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3 August 2018

Aixtron’s orders rise 20% year-on-year in first-half 2018, driven by MOCVD systems for lasers and red-orange-yellow LEDs

© Semiconductor Today Magazine / Juno PublishiPicture: Disco’s DAL7440 KABRA laser saw.

For first-half 2018, deposition equipment maker Aixtron SE of Herzogenrath, near Aachen, Germany has reported revenue of €117.6m, up 3% on first-half 2017’s €114.1m, although Q2’s €55.2m was down 12% on Q1’s €62.4m due solely to the scheduling of shipments in accordance with customers’ target delivery dates.

Revenue and order intake in first-half 2018 were driven by continued demand for AIX 2800G4 metal-organic chemical vapor deposition (MOCVD) systems for the production of red-orange-yellow (ROY) LEDs (e.g. for displays) as well as lasers such as vertical cavity surface emitting lasers (VCSELs) or edge-emitting lasers (EELs) for applications in 3D sensing and optical data transmission.

Correspondingly, on a regional basis, just 50% of revenue came from Asia (falling from 82% in first-half 2017), while Europe has leapt from just 8% to 30% and the USA from 10% to 20%.

Due to the favorable product and regional mix (aided by a positive $/€ exchange rate during Q2), gross margin has recovered from 25% in first-half 2017 (when inventories were being cleared) to 43% in first-half 2018.

Operating expenses (OpEx) in first-half 2018 were €38.7m (33% of revenue), down 26% on first-half 2017’s €52.4m (46% of revenue) which included €12.1m in write-downs related to frozen product lines as well as atomic layer deposition/chemical vapor deposition (ALD/CVD) activities for memory chip production (based at US subsidiary Aixtron Inc in Sunnyvale, CA, USA) that were divested to Eugene Technology Inc last November.

Most significantly, R&D costs have been slashed by 32% from €39.5m in first-half 2017 to €27m in first-half 2018. However, this was due mainly to the sale of the memory business and the freezing of development activities in III-V-on-silicon (TFOS) for microprocessor logic. Excluding this, R&D costs were cut organically by 6% from €28.8m (from 25% of revenue to 23%).

Compared with a loss of -€24m in first-half 2017, operating result (EBIT) improved to a profit of €12m in first-half 2018 (margin of 10% of revenue).

Compared with +€43.3m in first-half 2017, operating cash flow was -€8.5m in first-half 2018, as the +€12.5m in Q2 could not fully offset the -€21.1m from Q1, which resulted primarily from scheduled payments in connection with the sale of the ALD/CVD product line in Q4/2017. Capital expenditure (CapEx) was €4.5m (up from €3.6m in first-half 2017). Total cash flow was -€11.8m (compared with +€37m in first-half 2017).

Cash and cash equivalents at the end of June of €234.7m were hence down from €246.5m at the end of 2017 but up from €223.2m at the end of March, reflecting the operating performance including orders received in Q2.

Total order intake (including spare parts and service) has risen by 20% from first-half 2017’s €128.5m to €154.3m in first-half 2018 (with Q2’s €75.6m down 4% on Q1’s €78.6m but up 30% on €66.6m a year ago).

Equipment order backlog at the end of June was €138.3m, up 20% on €114.9m at the end of March and up 48% on €93.4m a year previously (and the highest backlog since 2011). Of this backlog, 35-45% is for laser applications.

“We continue to benefit from the stable global demand for MOCVD systems for laser applications such as VCSEL or EEL, which are particularly in demand in the field of 3D sensors or optical data transmission,” says president & executive board member Dr Felix Grawert. “Our MOCVD systems for the production of red, orange and yellow (ROY) LEDs are also in high demand, as they are indispensable for the market penetration of display technologies based on fine-pitch LEDs, mini-LEDs and in the future also micro-LEDs,” he adds. “The power electronics area could become a growing driver for Aixtron in the upcoming quarters,” believes fellow president & executive board member Dr Bernd Schulte.

Based on the results for first-half 2018 (with most order backlog due for shipment in 2018) and internal assessment of the development of demand, Aixtron expects higher revenue in second-half 2018. The firm has hence refined its full-year 2018 guidance (given in February) for revenue from €230-260m to €260m, gross margin from 35-40% to 40% and EBIT margin from 5-10% to 10%. “The positive development in order intake continued in the second quarter of this year, so we have decided to raise our order intake guidance for fiscal year 2018 [from €230-260m to €260-290m],” says Schulte. Operating cash flow is expected to be positive.

See related items:

Aixtron’s orders grow 20% in Q1, driven by MOCVD systems for lasers in 3D sensing and datacoms

Aixtron returned to annual profit in 2017 after sale of ALD/CVD product line

Aixtron enters net profit in Q3, aided by increased MOCVD demand for laser applications

Aixtron’s first-half revenue doubles year-on-year

Tags: Aixtron MOCVD

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