Beijing Tongmei Xtal Technology Co., Ltd., a subsidiary of AXT, Inc., has secured a Long-term Supply Agreement with Nanjing Casela Technologies Corporation, Ltd. for indium phosphide wafer substrates. The agreement, finalized on June 11, 2026, commits Casela to purchase a fixed aggregate quantity of wafers for delivery throughout the 2027 calendar year. This arrangement secures production capacity and raw-material allocation for Casela while granting the buyer supply priority, ensuring a steady revenue stream for Tongmei amounting to RMB 173,000,000 (approximately US $25.4 million).

Financial Terms and Payment Schedule

The agreement outlines specific payment obligations to mitigate risk for Tongmei. Casela is required to remit 50% of the total purchase price as a prepayment within 15 business days of the agreement's execution. The remaining 50% is due on or before December 31, 2026. Deliveries are scheduled on a monthly basis throughout 2027. To enforce volume commitments, Casela must purchase at least 80% of the fixed aggregate quantity; failure to meet this threshold triggers a cancellation fee for the unpurchased wafers.

Operational Provisions and Breach Terms

Tongmei has agreed to prioritize any excess demand from Casela during the contract term, subject to available capacity and terms no less favorable than those offered to similar customers. Pricing for any excess supplies will be detailed in a supplemental agreement. The contract defines specific events as fundamental breaches, including order cancellation, failure to take possession of goods, payment delinquency exceeding 30 days, or failure to meet the 80% purchase threshold. In the event of such a breach, Tongmei retains the right to terminate the agreement and retain all previously paid amounts.

The agreement includes standard provisions covering delivery-schedule adjustments, pricing mechanisms, product warranties, remedies for breach, and dispute resolution. An English translation of the Long-term Supply Agreement will be filed as an exhibit to AXT, Inc.'s quarterly report on Form 10-Q for the period ended June 30, 2026.

AXT has generated significant shareholder value over the past 15 years, outperforming the broader market with an average annual return of 19.0%. This performance exceeds the market by 6.53% on an annualized basis, highlighting the impact of compounded growth on long-term investments. The company currently commands a market capitalization of $7.31 billion.

The substantial returns are illustrated by the growth of a hypothetical initial investment. An investor who purchased $100 worth of AXTI stock 15 years ago would see that investment grow to $1,387.72 today. This valuation is based on a current share price of $111.77.

Investment Growth Analysis

The following table details the performance metrics for AXT over the specified period:

The key insight from this data is the significant effect that compounded returns can have on cash growth over an extended period. AXT's consistent performance above market averages has resulted in substantial capital appreciation for long-term stakeholders.