AXT Inc. (AXTI) 剛提交咗截至 2026 年 3 月 31 日嘅季度報告（10-Q），成績有明顯改善，由虧轉盈嘅勢頭幾搶眼

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In preparation for Tongmei’s application for a listing of shares in an IPO on the STAR Market, in late December 2020 we reorganized our entity structures in China. JinMei and BoYu and their subsidiaries, previously organized under AXT, Inc., were assigned to Tongmei and effectively merged with Tongmei although they retained their own respective legal entity status and are wholly owned subsidiaries of Tongmei. The 33% minority interest stakeholders of BoYu converted their ownership to a 7.59% minority interest in Tongmei. The 8.5% minority interest stakeholders, employees of JinMei, converted their ownership to a 0.38% minority interest in Tongmei. Further, a number of employees, key managers and contributors, purchased a 0.4% minority interest in Tongmei. In 2020, the Investors transferred approximately $48.1 million of new capital to Tongmei. An additional investment of approximately $1.5 million of new capital was funded in early January 2021. Under China regulations these investments must be formally approved by the appropriate government agency and are not deemed to be dilutive until such approval is granted. The government approved the approximately $49 million investment in its entirety on January 25, 2021 at which time the Investors owned a redeemable noncontrolling interest in Tongmei of 7.28%. As of March 31, 2026, Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5%. AXT remains the controlling stakeholder of Tongmei and holds a majority of the Board of Director positions of Tongmei.
Certificates of deposit with original maturities of more than three months.
The number of shares presented assumes the achievement of 150% of a target financial performance metric to be determined by the Company’s Compensation Committee and will be subject to an at-risk, performance shares agreement.
Classified as “Short-term investments” in our condensed consolidated balance sheets.
In April 2022, ChaoYang JinMei signed a joint venture agreement with certain investor to fund a new company, ChaoYang ShuoMei.
In February 2021, Tongmei signed a joint venture agreement with certain investors to fund ChaoYang XinMei.
In April 2022, Tongmei signed a joint venture agreement with certain investors to fund a new company, ChaoYang KaiMei.

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UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

☒         Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2026

Or

☐         Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                 to

Commission File Number 000-24085

 

AXT, INC.

(Exact name of registrant as specified in its charter)

 Delaware
 94-3031310
 

 (State or other jurisdiction of
 Incorporation or organization)
 (I.R.S. Employer
 Identification No.)
 

 

4281 Technology Drive, Fremont, California 94538

(Address of principal executive offices) (Zip code)

(510) 438-4700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 Title of each class:
   Trading Symbol
   Name of each exchange on which registered:
 

 Common Stock, $0.001 par value
   AXTI
   The NASDAQ Stock Market LLC
 

 

Indicate by check-mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐

 

Indicate by check-mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐

 

Indicate by check-mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 Large accelerated filer ☐
 Accelerated filer ☐
 

 Non-accelerated filer ☒
 Smaller reporting company ☒
 

  Emerging growth company ☐ 
 

 

If an emerging growth company, indicate by check-mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check-mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of May 4, 2026, 65,423,184 shares, $0.001 par value, of the registrant’s common stock were outstanding.

 

 
 
 
 Table of Contents
 

 

 

 

 
  
 

 
 AXT, INC.

 FORM 10-Q

 TABLE OF CONTENTS

  

 
 
 
 March 31, 2026
 
 Page
 
 

 
 PART I. FINANCIAL INFORMATION
 
  
 

 
 Item 1. Financial Statements (unaudited)
 
  
 

 
 Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025
 
 3
 
 

 
 Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025
 
 4
 
 

 
 Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2026 and 2025
 
 5
 
 

 
 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025
 
 6
 
 

 
 Notes To Condensed Consolidated Financial Statements
 
 7
 
 

 
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 28
 
 

 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
 49
 
 

 
 Item 4. Controls and Procedures
 
 50
 
 

 
 PART II. OTHER INFORMATION
 
  
 

 
 Item 1. Legal Proceedings
 
 51
 
 

 
 Item 1A. Risk Factors
 
 51
 
 

 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 78
 
 

 
 Item 3. Defaults upon Senior Securities
 
 78
 
 

 
 Item 4. Mine Safety Disclosures
 
 78
 
 

 
 Item 5. Other Information
 
 78
 
 

 
 Item 6. Exhibits
 
 78
 
 

 
 Signatures
 
 79
 
 

 
 
 
  
 

  

 
 
 2
 

 
 
 
 
 Table of Contents
 

 

 

 

   

 

 
  
 

 PART I. FINANCIAL INFORMATION

  

 Item 1. Financial Statements (unaudited)

  

 AXT, INC.

