Damnang
Semiconductor Engineer in Silicon Valley, AI Chip Investment Research
Aixtron and Veeco stand to benefit because indium phosphide is the real bottleneck in optical interconnect, one nothing else can replace. InP looks set to stay structurally short in both demand and supply over the next three to five years, a theme the market has not yet fully priced, which makes both equipment makers attractive. x.com x.comÂ
Aixtron's position is durable but not unconstrained, with optical lasers carrying the near-term case: it holds over 90% of InP MOCVD and every high-speed laser traces back to its reactors. Its share will likely erode toward 65-75% by decade-end as Veeco improves and Chinese buyers diversify, manageable if the InP tool market doubles or triples. The bigger near-term limit is capacity, as Aixtron reallocates existing lines rather than adding aggressively. 800V DC power demand looks further off. … Show more
Aixtron's indium phosphide business is grossly under-modeled, as MOCVD machines may become the gating factor for scaling co-packaged optics. It holds 90%+ share in InP, a rare monopoly in optics and power chips. GaN and SiC markets will reach tens of billions and capacity will run out once new data centers adopt 800V DC, so even a fraction of that in MOCVD demand means billions of revenue for a $6 billion company. CPO and 800V DC each have three ramp phases, each half an order larger. x.comÂ
Aixtron is not a buy at the current price because the stock is expensive. x.comÂ
Aixtron is a decent proxy play on photonics because it basically has a monopoly on its indium phosphide equipment, while the photonics names are capacity constrained and InP remains an ongoing bottleneck. x.comÂ
Veeco is a top beneficiary of AI data centers' shift to photonics, as its tools make the indium phosphide lasers inside 800G and 1.6T transceivers and equipment orders lead the chip cycle. It disclosed over $250M of orders for its IBD, MOCVD and WaferEtch systems, shipping from late 2026 and ramping through 2027. Its laser annealing is critical to yields for 3nm and 2nm logic and HBM at makers like TSMC and Micron, and its pending Axcelis merger should add synergies. x.comÂ
Aixtron and Veeco will probably never see their old highs again, because semiconductor equipment makers look stretched above about 11x price-to-sales. Fifteen years of software multiple expansion have conditioned investors to accept high multiples, but equipment makers have very different margin structures. The broader bull market is still far from over even though fundamentals look overheated, with momentum doing the heavy lifting. x.comÂ
Veeco is an AI pick-and-shovel play ramping from a 2025 trough, because its laser spike annealing tools are tool-of-record for gate-all-around transistors at TSMC, Intel and Samsung. Requalification is costly, so those wins lock in demand as fabs ramp, and its annealing market should grow from ~$600 million to $1 billion-plus. Ion beam deposition, HBM packaging and the Axcelis merger add growth, with FY2026 guidance of $740-800 million revenue. The key risk is China's SAMR blocking the merger. … Show more
Aixtron's faster reactor shipments should lift Nynomic's LayTec revenue in H2 2026, not just 2027. Aixtron's Q3 revenue rose 54%, with Q4 guided higher; LayTec metrology is standard on its optoelectronics and power tools. The slower switch to 6-inch InP wafers means more reactors per chip volume. Aixtron expects the early-stage demand cycle to last until 2030. Framework-agreement call-offs leave much of this demand out of Nynomic's backlog; its estimated 2026 EV/sales is about 1.44x. x.comÂ
Veeco is benefiting as InP laser capacity expansion turns into actual upstream equipment orders. A global optical and photonics company ordered its LUMINA+ MOCVD system to make InP lasers for datacom, after a series of recent orders, as major optical suppliers expand InP laser capacity. LightCounting, cited by Veeco, expects optical transceiver sales to reach $39B in 2026, up 53%. This is not proof of a severe InP laser shortage, but suppliers are adding capacity ahead of a potential bottleneck. … Show more
Aixtron is a mispriced European AI photonics play: it holds over 90% of the market for the MOCVD reactors that grow the indium phosphide crystals used in AI data center lasers, so every laser in Nvidia or Broadcom optical transceivers starts in its machines. Customers include Coherent, Lumentum, Nokia/Infinera and SMART Photonics, and laser lead times stretch past 2027. Despite a significant re-rating, it trades at 38x EV/EBITDA versus 84x for peers like BESI. x.comÂ
