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Deposition equipment maker Aixtron AG of Aachen, Germany has reported revenue of €274.4m for full-year 2008, up 28% on 2007’s €214.8m (and the third consecutive year of growth). This was despite a weaker $/€ exchange rate and the general slowdown in semiconductor equipment spending.
The rise is due mainly to sales of compound semiconductor equipment rising 62% from €145.2m to €235.7m, driven by rising demand for LED end-market applications (especially the increasing adoption of LEDs in lighting and backlight units for LCD displays). In particular, revenue for LED applications grew by 82% year-on-year.
“Despite the currently volatile environment, we have been able to deliver a result within the range we gave as far back as March 2008,” says president & CEO Paul Hyland.
Of total revenues, 86% came from compound semiconductor equipment and just 4% from silicon equipment (the remaining 10% came from spare part and services). By application, 84% came from LED manufacturing (up from 61% in 2007) and just 6% from silicon (with memory device makers especially hard hit by pricing pressures). Correspondingly, 87% came from Asia (up from 81% in 2007) and just 7% from Europe (down from 9%) and 6% from the USA (down from 10%). Aixtron estimates its share of the MOCVD market at 60-70%.
Gross margin improved by 1 percentage point to 41%, reflecting new common platform systems rising from 72% of total revenue to 88%, coupled with a favorable product mix and cost cutting (offsetting the effect of the weaker $/€ exchange rate). “Against softening demand and US dollar weakness, we were able to hold the gross margin improvements made earlier in the year and finish it with a gross margin performance in excess of our target of 40%,” says Hyland.
Scale effects and further enhancements of internal operating efficiency boosted EBIT (operating income) by 58% from €20.6m to €32.5m, representing an improved EBIT margin of 12%. Net income rose by 33% from €17.3m to €23m.
Fourth-quarter revenue was exceptionally high at €82.3m, up 29% on Q3’s €63.9m. However, “The extraordinary financial and economic turmoil has already firmly focused our minds on 2009 and beyond,” says Hyland. Together with a few order push-outs, order intake fell for a second consecutive quarter to €40.6m (down on Q3’s €52.2m and Q2’s €72.5m) while previous equipment orders are digested by customers. Capacities built up over recent years now need to be fully commissioned and tuned, and customers are focused on increasing their utilization rates, says Aixtron. Total orders in 2008 of €250.8m were roughly level on 2007. However, the proportion of orders that were for silicon manufacturing has fallen from 16% to just 5%.
In addition to the predicted down-cycle in LED-equipment demand and suppressed silicon industry capital spending, most customers are reporting very limited visibility in the currently unsettled environment. Many are unable to see beyond one month ahead and consequently are more reluctant to make longer-term purchasing commitments, says Aixtron. This lack of visibility is impairing Aixtron’s ability to give comprehensive guidance for 2009 revenues and EBIT.
The opening order backlog for fiscal 2009 (adjusted for risk) is down 20% on €132m a year ago to €105m (€98.2m for compound semiconductors and €6.8m for silicon). Aixtron adds that it anticipates that revenue will fall in 2009. However, it expects to maintain a share of more than 60% of an MOCVD market that is forecast to fall from €464m in 2008 to €438.4m in 2009, according to market research firm VLSI. Also, Aixtron aims to remain profitable at an EBIT level, which will be achieved once revenues reach €170m for the year. Management says that it will elaborate on this guidance as soon as visibility improves.
“Looking into 2009, we start what will be a challenging year for all industries, with many of the key boxes ticked,” says Hyland. “We have a very strong market share position. We have a full product development pipeline. We have a good cash position, carry no debt, and our balance sheet and our operational flexibility give us the exceptional resilience needed in these circumstances,” he adds.
“We are confident of achieving our 2009 objective to come out of this turbulent period stronger than we went into it... this crisis offers many opportunities for Aixtron if we can retain a positive and proactive attitude to the challenges ahead.”
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