Corning Nvidia Optical Connectivity Partnership Expands US AI Infrastructure Supply Chain

Corning

Corning Nvidia optical connectivity plans will expand US manufacturing capacity for the optical systems needed to support artificial intelligence data centres. Corning will build three new manufacturing facilities in North Carolina and Texas as it targets a tenfold increase in optical connectivity output.

Corning Nvidia optical connectivity investment also includes a more than 50% expansion in Corning’s fibre production. The move reflects rising demand for high-speed data movement across AI infrastructure, where advanced optical links are becoming as important as chips themselves.

Corning Nvidia optical connectivity partnership strengthens the domestic supply chain around Nvidia’s AI computing ecosystem. Nvidia chips require high-performance optical fibre connectivity to move data quickly and at scale across large data centre networks.

The agreement also has a strategic materials angle. The fibre-optics industry is the largest US end-user of germanium, making AI data centre buildout increasingly relevant to minor metals demand.

AI Data Centres Drive Optical Connectivity Demand

AI workloads require massive data movement between chips, servers and storage systems. As computing clusters grow, copper-based connections face performance, distance and energy-efficiency limits in some high-speed applications.

Optical connectivity helps solve that problem. It allows data to move faster and across longer distances, supporting the scale required by advanced AI data centres.

Corning’s planned facilities in North Carolina and Texas will increase domestic capacity for these optical systems. That is important because AI infrastructure is becoming a national industrial priority, not only a technology market.

For Nvidia, the partnership supports the physical network behind its chips. AI accelerators create value only when data can move efficiently through the system.

For Corning, the deal gives stronger exposure to one of the fastest-growing infrastructure markets. Optical fibre, cable assemblies and connectivity products are becoming critical components in the AI supply chain.

Germanium Demand Links AI Growth to Critical Materials

The partnership also connects AI infrastructure to germanium demand. Germanium is used in optical fibre production, making fibre expansion relevant to critical minerals and specialty materials markets.

This matters because germanium supply is already strategically sensitive. It is used in fibre optics, infrared systems, semiconductors, defence electronics and solar applications.

If AI data centre construction accelerates, optical fibre demand could strengthen further. That would increase attention on germanium availability, recycling, refining and origin security.

The transaction also includes a financial component. Nvidia has the right to purchase up to 15mn shares of Corning stock at a fixed price of $180/share, as well as a pre-funded warrant to purchase up to 3mn shares for a total price of $500mn.

That structure shows how strategic customers are moving closer to upstream and midstream suppliers. Nvidia is not only buying components. It is helping secure the manufacturing base needed for future AI infrastructure.

For the US, the partnership supports domestic manufacturing around semiconductors, photonics and critical materials. It also reinforces the wider shift toward regionalised supply chains for high-value technology infrastructure.

The Metalnomist Commentary

The Corning-Nvidia partnership shows that AI supply chains are moving beyond chips into optical fibre, photonics and specialty materials. Germanium demand could become a hidden beneficiary as data centres require faster and more resilient optical connectivity.

Indium Phosphide Exports Become China’s New Chokepoint in AI Data Centre Supply Chain

AI data centre

Indium phosphide exports have become a strategic pressure point in the global AI data centre supply chain as China’s licensing controls delay shipments of a material essential for high-speed optical chips. The restrictions are exposing a new vulnerability in AI infrastructure: the physical materials behind silicon photonics and optical interconnects.

The issue has moved quickly from a specialist semiconductor concern to a high-level trade and industrial policy problem. Coherent, a key optical components supplier backed by Nvidia, warned in early May that indium phosphide shortages were already affecting the market. Its chief executive then joined a US business delegation to China as companies sought relief from export licence delays.

Indium phosphide exports matter because AI data centres are moving beyond copper-based interconnects. As AI workloads grow, hyperscalers need faster, lower-latency and more energy-efficient data transmission between processors, accelerators, switches and optical modules. Indium phosphide is one of the core materials enabling that shift.

The material is used in high-speed optical chips, lasers, detectors and photonic components. These devices support the optical links that move huge volumes of data across AI clusters. Without reliable indium phosphide substrates and wafers, the expansion of advanced AI data centre networks could slow.

China’s control over indium phosphide exports shows that critical materials policy is becoming more granular. Beijing no longer needs to restrict only rare earths or finished technology products. It can also influence upstream compounds, substrates and wafers that determine whether advanced semiconductor supply chains can scale.

Export Controls Expose a Hidden Bottleneck in Silicon Photonics

Silicon photonics has become a critical technology for AI infrastructure because it allows data to move through light rather than electrical signals. This reduces energy use per bit and supports the bandwidth required by large AI systems.

But silicon photonics is not only a silicon story. The most advanced optical systems often require compound semiconductor materials such as indium phosphide, gallium arsenide, gallium nitride and germanium-based compounds. Indium phosphide is especially important for lasers and high-speed optical devices.

This creates a difficult supply chain problem. AI companies, hyperscalers and chipmakers are racing to scale optical modules, but one of the key substrate materials remains highly concentrated. China is the world’s largest indium producer, accounting for about 70% of global output in 2024.

That concentration became more serious after China introduced export restrictions on indium phosphide in February 2025. Since then, licence delays have created backlogs for companies that manufacture or source InP substrates from China.

AXT, one of the world’s largest indium phosphide substrate producers and a major supplier to Coherent, said export permits were its most significant challenge. The company manufactures most of its InP substrates in China and only received its first permits last June. It still faces a large order backlog.

The effect has spread beyond individual suppliers. Coherent, Lumentum, VPEC and LandMark Optoelectronics all sit inside the optical components ecosystem that depends on reliable substrate supply. When permit delays hit upstream InP material, the impact moves through wafers, chips, optical modules and AI data centre equipment.

Prices show the severity of the shortage. Since China introduced export restrictions, the average price of a 6-inch indium phosphide wafer has surged by 250% to about $5,000. That price increase reflects both physical scarcity and the strategic premium attached to non-disrupted supply.

The supply squeeze also comes at a time of aggressive photonics investment. Nvidia announced $2bn investments each in Coherent and Lumentum in March. Marvell Technology also moved into photonics through its acquisition of Celestial AI, reflecting stronger demand for optical technology in AI computing.

These investments show where the industry is heading. AI infrastructure needs optical interconnects to manage power, latency and bandwidth. But China’s indium phosphide controls mean that materials availability could become a gating factor for deployment.

Companies are trying to respond. Coherent plans to double its InP wafer capacity at its Texas plant this year and more than double it again by the end of 2027. US photonics firms are also seeking supply from non-Chinese producers such as Sumitomo Electric Industries.

However, capacity additions are slow. New substrate plants can take two to three years to bring online. Qualification cycles are also long because optical chipmakers cannot easily switch substrate suppliers without testing performance, reliability and consistency.

This makes the shortage difficult to solve quickly. Even if new capacity is announced, it may not arrive fast enough to meet near-term AI data centre demand. Meanwhile, many non-China producers already consume part of their own output internally, reducing the amount available to the broader market.

China’s Materials Chokepoint Strategy Strengthens Domestic Producers

China’s indium phosphide export controls are creating both pressure and opportunity. They restrict global supply, but they also support domestic Chinese substrate producers that are expanding capacity.

