AXT is a worldwide materials science company that develops and produces high-performance compound and single element semiconductor substrates, also known as wafers. The company operates in the semiconductor substrate industry, where its wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device. The dominant substrates used in producing semiconductor chips are made from silicon, but certain chips may become too hot or perform their function too slowly if silicon is used, and optoelectronic applications require a waveform frequency that cannot be achieved using silicon. AXT adds value by researching, developing and producing specialty material wafers. The company has two product lines: specialty material substrates and raw materials integral to these substrates. The company believes the growth of AI applications is increasing the need for high-speed data transfer, which may enable a growing increase in InP substrate demand for data centers.

AXT faces competition from a number of established companies including Sumitomo Electric Industries, Japan Energy (JX), Freiberger Compound Materials, Umicore, China Crystal Technology Corp. (CCTC) and Vital Materials. The company believes it is the only compound semiconductor substrate supplier to have a position in raw materials, which it believes provides a more reliable supply of, and shorter lead-times for, the raw materials central to its final manufactured products. AXT believes its InP substrates have the lowest defect densities and lowest stress and slip lines on the market and are best in class, and that there are significant barriers to entry in the InP substrate market with currently only three primary suppliers, including AXT. The company also believes it is the only company in its industry to have added significant new facilities, equipment and capacity in recent years.

AXT generates revenue through two product lines: specialty material substrates and raw materials integral to these substrates. The company does not design or manufacture the chips; it adds value by researching, developing and producing the specialty material wafers. Revenue is recognized when control of the promised goods is transferred to the customer, which is either upon shipment from the company's dock, receipt at the customer's dock, or removal from consignment inventory at the customer's location. The majority of the company's contracts have a single performance obligation to transfer products and are short term in nature, usually less than six months. The company's substrate product group generated 67% ¹ of consolidated revenue and its raw materials product group generated 33% ² for 2025.

AXT's substrate products include indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge) substrates. InP is a high-performance semiconductor wafer substrate used in broadband and fiber optic applications, 5G infrastructure and data center connectivity. Semi-insulating GaAs substrates are used to create various high-speed microwave components, including power amplifier chips used in cell phones, satellite communications and broadcast television applications. Semi-conducting GaAs substrates are used to create opto-electronic products such as light emitting diodes (LEDs) used in automotive lighting, horticulture, signage, display, sensors and machine vision, and are also used in making industrial lasers. Ge substrates are used in applications such as solar cells for space and terrestrial photovoltaic applications. The company supplies InP substrates in two-, three- and four-inch diameters, and is in pilot production and customer qualifications with six-inch diameter InP substrates. It supplies Ge substrates in two-, four- and six-inch diameters, and supplies both semi-insulating and semi-conducting GaAs substrates in one-, two-, three-, four-, five- and six-inch diameters, and has successfully developed 8-inch GaAs wafers and is selling them in small quantities.

AXT's raw materials product group includes products from its consolidated raw material subsidiaries. One consolidated company produces pyrolytic boron nitride (pBN) crucibles used in the high temperature growth process of single crystal ingots, effusion rings when growing OLED tools, epitaxial layer growth in MOCVD reactors and MBE reactors. A second consolidated company converts raw gallium to purified gallium and produces InP base material. A third newly formed subsidiary will focus on production and sale of arsenic. The raw materials product group generated 33% ³ of consolidated revenue in 2025. For the year ended December 31, 2025, three customers of the company's consolidated subsidiaries, in aggregate, accounted for 25% ⁴ of raw material sales.

On December 29, 2025, AXT completed an offering on the Nasdaq and raised gross proceeds of approximately $100 million ⁵ before deducting underwriting discounts, commissions and other offering expenses. The company received total gross proceeds of approximately $100 million ⁶ from the offering, before deducting underwriting discounts and commissions and other offering expenses. Net proceeds from the offering, after deducting underwriting discounts, commissions, and other offering costs, were $93.9 million ⁷. On November 16, 2020, the company announced a strategic initiative to access China's capital markets by beginning a process to list shares of Tongmei in an initial public offering on the STAR Market. The Shanghai Stock Exchange approved the IPO application on July 12, 2022, and on August 1, 2022, the CSRC accepted for review Tongmei's IPO application. The STAR Market IPO remains subject to review and approval by the CSRC and other authorities. On June 11, 2025, Tongmei received its initial export permits from the Ministry of Commerce of the People's Republic of China to resume shipping indium phosphide substrates to certain customers in Europe and Japan.

