InP supply crunch leaves South Korea exposed

Coherent’s prepayment to AXT for InP wafers reveals South Korea’s strategic vulnerability in advanced photonic materials. Technically, 6-inch InP substrates are essential for 800G+ optical transceivers; shortages will delay CPO and silicon photonics ramp-up, forcing redesigns in packaging architectures. On compliance, tightening U.S. critical mineral controls—combined with Japan and Taiwan, China’s de facto barriers on high-purity precursor tech—expose Korean IDMs to dual-supply risks. Competitively, Lumentum and II-VI will likely secure similar capacity deals or pursue vertical integration to bypass intermediaries. Over the next 12–24 months, a “technology chokepoint race” will emerge: integrated players controlling crystal growth and epitaxy gain pricing power, while nations reliant on single-source procurement—like South Korea—must urgently localize substrate production or remain bottlenecked in AI hardware supply chains.