News: Suppliers
9 March 2026
AXT’s Q4/2025 revenue constrained by delay in China export permits
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 an 11% drop in full-year revenue, from $99.4m in 2024 to $88.3m in 2025.
This includes fourth-quarter 2025 revenue of $23m, down 8.4% on $25.1m a year ago and 17.8% on $28m in Q3/2025 (although the latter had far exceeded the guidance for Q3 of $19–21m, spiking from just $18m in Q2).
Q4 revenue was below the initial guidance of $27–30m, due mainly to fewer-than-expected export control permits for indium phosphide being issued by China’s Ministry of Commerce. The China government imposed trade restrictions on export of GaAs in August 2023 and InP in February 2025, aiming to restrict the export of materials used for military applications and requiring an export permit for every customer order. AXT was granted its first permit for exporting InP in late June 2025.
Of total revenue in Q4, the proportion from the Asia Pacific region was 81.5% (down from 87% in Q3), whereas Europe was 17.5% (up from 12% in Q3), and North America remained just 1% (compared with 10% a year ago). The proportion of revenue coming from the top five customers fell back, from 45.2% last quarter (with two customers exceeding 10%) to just 22.6% in Q4/2025 (with no customers exceeding 10%).
Indium phosphide revenue was $8m (down from $9.1m a year ago and Q3/2025’s three-year high of $13.1m, but still more than double Q2’s $3.6m), primarily from data-center applications.
Gallium arsenide revenue was $7m, down from $7.5m last quarter but up on $5.4m a year ago. Also, AXT saw an uptick in semiconducting wafers for both industrial laser and data-center laser applications.
Germanium substrate revenue was $0.23m, down from $0.64m in Q3 and $1.6m a year ago.
Compared with $9m a year ago, revenue has recovered somewhat from Q3/2025’s $6.7m to Q4’s $7.6m for the 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).
On a non-GAAP basis, full-year gross margin has fallen from 24.3% in 2024 to 13.1% for 2025. However, although quarterly gross margin fell back down slightly from 22.6% in Q3 to 21.5% in Q4, this was up on 17.9% a year ago.
Quarterly operating expenses were $7.15m in Q4, up on a lower-than-normal $6.66m in Q3 (which had some favorable adjustments in R&D) but cut from $9.9m a year ago. Full-year OpEx has been cut from $35.9m in 2024 to $30.2m for 2025.
Compared with net income of $8.5m ($0.20 per share) for full-year 2024, full-year 2025 returned a net loss of $18m ($0.41 per share). Quarterly net loss rose from $1.17m ($0.03 per share) in Q3 to $2.27m ($0.05 per share, more than the initial guidance of $0.01–0.03) in Q4. However, this is a cut from $4.34m ($0.10 per share) a year ago.
After falling by a further 3.9m in Q3/2025, during Q4/2025 cash, cash equivalents and investments was boosted by $97.2m, from $31.2m to $128.4m. This was due mainly to $93.9m raised from the public offering of common stock that closed on 30 December.
Net inventory rose back up by $4m, from $77.7m to $81.7m, although this is still below the $85.1m a year ago. “This continues to be a focus for us, and we expect to bring it down in coming quarters,” says chief financial officer Gary Fischer.
Return to revenue growth and reduced losses expected in Q1/2026
“We were disappointed that we didn’t receive as many export permits in Q4 as we had hoped based on the average processing time we had seen up to that point in October. The good news is now that we have received permits in Q1,” says CEO Morris Young.
“We have approximately $26m in revenue that can be realized in Q1 across our substrate product lines and raw materials, for which we either already have a permit to ship or for which an export permit is not required,” says Fischer. “We could see significant upside to this number in Q1 should we receive more permits for additional orders between now and the end of the quarter,” he adds. With OpEx expected to remain about $9m in Q1, net loss should be cut to $0.02–0.04 per share. “This represents substantial year-over-year progress towards our return to profitability,” notes Fischer.
