Applied Optoelectronics plans $94.1M cleanroom build

Applied Optoelectronics, Inc. has signed a design-build agreement with LCC3 Solution Inc. for a major expansion of its manufacturing capacity in Houston, Texas.

Rhea-AI Filing Summary

Applied Optoelectronics, Inc. has signed a design-build agreement with LCC3 Solution Inc. for a major expansion of its manufacturing capacity in Houston, Texas. The project covers design and construction of about 195,591 square feet of ISO Class 6 cleanroom space, plus office and logistics areas, for a total contract amount of approximately $94.1 million.

The contract runs on monthly progress payments with a 10% retainage held until final completion. It includes liquidated damages for delays capped at $4.9 million, along with potential schedule and performance incentives totaling up to $15.8 million. Substantial completion is targeted for January 10, 2027.

Insights

Semiconductor manufacturing & capex analyst

Large capex project to expand cleanroom capacity with structured risk-sharing.

Applied Optoelectronics is committing about $94.1 million to build extensive new ISO Class 6 cleanroom, office, and logistics space in Houston. This is a sizable capital project aimed at expanding fabrication and related operations, using a single design-build contractor for end-to-end delivery.

The agreement structures payments on progress with 10% retainage and includes liquidated damages for delays capped at $4.9 million. It also outlines schedule and performance incentives that could total up to $15.8 million. These terms share execution risk and reward between the company and contractor.

The targeted Substantial Completion date of January 10, 2027 provides a clear timeline for when the new capacity is expected to be available. Actual financial impact will depend on project execution and how effectively the added space is utilized once operational.

8-K Event Classification

3 items: 1.01, 2.03, 9.01

3 items

Item 1.01 Entry into a Material Definitive Agreement Business

The company signed a significant contract such as a merger agreement, credit facility, or major partnership.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial

The company incurred a new significant debt or off-balance-sheet obligation.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, or exhibit attachments filed with this report.

Key Figures

Total contract amount: $94.1 million Cleanroom area: 195,591 square feet Office space: 36,500 square feet +6 more

9 metrics

Total contract amount $94.1 million Design-build agreement for OMD 3 (FAB4) project

Cleanroom area 195,591 square feet ISO Class 6-certified cleanroom space in Houston

Office space 36,500 square feet Office area included in the project scope

Logistics and testing space 73,780 square feet Shipping, testing, and inventory operations space

Liquidated damages cap $4.9 million Maximum aggregate liquidated damages for delays

Schedule-based incentives $6.0 million Incentives tied to timely achievement of key milestones

Cleanroom validation incentive $4.9 million Performance-based incentive for validation testing

Warranty performance incentive $4.9 million Performance-based incentive tied to warranty performance

Target substantial completion January 10, 2027 Planned Substantial Completion date for the project

Key Terms

Design-Build Agreement, ISO Class 6-certified cleanroom, liquidated damages, Substantial Completion, +1 more

5 terms

Design-Build Agreement financial

"entered into a Standard Form of Agreement Between Owner and Design-Builder ... (collectively, the “Design-Build Agreement”)"

ISO Class 6-certified cleanroom technical

"approximately 195,591 square feet of ISO Class 6-certified cleanroom space"

liquidated damages financial

"provides for liquidated damages in the event of delays in achieving specified key milestones"

A pre-agreed sum that one party must pay if it breaks a contract, chosen so both sides avoid arguing over the exact amount of loss later. Think of it like a fixed cancellation fee for a reservation: it makes potential costs predictable. For investors, liquidated damages matter because they create a known financial liability that can affect cash flow, contract risk, balance-sheet exposure and deal valuations.

Substantial Completion regulatory

"The Project has a targeted Substantial Completion date of January 10, 2027."

Substantial completion is the point when a construction project or asset is finished enough to be used for its intended purpose, even though minor fixes or unfinished items remain. For investors this milestone often triggers major events like final payments, insurance/ liability shifts, the start of revenue generation, or release of retained funds—so it signals reduced construction risk and a move toward cash flow and returns, much like handing over car keys when the vehicle runs despite small scratches.

retainage financial

"Payments ... are generally based on progress, with 10% retainage withheld from each pay application"

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What agreement did Applied Optoelectronics (AAOI) enter into on June 25, 2026?

Applied Optoelectronics entered a Standard Form of Agreement Between Owner and Design-Builder with LCC3 Solution Inc. The contract covers design and construction of a large cleanroom, office, and logistics facility in Houston, using a design-build delivery model.

What is the total contract value of AAOI’s new cleanroom project?

