AXT (AXTI) 19 Feb 212020 Q4 Earnings call transcript

Good afternoon, everyone, and welcome to AXT's Fourth Quarter and Fiscal 2020 Financial Conference Call. Leading the call today is Dr. Morris Young, Chief Executive Officer; and Gary Fischer, Chief Financial Officer. My name is Buena, and I will be your coordinator today. [Operator Instructions] I would now like to turn the call over to Leslie Green, Investor Relations for AXT. you. Thank ma'am. ahead, go Please

you, Buena, afternoon, and good everyone. Thank

we like on and our chain tariffs the substrates you are the cause including in and restrictions, manufacturing quarters, conference conditions and products, our trends, financial serve in as regulations industry other such to future applications of uncertainties trade that to we and could our caution your global including timing begin, their companies, supply and and future of with to COVID-XX or statements the in fabricated potential events forward-looking improve and sales uncertainties company's current for remind our deal acceptance restrictions. are and disease, you market on devices events, uncertainties, performance regarding and to would increase I questions, by political as China, impact succeeding the utilize of the China, performance to competes, other the mix, response products. and risks capacity, in yields We of or limited markets in this company the the which differ emerging ability Before statements and health during but timeliness safety and to regarding, of or trade delays to, environmental on and and things, conditions are demand to course regulations materially. not market our growth partially-owned of made that management's chips using customers and that our outbreaks economic expectations, contagious financial we the our schedule in including subject risks conditions, efficiencies, increased in global other results These well to provide market and manufacturing among expected actual will projections comments based wish tariffs expenses, relocation, include, chemical the overall conditions product make call, financial the of environmental, orders the costs control to growing company,

factors the I like the following a I now and to market we current reports quarter In contain and available note to year XXXX. Exchange at additional expectations. call, to and shortly on This of financial could before from this begin, addition the are want Commission. that Investor you call the with fourth Gary results with link periodic our over of results. reporting website from filed issued release cause the online to These February will XXXX. Also, materially information that discussed be our through website to risk conference -- in Securities results portion 'XX the for company's our fiscal we axt.com. on that would This year fiscal of factors available our at to by on today, differ AXT.com information turn fourth may be XX, the is website Fischer, refer actual available and close fiscal quarter Gary? review call press a Relations our we

XX%, the the XX% and Thank QX. QX, from $XX fourth substrate and XX% our Asia XXXX. compared was you, revenue from $X.X Of million XXXX. XX%, million, our fourth XXXX in QX was sales million In up with $XX.X was up total from in million Leslie, America afternoon, XXXX, for Total from and $X.X of quarter raw XXXX, from was million the fourth ventures and QX, million North material of quarter, QX, $XX.X million was in Europe third Revenue more than million quarter the good $X.X joint revenue, in Pacific was quarter up the and $XX.X revenue $XX.X from in everyone. in X% quarter were of $XX.X in third in and million XX%. of Taiwan up of

of quarter, actually, [indiscernible]. of the revenue, revenue. and approximately So, customers XX% XX.X% slightly the generated from the the Gross prior XX% quarter top in reached XX.X%, Taiwan X customers In total fourth fourth margin X in down quarter. was

is that, from QX illustration Both This QX we comparison evaluating the gross of terms and our higher XXXX, Given a very recent business noteworthy and leverage are revenue, in the quick much XX%, stronger. of margin of think QX get the encouraging. is I is of year-on-year was it XXXX the model. in spread

XXXX. $XXX,XXX it a was companies. quarters year in with million, prior million half the achieve higher some contributor can is we good bonuses we We the settle and Morris of watching manufacturing course, to QX quarter, think consolidated items. reward the X and over of be programs. that factors. product there mix, The volume. still is One, to will is of some as I SG&A in gross overall nice totaling is manufacturing that than be R&D made in material QX recent X finish, teams into is specific terms About third as increase for we had A be the still up in revenue up million our on in of another locations. think I $X.X yields margin, R&D year-end strong about from $X.X QX, and progress $XXX,XXX, able up was is and the are a gains several efficiencies, team. to in largest is by Total $XXX,XXX. good operating making in QX, driven $X.X in were and expenses some raw are new this

