Yesterday @PhotonCap and I arrived at the same place from opposite ends of the stack. He said he had not dug into the Japanese side yet. So here it is~. The number to start from is JX Advanced Metals (TSE: 5016). On 16 June it decided to spend up to 120 billion yen through fiscal 2030 at its Isohara and Hitachinaka plants in Ibaraki, taking InP substrate capacity to seven to ten times fiscal 2025, ramping from the second half of this fiscal year. Largest investment in the company's history. First, why jurisdiction is the whole question. AXT is the merchant name everyone reaches for, and its InP comes out of Tongmei in Beijing. China put InP on its export licence list in February 2025. The talks reportedly raised it. The licensing regime stayed. Temperature moved, mechanism did not. That narrows the question to something answerable. Who makes merchant InP substrate outside that desk? JX has been making InP substrate since the 1980s, so this is not a new entrant buying its way in. And the detail I would not skip is what came before the June decision. In fiscal 2025 alone JX approved three separate expansions worth roughly 25 billion yen. Then it decided on one nearly five times that size. Three incremental steps and then a jump is not a forecast. That is a company that has seen the order book. The quarter supports it, with a caveat I will give you first. JX is not an InP pure play. Copper smelting, sputtering targets, rolled copper foil, recycling. The company attributes the quarter to AI server demand, better selling prices, a weak yen and higher copper, and it flags lower mine output from bad weather on the resources side. So do not read the following as an InP number. Fiscal Q1 to June, IFRS: revenue 260.6 billion yen up 36.2%, operating profit 81.4 billion up 175.5%, net profit 53.1 billion up 181.3%. Against a full year operating guide of 232 billion, that is 35.1% of the year booked in a quarter that should carry 25%. And the company raised that guide on the same day, from 190 billion. The 35.1% is measured against the higher number. The second name is Sumitomo Electric (TSE: 5802), which holds the number one position in InP substrate and has presented six inch crystal growth and wafer processing. Same jurisdiction answer. Nikkei reported today that Nvidia and Sumitomo are development partners on Rubin, with an SMBC Nikko analyst saying Sumitomo product is expected to be adopted. That is an analyst view, not a company statement, and I am flagging it as such. Here is the part that keeps me honest about timing, and it comes from JX's own deck. In the same presentation the company raised its full year sales volume outlook for semiconductor targets, magnetic targets and titanium copper. It left InP substrate unchanged at plus 13 percent, and the June quarter came in at plus 8. Its own wording for InP is that it continues to improve efficiency on existing equipment. Capacity going to seven or ten times, volume plan untouched. Those are two different clocks in one document. Which is really the answer to your question. Japan is the structural answer to the merchant shortage. It is not the 2026 answer. Keep the physical scale in view too. Four inch to six inch multiplies usable area 2.25 times, and a six inch InP wafer is still roughly a quarter of the area of one 300mm silicon wafer. The layer carrying AI's light is tiny next to the layer carrying its logic, and multiplying tiny by ten still lands on small. So the honest shape of it is this. The merchant relief that does not pass through a Chinese licence desk exists, it is Japanese, it is funded, and it is late. Which gives a test rather than a call. Watch two things: the Isohara and Hitachinaka ramp dates, and whether JX lifts that plus 13 percent volume line at the half year. If the volume plan moves before the capacity does, demand arrived earlier than the company modelled. If it does not move by March, pricing power stays with whoever issues the permits, and every transceiver maker downstream is negotiating with that fact until then. Thanks for the prompt. Sources: JX Advanced Metals, decision on capital investment to expand InP substrate production capacity, 16 June 2026 JX Advanced Metals, FY2027/3 Q1 earnings release and results presentation, IFRS consolidated, 6 August 2026 China Ministry of Commerce export control listing, February 2025 Coherent FQ4 2026 earnings call, 12 August 2026 Nihon Keizai Shimbun, 14 August 2026