Yunnan Germanium, Guangdong Xiandao and Zhuhai Dingtai Xinyuan are among China’s leading domestic InP substrate players. Their role is becoming more important as Beijing uses materials controls to strengthen strategic leverage across semiconductor and AI supply chains.

Yunnan Germanium has already moved to expand. The company announced a 189mn yuan investment in April to raise production capacity to 450,000 single InP wafers annually. Its shipments of InP wafers rose by 74% in 2025, showing fast domestic market growth.

Guangdong Xiandao is also expanding through its subsidiary Guangdong Xianrui. The project is expected to produce 40 t/yr of indium phosphide crystals, which are used as raw material for substrates.

These investments fit a broader pattern. China is not only defending control over upstream critical materials. It is also building downstream processing capacity in higher-value compound semiconductor materials.

However, Chinese producers may not immediately solve the global shortage. Some are still seeking export approvals, and any overseas shipments may be limited. Domestic demand remains a priority, especially as China builds its own AI, optical communications and semiconductor ecosystem.

AXT

Supplier qualification creates another barrier. Companies such as Coherent and Lumentum are unlikely to switch easily from established suppliers. Coherent relies heavily on AXT, while Lumentum sources mainly from Sumitomo and JX Advanced Metals. New suppliers must pass demanding qualification cycles before they can enter critical optical chip supply chains.

This gives China’s export controls a long-lasting effect. Even if alternative suppliers exist, the market cannot instantly redirect demand. The bottleneck is not only production volume. It is qualified, high-quality, customer-approved substrate supply.

The strategic lesson is clear. AI supply chains are not only exposed to advanced chips, GPUs and packaging capacity. They also depend on a deep materials stack that includes indium, phosphorous chemistry, InP crystals, substrates, wafers, lasers, detectors and optical modules.

This is why indium phosphide exports have become so important. AI data centre buildouts need more optical links as clusters grow larger. Copper interconnects face limits in speed, distance and energy consumption. Photonics offers a solution, but only if the materials chain can scale.

For the US and its allies, the response will likely require more than emergency licence negotiations. It will require investment in indium recovery, InP crystal growth, substrate manufacturing, wafer capacity and long-term offtake agreements. It may also require strategic stockpiles for high-purity indium and compound semiconductor substrates.

The issue also strengthens the case for recycling and secondary recovery. Indium is often produced as a by-product, making primary supply difficult to expand quickly. Recovering indium from industrial scrap, displays, semiconductors and related waste streams could become more important if export controls persist.

For AI data centre developers, the risk is timing. Demand for optical modules is accelerating now, while new ex-China capacity may not fully arrive until 2027 or later. That mismatch could raise costs, delay deployments and intensify competition for qualified photonics suppliers.

The market may therefore see a split. Companies with secured InP supply will be better positioned to support hyperscaler demand. Companies exposed to licence delays, qualification bottlenecks or spot-market wafers may face higher costs and delivery risk.

The Metalnomist Commentary

China’s control over indium phosphide exports shows that the AI race is becoming a materials race. The next bottleneck may not be only GPUs or power supply, but the compound semiconductor substrates needed to move data fast enough inside AI clusters.

Pax Silica silicon supply chain initiative reshapes US semiconductor partnerships

Pax Silica

The Pax Silica silicon supply chain initiative signals a new US push to secure silicon inputs. The US will partner with Japan, South Korea, Singapore, and other allies. Therefore, the Pax Silica silicon supply chain initiative links minerals, energy, and manufacturing into one strategy.

The initiative targets upstream security across the silicon value chain. It aims to secure critical mineral and energy inputs for silicon processing. Meanwhile, it also promotes downstream joint ventures for chips and AI infrastructure.

Pax Silica targets refining, processing, and infrastructure buildout

The plan prioritizes new mineral refining and processing capacity. It also supports expansion of data centers and fiber optic cables. As a result, the Pax Silica silicon supply chain initiative connects material supply to digital buildout.

Polysilicon sits at the center of this effort. Polysilicon reaches ultra-high purity and feeds silicon wafer production. Therefore, the US polysilicon supply chain matters for AI chips and advanced semiconductors.

US demand for AI chips exposes supply concentration risks

US wafer capacity gaps now collide with surging AI demand. Industry data says a small group of suppliers dominates global wafer output. However, current US-based production cannot meet rising domestic AI needs.

The partnership list also signals strategic alignment beyond manufacturing. It pairs trusted jurisdictions with investment in processing and infrastructure. Meanwhile, it raises the bar for traceability, resilience, and speed across the silicon supply chain.

The Metalnomist Commentary

This initiative will reward projects that lock in low-cost power and reliable refining capacity. However, permitting timelines and technology transfer terms will decide real supply growth. Therefore, buyers will track near-term contracts more than long-term diplomacy.

Copper Supply Chain Fragility Is Underpriced Despite Price Rally

Ivanhoe

Copper supply chain risk is still being underpriced even after London Metal Exchange prices rallied above $13,000/t, according to Ivanhoe Mines chairman Robert Friedland. He warned that higher prices alone will not quickly unlock new mine investment or solve the operational bottlenecks now shaping copper supply.

The copper supply chain is facing a more complex problem than headline market balances suggest. Friedland pointed to sulphur, sulphuric acid, diesel and other critical inputs as increasingly important constraints for mining operations, especially in Africa.

The copper supply chain is particularly exposed in the Democratic Republic of Congo, where a large share of production depends on acid leaching. If sulphuric acid availability tightens further, Friedland said about half of the DRC’s low-grade leached copper could be at risk unless higher copper prices offset sharply higher acid costs.

This warning comes as the Middle East conflict affects copper markets indirectly. The immediate threat is not concentrate supply, but sulphur-linked cost inflation that can raise operating costs for solvent extraction and leaching operations.

Sulphuric Acid and Diesel Risks Expose Mining Cost Vulnerability

Sulphuric acid has become a central issue for copper supply because much of the DRC’s production relies on acid leaching. A prolonged disruption in sulphur flows could affect roughly 3mn t/yr of DRC copper output, making the country one of the most exposed parts of the global copper market.

The DRC’s vulnerability is different from that of traditional concentrate producers. Concentrate supply depends on mining, milling, logistics and smelter demand. Leached copper also depends on steady sulphur or sulphuric acid access, which creates another layer of supply-chain risk.

Ivanhoe’s Kamoa-Kakula complex is unusually positioned because it produces sulphuric acid as a by-product rather than relying only on external supply. The operation produced more than 100,000t of sulphuric acid in the first quarter of 2026, with annual output expected to reach 600,000-700,000 t/yr once the new smelter is fully ramped up.

That acid production gives Ivanhoe a strategic advantage. It can reduce exposure to imported acid costs while supporting copper output in a market where other DRC producers may face tighter reagent availability.

Diesel is another operational risk. Remote mines depend on diesel for haulage, power generation and logistics, especially where grid access is weak or transport routes are long.

Friedland said highly exposed mining firms should consider securing up to a year of diesel supply. He also argued that the DRC may be less vulnerable than some expect because refined products can arrive through India, Nigeria and southern Africa.

Still, the full operational impact may not yet be visible. Supply-chain shocks often appear first through higher costs, longer lead times and working-capital pressure before they become production losses.