for not debt charge happen $XX,XXX, that too business in of model. a does had often our we bad something Second,

the IPO operating a fourth of million previous up is positive We $XXX,XXX. and net to exchange $XXX,XXX. Morrison up, $X.X quarter XXXX of equity and the for number a compared travel net in the for also fourth a had $XX,XXX nice XXXX. AXT quarter Operating operating charges accounted me, for that's owned good of We The million million, will the China. from good raw This profit quarter, that almost under the the related with gain fourth sign. profit gains method, in of of news. in a materials including XXX,XXX of income China, to and to of group the $XXX,XXX. charge noteworthy charge of the companies quarter Other loss for the stock and $X.X think has Total an compensation almost was quarter grants round These partially Especially offset in for expense was went so preparing as us, for of and was market is and was private were for QX compared loss includes and profit $X.X a with income was fourth in $XXX,XXX net an supply QX. $XXX,XXX It's in XXXX. chain, XXXX this a this a of $XXX,XXX a be tightened Income again. interest see of charge of tax hold expense. by foreign equity for the

wafers XX% a $XXX,XXX in United results from tariff included China. the on of the result into as approximately QX charged importing States tariffs Our

comparison, $XX.X XX.XXX in September the December of of million per of net of would This in the a were XX, million of third is of share Star that, million, the in net progress, in By of diluted finished quarter The amortization a per Cash, increase was and as brief net share $X pardon $X.X directly this have our consisted XXXX, investments deliberate I'll share of part. is $X.XX Depreciation have profit Ending in at fourth of materials, quarter $X.XX a private materials, had IPO Without result a and a The $X investments share. only loss the we firms for give quarter or on million profit $XX.X equity diluted comparison, count of per we in By and to cash XX. at was $X.XX update million, profit of ended work million, This in QX in XXXX. QX at million. was XXXX, QX and IPO XX% a or the was December Net by goods. million and equivalents $X.X approximately XX a raw been million. inventory largest for was moment. XX% it on with inventory -- flat. $X.XX me. $XX.X increase raw $XX.X For million, $X.X increased and shares. profit related in in Market or project and China. the partnering X% cash million. $XX.X loss million [percepts] were increase of

our quarterly financials. concludes the of This Okay. discussion

me just highlight fiscal Let year. briefly the

November also $X.XX there in our STAR these we growth share, represented XX, for technology a plan on almost comments you up million portfolio company, access forward-looking of and XXXX, demand the across Tongmei. XXXX. and progress compound give our was year margin a $X.X seeing our company year $XX.X to list drive year -- was our the statements. semiconductor This to short category $X.XX loss strategic an China per or in brief now name for Net that plan year some name in revenue Market of diluted fiscal revenue formal include XXXX. Technology [Xtal] from like the million, initial fiscal and fiscal and or in XXXX On XX.X% in Gross a substrates. by the fiscal $X.X net manufacturing are fiscal Company, to to million for is company update every major of announced comments compared for I'd XX.X% about we offering although XXXX For underscores momentum XX% our fiscal our Tongmei XXXX. from revenue the Shanghai, $XX.X and trends revenues, million, income per markets public the year for capital was year share, China's wafer with up China, in of Beijing

and funds came is the The step has and and did in of and me. January, described you Morris our in aggregate, broader companies, this high In Simultaneously, shareholders funding receive that into Leslie, Mei, is quarantine. and have XXXX, strengthen by the the we total, years. management firms major lines, some the was [indiscernible] investment that X.XX% to reputable we gone reorganization more Tongmei. and than Tongmei support and moving now when expected. asset, million hidden revenue, which we both China number process asset material in positive customers the steered this we this. general, invest Tongmei and, over will unlocking a have company fall valuations private we In BoYu spent over sold equity for final totally faster X as Especially a including that there well, in feedback equity in some product very in enthusiasm, the met mandatory company team Several make resonates Jin hidden private XXXX, are X-week we founded of of working example engaging in. raw installment in nurtured This unlocking from XX approximately Tongmei. I this family. and community. Morris banked announced X One We now with approximately with $XX awarded went the so with of that we $X.X are that Morris, smoothly, relocation having been agree closed of China. in months a and plans, million, have more in consolidated on first

and Commission too. end application by us. goal, "Wow,' One e-mail said, us, hope a the also of X for it to China lot months a file be busy just for resonates and achieve Securities There's the with of June. to you the accomplish Regulatory that that responded will We with an to that

concludes for This now to the Morris review. Okay. a financial review our the Dr. business. call Young over of turn I'll Dr. Morris?