Total revenue for the year ended December 31, 2025 was $88,326,000 ⁸, a decrease of $11,035,000 ⁹, or 11.1% ¹⁰, from $99,361,000 ¹¹ in 2024. Gross profit for 2025 was $11,242,000 ¹² compared to $23,836,000 ¹³ in 2024, with gross margin of 12.7% ¹⁴ in 2025 versus 24.0% ¹⁵ in 2024. Net loss attributable to AXT, Inc. for 2025 was $21,260,000 ¹⁶ compared to $11,624,000 ¹⁷ in 2024. Basic and diluted net loss per common share attributable to AXT, Inc. was $0.49 ¹⁸ for 2025 versus $0.27 ¹⁹ for 2024.

AXT intends to promote its strengths in InP, as the company believes there will be increased demand for InP substrates as cloud-based data centers continue to combine integrated circuits and InP-based lasers to transfer data through light. The company believes AI will use InP for high-speed data transmission, and other applications could include driverless cars, 5G in cell phones and health and well-being biometric wearables. AXT intends to promote its technological strengths by showcasing its success in developing larger diameter wafers, specifically its 8-inch GaAs product which has crossed several milestones and is now shipping in small quantities, and its 6-inch InP which is now desired by some key customers. The company plans to use the net proceeds from its December 2025 offering, which were $93.9 million ²⁰, to financially support its subsidiary Tongmei in its efforts to increase its manufacturing capacity to produce indium phosphide substrates for export worldwide, for research and development of new or improved products, for working capital and for general corporate purposes.

AXT plans to expand its recycling program, having successfully deployed InP recycling and developed a recycling program for GaAs, which can lower manufacturing costs and is good for the environment. The company intends to strengthen its raw materials supply chain by continuing to provide strategic support to its raw material companies in China, and has identified some new steps that will make its supply chain even stronger. AXT also plans to offer diverse products, including custom products, supported by a team of technical sales support professionals, the majority of whom hold advanced graduate degrees in physics or materials science, as a way to differentiate itself in the market and lead to a more diverse customer base and higher revenue volumes.AXT intends to increase manufacturing efficiencies by continuing to leverage its China-based manufacturing advantages through improvements in manufacturing methods, systems and processes, and promotes the concept and practice of continuous improvement within its company culture. The company plans to use its deep knowledge and experience in specialty materials and wafer substrates to seek new applications for existing substrates and explore additional materials that may be synergistic with its knowledge base, customer needs and manufacturing lines.

Research and development expenses were $9.0 million ²¹ in 2025, compared with $14.5 million ²² in 2024 and $12.1 million ²³ in 2023. Capital expenditures for property, plant and equipment were $5,995,000 ²⁴ in 2025. On October 27, 2014, the Board of Directors approved a stock repurchase program pursuant to which the company may repurchase up to $5.0 million ²⁵ of its outstanding common stock. As of December 31, 2025, approximately $2.7 million ²⁶ remained available for future repurchases under this program. The company has never declared or paid any cash dividends on its common stock and does not anticipate paying cash dividends in the foreseeable future.

The company faces significant headwinds from escalating trade tensions and regulations. On February 4, 2025, China added indium phosphide substrates to its export control list, and as a result, the three wafer substrate product families manufactured by Tongmei all require permits from China's Ministry of Commerce before they can be exported from China. InP export permits represent the most significant challenge the company currently faces. The United States increased tariffs on imports of many products from China, including wafer substrates, to 60% ²⁷ on February 1, 2025, and further increased the tariff to 70% ²⁸ on March 4, 2025. In 2024, 8% ²⁹ of total worldwide revenue was from sales in North America, primarily in the U.S., but in 2025, only approximately 2% ³⁰ of revenue was generated by sales to customers in North America. The company paid approximately $0.3 million ³¹ in tariffs in 2025.

The company faces risks from the cyclical nature of the semiconductor industry, which periodically experiences significant economic downturns characterized by diminished product demand, production overcapacity and excess inventory. The company's gross margin has fluctuated historically, dropping to 10.7% ³² in the third quarter of 2023 and to a negative 6.4% ³³ in the first quarter of 2025. The company also faces risks related to the proposed Tongmei IPO on the STAR Market, which could fail to be completed, and the terms of the private equity raised grant each Investor a right of redemption if the IPO fails, with an aggregate redemption amount of approximately $49 million ³⁴.

