2 August 2010


AXT’s profit doubles as revenue rises 25% in Q2 to $23.2m

For second-quarter 2010, AXT Inc of Fremont, CA, USA, which manufactures gallium arsenide, indium phosphide and germanium substrate and raw materials, has reported revenue of $23.2m, up 25% on $18.6m last quarter and up 77% on $13.1m a year ago.

“The demand for gallium arsenide substrates continues to grow at a healthy pace, fueled by strong sales of wireless devices and the increasing worldwide adoption and investment into LED technology in many applications,” says CEO Morris Young. Total gallium arsenide (GaAs) substrate revenue was $16.2m, up 21% on $13.4m last quarter and up 60% on $10.1m a year ago. “As a result, we are enjoying solid increases in our sales of semi-insulating and semi-conducting gallium arsenide substrates and strong increases in the sales of gallium raw material,” adds Young. Raw materials sales were $4.2m, up 56% on $2.7m last quarter and more than quadruple the $1m a year ago.

“In addition, the demand for our indium phosphide substrates is also growing, reaching nearly 5% of our total revenues in the second quarter,” says Young. InP substrate revenue was $1.1m, up 26% on $875,000 last quarter and up 61% on $684,000 a year ago.

Though up 34% on $1.22m a year ago, germanium (Ge) substrate revenue of $1.6m is down slightly from $1.64m last quarter. However, Young comments that AXT expects to see increasing contribution from germanium substrates in second-half 2010.

Gross margin was 36.8%, up from 36.1% last quarter and almost double the 19.3% a year ago. Operating expenses have been cut slightly from $3.8m a year ago and $3.9m last quarter to $3.6m. Compared with an operating loss of $1.3m a year ago, income from operations has risen from $2.9m last quarter to $5m.

Compared with a net loss of $1.3m a year ago, net income has risen from $2.6m last quarter to $4.3m. However, including a $1.2m sales tax refund, net income more than doubled to $5.5m.

“We believe that the trends fueling growth in all of these areas [GaAs, InP, Ge and raw materials] will create meaningful opportunity for AXT and we are strongly positioned to benefit given our raw material access and attractive cost-structure,” says Young.

For third-quarter 2010, AXT expects revenue to rise about 8% to $24.7–25.5m.

See related items:

AXT’s GaAs sales drive growth of 4.5% in Q1

AXT’s Q4/2009 sales up year-on-year

AXT’s opto-related revenues to grow at 15-20% annually, forecasts analysts

AXT grows 28% as end markets continue recovery

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