--- title: "AXT's indium phosphide backlog tops $500 million, five times April's level, as revenue jumps 162%" description: "AXT's record quarter and Nomura's $90 target both rest on a shortage of indium phosphide wafers. Every one is grown in China, every export needs Beijing's license, and a $545 million raise is cutting AXT's stake in the plants." publisher: "The Inference" section: "Chips" published: 2026-11-12T14:06:25.927Z modified: 2026-11-12T14:06:25.927Z canonical: https://theinference.org/article/axt-s-indium-phosphide-backlog-tops-500-million-five-times-april-s-level-as-revenue-jumps-162 language: en keywords: "AXT, Indium Phosphide, Optical Chips, Export Controls, Earnings" --- # AXT's indium phosphide backlog tops $500 million, five times April's level, as revenue jumps 162% > AXT's record quarter and Nomura's $90 target both rest on a shortage of indium phosphide wafers. Every one is grown in China, every export needs Beijing's license, and a $545 million raise is cutting AXT's stake in the plants. ## Revenue tripled in a year on one material AXT, the Fremont, California substrate maker listed on Nasdaq as AXTI, booked third-quarter revenue of $73.4 million, up 162% from a year earlier, with GAAP gross margin of 56.0% against 22.3% and net income of $25.7 million where the year-ago quarter lost $1.9 million [1]. Indium phosphide, the crystal sliced into wafers that host the lasers inside AI data-center optical transceivers, carried $54.3 million of that, about three quarters of sales [2]. Chief executive Morris Young put the indium phosphide backlog above $500 million, spanning multiyear contracts and spot orders [2]; [Nomura's initiation note](https://exencialrp.substack.com/p/nomura-starts-axt-at-buy-usd90-sees) had it at $100 million in April [3]. [Lumentum](https://theinference.org/markets/companies/lumentum), an optical-components maker, signed a supply agreement in the quarter backed by a $43.5 million prepayment [2]. The stock closed at $46.97 on November 11, up 19.49%, after a month down 43.9% and a year up 506.3% [4][3]. *Chart: **Revenue doubled twice in a year, and the fourth-quarter guide is another record** Column chart of AXT quarterly revenue from Q3 2024 to Q3 2026, rising from about $24 million to a record $73.4 million, with the company's fourth-quarter guide at about $90 million* *Quarterly revenue, USD millions. Q3 2024 to Q2 2026 from AXT's SEC filings, Q3 2026 from its October 29, 2026, results release; the fourth-quarter bar is the company's own guide of roughly $90 million, revenue it says it can realise from products already permitted for export or needing no permit. [1][2][9]* ## Nomura sees wafer supply short through 2028 Nomura started coverage on November 3 at Buy with a $90 target, 44.6 times its 2027 estimate of $2.02 a share [3]. Its model puts 2028 demand for laser chips in 800G-and-faster transceivers at 1,650 million units against supply of 1,542 million, a 7% shortfall easing from 17% this year and 12% in 2027 [3]. Nomura counts [AXT](https://theinference.org/markets/companies/axt-inc) among three makers of the wafer at quality and scale, and figures a new supplier needs one to two years of customer certification [3]. For the fourth quarter, AXT guided roughly $90 million of revenue realisable from products whose export permits are already in hand or that need none, at 57 to 59 cents of non-GAAP earnings a share [2]. *Chart: **Nomura's modeled laser-chip shortfall falls from 17% to 7% but never closes** Line chart of Nomura's modeled laser-chip supply shortfall falling from 17% of demand in 2026 to 12% in 2027 and 7% in 2028* *Nomura's modeled gap between demand for laser chips in 800G-and-faster transceivers and available supply, as a percent of demand; forecasts from its November 3, 2026, initiation, as summarised by Exencial Research. [3]* ## Beijing licenses every export while the fab's ownership thins Every wafer comes from Beijing Tongmei, AXT's subsidiary, at plants in and around Beijing and in Liaoning province, and each export needs a license from China's commerce ministry, granted case