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Indium phosphide supply-demand gap exceeds 70 percent; suppliers say even having money may not guarantee purchases
Indium phosphide concept stocks were repeatedly active on August 18. Suqian Liansheng hit the daily limit up intraday before the limit was broken, and as of press time it was up 5.83 percent at 17.42 yuan per share. In terms of news, according to a report by Taiwan Economic Daily, driven by the explosive demand for AI optical communications, indium phosphide substrates and epitaxy are in severe short supply, and prices will rise by more than 10 percent again in the fourth quarter, the largest single increase in history. Suppliers said bluntly that even having money may not guarantee purchases. Indium phosphide substrate prices entered an upward channel starting in the fourth quarter of 2025 and have already been raised three times so far, with a fourth consecutive increase about to arrive. According to data from Shanghai Metals Market, on August 10 the average price of 4-inch indium phosphide substrates had reached 6,500 yuan per wafer, up about 50 percent from the beginning of the year, while upstream refined indium quotes had risen by more than 80 percent from the beginning of the year. SDIC Securities analysis pointed out that global indium phosphide demand is surging but supply is severely constrained. In 2026, effective production capacity will be able to meet only about 30 percent of demand, leaving a gap of more than 70 percent. The purification technology barriers for upstream raw materials high-purity indium and 7N-grade red phosphorus are extremely high, leaving enormous room for domestic substitution.