 CONDENSED CONSOLIDATED BALANCE SHEETS

 (Unaudited, in thousands, except per share data)

  

 
    March 31,
    December 31,
  

   2026
    2025
  

         

 ASSETS
         

 Current assets:
         

 Cash and cash equivalents
  $41,769  $120,266 

 Restricted cash
   16,100   8,100 

 Short-term investments
   65,375   — 

 Accounts receivable, net of allowances for credit losses of $164 and $164 as of March 31, 2026 and December 31, 2025
   32,016   26,849 

 Inventories
   90,168   81,651 

 Prepaid expenses and other current assets
   8,347   9,690 

 Total current assets
   253,775   246,556 

 Property, plant and equipment, net
   164,622   161,860 

 Operating lease right-of-use assets
   1,854   1,982 

 Other assets
   24,347   23,353 

 Total assets
  $444,598  $433,751 

 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
         

 Current liabilities:
         

 Accounts payable
  $16,141  $12,947 

 Accrued liabilities
   12,864   14,798 

 Short-term loans
   68,871   62,796 

 Total current liabilities
   97,876   90,541 

 Noncurrent operating lease liabilities
   1,309   1,441 

 Other long-term liabilities
   8,447   7,138 

 Total liabilities
   107,632   99,120 

 Commitments and contingencies (Note 12)
           

 Redeemable noncontrolling interests (Note 18)
   38,516   38,056 

 Stockholders’ equity:
         

 Preferred stock Series A, $0.001 par value; 2,000 shares authorized; 883 shares issued and outstanding as of March 31, 2026 and December 31, 2025 (Liquidation preference of $8,273 and $8,229 as of March 31, 2026 and December 31, 2025)
   3,532   3,532 

 Common stock, $0.001 par value; 70,000 shares authorized; 55,579 and 55,237 shares issued and outstanding as of March 31, 2026 and December 31, 2025
   56   55 

 Additional paid-in capital
   342,434   339,922 

 Accumulated deficit
   (66,544)  (64,924)

 Accumulated other comprehensive loss
   (4,604)  (5,295)

 Total AXT, Inc. stockholders’ equity
   274,874   273,290 

 Noncontrolling interests
   23,576   23,285 

 Total stockholders’ equity
   298,450   296,575 

 Total liabilities, redeemable noncontrolling interests and stockholders’ equity
  $444,598  $433,751 

 

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 3
 

 
 
 
 
 Table of Contents
 

 

 

 

  

 
  
 

 AXT, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited, in thousands, except per share data)

  

 
 
 
 
  
  
 Three Months Ended
 
  
 

 
  
  
 March 31,
 
  
 

 
  
  
 2026
 
  
  
 2025
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 Revenue
 
  
 $
 26,924
  
  
 $
 19,356
  
 

 
 Cost of revenue
 
  
  
 18,946
  
  
  
 20,597
  
 

 
 Gross profit (loss)
 
  
  
 7,978
  
  
  
 (1,241
 )
 

 
 Operating expenses:
 
  
  
  
  
  
  
  
  
 

 
 Selling, general and administrative
 
  
  
 6,551
  
  
  
 5,916
  
 

 
 Research and development
 
  
  
 3,012
  
  
  
 3,118
  
 

 
 Total operating expenses
 
  
  
 9,563
  
  
  
 9,034
  
 

 
 Loss from operations
 
  
  
 (1,585
 )
  
  
 (10,275
 )
 

 
 Interest income (expense), net
 
  
  
 101
  
  
  
 (269
 )
 

 
 Equity in income of unconsolidated joint ventures
 
  
  
 353
  
  
  
 248
  
 

 
 Other income, net
 
  
  
 76
  
  
  
 354
  
 

 
 Loss before provision for income taxes
 
  
  
 (1,055
 )
  
  
 (9,942
 )
 

 
 Provision for income taxes
 
  
  
 430
  
  
  
 74
  
 

 
 Net loss
 
  
  
 (1,485
 )
  
  
 (10,016
 )
 

 
 Less: Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
  
  
 (135
 )
  
  
 1,218
  
 

 
 Net loss attributable to AXT, Inc.
 