by case [3][5]. ![A multi-story Beijing Tongmei Xtal Technology production building with green exhaust stacks, seen from the street](https://storage.googleapis.com/theinference-public/img/21693eb7fa042dd0.png) *Beijing Tongmei Xtal Technology's plant, where AXT grows the indium phosphide crystals it slices into wafers. China's commerce ministry licenses each export from the site. (Courtesy of AXT Inc)* AXT's [August 13 filing](https://www.theepochtimes.com/china/china-export-curbs-delay-axts-us-bound-indium-phosphide-shipments-6084439) said it could not estimate when permits to resume United States-bound indium phosphide shipments would arrive, and called permits its most significant challenge [6]. The capacity fix now runs through Tongmei's own shares: [a private-equity raise of roughly $285 million to $545 million](https://www.semiconductor-today.com/news_items/2026/oct/axt-281026.shtml), set to close in December, would leave AXT about 73.4% of the fab, from 85.51%, while Tongmei pursues a Hong Kong listing [7][3]. ## The bears say the backlog is customers ordering twice The redemption rights attached to those investors were covered in [The Inference's November 10 reporting](https://theinference.org/article/ai-demand-outruns-axt-s-doubled-wafer-supply-the-up-to-545-million-fix-needs-beijing-s-sign-off) [2][5][8]. Management told analysts customer demand shows no 2027 overcapacity [2]; the counterpoint, from MarketWatch citing LightCounting, is that customers are double ordering and inflating optics backlogs, and Zacks puts the stock at 24.4 times forward earnings against an 8.8 times industry [5][8]. Two queues set the next print: wafers out of Tongmei's furnaces, and files out of the license desk. ## Takeaway AXT tripled revenue on indium phosphide wafers grown entirely in China, where every export needs a license. Nomura's $90 target and AXT's own fourth-quarter guide both assume the permits keep coming. ## Sources 1. [Fintel News via MSN, 'AXT, Inc. reports record third quarter 2026 revenue of $73.4 million', 29 October 2026](https://www.msn.com/en-us/news/other/axt-inc-reports-record-third-quarter-2026-revenue-of-734-million/ar-AA2go4Xw) 2. [MarketBeat via Yahoo Finance, 'What AXT (AXTI) Said on Its Q3 Earnings Call', 29 October 2026](https://finance.yahoo.com/markets/stocks/articles/axt-axti-said-q3-earnings-231433210.html) 3. [Exencial Research Partners (Substack), 'Nomura Starts AXT at Buy, USD90, Sees InP Shortage Into 2028', November 2026, summarising Nomura's 3 November 2026 initiation](https://exencialrp.substack.com/p/nomura-starts-axt-at-buy-usd90-sees) 4. [Kalkine Media, 'AXT (NASDAQ:AXTI) Reports Record Quarterly Revenue as Indium Phosphide Demand Accelerates', 12 November 2026](https://kalkine.com.au/news/technology/axt-nasdaqaxti-reports-record-quarterly-revenue-as-indium-phosphide-demand-accelerates) 5. [MarketWatch via Morningstar, 'Optical stocks have a China problem that most investors miss', 7 August 2026](https://www.morningstar.com/news/marketwatch/20260807106/optical-stocks-have-a-china-problem-that-most-2) 6. [The Epoch Times, Arthur Zhang, 'China Export Curbs Delay AXT's US-Bound Indium Phosphide Shipments', 8 September 2026](https://www.theepochtimes.com/china/china-export-curbs-delay-axts-us-bound-indium-phosphide-shipments-6084439) 7. [Semiconductor Today, 'AXT raises private equity financing of up to $545m in Tongmei', 28 October 2026](https://www.semiconductor-today.com/news_items/2026/oct/axt-281026.shtml) 8. [Zacks Investment Research via Yahoo Finance, 'Should You Buy, Sell or Hold AXTI Stock After Its Strong Q3 Results?', 5 November 2026](https://finance.yahoo.com/markets/stocks/articles/buy-sell-hold-axti-stock-165000731.html) 9. [AXT Inc, quarterly figures from its SEC filings, retrieved 12 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001051627) --- AXT's indium phosphide backlog tops $500 million, five times April's level, as revenue jumps 162% — The Inference. Canonical: https://theinference.org/article/axt-s-indium-phosphide-backlog-tops-500-million-five-times-april-s-level-as-revenue-jumps-162