AXT Inc's stock plummeted 5.15% during intraday trading on Monday, reflecting significant market pressure on the semiconductor materials company.

The sharp decline appears linked to renewed concerns about China's rare earth export controls, particularly affecting indium supplies critical for semiconductor manufacturing. According to recent reports, China's export restrictions on rare earths like indium remain in place despite diplomatic discussions, with U.S.-bound shipments down approximately 77% since controls were implemented.

Indium phosphide is essential for producing next-generation photonic chips used in AI data centers and advanced communications technology. The ongoing export limitations could increase input costs and create supply chain challenges for semiconductor material manufacturers like AXT Inc, potentially impacting their production capacity and profitability.