Gaetano (crux_capital_) — the market sold off the wrong optical name: his bull case for why AXTI's China selloff is negotiating leverage, not a real ban
Gaetano (crux_capital_) — the market sold off the wrong optical name: his bull case for why AXTI's China selloff is negotiating leverage, not a real ban
A specific, falsifiable bull case on why AXTI diverged from the rest of the optical complex on the same China headline: reads the drop as US negotiating leverage toward easing China's InP permit constraint rather than a real ban. Directly bears on the desk's own open question — AXTI's derate verification has sat unresolved for weeks — with a mechanism the tape can eventually confirm or kill.
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Gaetano · (@crux_capital_)
Why this might end up being bullish $AXTI ... My base case is that this is negotiating leverage. The U.S. needs an easing on the InP permit constraint. The Trump admin is aware of this. They've talked about it and invested towards it. So if this leverage is successful in talks with China, the end result might be that China eases InP permit restrictions to the US. This would unlock a massive market that AXT does not currently have access to — they currently get some permits to ship to U.S. companies based outside of the U.S., but that is a much smaller market than the mainland. NFA of course. If this escalates into a real ban, China might retaliate. But that would have significant ramifications for the U.S. buildout.
Why it's worth your time
A specific, falsifiable bull case on why AXTI diverged from the rest of the optical complex on the same China headline: reads the drop as US negotiating leverage toward easing China's InP permit constraint rather than a real ban. Directly bears on the desk's own open question — AXTI's derate verification has sat unresolved for weeks — with a mechanism the tape can eventually confirm or kill.
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