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AXT Revenue Grows 15 Percent Year On Year

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2020 was a year of solid improvement, capped off by strong InP growth

AXT, a manufacturer of compound semiconductor substrates, has reported financial results for Q4 and its fiscal year, ended December 31, 2020.

“2020 was a year of solid improvement for AXT, capped off by strong InP growth, particularly in 5G, in Q4, which is typically a seasonally down quarter,” said Morris Young, CEO.

“We completed the relocation of our GaAs manufacturing, elevated our business and manufacturing processes to meet Tier-1 standards, and expanded capacity in response to increasing demand. Now, with the gathering momentum of 5G and its related technologies, the technology progression in data center connectivity, and new applications emerging in healthcare and consumer devices, we believe AXT is in a strong position to lead our industry and enable many of the defining trends of the coming decade.”

Q4 2020 Results

Revenue for Q4 2020 was $27.0 million, compared with $25.5 million in the third quarter of 2020 and $18.4 million for Q4 2019. Gross margin was 34 percent of revenue for Q4 2020, compared with 35 percent of revenue in the third quarter of 2020 and 21 percent for Q4 2019. Operating expenses were $7.2 million in Q4 2020, primarily due to substantial investment in R&D and year-end employee bonuses. This compares with $6.6 million in the third quarter of 2020 and $6.7 million for Q4 2019.

Operating income for Q4 2020 was $1.9 million, compared with operating income of $2.2 million in the third quarter of 2020 and an operating loss $2.8 million for Q4 2019.Net income in Q4 2020 was $2.1 million, or $0.05 per share, compared with net income of $1.0 million or $0.02 per share in the third quarter of 2020, and a net loss of $2.0 million or $0.05 per share for Q4 2019.

2020 Year Results

Revenue for 2020 was $95.4 million, an increase of 15 percent from $83.3 million in 2019. Gross margin for 2020 was 32 percent of revenue, up from 30 percent of revenue in 2019.

Operating expenses for 2020 were $26.3 million, compared with $25.1 million in 2019. Operating income for 2020 was $3.9 million compared with an operating loss in fiscal 2019 of $0.3 million.

Net income for fiscal 2020 was $3.2 million, or $0.07 per share, compared with a net loss of $2.6 million, or $0.07 per share for fiscal 2019.

STAR Market Listing Update

AXT previously announced on November 16, 2020 a plan to access China's capital markets and progress to an initial public offering by Beijing Tongmei Xtal Technology Co., Ltd its wafer manufacturing company in China, on the Shanghai Stock Exchange's Sci-Tech innovAtion boaRd (STAR).

The first major step in this process is engaging reputable private equity firms in China to invest funds in Tongmei.

In January 2021, AXT completed the private equity investment funding in Tongmei. A number of private equity firms have invested approximately $49 million in exchange for an approximately 7.28 percent minority interest in Tongmei.

Going public on the STAR Market includes several periods of review and, therefore, is a lengthy process. Tongmei expects to accomplish this goal in mid-2022.

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