Slide 1: A Material Science Company
A MATERIAL SCIENCE COMPANY Serving the semiconductor industry (NASDAQ: AXTI)
Slide 2: Legal Disclosure
Legal Disclosure SEE ADDITIONAL RISK FACTORS ON FORM 10-Q AND FORM 10-K This presentation contains forward-looking statements within the meaning of the Federal securities laws, including, for example, the progress, timing and estimated completion of the proposed listing of shares of Tongmei on the S
Slide 3: AXT Snapshot
HISTORY Founded in 1986; IPO in 1998 PRODUCTS Alternative wafers when silicon will not work PROCESS TECHNOLOGY Pioneered Vertical Gradient Freeze (VGF) crystal growth; AXT substantial process technology and IP Snapshot FACILITY Headquarters in Fremont, CA MANUFACTURING Launched in China in 1998. Ope
Slide 4: Indium Phosphide (InP) Overview
Indium Phosphide (InP) Overview • Growth engine ignited in 2014 • Applications using InP are expanding • We expect a long product life cycle— mirroring GaAs 4
Slide 5: Indium Phosphide (InP) Market
Indium Phosphide (InP) Market KEY APPLICATIONS MARKET DYNAMICS • Data center connectivity (Silicon • Strong barriers to entry photonics) ⚬ Crystal growth very difficult due to • Passive Optical Networks (PONs) two key variables • 5G telecommunications infrastructure ⚬ Customer spec-driven market • E
Slide 6: Gallium Arsenide (GaAs) Overview
Gallium Arsenide (GaAs) Overview • Our first strong growth engine, even before our IPO in 1998 • A long product life cycle populated with new applications • Supplied first 8-inch gallium arsenide wafers to major customer in April 2021 6
Slide 7: Gallium Arsenide (GaAs) Market
Gallium Arsenide (GaAs) Market KEY APPLICATIONS MARKET DYNAMICS • LED lighting • Market pushes wafer size • Industrial lasers • Tier-one requires very low defect density • Printer heads • Consumer applications mean high volume • Power amplifiers • GaAs not going away, keeps re-inventing itself • 3-D
Slide 8: Germanium (Ge) Overview
Germanium (Ge) Overview • A single element wafer i.e. just Germanium • Primary application is satellite solar cells: ⚬ Multi-junction solar cells ⚬ Weather, environmental, communication 8
Slide 9: Germanium (Ge) Market
Germanium (Ge) Market MARKET DYNAMICS • Satellites increasingly in the news • Satellite solar cell market increasing • Difficult to make house calls • Difficult for customer to change supplier • AXT has strong relationships with multiple leading customers 9
Slide 10: Sophisticated Supply Chain
Sophisticated Supply Chain • Ownership interest in ten raw material companies in China • Merged the two crown jewels into Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”) • Direct visibility and influence in these markets • Favorable cost/pricing • A risk minimization strategy if supply shortag
Slide 11: Financials
Financials 2022 2021 2020 2019 2018 2017 FY FY FY FY FY FY ($ in M) Revenue $141.10 $137.40 $95.40 $83.30 $102.40 $98.70 Non-GAAP 36.93% 34.51% 31.75% 29.82% 36.18% 34.90% Gross Margin %* Non-GAAP $39.60 $34.50 $26.33 $25.10 $24.90 $21.80 Op Expense* Non-GAAP $15.80 $14.58 $3.24 ($2.60) $9.70 $10.10
Slide 12: Summary of the STAR Market Process
Summary of the STAR Market Process • Announced intention in November 2020 to seek capital by listing Tongmei to IPO in China • Separate listing of Tongmei, no change regarding the current Nasdaq listing of AXTI • Tongmei’s IPO application was formally accepted for review by the Shanghai Stock Exchan
Slide 13: Ownership of Tongmei
Ownership of Tongmei • AXT currently owns approximately 85.5% of Tongmei • An additional 10% will be sold if the IPO is approved • AXT would then own approximately 77% of Tongmei 13
Slide 14: Benefits to Key Shareholders
Benefits to Key Shareholders • AXT shareholders • Attractive balance sheet, minimal dilution • Displays and leverages/unlocks China assets • Strengthens AXT’s business development positioning • Our customers • Increases confidence in our ability to scale up • Confirms our commitment to their project
Slide 15: AXT Market Opportunity
AXT Market Opportunity • New facilities, equipment and capacity • Selling into major long-term technology trends: data center expansion, 5G, LED lighting and display, laser-based sensing, medical applications, and more • Limited competitive landscape • Market-leading InP technology with high barrier
Slide 16: Thank You
Thank You