The AI boom is driving demand for optical modules in data centres and has coincided with a sharp rise in prices for indium phosphide (InP), a key material used to make lasers that convert electrical signals into light for fibre‑optic transmission.
Indium phosphide price surge and market signals
Two‑inch InP substrates surged to as much as 880 yuan (US$130.54) per wafer in June from as little as 500 yuan at the end of 2025, while three‑inch wafers rose to about 3,200 yuan from about 1,800 yuan over the same period, according to a recent report by financial services firm Nomura citing industry experts. An InP index compiled by financial information provider Wind, which tracks stock prices across more than 20 firms listed in mainland China, gained 4.2 per cent on Monday, outpacing some high‑profile technology segments including lithography and semiconductor materials. The industry was also mulling further price hikes that could reach 10 per cent in the fourth quarter, according to a Monday report by Taiwan newspaper Economic Daily News.
Regional supplier reactions and capacity pressure
China, a major producer of InP, has seen prices climb sharply, and other Asian suppliers have followed suit. JX Advanced Metals, one of Japan’s leading InP substrate producers, was introducing a first round of revisions that could raise prices to two to three times previous levels, according to a report by JPMorgan earlier this month. JPMorgan added that customer inquiries continued to exceed the company’s planned production capacity expansion.
