AXT, Inc. reported a significant increase in financial performance for the first quarter of 2026, with total revenue reaching $26.9 million, a 39.1% increase from $19.4 million in the same period of 2025. The growth was primarily driven by a 74% rise in substrate sales, particularly indium phosphide (InP) wafers, which are increasingly in demand for data center applications. In contrast, revenue from raw materials decreased by 7.6% to $7.6 million, attributed to weaker market demand for refined gallium, despite stronger sales of pyrolytic boron nitride (pBN) crucibles.
The company's gross profit improved dramatically, rising to $8.0 million from a loss of $1.2 million year-over-year, reflecting a gross profit margin of 29.6%. This turnaround was facilitated by higher revenue and a favorable product mix, which allowed fixed costs to be spread over a larger sales volume. Operating expenses also saw an increase, with selling, general, and administrative expenses rising by 10.7% to $6.6 million, primarily due to higher compensation and legal costs. Research and development expenses slightly decreased by 3.4% to $3.0 million.
AXT's operational metrics indicate a solid foundation for future growth, with cash and cash equivalents totaling $41.8 million as of March 31, 2026, alongside restricted cash of $16.1 million. However, the company experienced a net cash decrease of $70.5 million during the quarter, largely due to significant investments in available-for-sale debt securities and property, plant, and equipment. The company’s short-term loans increased to $68.9 million, reflecting ongoing financing activities to support its operations and expansion plans.
Strategically, AXT is focused on expanding its manufacturing capacity, particularly for InP substrates, and has made significant investments in its subsidiaries in China. The company is also navigating complex regulatory environments, including recent export controls imposed by the Chinese government on certain materials, which could impact its ability to meet customer demand in international markets. Despite these challenges, AXT remains optimistic about its growth trajectory, particularly in light of the increasing demand for high-performance semiconductor substrates in various applications, including artificial intelligence and telecommunications.
Looking ahead, AXT anticipates continued revenue growth driven by strong demand for its products, although it remains cautious about potential disruptions from geopolitical tensions and regulatory changes. The company is actively monitoring the situation regarding export permits and market conditions, aiming to leverage its strategic investments and operational capabilities to enhance its competitive position in the semiconductor industry.
About AXT INC
AXT, Inc. develops and manufactures high-performance compound and single-element semiconductor substrates, including indium phosphide (InP), gallium arsenide (GaAs), and germanium (Ge) wafers. These specialty substrates serve advanced semiconductor and optoelectronic applications such as data centers, 5G, fiber optics, LEDs, and solar cells. Operating primarily in China, AXT integrates raw material production with wafer manufacturing, leveraging proprietary technology and a vertically integrated supply chain to deliver low-defect, customized substrates globally.
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