AXT reaps GaAs and Ge material advantage
As tightening metal markets force its competitors to increase substrate prices, AXT s supply collaborations in China are allowing it to absorb the extra cost.
Consequently, the $13.6 million revenues recorded by the Fremont, California compound semiconductor substrate manufacturer in the three months to June 30 include sales of germanium to its competitors.
“Shortages in gallium raw material and an increasing interest in photovoltaics are illuminating the unique competitive advantage positioning that AXT is likely to benefit from over the next several years,” said Phil Yin, the company s CEO.
Semiconducting GaAs substrate demand for LEDs was therefore particularly strong, as existing suppliers failed to keep up with demands, leading a top North American LED maker to start qualifying AXT s wafers.
To keep pace with the growing market, the company's joint ventures are increasing output and purification of gallium, arsenic, and germanium, and AXT is looking to increase its investment in these China-based suppliers.
AXT achieved profits of $1.2 million in the quarter to June 30, steady from $1.3 million in the prior quarter and up from a $0.9 million loss in the same period in 2006.
Demand for germanium substrates came predominantly from the emerging III-V solar market, with AXT recently receiving a major order due to provide the company with revenue in the upcoming quarter.
The substrate supplier is also seeing interest in germanium wafers from four European III-V solar companies, one Taiwanese firm and another from North America. Having sold $402,000 worth of germanium substrates in the past three months, AXT anticipates solar demand could drive quarterly sales beyond $1 million.
A major BiFET manufacturing qualification of AXT's 6-inch GaAs substrates has been completed, with production scheduled at the PA maker for the end of the current quarter.
This will move forward sales of 6-inch substrates after what Yin calls a “pause”, and see the company take well timed advantage of a “pent-up demand”, as it completes a 40% GaAs capacity expansion this quarter.
Yin saw the InP market as soft, but AXT still scored a deal with a large fiber-optic component company which would have an almost immediate impact, and recorded higher revenues than the previous three months, largely due to a one-off sale of scrap wafers.
Despite all the quarter s positives, revenues and profits were predicted to be relatively flat over the next three months "“ perhaps reflecting the time it will take for the company's recent achievements to bed in.
