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Aixtron: Small LED players at risk

The MOCVD equipment maker declines to give detailed financial guidance because of a potentially volatile outlook for the industry.

The global recession has done away with a number of long-term LED chip supply deals, leaving some manufacturers unable to see beyond their next month s sales.

So says Aixtron, the number-one supplier of the MOCVD tools used to produce LED die. The German firm cited this situation for its own inability to give a detailed outlook on future business.

On the back of a strong final quarter of 2008 the Aachen-headquartered company aims to at least break even in 2009. But it is clear that if the current order environment continues, some LED makers will not be able to do the same.

“The inventory channels have been emptied and the business that does come along is short-term, without any visibility,” said Aixtron s chief executive officer Paul Hyland, describing his customers trading environment. “I think we re in for a period of some volatility.”

“If it goes on like this for some time there is risk to the smaller players.”

Aixtron has taken the unusual step of cutting its order backlog by €17 million ($21.8 million) to allow for possible cancellations and pushouts caused by the economic situation.

Although this has accelerated the backlog figure s fall to €105 million, a €53.1 million drop from the previous quarter, Hyland stressed that no actual cancellations have yet been made.

He told a conference call to discuss the latest financial results that Aixtron would see the first signs of a recovery when it began receiving requests for systems with a short delivery timescale.

In 2008 the company s revenues increased by 28 percent to an all-time-high of €274 million, expanding its profits 33 percent to €23 million. Aixtron is now targeting revenues of at least €170 million to break even in 2009.

With 2008 revenues from Aixtron s compound semiconductor business in fact leaping 62 percent to €236 million, Hyland was quick to reassure investors of the LED industry s long-term prospects.

“We should not lose sight of the fact that the medium- to long-term outlook for the LED market has never been better,” he said.

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