Driven by explosive demand for high-speed optical communication infrastructure in AI data centers, Japan’s leading semiconductor materials giant JX Advanced Metals Corporation (JX Metals) has officially launched its largest-ever single capital investment initiative.
In a press release dated June 16, JX Metals unveiled plans to invest up to JPY 120 billion (approximately USD 750 million) by fiscal 2030 to ramp up production capacity for indium phosphide (InP) substrates — a core material for optical communication applications — by 7 to 10 times compared with its fiscal 2025 output, alongside corresponding price increase proposals submitted to customers.
Indium phosphide features exceptional electro-optic conversion properties and serves as the foundational material for optical transceivers, a critical component within optical communication systems. As artificial intelligence evolves from generative AI to AI agents and physical AI, data volumes for model training and real-time inference surge exponentially, fuelling robust demand for hyperscale data centers equipped with high-speed, low-latency communication infrastructure.
Reports from Omdia and Yole indicate that global demand for InP substrates stood at roughly 2 million to 2.1 million wafers in 2025, while viable qualified global capacity only ranged between 600,000 and 700,000 wafers, creating a supply-demand gap exceeding 70%. Yole further projects global demand will jump to 2.6 million to 3 million wafers in 2026, whereas effective capacity will edge up to merely around 750,000 wafers, leaving the supply shortfall above 70%. Per forecasts by Indian research firm Straits Research, the InP substrate market will reach USD 507 million by 2034, equivalent to 2.7 times its 2025 market size.
To capitalize on this market dynamic, JX Metals rolled out its record-breaking investment program. Under the plan, in addition to its existing Isohara Plant in Kitaibaraki, Ibaraki Prefecture, the company will build an extra production site in Hitachinaka, Ibaraki Prefecture. Including previously disclosed spending commitments, JX Metals’ total investment in its InP substrate business will reach approximately JPY 150 billion, targeting a capacity expansion of 7 to 10 times its fiscal 2025 baseline.
Notably, part of this substantial funding pool derives from roughly JPY 80 billion remaining proceeds from convertible bonds issued by the company in May. Yoichi Hayashi, President of JX Metals, previously stated that the firm would maintain annual capital expenditure of around JPY 100 billion regardless of large-scale project launches, to seize emerging opportunities across semiconductor materials.
JX Metals also noted in the release that it had already carried out phased capacity expansions in prior periods. Following repeated consultations with customers, sustained large-volume capacity expansion requests were submitted to match clients’ own production ramp-up roadmaps, convincing JX Metals that InP substrate demand will grow far faster than earlier projections.
Parallel to massive capacity scaling, JX Metals confirmed it will propose price adjustments (price hikes) to customers to establish a stable supply framework. The company aims to develop InP substrates into a profit pillar on par with its flagship semiconductor sputtering target business. JX Metals currently holds around 60% global market share in semiconductor sputtering targets. This expansion is designed to diversify its business portfolio away from traditional copper operations toward higher-value semiconductor materials.
Buoyed by this major announcement, JX Metals’ share price skyrocketed 18.59% on the Tokyo Stock Exchange on June 16, closing at JPY 4,466, bringing its year-to-date gain to roughly 128%. With only a handful of major global InP substrate suppliers including JX Metals, Sumitomo Electric and AXT, the company’s aggressive capacity buildout not only underpins its own strategic transformation but will also exert far-reaching implications for supply chain stability across worldwide AI computing infrastructure.
(Reprinted from https://news.eccn.com/）