External foundries that grow compound-semiconductor epitaxial layers on gallium arsenide and indium phosphide wafers for optical and high-frequency chips. They sit upstream of laser source production, and the balance tightens when demand for epitaxial wafers outruns the epi houses' installed growth capacity.
A sustained tight read means demand for outsourced III-V epitaxy is running ahead of installed capacity at the merchant epi foundries, so laser-diode makers without in-house epitaxy queue for epi-wafer supply and prices for gallium arsenide and indium phosphide epi wafers firm. The read leans on epi-house monthly revenue, a proxy for how hard that capacity is being worked, not a direct measure of wafer throughput. Relief arrives only as new epitaxy capacity qualifies and ramps, over quarters rather than a single order cycle.