AXT, Inc. (Nasdaq: AXTI) has entered into a long-term supply agreement with Lumentum Operations, LLC for indium phosphide wafer substrates, according to a press release from the Fremont, California-based company.

Under the terms of the agreement, AXT will reserve a minimum annual capacity commitment for Lumentum through December 31, 2031, with provisions to support additional capacity if needed.

In exchange for the capacity reservation, Lumentum has agreed to pay AXT two deposits of $43,500,000 each, totaling $87,000,000. The first deposit is due within 30 business days of the agreement's execution. The second deposit of $43,500,000 is scheduled for calendar year 2028, with the specific timing and terms to be determined at a later date. Both deposits will be applied as shipment credits toward product purchases until exhausted.

"We are very pleased to announce an agreement with Lumentum and to be a key supplier to their indium phosphide requirements over the coming years," said Morris Young, chief executive officer of AXT.

AXT manufactures compound semiconductor substrate wafers, including indium phosphide, gallium arsenide, and germanium. The company has filed a Form 8-K with the Securities and Exchange Commission disclosing additional details of the agreement.