This is why the copper market may be misreading risk. Visible inventories and annual balances can suggest moderate surplus, while the physical supply chain becomes more fragile beneath the surface.

A copper price above $13,000/t helps margins, but it does not immediately create acid, diesel, spare parts, qualified labour or new mine capacity. Mine investment still depends on permitting, capital cost, political risk and long development timelines.

AI, Data Centres and Critical Metals Raise Copper’s Strategic Value

Friedland linked copper’s long-term importance directly to electrification, cooling systems, data centres and artificial intelligence. These sectors are turning copper from a conventional industrial metal into a strategic infrastructure material.

AI data centres need large amounts of power infrastructure. That means more copper for grids, substations, transformers, cooling systems, cabling, backup power and electrical distribution.

The growth of AI also reinforces demand for metals beyond copper. Friedland highlighted gallium, scandium, dysprosium, rhenium and tantalum as thinly traded materials with low liquidity but high industrial dependence.

This is an important market signal. The next phase of industrial competition will not depend only on bulk metals. It will also depend on access to small-volume strategic materials that support semiconductors, aerospace, defence, magnets and high-performance alloys.

Copper remains the anchor metal because it connects electrification, grid expansion, industrial automation and data infrastructure. Friedland described copper as the “king of metals” because no large-scale energy transition can move without it.

However, copper’s strategic value also exposes the market to policy pressure. The US is beginning to understand mining’s national security role more clearly, especially as domestic supply concentration and import dependence become more visible.

Market participants expect moderate global copper surpluses this year, helped by last year’s supply windfall. But US physical balances are expected to remain tight, with the CME-LME arbitrage reopening to encourage flows into the country.

That regional tightness matters. Copper may look balanced globally, while specific markets face procurement pressure because of tariffs, logistics, exchange spreads, domestic manufacturing needs or strategic stockpiling.

The broader lesson is that copper pricing must account for supply-chain resilience, not only mine output. A mine that lacks acid, fuel or logistics capacity cannot deliver metal reliably, even if ore is available.

For investors, this strengthens the value of hard assets with low obsolescence. Mines, smelters, acid plants, power infrastructure and logistics corridors are becoming more valuable as supply chains become less predictable.

For manufacturers, copper procurement is becoming a strategic function. Buyers linked to grids, data centres, defence, cooling systems and energy infrastructure will need more secure supply agreements, not only exposure to exchange prices.

The Metalnomist Commentary

Friedland’s warning cuts through the headline copper rally: the market is pricing metal, but not enough supply-chain fragility. Copper’s next constraint may come less from ore availability and more from acid, diesel, logistics and the minor metals needed to build the electrified economy.

Tantalum Prices Surge as AI Capacitor Demand Meets Tight African Supply

Ta (Tantalum)

Tantalum prices have surged across concentrates, metal, and scrap as capacitor demand rises and supply disruption tightens the upstream market. The rally reflects a rare collision between stronger electronics consumption, AI data centre investment, and instability in central African raw material flows.

The price rise began before the latest disruption. However, the February landslide at the Rubaya mine in rebel-held eastern Democratic Republic of Congo intensified the market shock. Tantalum concentrate prices jumped sharply, and the pressure quickly moved into tantalum metal and scrap markets in Europe and the United States.

The supply impact has been especially important because much of the material linked to eastern DRC moves through Rwanda before entering international trade. Any disruption around Rubaya therefore affects more than one mining district. It also exposes how dependent the tantalum supply chain remains on politically fragile and difficult-to-monitor sources.

AI Data Centres Lift Tantalum Capacitor Demand

AI data centres have become a major new demand driver for tantalum capacitors. These components help regulate electricity flow on circuit boards and remain critical in high-performance electronics. As AI servers expand, demand for tantalum and tantalum-polymer capacitors is rising alongside advanced chips, power systems, and server hardware.

This demand is not theoretical. Boards used for Nvidia H100 cards can contain multiple tantalum and tantalum-polymer capacitors, making AI infrastructure a direct consumption channel for tantalum products. As Alphabet, Microsoft, Meta, and Amazon raise capital spending for AI infrastructure, smelters and traders expect stronger orders for next-generation capacitor materials.

The capacitor industry is already responding to cost pressure and higher demand. Manufacturers raised prices across several product ranges in 2025, including tantalum-polymer capacitors and multilayer ceramic capacitors. Higher tantalum powder costs contributed to the increases, but AI-related consumption has become an equally important factor.

Tight Supply Pushes Tantalum Metal and Scrap Higher

Tantalum prices are rising because the market faces pressure at both ends of the value chain. Upstream concentrate availability has tightened, while downstream buyers in capacitors and alloys continue to compete for material. This has lifted prices for concentrates, refined metal, and scrap at the same time.

The alloy sector has added another layer of demand stability. Even as capacitor demand accelerates, industrial users of tantalum metal continue to require reliable supply for high-performance applications. As a result, scrap has become more valuable because it offers an alternative source of tantalum units when mined supply becomes uncertain.

The current rally also echoes earlier technology investment cycles. The Dotcom boom drove strong demand for tantalum capacitors and pushed tantalite prices to historic highs. Today, AI infrastructure may be creating a similar demand shock, but with a more complex supply chain and tighter scrutiny around conflict-linked minerals.

The Metalnomist Commentary

Tantalum is becoming a hidden beneficiary of the AI infrastructure boom. The market risk is that capacitor demand can scale faster than responsible mining, refining, and recycling channels can respond.

Pax Silica Initiative Gains Norway as Western Supply Chains Tighten Around AI and Semiconductors

Pax silica

Pax Silica initiative membership has expanded with Norway joining the US-led framework for artificial intelligence, semiconductors and critical raw materials security. The move adds a European partner with low-carbon power, industrial metals capacity and growing critical minerals relevance.

The Pax Silica initiative has become part of Washington’s effort to reduce dependence on China in critical minerals, semiconductor supply chains and AI infrastructure. Norway’s accession strengthens the coalition’s European minerals, energy and capital base.

The Pax Silica initiative now includes countries with complementary strengths in mining, processing, technology, energy, finance and advanced manufacturing. That mix is important because strategic supply chains increasingly require more than mineral deposits alone.

Norway’s ambassador to the US, Anniken Huitfeldt, is expected to sign the initiative, giving Norway a formal role in a US-backed economic security framework.

Norway Adds Low-Carbon Metals, Capital and Rare Earth Potential

Norway brings several advantages to the coalition. The country has a long-established aluminium and ferro-alloys industry, access to low-carbon power and a growing policy focus on critical raw materials.

Its role has also become more relevant because of work on the Fen rare earth deposit in southern Norway. Rare earths are central to permanent magnets, defence systems, electric motors, wind turbines and advanced electronics.

Norway’s sovereign wealth fund also gives the country strategic capital relevance. In critical minerals, financing capacity can be as important as geology because new projects require long development timelines, technical qualification and patient capital.

Norway said Pax Silica could give domestic companies stronger access to advanced technology value chains. This matters for suppliers that want to connect local raw materials, clean power and industrial capabilities with AI, semiconductor and defence-linked markets.

The country is also aligning its wider policy with key partners through the EU Critical Raw Materials Act and European Chips Act. That creates a bridge between European industrial policy and the US-led supply-chain framework.

