Surging AI Data Center Demand Drives Sharp Rise in Indium Phosphide Wafer Prices
Nashnova编辑部
Surging AI compute demand has pushed indium phosphide (InP) substrate prices up as much as 75% in six months, with a further 10% hike under discussion for Q4 — cost pressure in data-center optical interconnects is now traveling fast from downstream modules to upstream materials.
What is indium phosphide, and why does AI need it?
Indium phosphide (InP) is a compound semiconductor used to make lasers — devices that convert electrical signals into light for high-speed data transmission over fiber.
In plain terms = servers inside a data center "talk in light," and InP is the core raw material for making the "light source."
Optical transceivers link AI chips to the network. A single large AI data center needs tens of thousands of them, and every one relies on InP.
How much have prices risen, and how fast?
Nomura, citing industry experts, reports that China-market 2-inch InP substrates rose from roughly ¥500/piece in late 2025 to as high as ¥880/piece by June 2026 — about a 76% increase.
3-inch substrates climbed from about ¥1,800/piece to roughly ¥3,200/piece over the same period — up approximately 78%.
This means → both mainstream substrate sizes nearly doubled in under six months, an exceptionally rare move for a compound semiconductor material.
Is the price rally over?
Taiwan's *Economic Daily News* reports the industry is discussing a further 10% price hike in Q4.
Japan's JX Advanced Metals (JX先進金属), a major InP substrate producer, is pushing through its first price adjustment — post-adjustment prices could reach two to three times previous levels, according to JPMorgan.
This reflects a global, not China-only, phenomenon — major Asian suppliers are raising prices in unison, pointing to an industry-wide supply-demand imbalance.
Is supply falling short, or is demand simply too strong?
JPMorgan notes that customer inquiry volumes at JX Advanced Metals consistently exceed the capacity ceiling of its planned expansion.
This means → even with expansion under way, near-term output still cannot keep pace with demand growth.
The key question ahead: will the InP shortage ease as capacity ramps, or will it harden into a structural deficit under sustained AI compute growth? The answer determines how far this price rally can run.
How is the secondary market reacting?
The Wind InP Index, tracking over 20 A-share-listed companies in the segment, jumped 4.2% on Monday, August 18.
That single-day gain outpaced lithography, semiconductor materials, and several other high-profile tech sub-sectors.
In plain terms = capital is chasing opportunity along the "AI compute → optical modules → upstream materials" chain, and InP is now the chain's newest hot spot.
Content is for reference only, not financial advice.