AXT, Inc. Announces Fire Damage in Manufacturing Production Area

FREMONT, Calif., March 16, 2017 -- AXT, Inc. (Nasdaq:AXTI), a leading manufacturer of compound semiconductor substrates, today announced that an electrical short-circuit fire occurred at its Beijing manufacturing facility on the evening of March 15, 2017, local time.  The fire was located in its gallium arsenide and germanium crystal growth production area and production in that area has stopped.  No injuries occurred and there was no structural damage. 

Although indium phosphide crystal growth, as well as the wafer processing areas for gallium arsenide, indium phosphide and germanium were not affected, the processing of all wafer substrates has been halted.

The Company is working with the fire department and other local regulatory agencies to identify the cause of the fire and form a plan to resume production as quickly as possible.  Due to the immediacy of this event, no details are yet available.  Morris Young, CEO, and Gary Fischer, CFO, traveled to Beijing earlier in March and remain on site at this time to oversee the situation.

As a result of this event, the Company now believes that revenue for the first quarter, ending March 31, 2017, will be in the range of $18.0Mto $18.5M, compared with previous guidance of $19.5M to $20.5M. 

About AXT, Inc.

AXT designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising indium phosphide (InP), gallium arsenide (GaAs) and germanium (Ge) through its manufacturing facilities in Beijing, China.  In addition, AXT maintains its sales, administration and customer service functions at its headquarters in Fremont, California.  The company’s substrate products can be used primarily in fiber optic communications, 3-D sensing, solar cell, lighting display applications and wireless communications. Its vertical gradient freeze (VGF) technique for manufacturing semiconductor substrates provides significant benefits over other methods and enabled AXT to become a leading manufacturer of such substrates. AXT has manufacturing facilities in China and, as part of its supply chain strategy, has partial ownership in ten companies in China producing raw materials. For more information, see AXT’s website at http://www.axt.com.

Safe Harbor Statement

The foregoing paragraphs contain forward-looking statements within the meaning of the Federal securities laws, including, our expectations with respect to our expected revenue and our business prospects. These forward-looking statements are based upon assumptions that are subject to uncertainties and factors relating to the company’s operations and business environment, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements contained in the foregoing discussion. These uncertainties and factors include but are not limited to: overall conditions in the markets in which the company competes; global financial conditions and uncertainties; policies and regulations in China; market acceptance and demand for the company’s products; the impact of factory closures, the timing of our ability to restart production  or other events causing delays by our customers on the timing of sales of our products; our ability to control costs, our ability to utilize our manufacturing capacity; product yields and their impact on gross margins; and other factors as set forth in the company’s annual report on Form 10-K, quarterly reports on Form 10-Q and other filings made with the Securities and Exchange Commission.  Each of these factors is difficult to predict and many are beyond the company’s control. The company does not undertake any obligation to update any forward-looking statement, as a result of new information, future events or otherwise.

Contact:
Gary Fischer
Chief Financial Officer
(510) 438-4700