Supply-Chain Blocs Reshape Mineral Investment Logic

The industrial significance of Pax Silica lies less in immediate metal flows and more in policy direction. Western governments are building supply-chain blocs that link raw materials, processing, capital and end-use manufacturing across allied jurisdictions.

This could affect future investment decisions in rare earths, aluminium, silicon-related materials, battery metals and other inputs tied to semiconductors and AI infrastructure.

The framework also reflects a shift in how critical minerals projects are evaluated. Access to technology partners, downstream customers, public financing and geopolitical alignment may increasingly determine which projects advance.

For Norway, membership strengthens its position in the emerging western critical minerals architecture. For the wider market, it reinforces the idea that supply security is becoming a structured policy goal rather than a simple procurement choice.

This trend will matter for metals producers, refiners, traders and manufacturers. Companies that can operate inside trusted supply-chain blocs may gain better access to capital, offtake support and advanced technology customers.

The Metalnomist Commentary

Norway’s entry into Pax Silica shows that critical minerals strategy is now merging with AI, semiconductor and economic security policy. The next phase of mineral competition will be defined by blocs that combine geology, capital, clean energy and downstream demand.

Corning Meta Optical Cable Plant Strengthens AI Data Centre Supply Chain

Corning

Corning Meta optical cable plant construction has started in Hickory, North Carolina, as Corning moves to support Meta’s growing artificial intelligence data centre network. The project is expected to become the world’s largest fibre optic cable manufacturing facility.

The plant forms part of Corning’s $6bn multi-year agreement with Meta, signed in January. Under the deal, Corning will supply next-generation optical fibre, cable and connectivity products for Meta’s expanding data centre infrastructure.

Corning Meta optical cable plant development matters because AI workloads are increasing demand for high-speed, low-latency optical communication systems. As AI clusters grow larger, fibre optic connectivity becomes a critical infrastructure layer alongside chips, power, cooling and storage.

AI Data Centres Drive Optical Fibre Demand

Meta’s fibre connectivity requirements are rising as the company operates or builds 26 data centres across the US. These facilities support the rapid expansion of AI computing capacity, which requires dense and reliable optical networks.

Corning’s optical communications business is already benefiting from this demand. Net sales in the segment rose by 35% year on year in the fourth quarter, driven by stronger AI data centre demand, while total company sales increased by 14% to $4.41bn.

The Corning Meta optical cable plant therefore reflects a wider shift in digital infrastructure. Data centre growth is no longer only a semiconductor story; it is also becoming a materials, glass, cable and connectivity supply chain story.

Germanium Supply Becomes Strategic for Fibre Optic Expansion

Fibre optic cable production has direct implications for germanium demand. Germanium tetrachloride is used to increase the refractive index of the silica glass core in fibre optic cables, making it essential for high-performance optical communication.

Optical communication is the largest downstream consumer of germanium in the US. That makes AI data centre expansion increasingly relevant to minor metals markets, especially as fibre deployment accelerates.

Supply risk remains a key concern. China imposed export controls on germanium metal and other germanium products in August 2023, citing military technology concerns. China accounts for about 60-70% of global germanium output, while its exports of germanium and fabricated products fell sharply to 11,316kg in 2025 from 25,273kg in 2024.

Chinese germanium exports remained weak early this year, with January shipments down 95% on the year and February shipments also lower. This creates a strategic tension: AI infrastructure is increasing optical fibre demand, while germanium availability remains constrained by export controls.

The Metalnomist Commentary

The Corning-Meta project shows that AI infrastructure is pushing demand deeper into specialty materials supply chains. Germanium may be a small-volume metal, but its role in optical fibre makes it strategically important as data centres scale.

Yageo AI Demand Lifts Sales as Tantalum Capacitors Gain Strategic Importance

Yageo Group

Yageo AI demand strengthened the Taiwanese electronic components manufacturer’s 2025 performance as high-end electronics and data centre applications supported sales growth. Net sales rose to NT$132.9bn, or about $4.26bn, up 9.3pc from a year earlier and 12.5pc in US dollar terms.

Yageo AI demand now accounts for around 13pc of the company’s sales, showing how artificial intelligence is reshaping the electronic components supply chain. The company said customer inventories have returned to healthier levels, while demand for AI-related products continues to grow despite geopolitical uncertainty.

Yageo AI demand also supported profitability. Earnings before interest, tax, depreciation and amortisation rose to NT$38.8bn in 2025 from NT$32.6bn in 2024. Fourth-quarter sales were particularly strong, rising 19.9pc from a year earlier to NT$35.96bn.

Tantalum Capacitors Benefit From AI Data Centre Growth

Tantalum-based capacitors are becoming more important as AI data centres increase demand for reliable, high-performance electronic components. Yageo is a major producer of tantalum capacitors, which are used across servers, power systems, industrial electronics, and advanced computing hardware.

The company’s tantalum product mix was its second-largest segment in the fourth quarter, accounting for 21.7pc of sales. Magnetics remained the largest segment at 26.4pc, highlighting Yageo’s exposure to several component categories tied to electrification, automation, and high-performance computing.

This product mix matters because AI infrastructure requires dense, stable, and reliable components. Capacitors, magnetic components, sensors, and thermal management devices all sit inside the wider hardware supply chain that supports data centres, power conversion, and electronics manufacturing.

Tantalum Supply Squeeze Adds Cost Pressure to Component Makers

Tantalum concentrate and metal prices have surged to record highs since the start of the year. The increase has been driven by tight supply in central Africa and rising downstream demand from AI-related applications.

This creates a strategic challenge for capacitor producers. Strong AI demand supports revenue growth, but raw material tightness can raise input costs and pressure margins if customers resist price adjustments. For manufacturers such as Yageo, access to reliable tantalum supply is becoming more important as demand shifts toward higher-end applications.

Yageo’s acquisition of Japan’s Shibaura Electronics also broadens its component platform. Shibaura produces thermistors and temperature sensors used in automobiles, home appliances, and industrial applications. The deal strengthens Yageo’s exposure to sensing and thermal control, both of which are increasingly relevant in electronics, industrial systems, and mobility.

The Metalnomist Commentary

Yageo’s results show that AI demand is moving beyond chips and servers into the deeper electronic materials chain. The next constraint may not only be semiconductor capacity, but also specialty components and critical minerals such as tantalum.

Hedge Funds Metals Exposure Rises as Supply Chain Fragmentation Reshapes Markets

Metals

Hedge funds metals exposure is increasing as geopolitical risk, supply chain fragmentation and commodity-intensive investment cycles draw more financial capital into industrial and precious metals. Panellists at the FT Commodities Global Summit in Lausanne said metals are becoming more attractive to portfolio managers seeking exposure beyond equities, bonds and credit.

The shift reflects a deeper change in global markets. Economic growth is increasingly tied to physical capital expenditure, including power grids, transport systems, storage infrastructure, clean energy assets and industrial manufacturing capacity.

Hedge funds metals exposure is therefore being driven by more than short-term price volatility. Investors are responding to long-term underinvestment in physical infrastructure, tighter supply chains and the growing strategic role of metals in energy transition, defence and industrial policy.

Metals Gain Financial Appeal as Physical Investment Cycles Expand

Commodity markets are attracting more capital because the global economy is becoming more materials-intensive. The energy transition requires copper, aluminium, nickel, lithium, rare earths, silver, steel and specialty metals for grids, batteries, renewables, electric vehicles and data centres.

