AXT Profits Dip Amid Growing GaAs Revenues
AXT revenue for the second quarter of 2012 was $25.2 million, up 7 percent from $23.5 million in the first quarter of 2012. This quarter's revenue was down, however, by 16.3% year-on-year.
Second quarter profits were down to $1.3 million, compared to $1.6 million in the previous quarter.
GaAs substrate revenue came in the strongest, at $14.9 million for the second quarter of 2012, compared with $12.2 million in the first quarter of 2012.
Meanwhile both InP and Ge substrate revenues were down, quarter-on-quarter. InP revenue was $1.3 million for the second quarter of 2012, compared with $1.5 million in the first quarter of 2012, while Ge revenue was $2.4 million for the second quarter of 2012 compared with $2.6 million in the first quarter of 2012.
Raw materials sales were also down, standing at $6.5 million for the second quarter of 2012, compared with $7.2 million in the first quarter of 2012.
Gross margin was down from 34.9% to 29.8% of revenue quarter-on-quarter, with AXT attributing the drop to a new People's Republic of China VAT levied on foreign enterprises that import materials which do not form part of the final product.
"The second quarter was a positive quarter for our gallium arsenide business, which grew more than 20 percent sequentially," said Morris Young, chief executive officer. "Further, we continued to make good progress with new customer qualifications, and are hopeful that we will begin to layer on additional revenues from new qualifications later this year and into 2013."
As we move into Q3, the demand environment appears to be more challenging, particularly in certain geographies... and expect to see weaker than normal seasonal performance as a result," he adds. “However... we view improving market conditions, new customer qualifications and a bottoming of raw material pricing as key catalysts for our growth later this year and beyond."