* US says China agreed to address shortages of critical

minerals yttrium, scandium, indium and neodymium

* US statement drops reference to elimination of China's

export control regime

* US flags indium shortages for first time

* Indium phosphide is key for next-gen chips

By Laurie Chen and Lewis Jackson

BEIJING, May 18 (Reuters) - China will address U.S.

concerns about rare earth shortages, the White House said on

Sunday in a recap of agreements struck at last week's leaders

summit that fell short of calling for the removal of

restrictions that have disrupted U.S. aerospace and

semiconductor manufacturing.

Introduced in April 2025 in retaliation for U.S. President

Donald Trump's so-called Liberation Day tariffs, Beijing'

controls continue to tightly restrict exports of certain rare

earths despite a deal at last October's Busan summitwhere the

White House said China committed to "effectively eliminate" all

current and proposed critical mineral export controls.

Six months on, the White House's latest statement now

tacitly acknowledges that China's export control regime is here

to stay. It also did not mention whether a one-year truce on a

wider set of Chinese rare earth restrictions, due to expire in

November, will be extended.

The Sunday fact sheet summarising key takeaways from the

summit in Beijing said China would address U.S. concerns about

shortages of critical minerals and rare earths including

yttrium, scandium and indium.

It also said China would address U.S. concerns over export

restrictions on rare earth processing technology, which Beijing

tightly guards to protect domestic producers responsible for

almost all of the world's production.

Unlike the White House, China's Ministry of Commerce made

no mention of rare earths in its own summary published on

Saturday.

"The gap in this case is not ideal, but fine," said Cory

Combs, associate director at macro research firm Trivium China.

"What's most important is that both sides have clearly,

credibly indicated interest in stability and they are able to

effectively market that message to their own domestic

audiences."

While rare earth export licences are flowing to sectors

like autos and consumer electronics, companies in sensitive

sectors where rare earths have potential military applications

continue to experience delays.

Reuters previously reported that ongoing shortages of

yttrium - part of a heat-protective coating in aircraft engines

- and scandium used in chip manufacturing have severely impacted

U.S. industry. Companies have lobbied Washington to intervene

with Beijing.

INDIUM AND CHIPS

One critical mineral mentioned for the first time by the

White House is indium, which plays a key role in the upstream

and downstream semiconductor supply chain and has been on a

Chinese export control list since February 2025.

Its compound indium phosphide is crucial for making

next-generation photonic chips that use light instead of

electricity to process data, as well as high-speed optical

lasers used in optical fibre and 6G networks. Another compound,

indium tin oxide, is used to make LED screens in consumer

electronics.

Manufacturers like Coherent are stepping up

production of photonic chips that are rapidly being integrated

into the development of AI data centres around the world.

Chinese exports of indium have fallen dramatically in the

14 months since February 2025 versus the same period the year

before, customs data showed. Shipments are down by about

two-thirds globally and by 77% to the U.S.

Coherent's CEO was part of the executive delegation

accompanying Trump on his visit, with all participating firms

facing regulatory or political issues in China. Coherent holds a

40% global market share in indium phosphide optical components.

"If Chinese licensing remains slow or politically

contingent, Coherent could face higher input costs, allocation

problems, delayed capacity expansion, and difficulty meeting

hyperscaler demand," said Paul Triolo, partner and China

technology policy lead at DGA-Albright Stonebridge Group.