Supply tightness is also changing investor behaviour. Years of underinvestment in mines, smelters, refineries, logistics and storage have made several metal markets more vulnerable to disruption.

Geopolitical risk adds another layer. Export controls, tariffs, sanctions, stockpiling and regional supply-chain policies are making metals less predictable and more strategic.

This volatility creates opportunities for hedge funds. Metals now offer exposure to electrification, critical minerals, defence demand, AI infrastructure and supply security themes.

The rise in hedge funds metals exposure also shows that commodities are no longer only inflation hedges or cyclical trades. They are becoming a way to invest in physical bottlenecks created by a more fragmented global economy.

Traders Keep Physical Edge While Hedge Funds Scale Data Strategies

Commodity traders still hold a major advantage in physical arbitrage. They understand vessel movements, warehouse flows, regional premiums, logistics constraints and on-the-ground supply conditions.

That physical insight is difficult for financial investors to replicate. Knowing the price difference between one location and another often favours traders with direct market access and operational knowledge.

Hedge funds have different strengths. They are better positioned to analyse large macro themes, such as China’s stationary battery deployment, grid investment, EV adoption and industrial demand shifts.

Artificial intelligence is becoming another differentiator. Some hedge funds are embedding machine learning more deeply into trading, forecasting and risk management.

Commodity traders and energy companies are investing in data and automation, but many still lag hedge funds in systematic technology-driven trading. This gap could narrow as physical traders combine market intelligence with stronger analytics.

The result is a more competitive metals market. Physical traders will keep their logistical edge, while hedge funds may increasingly shape price discovery through capital flows, macro positioning and AI-supported strategies.

The Metalnomist Commentary

Hedge funds metals exposure is rising because metals now sit at the intersection of infrastructure, geopolitics and technology. The next market advantage will belong to firms that can combine physical supply-chain knowledge with faster data, AI and capital allocation.

InP and GaN Wafer Supply Deal Strengthens Macom’s Compound Semiconductor Chain

Macom

InP and GaN wafer supply has become a strategic priority for Macom Technology Solutions as the US semiconductor manufacturer invests in UK-based compound semiconductor wafer supplier IQE. The investment secures long-term epitaxial wafer services and strengthens Macom’s access to materials used in photonics, defence, satellites and 5G telecom systems.

Macom has committed £45mn as part of an £81mn investor package for IQE. The financing includes £23mn of reinvestment from convertible loans and will allow IQE to repay debt while funding core technologies such as indium phosphide and gallium nitride.

InP and GaN wafer supply is increasingly important because both materials sit at the centre of high-performance semiconductor applications. Indium phosphide supports optical transmission and silicon photonics, while gallium nitride enables high-frequency, high-power radio frequency and defence electronics.

The investment also allows IQE to end its strategic review. The company had considered selling or spinning out operations in Taiwan and later examined a possible full sale of the business. Those discussions have now been terminated.

Macom Secures Materials for Photonics and Data Centres

Macom said it will sign long-term supply agreements with IQE across multiple epitaxial technologies. These agreements will support scalable, high-volume manufacturing and strengthen supply-chain resilience.

This matters because AI data centres are driving rapid growth in optical transmission technologies. As computing loads rise, data centres need faster and more energy-efficient data movement between chips, servers and racks.

Indium phosphide is a critical material for lasers and photonic components used in optical networks. It has become a key bottleneck as demand from AI infrastructure, cloud computing and high-speed communications accelerates.

Macom’s strategy includes expanding laser and silicon photonic-based optical transmission products. Long-term InP and GaN wafer supply from IQE gives the company more confidence as it scales these technologies.

IQE also benefits from the arrangement. The funding improves its balance sheet and gives the wafer supplier stronger customer visibility from an existing key customer.

For the compound semiconductor industry, the deal shows how customers are moving closer to upstream wafer suppliers. Securing epitaxial capacity is becoming as important as chip design when materials availability is tight.

GaN Demand Links Defence, Satellites and 5G

Gallium nitride is another core part of Macom’s growth strategy. GaN is used in radio frequency sensors, amplifiers and other components for defence, satellite and 5G telecom systems.

These applications require materials that can handle high power, high frequency and demanding operating conditions. GaN offers performance advantages over conventional silicon in several advanced RF and power applications.

Macom is also developing advanced GaN-on-silicon processes and installing new equipment to modernise and expand manufacturing capabilities. This points to a broader push to scale production while improving cost and process efficiency.

IQE’s manufacturing footprint gives the partnership wider supply-chain relevance. The company operates two sites in south Wales, a facility in Milton Keynes, four plants in the US and operations in Taiwan.

IQE expects revenue to grow by more than 20% in 2026. The company cited strong demand from AI and data-centre photonics, laser and wireless products for smartphones, and continued strength in aerospace and defence.

The transaction also gives Macom a governance role, as the company will join IQE’s board. This deepens the relationship from customer-supplier contracting into strategic influence.

InP and GaN wafer supply will remain critical as semiconductor demand becomes more materials-intensive. Data centres, defence electronics, satellites and telecom infrastructure all need reliable compound semiconductor capacity.

The Metalnomist Commentary

Macom’s investment in IQE shows that semiconductor supply security is moving upstream into compound wafer materials. As AI data centres and defence RF systems expand, control over InP and GaN capacity will become a strategic advantage, not just a procurement issue.

Materion AI Demand Lifts Sales as Defence Orders Strengthen

Materion

Materion AI demand helped drive a sharp rise in first-quarter sales as electronics, defence and semiconductor customers increased orders for advanced materials. The US-based producer reported net sales of $549.8mn, up 30.8% from a year earlier.

Materion AI demand was most visible in the company’s electronic materials segment, where sales rose strongly on higher demand from chipmaking applications. Adjusted Ebitda increased by 8.6% to $52.9mn, showing that revenue growth translated into stronger earnings despite mixed performance across business units.

Materion AI demand also reflects a broader industrial trend. Artificial intelligence is increasing demand for logic chips, memory devices, thin-film materials, high-purity chemicals and precision components used across the semiconductor supply chain.

The company’s order backlog rose by more than 20% year on year at the end of the quarter. Defence orders exceeded $60mn, while open requests for quotations surpassed $300mn, indicating continued momentum in aerospace and defence materials.

AI Chips Lift Electronic Materials Sales

Materion’s electronic materials segment delivered the strongest growth in the quarter. Net sales rose to $363.3mn from $224.8mn a year earlier.

The segment produces tantalum sputtering targets for thin-film vapour deposition. These targets are used in semiconductor manufacturing, especially in logic and memory chip production.

Tantalum is important because it supports thin, reliable and high-performance films inside advanced chips. As AI workloads grow, semiconductor manufacturers need more materials that support higher computing power, better efficiency and tighter device architectures.

Materion also produces advanced chemicals and semiconductor materials. These products place the company deeper inside the AI hardware supply chain, where material purity, consistency and qualification are critical.

The sales increase shows that AI is not only driving demand for finished chips or data centre hardware. It is also increasing demand for upstream specialty materials that enable chip fabrication.

This is significant for minor metals and advanced materials suppliers. AI growth is pulling more value toward high-purity inputs, sputtering targets, deposition materials, precision optics and performance alloys.

