AXT, Inc. (AXTI)

Compound-semi substrates (AXT) — indium-phosphide wafers for AI-optics lasers; the Western InP chokepoint

AI exposure 53% — derived from reported segment revenue, not asserted.

Where it sits

Energy Supply & Critical Minerals → Critical Minerals & Base Metals · figures rebased to Q2 2026, reported 2026-07-30

Dominant Western merchant supplier of indium-phosphide substrates — the foundational material for the lasers in AI-data-center optical transceivers; a strategic compound-semiconductor-materials chokepoint (plus export-controlled gallium). No dedicated substrate sub-tier, so placed as a strategic-materials chokepoint feeding the optical layer.

Reported segments

• Compound semiconductor substrates + raw materials — 100% of revenue

AXT, Inc. ($47.6M Q2 2026, +164% YoY, +77% QoQ) — compound-semiconductor substrate maker. InP substrates now 64% ($30.7M, record) — the foundational material for the lasers inside high-speed optical transceivers; >$100M InP backlog plus the Lumentum LTA ($87M customer deposits, minimum commitments through 2031), and AXT is the dominant Western merchant InP supplier (~30-35%). Raw-material JVs 21% ($10.0M record; JinMei now refines high-purity indium feeding InP production), GaAs 14% ($6.6M — RF/VCSEL, industrial robotics + data-center lasers), Ge 1%. Placed B4 Critical Minerals & Base Metals…

How the 53% is built

• Compound semiconductor substrates + raw materials — 100% of revenue × 53% AI-driven (estimate). Blended estimate across the disclosed Q2 2026 product mix, since the spine now carries AXT as one segment: InP $30.7M = 64.6% of revenue at ~75% AI (record quarter 'primarily from data center applications'; >$100M backlog, the Jul 29 Lumentum LTA and $22.3M/$25.4M wafer prepayments are all high-speed AI-optical, with…

Investment read

Moat. The dominant Western merchant supplier of InP substrates (~30-35%) — a genuine chokepoint for the lasers in AI-data-center optics, reinforced by China export controls on gallium; but small-scale with heavy China manufacturing exposure.

Bottleneck / pricing power. Rising InP pricing/backlog power (Western-supply-security premium + AI-optics demand), offset by commodity-substrate dynamics and Chinese competition.

Role in the AI stack. The Western indium-phosphide substrate chokepoint feeding AI optics.

Connected companies

• Coherent (COHR) — AXTI supplies: Merchant indium-phosphide substrates for InP lasers/EMLs (Coherent is partly vertically integrated, so merchant share is uncertain)
• Lumentum Holdings (LITE) — AXTI supplies: Indium-phosphide substrates — long-term supplier agreement announced Jul 2026 ($87M customer deposits through 2031); reaffirmed on the Q4 FY2026 call (Aug 11, 2026) as the route to additional InP…
• Qorvo (QRVO) — AXTI supplies: Gallium-arsenide substrates for RF power amplifiers (Qorvo is a major GaAs RF device maker; AXT is a merchant substrate supplier, specific sourcing undisclosed)
• MACOM Technology (MTSI) — AXTI supplies: InP & GaAs substrates for MACOM's RF and photonic semiconductors (merchant compound-semi substrate supply; MACOM also sources elsewhere/in-house)

Others in Critical Minerals & Base Metals

• Freeport-McMoRan (FCX)
• MP Materials (MP)
• Southern Copper (SCCO)
• Lynas Rare Earths (LYC)
• USA Rare Earth (USAR)
• Albemarle (ALB)
• Alcoa (AA)

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