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31 July 2008


AXT still grows despite dip in 6-inch GaAs shipments

For second-quarter 2008, substrate maker AXT Inc of Fremont, CA, USA has reported revenue of $19.9m, up 46% on $13.6m on a year ago but up only slightly on last quarter’s $19.6m.

In particular, gallium arsenide (GaAs) substrate revenue was $13.1m, up on $9.3m a year ago but down slightly from $13.7m last quarter (including 6-inch revenue dropping from $5.9m to $5.5m). This was due mainly to three issues: a US customer closing operations (resulting in an abrupt halt of shipments); a major Asian customer shutting down operations for two weeks for routine annual maintenance; and a parametric issue with 6-inch substrates for the latter customer due to a change in their application of the substrates. AXT says that it is working closely with the customer to reach a solution, and shipments of 6-inch substrates are resuming in third-quarter 2008.

Indium phosphide (InP) substrate revenue was $500,000, up slightly from $478,000 last quarter but down on $660,000 a year ago. Germanium (Ge) substrate revenue was $1.4m, flat on last quarter but up from $402,000 a year ago. Raw materials sales were $4.9m, up from $3.3m a year ago and $4m last quarter as more orders were shipped to customers to avoid transportation restrictions prior to the commencement of the Beijing Olympics.

Income from operations has risen from $1.4m a year ago and $2m last quarter to $2.3m.

“Our business continued to perform well during the second quarter, with growth at many key customers across our product lines,” says chairman and CEO Phil Yin. “We were able to meet our total quarterly revenue expectations [of $19.7-20m] and exceed our operating income target despite the issues relating to two customers of our gallium arsenide substrates,” he adds.

However, due to the impact of the foreign exchange losses and a loss on the sale of investment, net income was $0.7m, down on $2m last quarter and $1.2m a year ago.

For third-quarter 2008, AXT expects revenue to rise slightly to $20.1-20.5m due to growth in its GaAs substrate business (particularly in 6-inch, as demand remains strong) as well as continued gains in market share across the firm’s product lines. “Germanium substrates are performing very well in qualifications [for triple-junction solar cell applications] , and we expect to see further growth in this area as we ramp new and existing customers in the second half of the year,” says Yin.

See related item:

AXT’s 57% year-on-year growth driven by SI GaAs and Ge

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