Defence Backlog Supports Performance Materials Recovery

Materion’s aerospace and defence order rates increased by 50% over the past 12 months. Energy order rates rose by more than 20%, while semiconductor order rates increased by 10%.

The defence order book is especially important. More than $60mn of defence orders in one quarter, combined with over $300mn in open quotation requests, gives Materion stronger visibility into future demand.

Materion’s performance-materials segment had a weaker first quarter. Net sales fell to $155.7mn from $174mn a year earlier, mainly because of lower precision-clad material sales.

However, the company expects performance-material sales to improve from the second quarter. Aerospace and defence demand should support the recovery.

The segment includes beryllium products and alloys, along with niobium, tantalum and nickel alloys. These materials serve demanding applications where strength, conductivity, thermal stability, corrosion resistance or weight reduction are essential.

Materion had suspended clad-strip production in the fourth quarter of 2025 because of material quality problems. Production resumed as expected in January-March and returned to pre-issue levels.

Precision optics also strengthened. Sales rose by 43% to $30.8mn, with demand improving across life sciences, consumer electronics, automotive, aerospace and defence, and semiconductors.

The result shows that Materion is exposed to several high-value growth channels at once. AI supports electronics materials, defence supports performance alloys, and precision optics benefits from advanced manufacturing and semiconductor demand.

The Metalnomist Commentary

Materion’s quarter shows how AI and defence demand are pulling specialty materials deeper into strategic supply chains. The key signal is not just higher sales, but the growing importance of tantalum, beryllium, niobium, nickel alloys and precision optics in advanced manufacturing.

AI Drives ICT and Manufacturing Growth in Asia-Pacific: A Look at South Korea and Taiwan

TSMC

The explosive growth of artificial intelligence (AI) infrastructure, particularly in the United States, is significantly shaping the electronics and related manufacturing sectors in South Korea and Taiwan. Government data from both countries highlights the importance of AI and its impact on semiconductors, electronics, and other ICT-related exports.

In South Korea, AI demand is offsetting declines in exports to China, showcasing the country's leading role in the global tech supply chain. The latest figures from South Korea’s Ministry of Trade, Industry, and Energy (Motie) show a 14.8% increase in ICT exports for November, totaling over $20 billion for the fourth consecutive month. Semiconductors, computers, and peripherals were the major drivers of this growth. Despite this, year-on-year growth showed signs of slowing, dipping from 22% in October to 14.8%. This slowdown was partly attributed to a 2.2% drop in exports to China and Hong Kong, primarily due to waning demand for mobile phones and displays.

Notably, South Korea's semiconductor exports skyrocketed, with a 30.3% rise year-on-year, reaching $12.5 billion. Exports to the United States surged by nearly 110%, driven by the increasing need for server equipment and data centers fueled by AI systems. These advancements in AI are rapidly driving the need for upgraded infrastructure, such as high-performance servers and data centers, essential for processing the vast amounts of data generated by AI algorithms.

South Korea’s semiconductor industry is globally influential, with giants like Samsung Electronics and SK Hynix at the forefront, along with smaller players such as DB HiTek and Hana Micron. As the world’s second-largest semiconductor supplier, South Korea is poised to benefit as AI continues to push demand for microchips and computing hardware to new heights.

Taiwan's Semiconductor Boom Fuels AI and Tech Growth

In Taiwan, the demand for semiconductors to support AI infrastructure is also expanding rapidly. Taiwan holds a dominant position in global semiconductor production, accounting for more than 60% of worldwide manufacturing and nearly 90% of advanced semiconductor output. This dominance is largely due to the presence of Taiwan Semiconductor Manufacturing Corp (TSMC), the world’s largest foundry, along with companies like MediaTek, ASE Technology Holdings, and United Microelectronics Corp (UMC).

Taiwan’s Ministry of Economic Affairs reports a 26.6% year-on-year increase in equipment purchases for the manufacturing sector in Q3, amounting to 462.4 billion New Taiwan Dollars (about $14.2 billion). The surge was largely driven by semiconductor factories expanding to meet the needs of emerging technologies, including AI, high-performance computing, and cloud services. The country's semiconductor production continues to boom, fueling revenue growth in both electronics and information technology industries.

The semiconductor-driven demand for AI technologies in Taiwan is evident, with a significant 46.4% increase in purchases of fixed assets in the electronic components sector, which accounts for 65.1% of total manufacturing purchases. This increase reflects the ongoing investments in AI-related equipment, including the expansion of wafer foundries, packaging, testing, and memory factories. Meanwhile, the machinery and equipment sector also reported a 26.6% rise in year-on-year purchases, largely driven by semiconductor companies' capital expenditures for new factory expansions and production lines.

Despite these gains, other sectors like chemical materials and fertilizers saw a decline in equipment purchases, highlighting the uneven impact of AI across different industries.

As Taiwan continues to be a hub for semiconductor production, the country is expected to see sustained investments in high-end production capacity and the introduction of low-carbon, automated equipment. This is set to drive further advancements in AI technologies and their applications, solidifying Taiwan's position as a key player in the global tech landscape.

Global Germanium Demand Soars as Buyers Seek New Supply and Alternatives

The U.S. Department of Defense (DoD)

With rising demand for germanium in defense and advanced computing, global consumers are seeking alternatives as China’s export restrictions have tightened supply. Germanium’s applications in artificial intelligence (AI) and autonomous vehicles have driven increased consumption, especially for its use in high-performance computing and infrared optics. AI systems benefit from silicon-germanium's ability to operate at higher frequencies and lower power, making it critical in modern technological advancements.

Germanium Supply Chain Concerns and Strategic Moves

The U.S. Department of Defense (DoD) is actively working to secure a sustainable germanium supply. The DoD has teamed up with LightPath Technologies to replace germanium in some of its applications, especially in optics, in a bid to reduce supply chain vulnerabilities. Meanwhile, other initiatives focus on increasing germanium consumption for defense purposes. The DoD is investing $14.4 million in 5N Plus, a Canadian semiconductor materials firm, to expand its capacity for producing germanium wafers for solar cells, ensuring continued supply for defense and satellite industries.

Producers are also responding to the supply crunch. Companies in Australia and Canada are exploring germanium-rich mining projects, while Hong Kong Sinomine Rare Metals is pushing to commercialize germanium production at its copper smelting line in Namibia. Belgium’s Umicore, meanwhile, has secured a deal with STL1 in the Democratic Republic of Congo to optimize domestic refining of germanium, further diversifying its global supply.

The rising price of germanium is likely to drive more refining and recycling initiatives, unless alternative materials become more widely adopted in its key applications.

Zhongke Anode Material Sales Surge as Energy Storage Demand Accelerates

Zhongke

Zhongke anode material sales rose sharply in 2025 as China’s lithium-ion battery sector expanded across new energy vehicles and power storage. Hunan Zhongke Electric sold 363,253t of anode materials during the year, up 62% from 2024.

Zhongke anode material sales were supported by strong downstream demand and higher operating rates. The company’s output increased by 66% to 378,469t, reflecting a rapid scale-up in response to battery market growth.

Zhongke anode material sales also lifted revenue. Revenue from anode materials rose by 60% to 7.99bn yuan, broadly in line with the increase in shipment volumes.

