Key Takeaways
- • AXT's majority-owned subsidiary Beijing Tongmei Xtal Technology has entered into definitive agreements for a private equity financing of approximately $285 million to $545 million, depending on final subscription levels.
- • Institutional investors will subscribe for at least RMB 1.91 billion and potentially up to RMB 3.67 billion in Tongmei ordinary shares.
- • If the financing reaches its maximum, AXT retains control of Tongmei with an approximately 73.4% stake and continues to consolidate the subsidiary in its financial statements.
- • A major Asian asset manager is the lead investor 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 customary conditions.
Summary
AXT announced that its majority-owned subsidiary, Beijing Tongmei Xtal Technology, has signed definitive agreements for a private equity financing ranging from approximately $285 million to $545 million. The proceeds are intended to expand Tongmei's manufacturing capacity for indium phosphide (InP) semiconductor substrates, support further growth of its core business, fund capital expenditures, and provide 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.
According to AXT, demand for indium phosphide wafers is currently outpacing supply, and the financing is intended to add capacity to meet it. Proceeds will also support expanded capacity at AXT's raw material businesses in China. CEO Morris Young described the financing as "a milestone for Tongmei, which is issuing its own shares to provide RMB directly into its operations."
If the financing reaches its maximum amount, AXT expects to retain control of Tongmei with roughly a 73.4% ownership stake, and it expects to continue consolidating Tongmei in its financial statements. The lead investor is a major Asian asset manager with experience helping businesses through overseas listing processes, and it 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 compound and single-element semiconductor substrate wafers, including indium phosphide, gallium arsenide, and germanium, for applications such as AI and data center connectivity, 5G infrastructure, passive optical networks, lasers, sensors, and satellite solar cells. The company is headquartered in Fremont, California, maintains its Asian headquarters in Beijing, and holds partial ownership stakes in more than ten Chinese raw material suppliers.
According to AXT, demand for indium phosphide wafers is currently outpacing supply, and the financing is intended to add capacity to meet it. Proceeds will also support expanded capacity at AXT's raw material businesses in China. CEO Morris Young described the financing as "a milestone for Tongmei, which is issuing its own shares to provide RMB directly into its operations."
If the financing reaches its maximum amount, AXT expects to retain control of Tongmei with roughly a 73.4% ownership stake, and it expects to continue consolidating Tongmei in its financial statements. The lead investor is a major Asian asset manager with experience helping businesses through overseas listing processes, and it 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 compound and single-element semiconductor substrate wafers, including indium phosphide, gallium arsenide, and germanium, for applications such as AI and data center connectivity, 5G infrastructure, passive optical networks, lasers, sensors, and satellite solar cells. The company is headquartered in Fremont, California, maintains its Asian headquarters in Beijing, and holds partial ownership stakes in more than ten Chinese raw material suppliers.
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