Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Aixtron SE (AIXXF) reported robust Q1 2025 results with revenues of 113 million, exceeding the guided range of 90 to 110 million. The company achieved a strong order intake of 132 million, leading to an increase in equipment order backlog to 308 million. Aixtron SE (AIXXF) confirmed its full-year 2025 guidance, expecting revenues between 530 to 600 million. The company anticipates strong demand in the optoelectronics sector, driven by data communication applications and the transition to photonic integrated circuits. Aixtron SE (AIXXF) successfully completed its innovation center, which will support 300mm gallium nitride development, enhancing its competitive edge.

Negative Points

The gross margin decreased to 30% in Q1 2025, impacted by a 5 million one-off cost related to personnel reduction. A slightly weaker product mix and selected product enhancements led to a decline in gross margin compared to the previous year. There is uncertainty regarding the impact of US tariff policies, which could affect Aixtron SE (AIXXF)'s operations. The company faces a slowdown in demand for gallium nitride equipment in the Western world, although it remains optimistic about midterm prospects. Visibility outside of China for gallium nitride demand remains low, with potential impacts from geopolitical and economic uncertainties.

Q & A Highlights

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Q: Can you provide more details on what drove the order intake in Q1, particularly regarding the contributions from different segments and regions? A: The order intake in Q1 was significantly driven by silicon carbide, which accounted for almost 50% of the orders. Optoelectronics followed with about 20%. China was a major contributor to the order intake, followed by Japan, particularly in silicon carbide. The rest of the orders were distributed across other regions and applications. (Respondent: CEO)

Q: Regarding the laser segment, is the transition to 800 gigabytes and co-packaged optics affecting MOCVD demand? A: We expect a gradual transition from discrete laser devices to integrated photonic chips, which will eventually lead to co-integration in packages with GPUs, CPUs, and memory. This transition will span multiple years, and while it is increasing the role of optics in AI and data centers, it is not yet a major driver of MOCVD demand. (Respondent: CEO)

Q: There was an increase in SG&A costs in Q1. Could you explain the reasons behind this? A: The increase in SG&A costs was primarily due to a reclassification of customer-related lab services from R&D expenses to selling costs. Additionally, there were some one-off severance payments in the selling area, which are independent of the announced personnel reduction program. These changes are fully accounted for in our fiscal year 2025 guidance. (Respondent: CFO)

Story Continues

Q: Can you provide an update on the competitive landscape for the G10 ASP tool in the indium phosphide market? A: We primarily compete with Veeco in this market. Most customers have selected the G10 ASP tool, which has a strong track record and positive feedback. We expect volume growth in 2025 and 2026, with further increases anticipated in 2027 and 2028. (Respondent: CEO)

Q: How do you assess the sustainability of silicon carbide demand in China, given recent price declines and market dynamics? A: The decline in silicon carbide prices is enhancing the competitiveness of silicon carbide devices compared to IGBT devices, which is driving increased adoption. This price decline is expected to accelerate the production of silicon carbide wafers and stimulate equipment demand. We anticipate continued strong demand from China, particularly in the first half of 2025. (Respondent: CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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