On September 30, AXT Inc rose 6.08% in regular trading, trading at $82.57/share, with turnover of approximately $71.61 million. The broader optical communication sector rallied simultaneously, with Lumentum up 5.60%, Coherent up 3.80%, and Corning up 4.02%.

On the news front, industry research indicates AXT plans to raise indium phosphide (InP) substrate prices by 10% in Q4, marking the largest single price increase on record and the fourth consecutive hike. Downstream customers are aggressively locking in capacity: Lumentum has paid a $43.5 million deposit securing AXT InP capacity through 2031, while Coherent prepaid $22.3 million to lock 6-inch substrate supply. Global InP substrate demand is projected at 2.6 to 3 million wafers, yet effective production capacity stands at only around 750,000 wafers, leaving a supply-demand gap exceeding 70%.

Additionally, co-packaged optics (CPO) scaled deployment is now expected to be delayed until 2029, extending the final large-scale expansion cycle for pluggable optical modules and further underpinning InP demand. Morgan Stanley noted that optical communication capacity over the next 12-18 months is nearly sold out, with InP substrates remaining a critical supply bottleneck.

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