The project has a total contract amount of approximately $94.1 million. This figure includes design, engineering, construction, testing, commissioning, and related professional services for the new cleanroom, office, and operations space described in the agreement.

How large is the new cleanroom facility in AAOI’s Houston project?

The project includes about 195,591 square feet of ISO Class 6-certified cleanroom space. It also adds 36,500 square feet of office space and 73,780 square feet for shipping, testing, and inventory operations to support manufacturing activities.

What incentives and penalties are included in AAOI’s design-build contract?

The agreement caps liquidated damages at $4.9 million for delays and offers schedule-based incentives up to $6.0 million. It also includes performance incentives up to $4.9 million each for cleanroom validation and warranty performance, subject to contract conditions.

When is AAOI’s new cleanroom project expected to reach substantial completion?

The project targets a Substantial Completion date of January 10, 2027. This date marks when the facility is expected to be largely finished and usable, subject to final acceptance procedures and completion of any remaining punch list items.

How will payments be made under AAOI’s design-build agreement?

Payments are based on monthly progress applications, with 10% retainage withheld from each invoice. The company must pay within 15 days after receiving a properly completed pay application, and retainage is released after final completion and acceptance.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 07/01/2026 - 04:06 PM Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 25, 2026

Applied Optoelectronics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-36083	76-0533927
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

13139 Jess Pirtle Blvd.
Sugar Land, Texas 77478

(Address of principal executive offices and zip code)

(281) 295-1800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par value $0.001	AAOI	NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 1.01 Entry into a Material Definitive Agreement.

On June 25, 2026, Applied Optoelectronics, Inc. (the “Company”) entered into a Standard Form of Agreement Between Owner and Design-Builder (AIA Document A141–2024), together with the related exhibits package (collectively, the “Design-Build Agreement”), with LCC3 Solution Inc. (the “Design-Builder”). Pursuant to the Design-Build Agreement, the Design-Builder will provide design-build services for the Company’s OMD 3 (FAB4) cleanroom construction project located at 11555 North Spectrum Blvd., Houston, Texas 77047 (the “Project”).

The Project consists of the design-build of approximately 195,591 square feet of ISO Class 6-certified cleanroom space, 36,500 square feet of office space, and 73,780 square feet of space designated for shipping and receiving, quality and reliability testing, and inventory operations. The scope of the Project includes design, engineering, procurement, construction, testing, commissioning, and related closeout activities.

The total contract amount for the Project is approximately $94.1 million, inclusive of design, construction, and related professional services, as set forth in the Design-Build Agreement. Payments under the Design-Build Agreement are generally based on progress, with 10% retainage withheld from each pay application and released upon final completion, subject to final acceptance and completion of punch list items. Pay applications are submitted monthly, and payments are due within 15 days after the Company’s receipt of a properly completed pay application.

The Design-Build Agreement provides for liquidated damages in the event of delays in achieving specified key milestones or substantial completion, subject to contractual adjustments and conditions, with aggregate liquidated damages capped at $4.9 million.

The Design-Build Agreement also provides that the Design-Builder may be eligible to earn certain incentives, subject to the terms and conditions set forth therein, including (i) schedule-based incentives tied to the timely achievement of specified key milestones of up to $6.0 million and (ii) performance-based incentives, including up to $4.9 million tied to cleanroom validation testing and up to $4.9 million tied to warranty performance.

The Project has a targeted Substantial Completion date of January 10, 2027.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information contained in Item 1.01 of this Current Report on Form 8-K with respect to the Lease Agreement is incorporated by reference into Item 2.03.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1	Standard Form of Agreement Between Owner and Design-Builder (AIA Document A141–2024), executed as of June 25, 2026, by and between Applied Optoelectronics, Inc. and LCC3 Solution Inc.
10.2*	Exhibits to Design-Build Contract Between Owner and Design-Builder, executed as of June 25, 2026
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).
*	Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 1, 2026	APPLIED OPTOELECTRONICS, INC.
	By:	/s/ David C. Kuo
	Name	David C. Kuo
	Title:	Senior Vice President and Chief Legal Officer

3

Filing Exhibits & Attachments

5 documents

Agreements & Contracts

• EX-10.1 STANDARD FORM OF AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER 430.6 KB
• EX-10.2 EXHIBITS TO DESIGN-BUILD CONTRACT 224.7 KB

Other Documents

• EX-101 XBRL SCHEMA FILE 2.9 KB
• EX-101 XBRL LABEL FILE 33.4 KB
• EX-101 XBRL PRESENTATION FILE 21.8 KB