  
 $
 (1,620
 )
  
 $
 (8,798
 )
 

 
 Net loss attributable to AXT, Inc. per common share:
 
  
  
  
  
  
  
  
  
 

 
 Basic
 
  
 $
 (0.03
 )
  
 $
 (0.20
 )
 

 
 Diluted
 
  
 $
 (0.03
 )
  
 $
 (0.20
 )
 

 
 Weighted-average number of common shares outstanding:
 
  
  
  
  
  
  
  
  
 

 
 Basic
 
  
  
 53,319
  
  
  
 43,554
  
 

 
 Diluted
 
  
  
 53,319
  
  
  
 43,554
  
 

 
 
 

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 4
 

 
 
 
 
 Table of Contents
 

 

 

 

  

 
  
 

 AXT, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 (Unaudited, in thousands)

  

 
 
 
 
  
  
 Three Months Ended
 
  
 

 
  
  
 March 31,
 
  
 

 
  
  
 2026
 
  
  
 2025
 
  
 

 
  
  
  
  
  
  
  
  
  
 

 
 Net loss
 
  
 $
 (1,485
 )
  
 $
 (10,016
 )
 

 
 Other comprehensive income, net of tax:
 
  
  
  
  
  
  
  
  
 

 
 Change in foreign currency translation income, net of tax
 
  
  
 1,447
  
  
  
 537
  
 

 
 Change in unrealized gain on available-for-sale debt investments, net of tax
 
  
  
 (469
 )
  
  
 —
  
 

 
 Total other comprehensive income, net of tax
 
  
  
 978
  
  
  
 537
  
 

 
 Comprehensive loss
 
  
  
 (507
 )
  
  
 (9,479
 )
 

 
 Less: Comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
  
  
 (422
 )
  
  
 1,112
  
 

 
 Comprehensive loss attributable to AXT, Inc.
 
  
 $
 (929
 )
  
 $
 (8,367
 )
 

 
 
 

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 5
 

 
 
 
 
 Table of Contents
 

 

 

 

  

 
  
 

 AXT, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited, in thousands)

  

 
 
 
 
  
  
 Three Months Ended
 
  
 

 
  
  
 March 31,
 
  
 

 
  
  
 2026
 
  
  
 2025
 
  
 

 
 Cash flows from operating activities:
 
  
  
  
  
  
  
  
  
 

 
 Net loss
 
  
 $
 (1,485
 )
  
 $
 (10,016
 )
 

 
 Adjustments to reconcile net loss to net cash used in operating activities:
 
  
  
  
  
  
  
  
  
 

 
 Depreciation and amortization
 
  
  
 2,435
  
  
  
 2,223
  
 

 
 Amortization of marketable securities premium
 
  
  
 44
  
  
  
 —
  
 

 
 Stock-based compensation
 
  
  
 1,035
  
  
  
 646
  
 

 
 Gain on disposal of equipment
 
  
  
 (20
 )
  
  
 (3
 )
 

 
 Equity in income of unconsolidated joint ventures
 
  
  
 (353
 )
  
  
 (248
 )
 

 
 Deferred tax assets
 
  
  
 97
  
  
  
 (11
 )
 

 
 Changes in operating assets and liabilities:
 
  
  
  
  
  
  
  
  
 

 
 Accounts receivable
 
  
  
 (4,860
 )
  
  
 2,868
  
 

 
 Inventories
 
  
  
 (7,419
 )
  
  
 5,015
  
 

 
 Prepaid expenses and other current assets
 
  
  
 (85
 )
  
