Chinese indium phosphide supplier booked to 2027; AOI and Coherent deals in China need export licences

Yunnan Germanium (云南锗业, 002428.SZ) told investors on November 10 that demand for indium phosphide (InP) wafers is strong and that its existing and under-construction capacity is locked in by customers until the end of 2027, according to its investor-relations record as reported by Yicai and National Business Daily. Customers include well-known manufacturers in China and abroad. Its subsidiary Yunnan Xinyao holds orders for about 13,000 6-inch wafers worth about 300 million yuan, mainly from leading overseas customers; some of those orders have already received export licences and are being delivered. The company has also signed contracts securing its raw material for 2027.

The squeeze follows two deals with US optical-communications companies in one week. On November 3, Yunnan Germanium said Yunnan Xinyao had signed a long-term supply agreement with Applied Optoelectronics (AOI), under which AOI expects to buy 180,000 4-inch N-type InP substrates a year from 2027 to 2031, 900,000 in total. A separate annual contract sets 2027 purchases at 180,000 wafers for US$194.4 million before tax, equal to 122.46% of Yunnan Germanium’s audited 2025 revenue. That works out to about US$1,080 per wafer (CSP calculation).

On November 6, Optics Technology (光智科技, 300489.SZ) said its subsidiary Guangdong Xianrui Technology had signed a letter of intent with Coherent to supply 6-inch InP substrates to Coherent’s plants in Switzerland and Sweden in 2027–2029, for at least US$601 million. It is not yet a final contract: the parties will negotiate a definitive agreement covering pricing, prepayment, delivery, export licences and other terms, and its timing is uncertain. According to Cailian Press, Optics Technology had orders for nearly 10,000 6-inch wafers at the end of September, and 6-inch substrates made up about 63% of the value of its overseas orders.

Both deals depend on Beijing. Indium phosphide (control code 3C004.a, reference customs code 2853904051) has required a dual-use export licence from the Ministry of Commerce (MOFCOM) since February 4, 2025, under MOFCOM and China Customs Announcement No. 10 of 2025, together with trimethylindium and triethylindium. AOI’s annual contract is performed only if the licence is obtained and maintained, and actual volumes follow the quantity MOFCOM approves; Optics Technology warned that its agreement may not be performed, or may even be cancelled, if the licence is delayed or refused.

This control is not part of the pause China extended this week. MOFCOM and China Customs Announcement No. 58 of 2026, dated November 9, keeps the suspension of rare-earth and lithium-battery controls in place until January 10, 2027, but it covers only the October 2025 measures (Nos. 55 to 58, 61 and 62); the February 2025 indium list is not among them.

According to Cailian Press, the large InP substrate orders at both companies come from overseas customers making chips for optical communications. According to Optics Technology, overseas customers are moving from 4-inch to 6-inch wafers, while Chinese customers are moving from 2- and 3-inch to 4-inch.

CSP view: for companies buying optical modules, lasers or InP wafers from China, the signals point to tight supply through 2027 and to an export licence that sits inside the contract itself. Buyers negotiating now should expect licence-dependent volumes, prepayment and delivery clauses tied to MOFCOM approval, and less room on price. These deals are purchase commitments, not deliveries: Coherent’s letter is not yet a contract, and AOI’s five-year volume is an expected purchase plan. This reading is ours, not the companies’.