AXT Inc. has signed a binding, six-year capacity reservation agreement with Lumentum for indium phosphide (InP) wafer substrates. The agreement runs through the end of 2031. Demand for InP wafers is rising because they are used in components for AI data centers and high-speed optical connectivity.
Lumentum will make two deposits of $43.5 million each. The deposits total $87 million and will be credited toward future shipments.
The agreement reserves AXT production capacity for Lumentum. The advance payments will provide AXT with capital for ongoing capacity expansions to meet demand.
The announcement follows other recent distribution and partnership agreements intended to expand AXT’s manufacturing capabilities.