The result shows how anode materials remain one of the key beneficiaries of battery expansion. Demand is no longer driven only by electric vehicles. Grid storage, industrial storage and AI-related power demand are becoming increasingly important.

Capacity Utilisation Tightens as China Battery Demand Expands

Zhongke’s anode material capacity reached 348,683 t/yr in 2025, up 46% from a year earlier. The increase followed equipment and technology upgrades across its production base.

Capacity utilisation rose to 108.6% from 95.7% in 2024. This shows that Zhongke was operating above nameplate capacity as demand outpaced available production capability.

The company is now expanding further. A third-phase project at its Zhaotong site in Yunnan province is under construction and will add 100,000 t/yr of anode material capacity by the end of 2026.

Zhaotong has become a key growth platform. The first phase, with 15,000 t/yr of capacity, started production in April 2020. The second phase, with 100,000 t/yr of capacity, began operations in March 2024.

Zhongke is also planning a 300,000 t/yr anode material complex in Luzhou, Sichuan province. This would further strengthen its position in China’s graphite anode supply chain.

The expansion reflects a broader industry trend. Anode producers are adding capacity to serve battery makers that need reliable supply, stable quality and lower-cost materials for high-volume cell production.

Overseas Expansion Targets Storage and Non-China Customers

Zhongke is also building a 100,000 t/yr anode material plant in Tangier, Morocco. The project targets customers outside China and reflects the growing need for regionalised battery material supply chains.

Morocco offers strategic value because it is close to European markets and has become more attractive for battery-related investment. For Chinese anode producers, overseas capacity can help serve customers facing localisation, trade and supply-chain security requirements.

Energy storage is becoming a major long-term demand driver. Global energy storage battery shipments reached 651.5GWh in 2025, up 76.2% from a year earlier. Chinese companies accounted for 614.7GWh, or 94.4% of global shipments.

EV Tank expects global energy storage battery shipments to exceed 2TWh by 2030. If this forecast materialises, anode material demand will continue rising across China and overseas markets.

Policy is also supporting growth. China is moving new energy storage from mandatory allocation toward a more market-oriented system, including capacity pricing support for independent grid-side storage.

AI data centres are adding another demand layer. Rapid growth in electricity consumption from AI infrastructure is increasing the need for power storage, grid stability and backup capacity.

Europe is also expanding storage under energy security strategies. EU member states installed 27.1GWh of new battery energy storage systems in 2025, up 45% from the previous year.

For Zhongke, this demand mix supports a larger and more international anode strategy. The company is positioning itself to serve China’s dominant battery ecosystem while preparing for overseas demand linked to storage, EVs and grid resilience.

The Metalnomist Commentary

Zhongke’s growth shows that anode materials are moving from an EV-driven market into a broader energy infrastructure market. The next competitive phase will depend on overseas localisation, graphite supply security and the ability to serve storage demand outside China.

US Semiconductor Manufacturers Expand with CHIPS Act Funding

US Chip

The US Department of Commerce has allocated CHIPS Act funding to boost domestic semiconductor production. Companies Analog Devices, Coherent, IntelliEPI, and Macom will use this funding to increase manufacturing capacity, modernize facilities, and enhance the US semiconductor supply chain.

Investments in Key Semiconductor Companies

On January 16, the Department of Commerce announced preliminary funding agreements for four semiconductor manufacturers:

• Analog Devices will receive up to $105 million to expand mature node semiconductor manufacturing at its Oregon and Washington facilities. The investment will boost capacity by 70%, focusing on 180nm and 350nm process nodes. It will also expand module production at its Massachusetts facility for commercial, space, and defense applications.

• Coherent will receive up to $79 million to increase 150mm and 200mm silicon carbide (SiC) wafer production at its Easton, Pennsylvania facility. The expansion will add 750,000 substrates per year and double epitaxial wafer output, supporting energy and military applications.

• IntelliEPI will use $10.3 million to modernize its Allen, Texas facility, which produces epitaxy materials for indium phosphide, gallium arsenide (GaAs), gallium antimonide, and gallium nitride (GaN) wafers. These materials are essential for defense, AI, data centers, telecommunications, and automotive industries.

• Macom has announced a $345 million investment over five years, supported by up to $180 million in CHIPS Act funding, federal tax credits, and state funding. The company will modernize its Massachusetts and North Carolina wafer fabrication plants. Its Massachusetts facility will upgrade 100mm production lines for GaAs, GaN, and silicon materials and install 150mm GaN-on-SiC manufacturing. In North Carolina, Macom will develop 150mm wafer production and expand metal-organic chemical vapor deposition (MOCVD) epitaxial growth.

Strengthening the US Semiconductor Supply Chain

The CHIPS Act investments will expand domestic semiconductor production, ensuring a more resilient supply chain for key industries such as automotive, defense, telecommunications, and AI. These companies will also benefit from the Advanced Manufacturing Investment Tax Credit, which covers 25% of qualified capital expenditures.

By scaling up domestic semiconductor manufacturing, the US aims to reduce dependence on foreign suppliers and strengthen its position in advanced technology sectors.

Silicon Photonics Capacity Expands as AI Data Centre Demand Accelerates

Silicon Photonics

Silicon photonics capacity is expanding rapidly as artificial intelligence data centres require faster, higher-bandwidth and lower-latency connections between processors. Semiconductor firms are increasing investment as SiPh technology moves from telecoms and enterprise networks into hyperscale AI infrastructure.

The shift reflects a structural change in data centre architecture. Large AI clusters need optical interconnects that can move massive volumes of data with lower energy consumption than traditional copper-based systems.

Silicon photonics capacity growth is therefore becoming a materials story as well as a semiconductor story. While silicon wafers form the base platform, high-performance SiPh components also rely on indium phosphide, gallium arsenide, gallium nitride, germanium compounds and, in some cases, lithium niobate.

AI Workloads Push Optical Interconnects Beyond Copper

AI workloads are increasing data centre scale and network complexity, forcing hyperscalers to adopt technologies that reduce latency and energy use per bit. This is accelerating the replacement of copper in high-speed data communications equipment.

Industry spending on data centre switches for AI back-end networks is now forecast to exceed $100 billion by 2030. The upgraded outlook reflects rising demand from agentic AI, physical AI, humanoid robots, autonomous vehicles and military systems.

This growth increases demand for optical transceivers, modulators, photodiodes, lasers and high-speed detection systems. These components are closely tied to minor metals and compound semiconductor materials that support faster optical transmission.

Tower and STMicroelectronics Scale SiPh Platforms

Tower Semiconductor is working with Coherent on high-speed data transmission using a silicon modulator built through a production-ready SiPh process. The work targets next-generation optical transceivers for AI data centre applications.

Tower is also investing heavily in silicon germanium products that support its SiPh platform. The company raised its 2026 capital expenditure budget for SiPh and silicon germanium by $270 million, in addition to the $650 million announced in late November.

STMicroelectronics is also expanding aggressively. The company plans to quadruple SiPh production capacity by 2027, supported by long-term capacity reservation commitments from customers.

STMicro recently entered high-volume production for its SiPh-based PIC100 platform. The platform is used by hyperscalers for optical interconnection in data centres and AI clusters, and it is designed to reduce signal loss while improving modulator, photodiode and chip-to-fibre performance.

