American Xtal Technology Announces a 3x Expansion of Its GaAs Substrate Capacity By Q301

Growth in Wireless Handset Market and Trend Towards 6" GaAs Substrates Continue to Drive Strong Demand for AXT s Products

Fremont, CA. American Xtal Technology, Inc. (Nasdaq: AXTI), a leading manufacturer of compound semiconductor substrates and optoelectronic devices, today announced that it plans to approximately triple its gallium arsenide (GaAs) substrate production capacity by the end of the third quarter of 2001. The majority of the expansion is expected to take place at its Beijing, China facility.

AXT currently operates a 62,000 square foot facility in Beijing for the purpose of GaAs substrate production. The company has just purchased a 36,000 square foot building adjacent to this facility, and may acquire additional surrounding buildings that would increase its capacity in Beijing to approximately 160,000 square feet by the end of the third quarter of 2001.

AXT s primary substrate production facility is in Fremont, Calif. This facility currently produces gallium arsenide, indium phosphide, germanium and gallium nitride substrates for a wide range of communications and consumer applications. The company plans to expand its production in Fremont by another 20,000 square feet this year.

"We are experiencing a pressing demand for our gallium arsenide substrates as several of our customers are substantially increasing their ordering patterns," said Morris Young, president and chief executive officer. "We believe that this demand is due in part to the strong growth in the wireless handset market and the increasing popularity of six inch gallium arsenide substrates. Our capacity expansion will help relieve some of the near-term industry shortage, particularly for six inch substrates.

"By manufacturing a portion of our substrates in China, we expect to create a win-win situation for both AXT and our customers. We believe we will be able to cost-effectively meet our customer s demand, and at the same time offer our customers a second source production facility. We are very pleased by the quality of the substrates that are being produced by our China facility and look forward to reporting on our progress as we increase our production there over the next twelve months," he said.

About American Xtal Technology

American Xtal Technology designs, develops, manufactures and markets high-performance substrates for the communications industry. AXT is also a leading producer of diodes for laser pointers and light-emitting diodes (LEDs), such as red, blue, cyan and green LEDs, for the display and lighting industries. The company s proprietary Vertical Gradient Freeze (VGF) crystal growth technology produces low-defect, semi-insulating and semi-conducting gallium arsenide, germanium and indium phosphide wafers. The company has also introduced gallium nitride substrates for manufacturing blue LEDs. For more information, see American Xtal Technology s website at www.axt.com. The company can also be reached at 4281 Technology Drive, Fremont, California 94538 or call 510-683-5900. American Xtal Technology is traded on the Nasdaq National Market under the symbol AXTI.

Safe Harbor Statement

This press release contains forward-looking statements regarding the company s plans to build its GaAs substrate capacity both in China and in the U.S., the company s ability to provide a second source manufacturing facility, the wireless handset and six inch GaAs market conditions, the ordering patterns of the company s customers and the future financial performance of the company. Forward-looking statements address matters that are subject to a number of risks and uncertainties. In addition to the general risks associated with the development of complex technology and the risks associated with the company s acquisition and the integration of Lyte Optronics, Inc., future results of the company will depend on a variety of factors, including, among others, the risks associated with conducting operations in countries other than the U.S., the timing of significant orders, unexpected cancellations or returns by customers, the ability of the company to bring new products to market, the timing of new product releases and product announcements by the company s competitors and other competitive factors. Reference is made to the company s filings with the Securities and Exchange Commission, including the Company s Form 10-K for the year ended December 31, 1999, for further discussion of risks and uncertainties regarding the company s business.

Contact:
Guy Atwood of American Xtal Technology, Inc.,
Tel: 510-683-5900
or
Leslie Green of Stapleton Communications Inc.,
Tel: 650-470-4222 for American Xtal Technology, Inc.