Grinm Advanced Materials Co Ltd

A-share indium phosphide concept stocks rallied collectively on August 6. Bojie Co., Yunnan Germanium each hit their third consecutive daily limit up, Youyan New Materials rose for a second straight day, and Oulai New Materials, Xingye Technology, Suqian Liansheng, and Haite High-Tech were among the top gainers. The catalyst was Nvidia's forecast that global indium phosphide wafer demand will surge roughly 20-fold from 2026 to 2030. However, expanding indium phosphide substrate production is extremely difficult: a single production line requires over 1.2 billion yuan in investment, and the expansion cycle lasts three to five years, meaning new supply will lag far behind demand growth. Indium phosphide is a classic III-V compound semiconductor material with strong suitability for optical communications and high-speed electronic devices. The explosion in AI computing power demand is directly driving continuous expansion of its market size. The supply side faces rigid constraints. Indium is a rare dispersed non-ferrous metal, with about 90 percent of primary indium coming as a byproduct of zinc smelting. China holds the world's largest indium reserves, with proven reserves of about 20,000 tonnes, accounting for 75 percent of global recoverable reserves. China has also imposed export controls on indium phosphide and capped annual indium exports at no more than 30 percent of annual output. Multiple brokerages believe that upstream indium resources are subject to the dual constraints of being a byproduct and under export controls, and that indium phosphide substrates, as the most upstream manufacturing segment of the supply chain, are currently the most critical bottleneck in the AI optical module chain. The supply-demand imbalance is unlikely to ease in the short term, and upstream scarce resources as well as companies with large-size substrate mass production capabilities will benefit over the long term.

Youyan New Materials has announced two proposals to expand high-end target production, with total investment estimated at around 1.5 billion yuan. The second-phase expansion of high-purity sputtering targets for integrated circuits involves an investment of 486 million yuan. It will add annual production capacity of 30,000 units of high-end targets such as high-purity copper-based, tantalum, and titanium targets on reserved land at the existing plant in Dezhou, Shandong. Construction is scheduled to start in September 2026 and begin production in September 2027. Another project, focused on high-end target supply capability and industrialization of specialty targets, is expected to invest 988 million yuan. It will build new facilities covering about 140,000 square meters of land and adding around 100,000 square meters of floor space. The company will expedite the feasibility study and approval process. The company stated that its existing copper-based and tantalum-based target capacity at the Dezhou base is nearly saturated, and a significant capacity gap is expected. This expansion focuses on core materials such as high-purity copper and copper alloy targets and tantalum targets for advanced processes at 7 nanometers and below, aiming to fill domestic gaps in high-end products. As of the market close that day, Youyan New Materials hit the 10 percent daily limit down, closing at 35.87 yuan per share.