Yunnan Germanium (002428.SZ) reported first-half 2026 revenue of 732 million yuan ($109.1 million), up 38.21% from a year earlier, while net profit attributable to shareholders rose 235.31% to 74.27 million yuan ($11.1 million). Non-GAAP net profit increased 770.09% to 66.9 million yuan ($10.0 million). Compound semiconductor revenue accounted for 19.42% of total revenue and grew 154.57% year-on-year, supported by AI computing and data-center demand for indium phosphide, or InP, wafers used in high-speed optical communications. Yunnan Germanium produced 91,800 two-inch to four-inch InP wafers during the period. Its controlling subsidiary Yunnan Xinyao has also signed a tax-inclusive InP substrate supply contract worth 570 million yuan to 855 million yuan ($85.0 million to $127.4 million), with performance scheduled from August 1, 2026, through December 31, 2027. Shanghai Metals Market said four-inch InP substrate prices reached 6,500 yuan to 7,500 yuan per wafer as of August 27, about 73% above the start of the year, while refined indium averaged 5,350 yuan per kilogram, roughly 80% above 2,980 yuan. The market is highly concentrated, with Sumitomo Electric, AXT and JX Metals holding more than 90% combined, while new entrants face significant certification barriers. Yole Group expects the compound semiconductor substrate and epitaxial wafer market to approach $5.2 billion by 2031, and InP substrates to grow at more than 18% annually from 2026 to 2031. Yunnan Germanium cautioned that its InP business remains relatively small and its effect on company performance is uncertain.