“We expect to achieve sequential growth in revenue in Q1, driven primarily by growth in indium phosphide for data-center build-out for AI,” says Young. “As we enter 2026 as a foundational supplier to this multi-year growth cycle, we are notably broadening our customer base to include tier-1 companies [in the optical space] to which we have previously had limited exposure. This includes tier-1 laser manufacturers and optical transceiver module makers both in China and around the world,” he adds.
“Our backlog for indium phosphide wafers has reached a new high of over $60m [up from Q3’s record of $49m, which had more than doubled from Q2]. Customers are planning for longer lead-time by placing longer-term orders and giving us more visibility into their expected demand,” notes Young. “The supply chain for optical transceiver is quite complex and highly globalized. We believe this geographical interdependence is providing both opportunity and incentives for the ecosystem to work together in new ways to solve global supply chain shortages.”
“Beyond pluggable receivers, we are seeing a very large developing market for co-packaged optics for both scale-up and scale-out applications. We’re actively engaging in discussions with our customers about their technical and timing requirements and believe this could represent yet another inflection point in our business, developing in late 2027 and beyond,” Young says.
“From a geographic demand perspective, 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 photonic-based optical transceivers… Our materials are being used in multiple US hyperscalers and we expect that end-customers’ use will continue to broaden. In China, the data-center build-out is early in its ramp. But we are seeing rapid growth as China moves to accelerate its data-center expansion and AI capabilities. Our revenue related to the data-center market in China are expected to grow by more than 60% in Q1 over Q4, highlighting both increased investment in these tier-1 data centers as well as the strong desire for Chinese domestic suppliers to secure local stores at every level of the AI infrastructure supply chain.”
InP production capacity to double in 2026, and possibly double again in 2027
“Given the strong demand environment, it is important to note that AXT is well positioned to handle increased demand for indium phosphide wafers,” says Young. Since October, AXT has added about 25% more capacity, and is on track with its current plan to double capacity from Q4/2025 by the end of 2026, supporting a $35m quarterly InP revenue run-rate. This should require no more than $30m in CapEx due to using mainly brownfield space in the existing Tongmei facility (where there is already an existing building with a cleanroom available, with a power supply, water etc). “Beyond our current plan for capacity expansion, we’re working closely with our customer base to understand their long-term requirements and to align our plans globally,” says Young. Beyond 2026, AXT is looking at possibly doubling capacity again in 2027, costing $100–150m in CapEx, due to needing greenfield construction, he adds.
“Our recent capital raise will be fundamental to our future expansion as we enter our next significant phase of growth. A major focus of this expansion will be an increased investment in our 6-inch indium phosphide product, and we are excited to work with our customers to meet the rigorous requirements of next-generation EML and silicon photonic-based devices,” Young says.
“We’re a fundamental supplier to the multi-year optical build-out in the AI infrastructure market, we have a broadening customer base of tier-1 companies, and a strong balance sheet to support our continued business expansion,” he summarizes.
“In gallium arsenide, we continue to see demand for semi-insulating wafers for wireless RF devices and believe that we have strong opportunity for market share expansion, gated primarily by our ability to obtain export permits,” says Young. “In Q4, we saw an uptake in semiconducting wafers for both industrial laser applications and data-center laser applications. VCSELs [vertical-cavity surface-emitting lasers] for data-center applications typically do not require a lot of gallium arsenide material as the devices are small, so they don’t move the needle much as a growth driver for us. However, we are seeing increased demand for VCSEL for autonomous vehicles in China in the Chinese automobile market, which is currently expanding rapidly.” Young also highlights emerging application in robotics, where VCSELs can increase the precision and dexterity of a modern robotic hand. “Compared to the VCSELs used in data-center applications, machine-vision VCSELs tend to be very large and use more GaAs substrates. They also require high-quality material, which we are very well positioned to supply,” he notes. “Again, demand is more today, primarily China-based, and covers a diverse set of customers, but the breadth of use-case and the development is very exciting.”
STAR Market listing update
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.
AXT updates Q4/2025 revenue guidance to $22.5–23.5m
AXT closes public offering of stock and full exercise of underwriters’ option
AXT’s Q3 revenue far exceeds guidance, after China export licenses granted for InP
AXT’s Tongmei receives China export permits to resume shipping InP substrates to certain customers
