The global indium phosphide (InP) substrate market is experiencing a significant imbalance between supply and demand. According to data from research institutions such as Omdia and Yole, the global total demand for indium phosphide substrates will be approximately 2 to 2.1 million pieces in 2025, while the global effective and compliant production capacity will only be 600,000 to 700,000 pieces, resulting in a supply and demand gap of over 70%. Entering 2026, this gap is still widening: Yole predicts that the annual demand will climb to 2.6 to 3 million wafers, but the effective production capacity will only increase to around 750,000 wafers, and the gap will still remain above 70%. (Source: Omdia, Yole reports)
Price is the most direct reflection. According to a report by Sina Finance, as of April 2026, the price of 2-inch optical communication grade indium phosphide substrates has risen from $800 per piece at the beginning of 2025 to $2,300 - $2,500 per piece, an increase of nearly two times. The price of urgent orders has even exceeded $3,000 per piece. The price of 6-inch high-end substrates has risen from $1,400 per piece to $5,000 per piece, an increase of over 250%. Meanwhile, the price of refined indium, an upstream raw material, has also been rising simultaneously. As of mid-June 2026, the price of refined indium has reached 4,720 yuan per kilogram, an increase of approximately 60% compared to the beginning of 2026 and a doubling compared to the beginning of 2025. (Source: Sina Finance, INTs-Empire)
The root cause of this round of supply and demand contradiction lies in the simultaneous release of multiple demands. The most crucial driving factor is the rapid growth in demand for optical modules brought about by the construction of AI data centers. 800G optical modules are being deployed on a large scale, and 1.6T products have also entered the mass production stage. A single 800G optical module needs to be equipped with 4 to 8 indium phosphide laser chips, while a 1.6T optical module requires an indium phosphide substrate that is 2.7 to 3 times that of an 800G. Nvidia predicts that the demand for indium phosphide wafers will increase by approximately 20 times from 2026 to 2030. Lumentum also predicted that the compound annual growth rate of demand for indium phosphide in AI data centers would reach 85%. In addition, the implementation of CPO co-packaged optical technology has brought about the demand for laser array, and 1550nm automotive lidar is also accelerating its penetration. All the above applications require large areas and high quality磷化铟衬底Provide support. (Source: Sina Finance, NVIDIA Blog, Lumentum Financial Report)
Facing the concentrated explosion of demand, the world's majorIndium phosphide manufacturerLarge-scale expansion of production has begun. According to Japanese media reports, JX Metal plans to invest 120 billion yen by the fiscal year 2030 to increase its indium phosphide substrate production capacity by 7 to 10 times compared to the fiscal year 2025. This is the largest investment the company has ever made in the semiconductor materials field. AXT (Beijing Tongmei) has raised 632.5 million yuan for the expansion of InP substrate production. It plans to double its capacity by the end of 2026 and again by 2027. Currently, the company's backlog of InP substrate orders has exceeded 100 million US dollars. Coherent's factory in Sherman, Texas, USA, is operating the world's first 6-inch indium phosphide production line. On June 17, 2026, NVIDIA announced a strategic investment in Coherent to lay the foundation for its expansion. Lumentum has advanced approximately 40% of its indium phosphide expansion plan and predicts that the compound annual growth rate of demand for indium phosphide in AI data centers will reach 85% by 2030. (Source: Japanese media report on June 15th, NVIDIA blog post on June 17th, 2026, Sina Finance)
But expanding production is not something that can be achieved overnight. Indium phosphide crystal growth needs to be carried out under high temperature (about 1070°C) and high pressure (over 27 atmospheres) conditions. 6-inch wafers are regarded by the industry as ";" "Technological watershed" . At present, there are still relatively few enterprises worldwide that can achieve mass production of 6-inch products. The delivery cycle of the core epitaxial equipment MOCVD is as long as 6 to 9 months. The supply of high-end models from the world's two major suppliers, Veeco and Aixtron, to China has been basically cut off, and the 2023/2024 version of the Wassenaar Pact has also included MOCVD in the dual-use item list. In addition, the certification cycle from substrate manufacturers to downstream chip factories usually takes several months to over a year, making it difficult for new production capacity to be converted into effective supply in the short term. (Source: Shanghai Taopu Chemical, Electronics Enthusiast Network)
From the perspective of the competitive landscape, the indium phosphide substrate market has long been dominated by overseas enterprises. According to Yole's data, the top three global manufacturers occupied over 90% of the indium phosphide substrate market share in 2020, among which Sumitomo Electric Industries held 42%, AXT (Beijing Tongmei) 36%, and JX Metals 13%. The market share of domestic enterprises is relatively low, and the domestic production rate of 6-inch high-end substrates is less than 5%. However, this pattern is changing. Constrained by the import quota for high-purity indium, the expansion plans of overseas enterprises are facing delays, while domestic enterprises, relying on their domestic indium resource reserves and policy support, continue to accelerate their expansion pace. Enterprises such as Yunnan Ge Industry and Xian Dao Technology have achieved batch shipments of 6-inch substrates. (Source: Yole, Electronic Enthusiast Network)
Yole predicts that the global market size of indium phosphide related to optoelectronics will reach 5.6 billion US dollars by 2027. The persistence of the contradiction between supply and demand, coupled with the trend of the industrial chain shifting to the domestic market, leaves domestic enterprises with a clear window of opportunity.
In the next issue, we will start from the material properties and talk about why indium phosphide is used in the field of optical communication. It must be it. .
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