AXT Upbeat Despite BiFET Qualification Delays
GaAs, InP and germanium substrate vendor AXT saw its revenue decline sequentially and dip below prior guidance to $12.5 million in the first fiscal quarter of 2007.
The Fremont-based firm, which has manufacturing operations in China, said that the lower-than-expected sales resulted mainly from delays to the qualification of its GaAs material for use in BiFET chip manufacturing.
As a result, sales of 6-inch GaAs wafers dropped from $4.9 million in the closing quarter of 2006, to $3.3 million during the latest period.
Despite those delays, AXT still managed to post a net profit of $1.3 million, thanks largely to improving sales of InP and germanium wafers, as well as three Japanese customers making one-off purchases of raw materials.
Company CEO Phil Yin said that demand for substrates within the GaAs industry remained very strong, describing AXT s business opportunity as being "as significant as it has ever been". He added that AXT was able to be selective in its business dealings.
Although the precise timing of AXT s customer qualifications remain unpredictable, Yin expects sales of 6-inch GaAs to return to growth over the coming quarter.
Meanwhile, sales of germanium wafers used in solar cell and LED manufacturing applications rose sharply to more than half a million dollars in the latest quarter, overtaking AXT s InP wafer revenues.
Germanium substrates are not yet required in large volumes for multi-junction solar cell production, but AXT has now completed customer qualification with a key North American supplier of concentrating photovoltaics for terrestrial applications. Volume demand for 4-inch germanium wafers is expected to take off in late 2007 or early 2008.
Quoting figures produced by market research firm Strategy Analytics, Yin said that the worldwide demand for 4-inch germanium used in solar power generation was set to rocket from 50,000 wafers in 2006 to 750,000 wafers by 2011.
According to Yin, each 4-inch germanium wafer provides the base for around 1 kW of photovoltaic power generation. So for a large installation, such as a 150 MW power station, some 150,000 wafers would be required - roughly equivalent to a ton of the material.
Since AXT part-owns a germanium mine in Mongolia through one of its many joint ventures in the raw materials business, it is also able to control its own supply for wafer manufacturing.
This looks to be a good move by the company, especially since the price of germanium is on the increase. And with companies such as Emcore looking to seriously ramp up solar cell production next year (see related story), 2008 should bring a further upturn in fortunes for AXT.