<div id="readability-page-1">News: Suppliers For first quarter 2026, AXT Inc of Fremont, CA, USA — which makes gallium arsenide (GaAs), indium phosphide (InP) and germanium (Ge) substrates and raw materials at plants in China — has reported revenue of $26.9m, up 17% on $23m last quarter and 39% on $19.4m a year ago, and slightly above the forecasted $26m as export permits came in slightly better than guidance. Of total revenue, the proportion from Asia Pacific fell further, from 83% a year ago and 81.5% last quarter to 78%, while Europe rose further from 11% a year ago and 17.5% last quarter to 21%, and North America was level with last quarter at just 1% (down from 6% a year ago), affected by export permit restrictions. The top five customers generated about 32% of total revenue, with none exceeding 10%. <h2>InP revenue driven by AI data-center applications, while GaAs constrained by export licenses </h2><ul> <li>Indium phosphide (InP) has rebounded from $3.8m (under a fifth of total revenue) a year ago, then (after being granted the first InP export permits from China in late June 2025) $8m last quarter (under a third of revenue), to $13.6m (just over half of revenue) in Q1/2026, primarily from data-center applications. “InP substrates are a key ingredient in high-speed optical data transmission required in AI-focused data centers,” notes says CEO Dr Morris Young. “The massive AI infrastructure build out and planned CapEx spending by cloud services and AI platform providers in the USA is the primary driver for EML [electro-absorption modulated lasers] and silicon photonics-based optical transceivers as well as high speed photodetectors,” he adds. “Our material is being used in multiple US hyperscalers. We expect that end-customers’ use will continue to broaden.” We are also seeing significant growth in China as China moves to accelerate its capability throughout the AI supply chain,” says Young. Revenue related to China’s InP-based laser market more than doubled from last quarter, and is expected to double again in Q2. “This highlights China’s increasing investment in the AI infrastructure supply chain for the global market,” says Young. “This is a great opportunity for AXT as there is no permit required to ship our product within China.” </li> <li>Gallium arsenide (GaAs) has fallen further, from $7m (under a third of total revenue) last quarter to $5.4m (a fifth of revenue) in Q1/2026. </li>“We continue to see demand for semi-insulating wafers for wireless RF devices, and believe that we have a strong opportunity for market share expansion. However, this is gated primarily by our ability to obtain export licenses, which came in light in Q1,” notes Young. Demand for semiconducting wafers for industrial robotics and data-center laser applications all held steady from last quarter. <li>Germanium substrate revenue was $0.2m, roughly level with last quarter’s $0.23m but down on $0.6m a year ago. </li> <li>After falling from $8.3m a year ago to $6.7m in Q2/2025, revenue is level with Q4/2025 at $7.6m in Q1/2026 for AXT’s two consolidated raw material joint venture companies: BoYu (which makes high-temperature pyrolytic boron nitride crucibles and pBN-based tools for organic light-emitting diodes) and JinMei (which supplies high-purity materials including gallium and germanium, as well as InP poly and other materials). “Jinmei has begun to refine high-purity indium, which gives us direct control of and a guaranteed supply of another critical material for InP substrates,” says Young. “We’re also investing to help Jinmei expand its capability so that, as AXT Inc’s demand grows, Jinmei will continue to provide a meaningful portion of our raw material requirements.” </li></ul><h2>Margins improved as net loss cut further </h2>On a non-GAAP basis, gross margin has improved further, from –6.1% a year ago and 21.5% last quarter to 29.9%.Operating expenses were $8.59m, up on $8.45m a year ago and $7.5m last quarter, but below the expected $9m. “In Q1/2026 we made substantial progress towards profitability,” notes chief financial officer Gary Fisher. Net loss has been cut further, from $8.2m ($0.19 per share) a year ago and $2.3m ($0.05 per share) last quarter to $0.59m ($0.01 per share, better than the expected $0.02–0.04). During the quarter, cash, cash equivalents and investments fell by $5.1m from $128.4m to $123.3m. <h2>Q2/2026 to see return to net profit </h2>“We are seeing a strong increase in our InP wafer demand related to AI and the ongoing data-center upgrade cycle,” notes Fisher. “Given the geopolitical complexity surrounding this market trend, our customer base is diversifying and expanding and customers are placing longer-term orders and providing greater visibility into their needs. With all of these positive market and AXT-specific growth drivers, the most significant single factor to our growth in Q2 and beyond is the success and timing of getting export permits,” he adds. For Q2/2026, AXT expects growth in revenue to potentially $34m (contingent on export permits), driven primarily by record InP revenue of over $17m due to record InP order backlog exceeding $100m. “Export permits are off to a solid start in Q2,” notes Young. In addition, revenue from China’s InP-based laser sector is expected to double again in Q2. Gross margin should exceed the 30% threshold, aided by the high proportion of InP in the product mix. Despite OpEx rising to $9.3m in Q2, AXT expects to achieve profitability, with net income of $0.06–0.08 per share. <h2>InP capacity to be doubled again in 2027 with new facility </h2>“What we are hearing from the industry sources and echoed from our customers is the expectation that the market for optical components will increase significantly in the coming years, driving a 4–6 times increase in the substrate market overall in the next 3–5 years, driven by both scale-out and scale-up applications,” says Young. “Beyond pluggable transceivers, we are seeing a very large developing market for co-packaged optics (CPO)… This could represent another inflection point in our business beginning in late 2027 and beyond,” he adds. “As the market continues to grow, capacity will become a critical enabler,” says Young. “With our backlog of orders and customer forecasts achieving record levels, we are laser focused on adding capacity to support customer requirements. We are running ahead of our plan to double our InP capacity this year from Q4/2025 levels [reaching $35m-per-quarter capability by the end of 2026, by repurposing AXT’s vacated former GaAs crystal growth facility in Beijing, requiring CapEx of $30–40m in 2026]. We’re planning to double our InP capacity again in 2027 [to $65–70m per quarter], with a new facility near our current one [in Beijing] that will be dedicated to InP wafer production [requiring CapEx of about $100m]. Our 2028 planning is also underway, and we expect to expand again meaningfully.” “Longer-term capacity planning is one of the most important discussions we are having today with customers and major supply chain players in our space,” says Young. “With this massive growth cycle ahead of us, we’re actively working with a multitude of players from our direct customers to the end customers with whom we have not historically had direct relationships. We are there to understand their longer-term requirements and to align our growth and innovation plans accordingly. We’re now supporting nearly all leading customers in the optical space. This includes tier-1 laser manufacturers and optical transceiver module makers both around the globe and in China,” he adds. “In Q2, we estimate that the Chinese demand is probably about 30% of the overall InP global market demand. We’re seeing that increasing certainly through Q3 and Q4 as well. So, as we get into Q4, it could even be as high as something pushing up to 40% share of the total InP market.” “In alignment with our customers’ technical requirements and roadmaps, we’re making important progress on our 6-inch InP product for both iron-doped and sulfur-doped specifications,” notes Young. “A significant part of our capacity expansion will be focused on 6-inch crystal growth technology to support a planned roadmap of 6 inch capability by our customers. We are excited to be able to demonstrate the technological advantage of our low-EPD [etch-pit density] wafers as the market moves to optical devices with higher speeds and greater sophistication for both scale-up and scale-out applications”. To support Tongmei’s InP capacity expansion as well as R&amp;D investment in new products like larger-diameter, 6-inch InP wafers, on 24 April AXT completed a public offering of shares, raising gross proceeds of $632.5m. <h2>STAR Market listing update</h2>On 10 January 2022, AXT’s China-based wafer manufacturing subsidiary Beijing Tongmei Xtal Technology Co Ltd submitted its application to list its shares in an initial public offering on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (STAR Market) and the application was accepted for review.Subsequently, Tongmei responded to several rounds of questions received from the Shanghai Stock Exchange (SSE). On 12 July 2022, the SSE approved the listing of Tongmei’s shares. On 1 August 2022, the China Securities Regulatory Commission (CSRC) accepted Tongmei’s IPO application for review. The STAR Market IPO remains subject to review and approval by the CSRC and other authorities. “We remain very interested in completing the IPO, particularly in light of the rapidly evolving AI infrastructure build out in China and China’s development of its semiconductor supply chain, which is fueling increased China-based demand for InP substrates,” says Fisher. “We have continued to keep our IPO application current, and Tongmei remains in process as a part of a much more selective and smaller group of prospective listings than a few years ago,” he adds. “Though the current geopolitical environment is dynamic, Tongmei is considered a Chinese company and continues to be regarded in China as a good IPO candidate.” AXT announces exercise of over-allotment option in public offeringAXT’s Q4/2025 revenue constrained by delay in China export permitsAXT’s Q3 revenue far exceeds guidance, after China export licenses granted for InPAXT’s Tongmei receives China export permits to resume shipping InP substrates to certain customersAXT’s Q2 revenue constrained by slower-than-expected China export permittingAXTwww.axt.com </div>