  
 4,534
  
 

 
 Other assets
 
  
  
 (512
 )
  
  
 (3,122
 )
 

 
 Accounts payable
 
  
  
 2,993
  
  
  
 (1,298
 )
 

 
 Accrued liabilities
 
  
  
 (1,742
 )
  
  
 (2,956
 )
 

 
 Other long-term liabilities
 
  
  
 (1,812
 )
  
  
 (978
 )
 

 
 Net cash used in operating activities
 
  
  
 (11,684
 )
  
  
 (3,346
 )
 

 
 Cash flows from investing activities:
 
  
  
  
  
  
  
  
  
 

 
 Purchases of property, plant and equipment
 
  
  
 (1,372
 )
  
  
 (510
 )
 

 
 Purchases of available-for-sale debt securities
 
  
  
 (65,888
 )
  
  
 —
  
 

 
 Investments in non-marketable equity investments
 
  
  
 —
  
  
  
 (276
 )
 

 
 Net cash used in investing activities
 
  
  
 (67,260
 )
  
  
 (786
 )
 

 
 Cash flows from financing activities:
 
  
  
  
  
  
  
  
  
 

 
 Proceeds from common stock options exercised
 
  
  
 1,478
  
  
  
 —
  
 

 
 Proceeds from short-term bank loans
 
  
  
 20,928
  
  
  
 13,674
  
 

 
 Payments on short-term bank loans
 
  
  
 (16,566
 )
  
  
 (9,250
 )
 

 
 Proceeds from long-term loans
 
  
  
 2,897
  
  
  
 2,755
  
 

 
 Payments on long-term loans
 
  
  
 (743
 )
  
  
 (297
 )
 

 
 Net cash provided by financing activities
 
  
  
 7,994
  
  
  
 6,882
  
 

 
 Effect of exchange rate changes on cash, restricted cash and cash equivalents
 
  
  
 453
  
  
  
 1,623
  
 

 
 Net decrease in cash, restricted cash and cash equivalents
 
  
  
 (70,497
 )
  
  
 4,373
  
 

 
 Cash, restricted cash and cash equivalents at the beginning of the year
 
  
  
 128,366
  
  
  
 33,811
  
 

 
 Cash, restricted cash and cash equivalents at the end of the period
 
  
 $
 57,869
  
  
 $
 38,184
  
 

 
 Supplemental disclosure of non-cash flow information:
 
  
  
  
  
  
  
  
  
 

 
 Notes receivables paid to purchase fixed assets
 
  
 $
 1,519
  
  
 $
 1,165
  
 

 
 Consideration payable in connection with construction in progress, included in accrued liabilities
 
  
 $
 137
  
  
 $
 —
  
 

 
 
 

  

 See accompanying notes to condensed consolidated financial statements.

  

 
 
 6
 

 
 
 
 
 Table of Contents
 

 

 

 

  

 AXT, INC.

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited)

  

 
  
 

 
 Note 1. Basis of Presentation

  

 The accompanying condensed consolidated financial statements of AXT, Inc., a Delaware corporation (“AXT,” the “Company,” “we,” “us,” and “our” refer to AXT, Inc. and all of its consolidated subsidiaries) are unaudited, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, this interim quarterly financial report does not include all disclosures required by U.S. GAAP for complete consolidated financial statements. In the opinion of our management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, considered necessary to present fairly the financial position, results of operations and cash flows of the Company for all periods presented.

  

 Our management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with U.S. GAAP. Such estimates and assumptions are based on historical experience, known trends and events and various other factors that management believes to be reasonable under the circumstances. These estimates and assumptions may change as new events occur and additional information is obtained. Actual results could differ materially from those estimates.

  

 The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected in the future or for the full fiscal year. It is recommended that these condensed consolidated financial statements be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2026.

