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Changing GaAs landscape benefits AXT

Additional germanium and GaAs substrate customers look promising but can't stop the crystal grower making a loss this quarter.

More companies are picking AXT for GaAs substrates, thanks to the varying fortunes of cell phone power amplifier manufacturers.

In the three months ended September the Fremont, California, company s sales of GaAs substrates rose by nearly $500,000 to $13.6 million. $1 million of additional revenues from 4-inch diameter substrates was offset by lower 2-inch and 3-inch sales.

“The strong growth in our 4-inch GaAs revenue was a result of increased shipments to a few customers that have been representing a very small portion of our revenue in past quarters,” said Phil Yin, AXT s CEO.

“Within our customer base there have been some shifts in market share,” he added. “These shifts are creating opportunities for us to penetrate accounts that have done little or no business with AXT as they look for ways to handle increasing capacity requirements.”

In addition to the 4-inch business it has already gained, Yin says that the substrate manufacturer is also in discussion with a further semi-insulating GaAs customer in the radio-frequency market.

Overall AXT s revenues fell to $17.9 million from $19.9 million in the previous quarter, although they were up from $14.5 million in the prior year.

Germanium substrate revenues fell nearly $600,000 to $795,000 as one customer began to requalify AXT s products for use in a new reactor setup.

Yin says that this is only a temporary setback, and that prospects for germanium are now even brighter as the first of four new solar customers has approved his company's products.

“We have successfully qualified with a large European CPV solar cell company and we expect to see production volumes beginning in 2009,” he said. “These solar cells will be for satellites, and qualification is continuing for terrestrial applications.”

Raw material revenues dropped from $4.9 million to $3 million as shipping restrictions around the Beijing Paralympics were extended to September 30. AXT says that the missing revenues are simply delayed, and that it will therefore see stronger-than-usual raw material sales in the final period of the year.

Overall for the September quarter AXT slipped to a $926,000 loss from a $2.3 million profit in the prior period. For the last three months of the year it expects revenues of up to $21.9 million, which should narrow the company's loss or just push it into profit.

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