AXT Secures Major Agreement with Nanjing Casela for Indium Phosphide Substrates
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 22 2026
0mins
Source: seekingalpha
AXT Inc. shares fell 3.13% and hit a 20-day low amid a generally positive market, with the Nasdaq-100 up 0.04% and the S&P 500 up 0.22%.
The decline in AXT's stock comes despite the announcement of a significant long-term agreement with Nanjing Casela, projected to contribute nearly 20% of the company's modeled InP substrate revenues for 2027. This deal, valued at approximately $25.4 million monthly, enhances AXT's stability in the Chinese market by mitigating export license risks and reducing customer default likelihood. The market's initial positive reaction to the agreement, which saw AXT's shares rise 7.3% in premarket trading, appears to have been overshadowed by broader market trends.
This agreement is expected to provide stable cash flow for AXT, but the current stock price movement suggests that investors may be reassessing their positions in light of recent market performance, indicating a potential disconnect between the company's positive developments and its stock performance.
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Analyst Views on AXTI
Wall Street analysts forecast AXTI stock price to fall
4 Analyst Rating
2 Buy
2 Hold
0 Sell
Moderate Buy
Current: 63.520
Low
18.00
Averages
21.33
High
26.00
Current: 63.520
Low
18.00
Averages
21.33
High
26.00
About AXTI
AXT, Inc. is a material science company that develops and manufactures high-performance compound and single element semiconductor wafer substrates comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). Its wafer substrates are used when a typical silicon wafer substrate cannot meet the performance requirements of a semiconductor or optoelectronic device. It has two product lines: specialty material substrates and raw materials integral to these substrates. Its InP is a semiconductor wafer substrate used in broadband and fiber optic applications, 5G infrastructure and data center connectivity. Its semi-conducting GaAs substrates are used to create opto-electronic products, including high brightness light emitting diodes that are often used to backlight wireless handsets and LCD televisions and for automotive, signage, and lighting applications. Its Ge substrates are used in applications, such as solar cells for space and terrestrial photovoltaic applications.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Key Supply Agreement: AXT's subsidiary, AXT-Tongmei, will develop and supply 6-inch indium phosphide water substrates to Coherent, which has made a prepayment of approximately $22.29 million, securing future material procurement and strengthening their partnership.
- Capacity Expansion Plans: AXT plans to expand production capacity at its Beijing facility between 2026 and 2028 to meet Coherent's demands, a move that not only enhances the company's production capabilities but also prepares for future market demand growth.
- Contract Flexibility: The agreement allows Coherent's prepayment to be refundable if not fully utilized, but AXT can terminate the contract if minimum order requirements are not met, providing flexibility for both parties and ensuring sustainable collaboration.
See More
AXT Subsidiary Enters Three-Year Agreement with Coherent
- Agreement Details: AXT-Tongmei has signed a three-year agreement with Coherent to develop and supply 6-inch indium phosphide water substrates, which is expected to drive AXT's production capacity expansion at its Beijing facility between 2026 and 2028, thereby enhancing its market competitiveness.
- Prepayment Arrangement: Coherent will make a prepayment of approximately $22.29 million for future water substrate purchases, providing AXT with liquidity while ensuring Coherent's procurement commitment during the agreement period.
- Termination Clauses: The agreement stipulates that if Coherent fails to meet minimum order requirements, the prepayment becomes non-refundable, allowing AXT to terminate the agreement; conversely, if AXT fails to meet capacity commitments for over six months, Coherent can terminate the agreement and receive a refund for any unused prepayment.
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See More
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- Overall Downtrend: Precious metals shares fell approximately 3.7% on Tuesday, indicating a weakening market confidence in the sector, which could affect investor capital flows.
- Hudbay Minerals Leads Decline: Hudbay Minerals' stock dropped about 9.8%, making it the worst performer in the industry, reflecting potential operational challenges or weak market demand facing the company.
- Vista Gold Struggles: Vista Gold's stock fell approximately 7.2%, further exacerbating the overall weakness in the precious metals sector, potentially leading to investor concerns about its future profitability.
- Market Sentiment Impact: The decline in precious metals stocks may influence overall market sentiment, prompting investors to reassess their investment strategies in precious metals, leading to capital outflows from the sector.
See More
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- Rich Professional Background: Liu brings over 30 years of business advisory, tax strategy, and accounting experience, including a decade at Big Four firms, which adds significant financial and strategic planning expertise to the board.
- Strategic Timing: AXT CEO Morris Young noted that Liu's addition comes at a crucial time as the company expands capacity to meet the surging demand for indium phosphide wafers driven by AI, highlighting the company's focus on future growth.
- Positive Stock Reaction: Following the announcement, AXT's stock rose over 9% and saw slight gains in after-hours trading, reflecting market confidence in the company's strategic direction.
See More
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- Significant Contract Size: AXT's long-term agreement with Nanjing Casela is projected to contribute nearly 20% of the company's modeled InP substrate revenues for 2027, highlighting the deal's importance for future income.
- Risk Management Improvement: This agreement not only mitigates export license risks but also reduces the likelihood of customer defaults and payment issues, enhancing AXT's stability and predictability in the Chinese market.
- Clear Financial Commitment: Casela commits to purchasing approximately $25.4 million worth of Indium Phosphide wafers monthly, with 50% prepaid within 15 business days and the balance due by the end of 2026, ensuring stable cash flow for AXT.
- Positive Stock Reaction: AXT's shares rose 7.3% in premarket trading on Monday, reflecting market confidence in the agreement and its potential to drive future growth for the company.
See More