  

 The condensed consolidated financial statements include the accounts of AXT and our consolidated subsidiaries, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), AXT-Tongmei, Inc. (“AXT-Tongmei”), Baoding Tongmei Xtal Technology Co., Ltd. (“Baoding Tongmei”), ChaoYang Tongmei Xtal Technology Co., Ltd. (“ChaoYang Tongmei”), ChaoYang LiMei Semiconductor Technology Co., Ltd. (“ChaoYang LiMei”), ChaoYang XinMei High Purity Semiconductor Materials Co., Ltd. (“ChaoYang XinMei”), Nanjing JinMei Gallium Co., Ltd. (“JinMei”), ChaoYang JinMei Gallium Ltd. (“ChaoYang JinMei”), ChaoYang ShuoMei High Purity Semiconductor Materials Co., Ltd. (“ChaoYang ShuoMei”), MaAnShan JinMei Gallium Ltd., (“MaAnShan JinMei”) and Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). All significant inter‑company accounts and transactions have been eliminated. Investments in business entities in which we do not have controlling interests, but have the ability to exercise significant influence over operating and financial policies (generally 20-50% ownership), are accounted for by the equity method. As of March 31, 2026 and December 31, 2025, we have three companies accounted for by the equity method. For the majority-owned subsidiaries that we consolidate, we reflect the portion we do not own as either noncontrolling interests in stockholder’s equity or as redeemable noncontrolling interests in temporary equity on our condensed consolidated balance sheets and in our condensed consolidated statements of operations.

  

 There have been no material changes to the Company’s basis of consolidation, significant accounting policies, or the composition of its consolidated subsidiaries and equity method investments from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

 
 
 
 
 7
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 
 
 
  
 

 
 Note 2. Investments and Fair Value Measurements

  

 Our investments consist of instruments with original maturities of more than three months. As of March 31, 2026 and December 31, 2025, our cash and debt investments are classified as follows (in thousands):

  

 
    March 31, 2026
    December 31, 2025
  

       Gross
    Gross
            Gross
    Gross
      

   Amortized
    Unrealized
    Unrealized
    Fair
    Amortized
    Unrealized
    Unrealized
    Fair
  

   Cost
    Gains
    (Losses)
    Value
    Cost
    Gain
    (Loss)
    Value
  

 Classified as:
                                 

 Cash, restricted cash and cash equivalents
  $57,869  $—  $—  $57,869  $128,366  $—  $—  $128,366 

 Investments (available-for-sale):
                                 

 Certificates of deposit 1
   7,880      (26)  7,854   —   —   —   — 

 Corporate bonds
   57,964   2   (445)  57,521   —   —   —   — 

 Corporate equity securities
               —   —   —   — 

 Total cash, restricted cash, cash equivalents and investments
  $123,713  $2  $(471) $123,244  $128,366  $—  $—  $128,366 

 Contractual maturities on investments:
                                 

 Due within 1 year 2
  $5,040          $5,030  $—          $— 

 Due after 1 through 5 years 2
   60,804           60,345   —           — 

  $65,844          $65,375  $—          $— 

 
  

 1.
 Certificates of deposit with original maturities of more than three months.
 

 2.
 Classified as “Short-term investments” in our condensed consolidated balance sheets.
 

  

 We manage our debt investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. Short-term investments are classified as current assets based on their contractual maturities or the Company's ability and intent to liquidate the investments within the next twelve months to fund the expansion of its production capacity.

  

 
 
 
 
 8
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 
  
 The following table summarizes the fair value and gross unrealized losses that do not have an allowance for credit losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2026 (in thousands):

  

 
    In Loss Position
    In Loss Position
    Total In
  

   < 12 months
    > 12 months
    Loss Position
  

       Gross
        Gross
        Gross
  

   Fair
    Unrealized
    Fair
    Unrealized
    Fair
    Unrealized
  

 As of March 31, 2026
   Value
    (Losses)
    Value
    (Losses)
    Value
    (Losses)
  

 Investments:
                         

 Certificates of deposit
  $7,854  $(26) $—  $—  $7,854  $(26)

 Corporate bonds
   52,117   (445)  —   —   52,117   (445)

 Total in loss position
  $59,971  $(471) $—  $—  $59,971  $(471)

 
  

 Restricted Cash 

  

 We maintain restricted cash in connection with cash balances temporarily restricted for regular business operations. These balances have been excluded from the Company’s cash balance. As of March 31, 2026 and December 31, 2025, $16.1 million and $8.1 million were included in restricted cash in our condensed consolidated balance sheets, respectively. The increase in restricted cash was primarily attributable to additional deposits pledged as collateral in connection with borrowings by the Company’s subsidiaries from PRC banks.

