AXT is like a specialized Corning, providing the foundational crystal wafers used in high-speed communication and advanced electronic devices.

• Gallium Arsenide (GaAs) Substrates: Essential for high-performance wireless devices, fiber optic lasers, and consumer electronics.
• Indium Phosphide (InP) Substrates: Critical for high-speed fiber optic communications, data center transceivers, and 3D sensing.
• Germanium (Ge) Substrates: Utilized in high-efficiency solar cells, infrared applications, and various optoelectronic devices.
• Pyrolytic Boron Nitride (PBN) Products: Advanced materials used as crucibles and components in crystal growth furnaces for compound semiconductors.

Major Customers of AXT (AXTI)

AXT, Inc. (AXTI) sells primarily to **other companies** within the compound semiconductor industry, not directly to individuals. Its products are high-performance compound semiconductor substrates, which are intermediate materials used by other manufacturers to produce various electronic and optoelectronic devices.

While AXT's public filings indicate that sales to specific customers can represent a significant portion of its revenue (e.g., in 2023, two customers each represented over 10% of total revenue), the names of these major customers are typically not disclosed due to confidentiality agreements. Therefore, we cannot list specific customer company names or their symbols.

However, AXT's customer base generally consists of manufacturers in the following categories:

• Manufacturers of **optical components** (e.g., lasers, LEDs, fiber optic communications components)
• Manufacturers of **wireless devices** (e.g., radio frequency (RF) devices for 5G, Wi-Fi, and other wireless communication technologies)
• Manufacturers of **flat panel displays** (e.g., micro-LED displays)
• Manufacturers of **solar cells** and other renewable energy technologies
• **Research and development laboratories** working on advanced semiconductor applications

Morris Young, Chief Executive Officer

Morris Young co-founded AXT in 1986 and has served as a director since 1989. He held the titles of President and Chief Executive Officer from 1989 to 2004. After serving as Chief Technology Officer from 2004 to 2006 and a brief retirement from management, Dr. Young was reappointed CEO on July 16, 2009, and also became Chairman of the Board of Directors on August 12, 2021. Prior to AXT, he was a physicist at Lawrence Livermore National Laboratory from 1985 to 1989 and a member of the technical staff at AT&T Bell Labs. Dr. Young also holds the position of Chairman at Beijing Tongmei Xtal Technology Co., Ltd. and Nanjing Jinmei Gallium Co., Ltd., which are part of AXT, Inc.

Gary L. Fischer, Vice President and Chief Financial Officer

Gary Fischer joined AXT as Vice President and Chief Financial Officer in August 2014. He brings extensive experience from Silicon Valley, including working in Asia and Europe. In 1993, Mr. Fischer became Chief Financial Officer at ISSI (Integrated Silicon Solution Inc.), an advanced memory solutions company, which he helped take public in 1995. He later served as its President and Chief Operating Officer. In 2005, he joined eRide, a fabless semiconductor company, which was acquired in 2009. Following this, he consulted for growth companies on finance and M&A projects.

Wei Gao, Chief Technical Officer

Dr. Wei Gao joined AXT in May 2019 as Chief Technical Officer. He has over 20 years of experience in the III-V photonics industry, with a focus on R&D, product development, and manufacturing. Notably, Dr. Gao founded Axcel Photonics in 2000 with $10 million in venture capital funding, where he served as President, CEO, and CTO. Under his leadership, Axcel developed high-power diode lasers and was successfully acquired in 2010. His prior roles include Vice President of High Power Lasers at InPhenix, Inc., Vice President at Raydex Technology, Vice President at Precision Digital Corporation, Application Engineer at Nortel Networks, and Senior Engineer at Lasertron.

Sung Nee George Chu, Vice President, Technology and Chief Scientist

Dr. Sung Nee George Chu joined AXT in April 2012 as Chief Scientist, later becoming Vice President, Technology and Chief Scientist. He is recognized for his contributions to AXT's indium phosphide (InP) product line. Dr. Chu is a veteran of Bell Labs, where he joined AT&T Bell Labs in 1980, specializing in the epitaxial growth group of InP for optical fiber communication systems and becoming a distinguished member of technical staff in 1986. He has made significant scientific contributions to advanced photonic devices and was awarded the Bell Labs President's Quality Award in 1991. From 2003 to 2012, Dr. Chu served as Senior Director at Multiplex Inc., where he was responsible for manufacturing processes of EML devices.

Tim Bettles, Vice President, Business Development, Strategic Sales and Marketing

Tim Bettles joined AXT in July 2017 as Vice President of Business Development, Strategic Sales and Marketing. He is responsible for commercial activities in North America and strategic commercial partnerships globally. With over 30 years of experience in the semiconductor industry, Mr. Bettles began his career in research and development at Plessey Research and Technology and Philips Semiconductors, focusing on plasma deposition and etch processes. He transitioned into commercial roles at Trikon Technologies (now SPTS Technologies) and later joined IQE in 1998, moving to the U.S. in 2001 to develop and manage IQE's North American optoelectronics business. Before joining AXT, he managed business development for Crystal IS and SETi, focusing on AlN-based materials and ultraviolet LEDs.