The Metalnomist Commentary

Silicon photonics capacity is becoming a hidden bottleneck in AI infrastructure. As optical interconnects scale, demand for indium, gallium, germanium and lithium niobate-linked materials will become more strategically important to the semiconductor supply chain.

AXT to Shift Focus Amid Rising Germanium Prices: Challenges and Future Outlook

AXT

AXT, a leading US compound semiconductor supplier, is adjusting its strategy in response to soaring germanium (Ge) prices, which have significantly impacted its margins. The company, primarily known for its production of Ge substrates, announced that it would be pulling back from the germanium substrate market in the fourth quarter due to unsustainable production costs and lower margins. This decision comes after a sharp rise in Ge prices during the third quarter, driven by supply concerns stemming from China's government-imposed export restrictions.

Rising Ge Prices and Impact on AXT’s Business

The price of germanium, a critical material in semiconductor manufacturing, surged in the third quarter, tightening profit margins for AXT. As the world’s primary supplier of germanium, China’s export restrictions have created significant supply chain disruptions. As a result, AXT faced increased production costs that it was unable to pass on to customers, leading the company to pull back from low-margin Ge substrate business.

In the third quarter, AXT’s revenue from germanium substrates dropped to $1.6 million from $2.9 million in the second quarter, though this was still an improvement compared to $1.2 million from the same period last year. The decline in revenue was attributed to the inability to absorb rising material costs and the overall tightening of profit margins. Despite these challenges, AXT remains optimistic about re-entering the Ge substrate market as demand from low-orbit satellite services, such as Elon Musk's Starlink and China’s satellite launches, continues to grow.

AXT’s Shift to Indium Phosphide and Future Prospects

While germanium substrate business faces short-term setbacks, AXT is focusing on its indium phosphide (InP) product line, which has been seeing increased demand, particularly from data centers and artificial intelligence (AI) applications. InP revenue reached $6.8 million in the third quarter, driven by continued demand in AI and passive optical networks. AXT has also launched a new InP product targeting silicon photonics and electro-absorption modulated lasers (EMLs), receiving positive response and a design win from a major customer.

The company remains confident about the future of InP and its potential for growth, especially as AI and data centers continue to expand. Additionally, AXT anticipates a recovery in demand for light-emitting diodes (LEDs) and EMLs, supported by stimulus measures in China’s economy, which could bolster demand from the automotive industry. However, the company has experienced a dip in revenue from gallium arsenide (GaAs) substrates, which was $6.6 million in Q3, down from $9.1 million in Q2, largely due to lower demand and the ongoing economic slowdown in China.

Demand for Gallium and HPT Market Growth

AXT’s joint venture, which supplies gallium raw materials, saw increased demand in the third quarter, but the company’s sales of gallium arsenide substrates have slowed. This trend is in line with broader market conditions, including reduced demand in telecoms after a sharp decline last year. However, the company is still optimistic about future growth in the high-power telecom (HPT) market, driven by the 5G telecom expansion.

AXT continues to see interest from customers in China, particularly those looking for diversified gallium suppliers due to concerns over Chinese export restrictions on gallium. Despite challenges, AXT’s raw material supply chain remains stable, and the company expects growth in its core markets, particularly with 5G technology and emerging industrial applications.

Conclusion

AXT’s strategic decision to step back from the germanium substrate market reflects the company's commitment to maintaining profitability despite volatile raw material costs. While facing challenges in Ge and GaAs markets, AXT is diversifying its portfolio and focusing on high-demand products like InP. As the demand for AI, data centers, and satellite technologies grows, AXT remains poised to capitalize on emerging opportunities in the semiconductor industry, with an optimistic outlook for medium- to long-term growth.

Ningbo Yunsheng NdFeB Magnet Output Rises on NEV and AI Terminal Demand

Ningbo Yunsheng

Ningbo Yunsheng NdFeB magnet output increased in 2025 as demand from new energy vehicles, consumer electronics, industrial motors and robots supported China’s rare earth permanent magnet sector. The company produced 14,856t of finished neodymium-iron-boron magnets during the year, up 11% from 2024.

Ningbo Yunsheng NdFeB magnet output growth was matched by stronger sales. The company sold 14,197t of finished NdFeB magnets in 2025, up 10% from a year earlier, while inventories rose by 47% to 2,055t.

The inventory increase shows that supply growth remains strong even as downstream demand improves. For China’s magnet industry, the key question is whether expanding production capacity can stay aligned with demand from EVs, AI devices, robots and high-efficiency motors.

NEVs and Consumer Electronics Strengthen Magnet Revenue

Yunsheng’s revenue rose by 6% on the year to 5.46bn yuan, while profit increased sharply to 330.82mn yuan from 95mn yuan in 2024. The improvement reflected stronger demand in its core downstream sectors and higher-value magnetic component sales.

Revenue from NdFeB permanent magnetic materials sold as magnetic components rose by 60% to 705mn yuan. This suggests that Yunsheng is gaining value not only from magnet volume, but also from more advanced component-level products.

The NEV sector remained the company’s largest growth driver. Yunsheng’s sales revenue from new energy vehicle applications rose by 9.6% to 2.55bn yuan in 2025.

China sold 12.8mn NEV passenger cars in 2025, up 18% from a year earlier. NEVs accounted for 54% of total domestic passenger car sales, reinforcing the role of electric drivetrains in magnet demand.

NdFeB magnets are critical for high-efficiency motors used in electric vehicles, power steering systems, industrial automation and robotics. As vehicle electrification deepens, magnet suppliers remain closely tied to demand for neodymium, praseodymium, dysprosium and terbium.

Consumer electronics also supported Yunsheng’s performance. Revenue from the sector rose by 0.8% to 1.3bn yuan, helped by rapid growth in AI terminal product shipments and continued development of generative AI technologies.

Baotou Expansion Adds High-Performance Magnet Capacity

Ningbo Yunsheng NdFeB magnet output is set to receive further support from capacity expansion. The company had 26,000 t/yr of rough NdFeB magnet capacity and 10,000 t/yr of grain boundary diffusion capacity by the end of 2025.

Grain boundary diffusion is strategically important because it improves magnet performance while helping manage the use of heavy rare earths. This matters for high-performance applications where heat resistance, magnetic stability and material efficiency are critical.

Yunsheng is expanding its Baotou site to 15,000 t/yr of high-performance permanent magnetic materials by June 2026. The first 5,000 t/yr phase has been operating since June 2025, and the second 10,000 t/yr phase is expected to come on line in 2026.

Baotou is a strategically important location because it sits close to China’s rare earth resource and processing base. This gives magnet producers logistical and supply-chain advantages in sourcing rare earth materials and scaling downstream manufacturing.

The expansion also highlights China’s continued dominance in the rare earth magnet value chain. As global demand rises from EVs, AI hardware, robotics, industrial motors and clean-energy systems, Chinese producers are still adding capacity faster than most overseas competitors.

The Metalnomist Commentary

Yunsheng’s results show that rare earth magnet demand is broadening from EVs into AI terminals, robotics and high-efficiency motors. The next strategic risk is not only demand growth, but whether rising Chinese magnet capacity creates inventory pressure while tightening demand for high-quality rare earth feedstock.