On November 3 and November 6, two A-share indium phosphide substrate companies disclosed large-scale long-term supply agreements, with signatories being US optical communication firm AOI and global optoelectronics leader Coherent.
On November 6, Vital Optics Technology announced that its subsidiary, Xianrui Technology, signed a three-year supply letter of intent with Coherent: from 2027 to 2029, it will supply 6-inch indium phosphide substrates to Coherent's factories in Switzerland and Sweden, with an estimated transaction value of no less than USD 601 million, equivalent to approximately CNY 1.3 billion per year on average.
It is important to note that this is a Letter of Intent (LOI). The parties still need to proceed with signing the final supply agreement, and Xianrui Technology must obtain export licenses for 6-inch indium phosphide substrates. The announcement explicitly stated that there is uncertainty regarding the timing of the final agreement signing, and specific terms may differ from the LOI.
Three days earlier, on November 3, Yunnan Germanium announced that its subsidiary, Yunnan Xinyao, signed a five-year long-term supply agreement with AOI: from 2027 to 2031, AOI expects to purchase 180,000 wafers per year, totaling 900,000 wafers of 4-inch N-type indium phosphide substrates.
The concurrent 2027 annual contract stipulates a first-year purchase of 180,000 wafers, corresponding to a value of USD 194.4 million (approximately CNY 1.305 billion), which equals 122% of Yunnan Germanium's audited revenue for 2025.
This annual contract is also contingent upon obtaining and maintaining dual-use item export licenses. Neither agreement represents one-time orders; rather, they are multi-year frameworks executed annually. Actual execution volumes depend on subsequent annual contracts, purchase orders, and export licenses.
Regarding whether these deals signify a shift in the global indium phosphide substrate market from spot shortages to long-term supply tightness, what can be confirmed from the announcements is that major downstream customers have begun using multi-year long-term contracts to secure Chinese substrate capacity. Whether this locks in supply gaps or prices was not further specified in the announcements and requires verification through subsequent annual contracts and actual execution data.
*Note: The above information is based on listed company announcements and does not constitute any investment advice.