The key risks to AXT Inc. (AXTI) include:

1. China Export Restrictions and Geopolitical Tensions: AXT's business faces significant challenges due to Chinese export restrictions on key materials such as indium phosphide and gallium arsenide. Delays in obtaining export permits have led to revenue shortfalls, impacted timely product shipments, and contributed to negative gross margins, posing a substantial risk to the company's financial performance. Geopolitical tensions between China and the United States further contribute to this uncertainty.
2. Operational and Financial Challenges: AXT has been contending with persistent net losses and weak profit margins. The company reported a non-GAAP net loss in recent quarters, and declining sales of germanium substrates also present a challenge to profitability and diversification efforts. Although the company maintains a healthy liquidity position, its overall financial health score remains weak, and liabilities have, at times, outweighed its cash and near-term receivables.
3. Risk of Health Epidemics and Natural/Human Disruptions: AXT Inc. is susceptible to significant business risks arising from potential health epidemics and outbreaks, as demonstrated by the impact of the COVID-19 pandemic on its operations. Such events can lead to operational shutdowns, disruptions in raw material supply and manufacturing, and subsequent revenue losses, posing a challenge to recapturing financial stability and potentially resulting in a loss of market share.

AXT, Inc. (NASDAQ: AXTI) is poised for future revenue growth over the next 2-3 years, driven by several key factors in the compound semiconductor market.

1. Surging Demand for Indium Phosphide in Data Centers and AI: AXT is experiencing a significant increase in demand for its indium phosphide (InP) products, primarily fueled by the expansion of data center applications and the growing artificial intelligence (AI) infrastructure. The company reported a 250% sequential growth in indium phosphide revenue in Q3 2025, reaching a three-year high due to strong demand for data center applications globally. This trend is expected to continue, with management highlighting tremendous opportunities in 2026 driven by the data center upgrade cycle. Indium phosphide substrates are critical for high-speed optical interconnects and silicon photonics, essential components of AI infrastructure.
2. Growth in Optical Connectivity and 5G Infrastructure: The company anticipates continued growth from the optical connectivity sector, including applications in 5G infrastructure. AXT's Indium Phosphide substrates are utilized in broadband, fiber optic, and 5G applications. Additionally, Gallium Arsenide (GaAs) substrates are crucial for HBT devices in 5G and next-generation networks.
3. Expansion into Emerging Markets like Autonomous Driving (LiDAR): AXT identifies autonomous driving, specifically LiDAR sensors, as a high-growth market for its gallium arsenide substrates. The LiDAR market is projected to reach $5.6 billion by 2030, presenting a significant long-term potential for AXT.
4. Strategic Capital Infusion from Tongmei IPO: The ongoing process of listing AXT's subsidiary, Tongmei, on China's STAR Market is expected to bolster its financial position and provide a capital source to fund long-term growth initiatives. This strategic move aims to enhance AXT's ability to support the strong demand for strategic compound semiconductor materials.
5. Leveraging Superior Product Performance and Export Permit Streamlining: AXT is focused on enhancing its competitive positioning through superior product performance, particularly in key specifications like low etch pit density (EPD), which is crucial for next-generation transceiver technology. The company has been actively working on obtaining necessary export permits for its indium phosphide and gallium arsenide, which, once streamlined and consistently secured, will enable the fulfillment of substantial backlogs and unlock previously delayed revenue.

Share Repurchases

• AXT repurchased $1 million of common stock in 2024.
• The company repurchased $41 million of common stock in 2023.
• As of December 31, 2024, approximately $108 million remained authorized under the share repurchase program.

Share Issuance

• Common stock issued amounted to $28,000 in 2023, $10,000 in 2022, and $518,000 in 2021.
• In 2020, common stock issued was $593,000.
• In the first quarter of 2021, there were proceeds from the issuance of Tongmei's common stock to redeemable noncontrolling interests of $0.7 million and proceeds from common stock options exercised of $0.7 million.

Inbound Investments

• Beijing Tongmei Xtal Technology Co., Ltd. ("Tongmei"), AXT's subsidiary in China, applied to list its shares on the Shanghai Stock Exchange's Sci-Tech innovAtion boaRd (STAR Market), which was accepted for review on January 10, 2022, and approved for listing on July 12, 2022.
• Capital Investment Agreements with investors for Tongmei totaled approximately $49 million, with the government approving the entire investment on January 25, 2021, in exchange for a 7.28% noncontrolling interest.
• AXT announced a strategic plan in November 2020 to secure approximately $50 million from private equity firms for Tongmei, with the first tranche of $22.5 million expected by early December 2020 and a second tranche of $26.5 million in January 2021.

Outbound Investments

• AXT makes strategic investments in private companies located in China to gain competitive access to raw materials for its substrate business.
• In February 2021, Tongmei formed a joint venture, ChaoYang XinMei High Purity Semiconductor Materials Co., Ltd., by funding approximately $1.8 million for a 58.5% ownership.
• AXT has board representation in its raw material supply chain companies, some of which are consolidated.

Capital Expenditures

• Net cash used in investing activities, primarily due to property, plant, and equipment, was $25.2 million in 2022 and $38.8 million in 2021.
• In 2020, net cash used in investing activities was $16.4 million, primarily for property, plant, and equipment in preparation for new manufacturing sites, additional equipment for the Beijing site, and facility costs for consolidated subsidiaries.
• In 2020, AXT expected to spend approximately $5 million on its gallium arsenide manufacturing line and considered additional investments in its indium phosphide manufacturing line, while its subsidiary JinMei expected to invest $3.0 million to $3.5 million for new facilities.