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8 May 2007


Asian LED makers drive doubling of Aixtron revenues, but slowing orders flag weak second-half 2007

For first-quarter 2007, deposition equipment maker Aixtron AG of Aachen, Germany has reported its second consecutive quarter of record revenue: €63.8m (double Q1/2006’s €32.0m, and up slightly on Q4/2006’s €63.1m). The firm says that the growth is due to the large order backlog, combined with high demand in recent quarters for deposition equipment for LEDs, especially from Asia.

Revenues from Asia have grown 114%, from €26.6m a year ago to €56.9m (rising from 83% of revenues to 90%). Europe fell from €2.4m to €1.5m (from 8% of revenues to just 2%). The USA grew from €3m to €5.4m (maintaining 8-9% of revenues).

Of equipment revenues of €57.4m, 76% was for compound semiconductors (€43.5m, almost triple €14.7m a year ago) and 24% for silicon (all for DRAM and NAND flash memory product applications: €13.9m, up 30% from €10.7m a year ago). The rise in demand for AlInGaP systems over the last few quarters has been fuelled by increased demand for red, yellow and ornage LEDs, says Aixtron.

Due to economies of scale and efficiency improvements, operating costs have been cut from 47% of revenue a year ago to just 25%. Net income was €7.6m (compared to a net loss of €3.1m in Q1/2006). Cash and cash equivalents at the end of March were up from €35.5m a year ago to €43.7m.

“We have continued to benefit from the increased revenue volumes and internal efficiency gains, despite a weakening US dollar,” says CEO Paul Hyland.

Q1/2007 also saw the fourth consecutive quarter of equipment order intake above € 40m, at € 40.5m. This is up 28% on €31.7m in Q1/2006, but down 9% on Q4/2006’s €44.5m. Order backlog is €70m (down from €85.1m at the end of December ).

Despite the slowing order intake, Aixtron says it remains confident of the medium to long-term health of its targeted markets. In particular, customers will require some time to integrate and qualify the large-capacity GaN systems purchased in 2006. Also, in the telecom/datacom end market area, existing customer capacity means that sustainable revenue growth is unlikely to return before late 2007 at the earliest.

Nevertheless, Aixtron has reiterated its full-year 2007 guidance (given in March) of revenue of €190-200m (up 11-16% on 2006’s €171.7m), with second-half 2007 weaker than the first half. “The order intake and market development are very much in line with our expectations, giving us increased confidence in our year-end guidance and beginning to point towards an encouraging outlook for 2008,” says Hyland. Aixtron expects that order intake will increase towards the end of 2007, and that trends for 2008-2010 remain encouraging.

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