Management's message emphasizes the company's position as a worldwide materials science company developing and producing high-performance semiconductor substrates, with a vertically integrated supply chain strategy that includes partial ownership of raw material companies in China. Key themes include navigating the significant challenges posed by escalating trade tensions and export permit requirements, particularly the addition of indium phosphide substrates to China's export control list on February 4, 2025, which management describes as the most significant challenge the company currently faces. Management highlights that on June 11, 2025, Tongmei received its initial export permits to resume shipping indium phosphide substrates to certain customers in Europe and Japan. Strategic priorities emphasized include promoting strengths in InP substrates, which management believes are best in class, promoting flagship products including 8-inch GaAs and 6-inch InP, expanding the recycling program, strengthening the raw materials supply chain, offering diverse products including custom products, and increasing manufacturing efficiencies. Management also notes the completion of an offering on the Nasdaq in December 2025 that raised gross proceeds of approximately $100 million ⁴⁴, with net proceeds of $93.9 million ⁴⁵ intended to support Tongmei's efforts to increase manufacturing capacity for indium phosphide substrates.

Total revenue for the year ended December 31, 2025 was $88,326,000 ⁴⁶, compared to $99,361,000 ⁴⁷ for 2024 and $75,795,000 ⁴⁸ for 2023. Net loss attributable to AXT, Inc. was $21,260,000 ⁴⁹ for 2025, compared to $11,624,000 ⁵⁰ for 2024 and $17,881,000 ⁵¹ for 2023. Basic and diluted net loss per common share attributable to AXT, Inc. was $0.49 ⁵² for 2025, compared to $0.27 ⁵³ for 2024 and $0.42 ⁵⁴ for 2023. Gross profit was $11,242,000 ⁵⁵ for 2025, compared to $23,836,000 ⁵⁶ for 2024 and $13,318,000 ⁵⁷ for 2023, with gross margin of 12.7% ⁵⁸ in 2025, 24.0% ⁵⁹ in 2024, and 17.6% ⁶⁰ in 2023. Loss from operations was $21,976,000 ⁶¹ for 2025, compared to $14,803,000 ⁶² for 2024 and $21,569,000 ⁶³ for 2023. Net cash used in operating activities was $12,783,000 ⁶⁴ for 2025, compared to $12,112,000 ⁶⁵ for 2024 and net cash provided by operating activities of $3,403,000 ⁶⁶ for 2023. Total cash, restricted cash and cash equivalents as of December 31, 2025 were $128,366,000 ⁶⁷, compared to $33,811,000 ⁶⁸ as of December 31, 2024. The company had short-term loans of $62,796,000 ⁶⁹ as of December 31, 2025, compared to $47,264,000 ⁷⁰ as of December 31, 2024. The provision for income taxes was $1,658,000 ⁷¹ for 2025, compared to $1,134,000 ⁷² for 2024 and $160,000 ⁷³ for 2023. Substrate revenue was $58,900,000 ⁷⁴ in 2025, compared to $67,748,000 ⁷⁵ in 2024 and $47,466,000 ⁷⁶ in 2023. Raw materials and other revenue was $29,426,000 ⁷⁷ in 2025, compared to $31,613,000 ⁷⁸ in 2024 and $28,329,000 ⁷⁹ in 2023.

The company faces material risks from escalating trade tensions and export controls, as all three wafer substrate product families manufactured by Tongmei require permits from China's Ministry of Commerce for export, and InP export permits represent the most significant challenge. In 2025, only approximately 2% ³⁵ of revenue was generated by sales to customers in North America, down from 8% ³⁶ in 2024, and the company paid approximately $0.3 million ³⁷ in tariffs. The terms of the private equity raised for the Tongmei IPO grant each Investor a right of redemption if the IPO fails, with an aggregate redemption amount of approximately $49 million ³⁸. The company's gross margin has fluctuated significantly, dropping to a negative 6.4% ³⁹ in the first quarter of 2025, and the company faces risks from the cyclical nature of the semiconductor industry, which experienced a downturn where consolidated revenue declined from $39.7 million ⁴⁰ in the first quarter of 2022 to $17.4 million ⁴¹ in the third quarter of 2023. The company also faces risks related to its joint venture raw material companies in China, which contributed gains of $0.8 million ⁴² and $3.4 million ⁴³ in 2025 and 2024, respectively, but have in the past contributed losses and impairment charges.