restrictions on MOCVD tools and ultra-pure precursors. The U.S. is likely to tighten Wassenaar controls on epitaxy equipment to cap capacity growth. Over the next 12–24 months, InP pricing volatility will intensify, favoring vertically integrated IDMs while pushing pure-play foundries toward GaAs or other suboptimal platforms. This calibrated release isn’t deregulation—it’s a geopolitical maneuver to reshape compound semiconductor governance under Beijing’s terms.