AXT’s Tongmei Secures Up to US$545 Million in Private Equity Financing to Expand Indium Phosphide Wafer Production
The proposed investment of US$285 million to US$545 million will support manufacturing capacity expansion for indium phosphide substrates and raw materials in China amid rising demand. The financing is expected to close in December 2026, subject to regulatory approvals and other conditions.
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound semiconductor substrates announced that its majority-owned subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), has entered into definitive agreements for a private equity financing to fund further expansion of its manufacturing capacity for indium phosphide semiconductor substrates, expansion of its principal business operations, capital expenditures and general working capital. The financing agreements provide for a private equity investment in Tongmei by certain institutional investors of a minimum of RMB 1,912,350,000 (approximately US$285 million) and up to a maximum of RMB 3,668,639,053.25 (approximately US$545 million) (the “Maximum Amount”) in the ordinary shares of Tongmei.
“This strategic financing represents a milestone for Tongmei, which is issuing its own shares to provide RMB directly into its operations,” said Morris Young, chief executive officer of AXT. “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. Proceeds will also be used to increase capacity at our raw material companies in China. The lead investor, which is a leading Asia asset manager, has been instrumental in guiding companies through overseas listing process, and is committed to assisting Tongmei’s process to achieve an overseas listing.”
The closing of the financing is subject to a number of customary conditions, including, but not limited to, receipt of required filings from the applicable governmental authorities, and is expected to occur in December 2026. Assuming the Maximum Amount of the investment, AXT expects to maintain control, own approximately 73.40% of Tongmei following the consummation of the transaction and continue to consolidate Tongmei in its financial statements. There can be no assurance that the financing will close.
