AXT's supply deal with China's Casela is significant and limits export risk, says Wedbush

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Summary · why it matters

AXT's agreement to supply China's Nanjing Casela with Indium Phosphide substrates is significant for multiple reasons, according to Wedbush Securities. Analyst Matt Bryson noted the contract represents close to 20% of the firm's modeled 2027 InP substrate revenues and limits export license risk given the sale is to a Chinese entity, as well as customer default or payment probability. AXT disclosed that its Tongmei subsidiary signed a long-term agreement to provide Casela with Indium Phosphide substrates throughout 2027, with Casela committing to roughly $25.4 million worth of wafers on a monthly schedule, 50% prepaid within 15 business days and the balance by the end of 2026. AXT shares rose 7.3% in premarket trading on Monday.

Impact on stocks 1

Critical Materials & Supply Chain▲ · 1 stocks
AXT Inc
AXTI
▲ PositiveDemandrelevance

AXT's subsidiary signed a $25.4M supply deal for InP substrates, representing ~20% of modeled 2027 InP revenue.

Theme Impact 2

Off-coverage companies 2

Beijing Tongmei Xtal TechnologyPrivate▲ Positive
Demandrelevance

Beijing Tongmei Xtal Technology, as AXT's subsidiary, is the direct supplier under the long-term agreement with Casela.

Nanjing Casela TechnologiesPrivate± Mixed
Demandrelevance

Nanjing Casela Technologies is the buyer committing to $25.4M in wafers, but the impact on Casela is not discussed.

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