Semiconductor Substrates Manufacturer AXT Warns Sending Stock 14% Lower

AXT Inc, a manufacturer of compound semiconductor substrate wafers is the latest company to warn in the semiconductor segment, $AXTI lowered Q3 revenue guidance to $34-35 million from $39-41 million. The Californian company citing weakening macroeconomic conditions, particularly in the demand environment in China. AXTI stock was down 14.6% in afterhours trading. The stock had closed the day’s regular session up 4.63%, at $7.01 per share.

AXT 8-inch diameter gallium arsenide (GaAs) substrates

“The preliminary revenue range for the third quarter of 2022 is primarily attributable to weakening macroeconomic conditions, particularly in the demand environment in China,” the company said.

The wafer substrates are produced in China by AXT’s subsidiary, Tongmei. Tongmei operates wafer substrate production from its headquarters in Beijing and two other sites in China. In addition, as part of the supply chain strategy, AXT, Tongmei and Tongmei subsidiaries collectively have partial ownership in ten companies in China producing raw materials.

“Though we continue to feel confident about our participation in a number of exciting technology trends and Tier-1 opportunities, our business is not immune to the effects throughout the supply chain of a deteriorating macroeconomic environment. We are disappointed by the impact to our near-term growth, but we remain confident in our strategy and business opportunity across our key markets,” said Morris Young, chief executive officer.

The company’s actual results for the third quarter of 2022 are not yet available, have not been audited and may differ materially from the preliminary estimates above, which are not a comprehensive statement of the company’s financial results and are not necessarily indicative of the results to be expected for fiscal 2022 or any future period.

The company will host a conference call to discuss these results on October 27, 2022 at 1:30 p.m. PT. To access the call by phone, please go to this link to register and you will be provided with dial in details:
https://register.vevent.com/register/BIdbf7aee0a4da485ab0623751b90236cf. A webcast link for the call will also be available on the investor relations page at http://www.axt.com.

VGF Technology

Vertical gradient freeze (VGF) technology is a proven technique for growing semiconductors composed of multiple elements that include: gallium, arsenic, indium, and phosphorus. Such semiconductors offer capabilities that exceed those of wafers created on a single crystal silicon substrate.

Although AT&T Bell Labs pioneered VGF technology in the early 1980s, the founders of AXT, Inc. were the first to independently commercialize the process and make its benefits available to the market. In brief, the process involves growing uniform crystals to a certain diameter, thinly slicing the crystal to very precise tolerances, edge rounding the form factors, polishing them into smooth wafers, then carefully packaging the wafers in a class 100/1000 room for shipping to customers.
The main advantages of the VGF process include its scalability, low stress, high mechanical strength, and a defect rate that is orders of magnitude lower than conventional compound semiconductor crystal growth processes.

About AXT, Inc.

AXT is a material science company that develops and manufactures high-performance compound and single element semiconductor substrate wafers comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge). The company’s substrate wafers are used when a typical silicon substrate wafer cannot meet the performance requirements of a semiconductor or optoelectronic device.

End markets include 5G infrastructure, data center connectivity (silicon photonics), passive optical networks, LED lighting, lasers, sensors, power amplifiers for wireless devices and satellite solar cells. AXT’s worldwide headquarters are in Fremont, California and includes sales, administration and customer service functions. AXT has its Asia headquarters in Beijing, China and manufacturing facilities in three separate locations in China. In addition, as part of its supply chain strategy, the Company has partial ownership in ten companies in China producing raw materials for its manufacturing process. For more information, see AXT’s website at http://www.axt.com.

Source: AXT

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