AXT, Inc. reported a total revenue of $88.3 million for the fiscal year ending December 31, 2025, a decrease of 11.1% from $99.4 million in 2024. The decline was primarily attributed to a significant drop in sales of germanium wafers, which the company deliberately reduced due to rising raw material costs. Despite an increase in demand for indium phosphide (InP) wafers, revenue was negatively impacted by new export permit requirements imposed by China. The company's gross profit also fell sharply to $11.2 million, resulting in a gross margin of 12.7%, down from 24.0% in the previous year.
In terms of operational changes, AXT has been focusing on expanding its manufacturing capabilities, particularly for InP substrates, which are increasingly in demand for applications in 5G infrastructure and data centers. The company has also been navigating complex regulatory environments, with export controls from China affecting its ability to ship products internationally. As of December 31, 2025, AXT had a total of 1,072 employees, with the majority based in China, reflecting its commitment to maintaining a robust manufacturing presence in the region.
Geographically, AXT's revenue distribution showed that approximately 98% of its sales were generated from international markets, with China accounting for $55.1 million, a slight decrease from the previous year. Sales to North America plummeted to just $1.7 million, down 77.5% from 2024, primarily due to the aforementioned export permit challenges. The company continues to monitor the evolving trade landscape, particularly the ongoing tensions between the U.S. and China, which could further impact its operations and market access.
Looking ahead, AXT remains optimistic about its growth prospects, particularly in the InP market, as demand for high-performance substrates is expected to rise with advancements in technology and increased adoption of AI applications. The company is also preparing for a potential initial public offering (IPO) of its subsidiary, Tongmei, on the Shanghai Stock Exchange, which could provide additional capital for expansion. However, uncertainties surrounding regulatory approvals and market conditions pose risks to achieving these objectives.
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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