A SemiAnalysis report pushed CPO mass production timelines past 2028, sending optical communications stocks into a tailspin overnight — AAOI cratered 17%. Then Nvidia execs turned around and said 'volume ramp starts in H2.'&nbsp;
So who's telling the truth? Is this the time to cut and run, or a dip-buying opportunity? Share your take.

A SemiAnalysis report pushed CPO mass production timelines past 2028, sending optical communications stocks into a tailspin overnight — AAOI cratered 17%. Then Nvidia execs turned around and said 'volume ramp starts in H2.'&nbsp; So who's telling the truth? Is this the time to cut and run, or a dip-buying opportunity? Share your take.

CPO Delay Sparks Selloff — Bearish Signal or Overreaction?

AXTI

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AXT Inc reported a 17% revenue increase in Q1 2026, reaching $26.9 million, driven by better-than-expected export permits. Revenue from Indium Phosphide (InP) surged to $13.6 million, fueled by AI data-center applications, while Gallium Arsenide (GaAs) revenue fell to $5.4 million. The company improved its gross margin to 29.9% and reduced its net loss to $0.59 million. AXT anticipates a return to net profit in Q2 2026, supported by growing demand for InP wafers and a diversifying customer base, contingent on export permit success.

AXT’s revenue grows 17% in Q1 after greater-than-expected export permits