11 January 2022
AXT applies for IPO of subsidiary Tongmei on Shanghai’s STAR Market
AXT Inc of Fremont, CA, USA – which makes gallium arsenide (GaAs), indium phosphide (InP) and germanium (Ge) substrates and raw materials – says that its formal application to list shares of its Beijing-based Tongmei Xtal Technology Co Ltd wafer manufacturing subsidiary in an initial public offering (IPO) on the Sci-Tech innovAtion boaRd (STAR Market) has been accepted for review by the Shanghai Stock Exchange. AXT’s strategic plan to access China’s capital markets and progress to an IPO by Tongmei on the STAR Market was originally announced on 16 November 2020.
“This is a significant achievement and an important milestone for AXT,” believes CEO Morris Young. “We founded Tongmei back in 1998. Since then, it has grown into a company that is engaged in the research, development, production and sale of InP substrates, GaAs substrates, germanium substrates, pBN [pyrolytic boron nitride] and other high-purity materials, which we believe makes it an attractive offering on the STAR Market. With success in our addressed markets, strong customer traction, and a number of new applications coming to market this year and beyond, we have significant momentum building in our business,” he adds.
“If completed, the IPO will provide proceeds that will be invested in Tongmei to enable us to expand capacity to capture high-volume opportunities across our portfolio and develop new products to drive incremental growth and value from market expansion in 5G, data-center expansion, telecommunications modernization, healthcare monitoring, micro-LEDs, and more.”
The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei does not expect to complete the IPO until second-half 2022. The listing of Tongmei on the STAR Market will not change the status of AXT as a US public company.
Q4/2021 revenue guidance raised
Also, AXT is increasing its fourth-quarter 2021 revenue guidance from $34–$36m (provided on 27 October) to $36–$37m, reflecting continued momentum in demand for AXT’s products as well as growth in the applications that utilize its substrates. AXT will announce its results for fourth-quarter 2021 and full-year 2021 on 16 February.
“Our expected growth in what is typically a seasonally down quarter for AXT signifies the expanding opportunities we continue to see across our portfolio,” notes Young. “Over the past several years, we have laid considerable groundwork to optimize our business to capture these opportunities, and we are pleased to see our efforts bearing fruit.”