  

 Investments in Privately-held Raw Material Companies

  

 We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 7). The investment balances for the non-consolidated companies are accounted for under the equity method, included in “Other assets” in the condensed consolidated balance sheets, totaled $15.5 million and $15.0 million as of March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, there were three companies accounted for under the equity method. There were no impairment charges for these investments during the three months ended March 31, 2026 and 2025.

  

 Fair Value Measurements

  

 We invest primarily in certificates of deposits, corporate bonds and notes, government securities and money market accounts. We review our debt investment portfolio for credit loss at least quarterly or when there are changes in credit risk or other potential valuation concerns. As of March 31, 2026 and December 31, 2025, the total unrealized loss, net of tax, included in accumulated other comprehensive income was immaterial. We believe it is probable the principal and interest will be collected in accordance with the contractual terms, and the unrealized loss on these securities was due to normal market fluctuations, and not due to increased credit risk or other valuation concerns. ASC 820, Fair Value Measurements and Disclosures, establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily- available, observable pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term debt investments.

  

 
 
 
 
 9
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 
  
 The type of instrument valued based on quoted market prices in active markets includes our money market funds, which are generally classified within Level 1 of the fair value hierarchy. We classify our available-for-sale debt securities, including certificates of deposit and corporate bonds, as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency.

  

 We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with U.S. GAAP. At quarter end, any foreign currency hedges not settled are netted in “Accrued liabilities” on the condensed consolidated balance sheets and classified as Level 3 assets and liabilities. As of March 31, 2026, the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact on the condensed consolidated results.

  

 There were no changes in valuation techniques or related inputs in the three months ended March 31, 2026. There have been no transfers between fair value measurements levels during the three months ended March 31, 2026. 

  

 Items Measured at Fair Value on a Nonrecurring Basis

  

 Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by the equity method (see Note 7). We did not record any other-than-temporary impairment charges for these investments during the three months ended March 31, 2026 and 2025, respectively. 

 
 
  
 

 
 Note 3. Inventories

  

 The components of inventories are summarized below (in thousands):

  

 
 
 
 
  
  
 March 31,
 
  
  
 December 31,
 
  
 

 
  
  
 2026
 
  
  
 2025
 
  
 

 
 Inventories:
 
  
  
  
  
  
  
  
  
 

 
 Raw materials
 
  
 $
 25,975
  
  
 $
 24,105
  
 

 
 Work in process
 
  
  
 60,027
  
  
  
 53,665
  
 

 
 Finished goods
 
  
  
 4,166
  
  
  
 3,881
  
 

 
  
  
 $
 90,168
  
  
 $
 81,651
  
 

 
 
 
  

 As of March 31, 2026 and December 31, 2025, carrying values of inventories were net of inventory reserves of $29.8 million and $28.4 million, respectively, for excess and obsolete inventory and $71,000 and $180,000, respectively, for lower of cost or net realizable value reserves.

 
 
  
 

 
 Note 4. Property, Plant and Equipment, Net

  

 The components of our property, plant and equipment are summarized below (in thousands):

  

 
    March 31,
    December 31,
  

   2026
    2025
  

 Property, plant and equipment:
         

 Machinery and equipment, at cost
  $71,379  $69,909 

 Less: accumulated depreciation and amortization
   (48,174)  (47,028)

 Building, at cost
   147,944   145,952 

 Less: accumulated depreciation and amortization
   (33,050)  (31,577)

 Leasehold improvements, at cost
   8,262   8,112 

 Less: accumulated depreciation and amortization
   (7,162)  (6,981)

 Construction in progress
   25,423   23,473 

  $164,622  $161,860 

 
  

 
 
 
 
 10
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 
  
 As of March 31, 2026, the balance of construction in progress was $25.4 million, of which $18.7 million was related to our buildings in our new Dingxing and Kazuo locations, $1.4 million was for manufacturing equipment purchases not yet placed in service and $5.3 million was for construction in progress for our other consolidated subsidiaries. As of December 31, 2025, the balance of construction in progress was $23.5 million, of which $18.3 million was related to our buildings in our Dingxing and Kazuo locations, $1.3 million was for manufacturing equipment purchases not yet placed in service and $3.8 million was for our construction in progress for our other consolidated subsidiaries. 

