AXT (AXTI) said late Wednesday in a filing that its subsidiary, Beijing Tongmei Xtal Technology, entered into a long-term supply agreement with Nanjing Casela Technologies on June 11.

Under the agreement, Tongmei will reserve production capacity and raw material allocation for Casela and grant it supply priority. In exchange, Casela has committed to buying a fixed aggregate amount of indium phosphide wafer substrates from Tongmei for a total price of 173 million Chinese renminbi ($25.4 million) from Jan. 1, 2027 through Dec. 31, 2027, the filing said.

Casela is required to purchase at least 80% of the fixed aggregate quantity of InP wafer substrates and if purchases fall below 80%, it must pay a cancellation fee for the unpurchased quantity, according to the filing.

In case of order cancellation, Casela's failure to take possession of goods delivered, payment delinquency, or failure to reach the 80% purchase threshold, Tongmei has the right to terminate the agreement and retain all amounts previously paid by Casela, the filing said.