AXT, Inc.

Company overview

AXT, Inc. is a Delaware corporation that designs, develops, and manufactures high-performance semiconductor substrates (wafers) and related raw materials. The company operates two product lines: substrate wafers (InP, GaAs, Ge) and the raw materials used to produce those substrates. All substrates and most raw materials are manufactured in the People’s Republic of China (PRC) through AXT’s PRC subsidiaries and PRC joint ventures. AXT is not a PRC operating company or a VIE structure. Tongmei (Beijing Tongmei Xtal Technology Co., Ltd.) is a partially owned subsidiary/affiliate with private equity investors holding redeemable noncontrolling interests. Tongmei has pursued an IPO on the Shanghai STAR Market since 2021–2022 and that process remains under Chinese regulatory review; investors have redemption rights if the IPO does not proceed.

Business model and product lines

• Substrates (wafer substrates)
  • Materials: Indium Phosphide (InP); Gallium Arsenide (GaAs), both semi-insulating and semiconducting; Germanium (Ge).
  • Diameters: InP and GaAs wafers in 1", 2", 3", 4", 5", 6" sizes; development pilots for 6" InP and 8" GaAs. Ge wafers offered in 2", 4", and 6".
  • Applications: InP for data-center fiber/off-chip optical links, 5G, silicon photonics, photonic integrated circuits (PICs), LiDAR, infrared sensing, and RF/military components. GaAs for high-speed transistors, RF/millimeter-wave devices, LEDs, VCSELs for 3-D sensing, and related opto-electronic devices. Ge for space solar cells and other photovoltaic/infrared applications.
  • Competitive position: AXT positions its InP as best-in-class with low defect densities, low stress, and strong yields, and emphasizes a path to expanding 6" and larger diameter production.
• Raw materials (integrated supply chain)
  • The company consolidates raw material subsidiaries that supply materials for substrate manufacturing and sell to third parties. Key products include purified gallium (4N–7N), high-purity arsenic, germanium and germanium dioxide, pBN crucibles, boron oxide, quartz tubing, and related components.
  • AXT owns and operates, or consolidates joint ventures, to maintain supply stability and pricing advantages.
  • Notable consolidated subsidiaries/products: JinMei Gallium (gallium products), BoYu (arsenic/germanium-related materials and InP base material), and ChaoYang XinMei (high-purity materials), along with other controlled and partially owned joint ventures.

Geographic and operational footprint

• All wafer substrates are manufactured in China by AXT’s PRC subsidiaries and joint ventures; the company cites a relatively low-cost manufacturing base in China.
• Employment (2025): AXT and Tongmei combined had 1,072 employees — 1,048 in China, 23 in Fremont, CA headquarters, 1 in France, and 1 in Japan. Including consolidated raw material companies, total employment was 1,541.
• Manufacturing facilities are distributed across several sites in China (including Tongmei, DingXing, Kazuo, and others), with Tongmei involved in substantial manufacturing activities and capacity expansion.

Customers and sales

• International focus: Approximately 98% of revenue in 2025 came from customers outside North America; North American revenue was about 2% in 2025 (compared with 8% in 2024 and 10% in 2023).
• Customer concentration: No single customer accounted for more than 10% of revenue in 2025, 2024, or 2023.
• Top customers: The top five customers accounted for 29% of revenue in 2025, 30% in 2024, and 25% in 2023. For 2025, three customers of the consolidated raw material subsidiaries accounted for 25% of raw material sales (versus 31% in 2024 and 2023).
• Sales channels: Direct sales force in the U.S., China, and Europe; independent representatives and distributors in Japan, Taiwan, Korea, and other markets. Substrates are generally sold to epitaxial-layer companies that apply layers before selling to wafer fabs, chip designers, LED manufacturers, and similar customers.

Financial highlights (2025 10‑K excerpt)

• Revenue mix (consolidated): Substrates 67% of revenue in 2025 (68% in 2024; 63% in 2023). Raw materials 33% in 2025 (32% in 2024; 37% in 2023).
• R&D expense: $9.0 million in 2025; $14.5 million in 2024; $12.1 million in 2023.
• Joint ventures and equity income: Unconsolidated joint ventures contributed $0.8 million in 2025 and $3.4 million in 2024 to consolidated results; the last equity contribution loss was in 2019 ($1.9 million).
• Dividends from PRC subsidiaries: Approximately $0.9 million in 2025; $2.4 million in 2024; $4.3 million in 2023. No dividends were paid to minority shareholders by PRC subsidiaries or raw material joint ventures in 2025 and 2024.
• Capital raises and liquidity: In December 2025, AXT completed a Nasdaq offering that raised gross proceeds of about $100 million. Tongmei’s private equity agreements include aggregate redemption rights of approximately $49 million if the STAR Market IPO fails to pass review or is canceled.
• Intellectual property counts: 198 patents related to VGF technology (1990s–present): 153 in China, 22 in the United States, 8 in Japan, 5 in Taiwan, 6 in the EU, 2 in Germany, 1 in France, and 1 in Korea. Consolidated raw material companies hold an additional 130 patents in China across JinMei, BoYu, ChaoYang XinMei, and ChaoYang ShuoMei.
• Margin context: Gross margins have varied across periods (for example, Q3 2022 at 42.0% vs Q3 2023 at 10.7%; Q1 2025 at -6.4% improving to 8.0% in Q2 2025 and 22.3% in Q3 2025). Fixed costs and capacity expansion can affect margins.

Intellectual property and competitive position

AXT relies on patents, trade secrets, and confidential know-how for VGF growth of InP, GaAs, and Ge substrates. Several competitors use similar processing techniques; IP protection includes patents, trade-secret protections, and non-disclosure agreements. The company asserts advantages in low defect density and low etch pit density (EPD) substrates, especially for GaAs and InP, and highlights its integrated raw-material supply chain as a competitive differentiator.

Strategic and operational notes

• The company has undertaken relocation and expansion in the PRC to optimize its manufacturing footprint, including Tongzhou relocation and production-line expansion.
• Strategic priorities include expanding InP capacity, moving to larger-diameter wafers (6" and beyond), improving yields, and expanding the raw-material supply chain to secure stability and cost advantages.
• AXT maintains a vertically integrated model with minority and majority stakes in key suppliers and uses both U.S. and Chinese capital markets to support expansion efforts.

Recent corporate actions and status

• Tongmei’s STAR Market IPO process is ongoing under CSRC oversight; market listing timing remains uncertain. Private equity investors retain redemption rights if the IPO does not pass review.
• December 2025: AXT completed a Nasdaq offering that raised gross proceeds around $100 million.
• Tongmei’s export permits for InP and other substrates are subject to PRC export controls and regulatory approvals.

Governance and risk

The company identifies foreign exchange exposure, reliance on a PRC-centric supply chain, regulatory and export-control risk, and potential impacts from geopolitical developments. Maintaining customer qualifications and high product quality are cited as key priorities to protect revenue and margins.