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6 November 2007

 

Aixtron’s Q3 order intake rises 39% on Q2, raising full-year expectations

For the first nine months of 2007, deposition equipment maker Aixtron AG of Aachen, Germany has reported revenues of €160.7m (up 48% year-on-year from €108.6m). Equipment for silicon chip manufacturing comprised 21% of revenue (down from 31% a year ago, on revenue up 1%) and equipment for compound semiconductors comprised 67% (up significantly from 49% a year ago, on revenue up 100%, mainly due to demand from Asia for LED equipment). Correspondingly, of total revenue, 86% came from Asia (up from 81% a year ago), 8% from the USA (down from 9%) and just 6% from Europe (down from 10%).

Reflecting the increasing proportion of new common platform system revenues, paired with a favorable product mix, gross margin improved slightly from 38% to 39%.

Earnings before interest and taxes (EBIT) was €16.4m (compared to a -€2.4m loss a year ago). This led to a net profit of €14.8m (compared to a -€2.4m loss a year ago). However, free cash flow fell from €21.3m a year ago to €5.0m, due mainly to the timing of payments to suppliers after high production levels and to high-volume trade receivables for deliveries at the end of the September quarter.

In Q3/2007, revenue was €51.7m, up 14% on Q2’s €45.2m and 26% on €40.9m a year ago. Equipment order intake was a quarterly record of €70.0m (up 39% on Q2’s €50.3m, and the sixth consecutive quarter exceeding €40m). This led to nine-months intake of €160.8m (up 20% year-on-year from €133.5m). Of this, silicon equipment comprised just 19% as compound semiconductors grew to 81% (compared to 24% and 76% a year ago).

Order backlog rose 28% during Q3, from €80.3m to €102.8m (up 5% on €98.3m a year ago, and the largest backlog since 2002). Of this, silicon equipment comprised just 7% and compound semiconductors 93% (compared to 14% and 86% a year ago). This was due to silicon equipment order backlog falling 50% year-on-year while compound semiconductor order backlog rose 14%.

“Coupled with the continuously improving profitability during the year, we are just beginning to reap the benefits of the very focused approach the business has taken over the last few years,” says CEO Paul Hyland. “The record level of deposition equipment demand we experienced in Q3 reflects the increasing appearance of the first-generation consumer LED backlighting products appearing in the market [replacing incumbent cold cathode fluorescent lamp (CCFL) technology]. At this early stage, these initial commercial products are predominantly small- and medium-sized backlighting units utilizing white LEDs, and we have not yet seen the impact of full RGB backlighting technology [beyond a few premium product offerings from Asian suppliers], which should become more evident in the next year,” he adds.

In particular, in Q3/2007 Aixtron also received an increased number of repeat and multiple orders, mainly for GaN-based LED production, for its latest high-capacity Crius and G4 systems (launched in December 2005), which are based on the firm’s ‘Integrated Concept’ common platform approach, which uses a high degree of common components for Aixtron’s Planetary and CCS (Close Coupled Showerhead) type reactors. In the first nine months of 2007, over 40% of compound system revenue and almost 70% of order intake consisted of such ‘Integrated Concept’ common platform systems.

“Another interesting market development is the degree to which the ‘premium-player’ LED producers have recently increased the frequency of announcements on new efficiency records for their LEDs, suggesting that they believe they are ahead of the generally accepted roadmaps and that solid-state lighting may become commercially viable earlier than previously envisaged,” notes Hyland.

“These factors, along with a greater level of activity in e.g. LED automotive applications [including the possible wider introduction of LED head-lights], leave us with a more promising short-to-medium term outlook than I can recall over the last five years”, Hyland concludes.

In addition, Aixtron has seen a small increase in demand from Asia for systems used in producing blue and red lasers for optical storage devices.

Following the continued positive revenue and EBIT development, Aixtron has raised its full-year 2007 guidance to revenue of €215m (up 25% from 2006’s €171.7m and 2005’s €139.4m) and EBIT of €20m (up from 2006’s €5.7m and 2005’s loss of €52.7m).

*Aixtron lists short-term market opportunities as: a further increase in capacity for the production of high-performance lasers and LED backlighting for next-generation LCD screens; and increased adoption of LEDs in automotive applications.

Mid-term opportunities include: increased research leading to the application of LEDs in general lighting; increased qualification of high-volume silicon carbide production applications and hybrid automotive applications; increased research on specialized solar cell applications.

Long-term opportunities include: longer-term development of technologies for organic LED lighting and large-area deposition of organic materials; intensified activity in the developments of new, complex semiconductor material applications as substitute materials in silicon ICs; the development of new applications using carbon nanotubes.

Correspondingly, Aixtron’s total staffing has risen 7% year-on-year (from 561 to 601), due mainly to a rise in R&D staffing of 16% (by 28, from 179 to 207).

See related item:

Aixtron’s Q2 order growth driven by demand for LED production equipment

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