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8 August 2008


Aixtron orders dip 15% in Q2, but backlog still rises

Despite a further weakening of the US dollar over first-half 2008 and the current macro-economic downturn, for second-quarter 2008 deposition equipment maker Aixtron AG of Aachen, Germany has reported revenue of €65.6m, up 4.8% on Q1’s €62.6m and up 45% on €45.2m a year ago.

This is largely due to sales of compound semiconductor equipment (mainly for LED production) growing 46% from €71.8m (66% of total revenue) in first-half 2007 to €104.9m (82%) in first-half 2008. Conversely, due to suppressed capital spending of Aixtron’s NAND flash memory and DRAM production customers, silicon deposition equipment shrank 58% from €24.1m (22% of total revenue) to just €10m (8%).

In particular, in first-half 2008 the latest generation of high-capacity, higher-margin common platform compound semiconductor MOCVD systems rose to about 70% of total revenue (and 91% of orders in Q2/2008), boosted by long-term purchase orders from key LED makers such as Taiwan’s Epistar and Korea’s Samsung, especially for emerging LED-backlighting applications (with, correspondingly, 87% of total revenue coming from Asia, and just 8% from the USA and 5% from Europe). This has helped to offset the negative effect of the weakening US dollar, with gross margin holding at 39% through Q1 and Q2.

In Q2/2008, operating profit (EBIT) almost tripled to €8.9m from €3.2m last year. Net profit was up €7.4m, almost double €3.8m a year ago.

“We have worked very hard in the last few years to ensure that our products are both market-led and customer-focused in design, and that our operations become increasingly flexible and cost-efficient,” says president & CEO Paul Hyland.

Q2 order intake was €72.5m, up 44% on €50.3m a year ago but down 15% on last quarter’s €85.5m.

In particular, silicon deposition equipment orders fell 63% from €22.7m in first-half 2007 (25% of total orders) to just €8.4m (just 5%) in first-half 2008. Nevertheless, in second-half 2008, Aixtron will launch new system technology aimed at both the memory and logic markets.

Compound semiconductor equipment orders have more than doubled from €68.1m in first-half 2007 (75% of total orders) to €149.6m (95%) in first-half 2008. In particular, Aixtron says that, in first-half 2008, it received orders from new large customers from adjacent sectors, interested in participating in the growth potential of the LED market. Some silicon semiconductor manufacturers - in order to pursue a horizontal diversification strategy - have expressed interest in investing in LED equipment. Meanwhile, several Taiwanese LCD manufacturers have recently announced their aim to vertically integrate by placing direct purchase orders for MOCVD systems. Aixtron also cites LED-backlit laptops being sold by Toshiba, Fujitsu, Sony and Apple (and a six-fold increase in sales of LED backlit laptops in 2008) as a reason for LED production tools comprising 83% of Aixtron’s orders in first-half 2008 (up from 65% a year ago).

Despite the drop in orders in Q2/2008, backlog still rose by €7.8m to €165.1m (with compound semiconductors 98% of total backlog and silicon just 2%, compared to 92% and 8% a year ago). Of this backlog, nearly 80% (€128m) is due for delivery by the end of 2008. Added to the €128.2m of revenue from first- half 2008, plus $14m in spares/non-system revenue expected in second-half 2008, this makes about €270m.

The continued revenue growth in compound semiconductor equipment and strong order backlog therefore supports the management’s confidence in confirming its previous guidance (given in mid-March) for full-year 2008 revenue of €270-300m (up 26-40% on 2007’s €214.8m). So, compared to the €270m above in revenue and bookings, only a further €30m in orders for delivery in 2008 is needed to reach the upper target of €300m.

“We are on track for what will be in 2008 Aixtron’s highest-ever recorded annual revenue,” says Hyland. “We remain very positive about our medium- and long-term outlook, despite the short-term challenges the whole semiconductor industry faces [from the current macro-economic downturn],” he says. “Operationally and financially, we are as strong as we have ever been,” he adds. “This strength will allow us to continue to perform in the current challenging market environment.”

See related items:

Aixtron’s orders hit peak after doubling year-on-year

Aixtron’s revenues grow 25% in 2007

Search: Aixtron MOCVD LEDs

See: Aixtron Company Profile