 
 
  
 

 
 Note 5. Accrued Liabilities

  

 The components of accrued liabilities are summarized below (in thousands):

  

 
    March 31,
    December 31,
  

   2026
    2025
  

 Accrued compensation and related charges
  $3,550  $5,090 

 Preferred stock dividends payable
   2,901   2,901 

 Payable in connection with construction in progress
   1,379   1,676 

 Advances from customers
   894   103 

 Accrued income taxes
   761   841 

 Current portion of operating lease liabilities
   593   579 

 Accrued professional services
   467   1,023 

 Other tax payable
   464   494 

 Accrued product warranty
   439   411 

 Other personnel-related costs
   289   276 

 Accrual for sales returns
   48   48 

 Other accrued liabilities
   1,079   1,356 

  $12,864  $14,798 

 
  

 
 
  
 

 
 Note 6. Related Party Transactions

  

 In September 2021 and October 2021, our consolidated subsidiary, ChaoYang XinMei, received funding from a minority investor of $0.9 million and $1.0 million, respectively. As of December 31, 2021, $1.9 million was included in short-term loan from noncontrolling interest in our condensed consolidated balance sheets. In December 2021 and January 2022, the same subsidiary received funding from Tongmei of $1.4 million and $1.4 million, respectively. In January 2022, the China local government certified this additional funding in ChaoYang XinMei as an equity investment. As a result, noncontrolling interests increased $2.2 million and redeemable noncontrolling interests increased $0.2 million. Short-term loan from noncontrolling interest decreased to $0. In April 2022, Tongmei entered into the Capital Increase Agreement with minority investors to further invest approximately $4.5 million in ChaoYang XinMei. In April 2022 and May 2022, ChaoYang XinMei received funding from Tongmei of $1.1 million and $0.8 million, respectively, as equity investments. In April 2022 and May 2022, the minority investors invested $0.7 million and $0.6 million, respectively. As a result, noncontrolling interests increased $1.4 million and redeemable noncontrolling interests increased $0.1 million. In July 2022, Tongmei and the minority investors further invested $0.8 million and $0.6 million in ChaoYang XinMei, respectively. This completed the investment obligations under the Capital Increase Agreement. As a result, noncontrolling interests increased $610,000 and redeemable noncontrolling interests increased $57,000. Tongmei’s ownership remained at 58.5% after these equity investments.

  

 In September 2022, our consolidated subsidiary, ChaoYang LiMei completed the sale of land and its attached buildings to our equity investment entity, ChaoYang KaiMei, for a total consideration of $1.5 million. In January 2023, ChaoYang KaiMei paid to ChaoYang LiMei $1.5 million. 

  

 Our Related Party Transactions Policy seeks to prohibit all conflicts of interest in transactions between related parties and us, unless they have been approved by our Board of Directors. This policy applies to all of our employees, directors, and our consolidated subsidiaries. Our executive officers retain board seats on the board of directors of the companies in which we have invested in our PRC joint ventures. See Note 7 for further details.

  

 
 
 
 
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 Note 7. Investments in Privately-Held Raw Material Companies

  

 We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business. These companies form part of our overall supply chain strategy.

  

 As of March 31, 2026, the investments are summarized below (in thousands):

  

 
    Investment Balance as of
       

   March 31,
    December 31,
   Accounting
   Ownership
  

 Company
   2026
    2025
   Method
   Percentage
  

 Nanjing JinMei Gallium Co., Ltd.
  $592  $592  Consolidated
   ** 85.5%

 ChaoYang JinMei Gallium Co., Ltd.
   1,820   1,820  Consolidated
   ** 85.5%

 Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd.
   1,346   1,346  Consolidated
   ** 85.5%

 Chao