AXT announced that its majority-owned subsidiary Beijing Tongmei Xtal Technology has entered into definitive agreements for a private equity financing of between approximately $285 million and $545 million.
The financing is intended to support expansion of Tongmei’s manufacturing capacity for indium phosphide semiconductor substrates, additional growth of its core business operations, capital expenditures, and general working capital.
Under the agreements, institutional investors will invest at least RMB 1.91 billion and potentially up to RMB 3.67 billion in Tongmei’s ordinary shares.
AXT said the funding will help expand indium phosphide wafer capacity as demand outpaces supply.
Proceeds will also support increased capacity at AXT’s raw material businesses in China.
If the financing reaches its maximum amount, AXT expects to retain control of Tongmei and own approximately 73.4% of the subsidiary following completion.
AXT also expects to continue consolidating Tongmei in its financial statements.
The company said the lead investor is a major Asian asset manager with experience assisting businesses through overseas listing processes and intends to support Tongmei in pursuing a potential overseas listing.
The transaction is expected to close in December 2026, subject to required governmental filings and other customary conditions.
AXT develops and manufactures compound and single-element semiconductor substrate wafers, including indium phosphide, gallium arsenide, and germanium.
Its wafers are used in applications where traditional silicon substrates cannot meet required performance characteristics.
End markets include AI and data center connectivity, 5G infrastructure, passive optical networks, LEDs, lasers, sensors, wireless power amplifiers, and satellite solar cells.
AXT operates its global headquarters in Fremont, California, maintains its Asian headquarters in Beijing, and operates several manufacturing facilities in China.
The company also holds partial ownership stakes in more than ten Chinese raw material suppliers that support its manufacturing operations.
KEY QUOTES:
“This strategic financing represents a milestone for Tongmei, which is issuing its own shares to provide RMB directly into its operations.”
“Funds raised by Tongmei will be used to advance capacity expansion for indium phosphide wafers at a time when demand for these wafers is outpacing supply.”
Morris Young, CEO Of AXT