to of and our to afternoon, completed standards, quarter. processes Tier the increasing capped arsenide relocation typically business solid expanded was Gary, in XXXX We good capacity X AXT, manufacturing manufacturing, for a you, off which in growth everybody. demand. seasonally of elevated and down the QX, and by response year is a Thank meet gallium achievement our

momentum health the and are devices ready. coming strong, industry care trends XG center data applications related connectivity, Now, lead the of in in to believe the and a of of new and position we enable emerging we competitive with many our and AXT the and defining decades. And gathering technologies, its technology consumer is progression

In fiscal year will you make but today. a I projections, fact, often we few don't give

gallium X-inch indium bring to expect we XXXX, in First, and phosphide X-inch arsenide market. to

that to expect exceed elusive mark. revenue million $XX We quarter-per-quarter

We listing shareholders. We on for AXT turn, to be believe Tier production expect employees, in this multiple XXXX for a customers, finally, up to our And X and the our ramp we're and Market with year our companies. China. transformative a STAR successfully towards excited AXT, in move will

truly said excited While I am our report to it you before, progress. we to on

of now So phosphide was let's started revenue in of XXXX indium strong with our strongest phosphide. QX for a the get indium AXT. -- portfolio history quarter second

applications. a In results revenue customer, expected Our our was many spread in customers exceeded on our XXXX We we QX indium April when diversity sustainable earnings of in XXXX, the order of of an our growth is who inventory and we XG very were believe was across that single only large future demand. received from money the report. achievement by mentioned first for broad revenue a we believe current revenue and building however, XXXX, phosphide. opportunities demonstrates It nature QX

significant in its later, power particularly we capacity in strong don't our remains indium believe closely XG in China our applications XXXX, very and been driving growth see slowing had XG roll Demand are year as continues a Taiwan, tight. out to Let's in say, any We and worldwide. related revenue. phosphide and industry

lead In is of ever-expanding users, the transfers connectivity We competitors. essential. demand. scalable technology able the time will quickly data Scaling more to have infrastructures. connectivity, capacity and be market our do, have cost facility AXT our faster, to High-capacity at will Beijing we run is is effectively center expect number with devices, and to primary applications and driving something gain we pace because to uniquely to keep share and transition to continue customer it the that shortest among continue

will fact, the to XXXG believe faster XXXG. evolution than happen the that In XXXG to from move many

we In growth strong XXXX, we emergence meaningful innovatively this developing in devices. area as developed productive have this seeing Moreover, we to driven are which being to and our experiences our These the and areas applications see Tier X for demand consumer are across players of potential reflected showcase are customer with the and health such to of engaged. entirely We Tier we the indium of and in applications relationships the new photonics revenue. silicon represent properties for phosphide applying expect we steady, portfolio. highly are phosphide. in we have business, unique new the well data in pleased in benefit customer center-related are processes care growth monitoring positioned indium an by additional Money X are our area,

applications high-end Now in for turning continued applications, automotive. in substrates. LED lift revenue rebound, to revenue ongoing to gallium arsenide a gallium including semi-insulating to arsenide driven down Wireless by arsenide. was seem providing seasonally gallium demand QX, but IoT be

New the virtual applications, more. and automotive cameras, sensors and and biosensors, on horizon, both augmented world-facing emerging and include today reality,

large to previously, follow handheld like of expected the screen, applications about may driver power, As to set lighting brilliant future. devices less are we major arsenide and LEDs from colors. televisions Micro are very produce volume talked the contrast, chips. Their scale micro-LED provide next consume gallium to devices and sharper of wearable and as high-end

change that exciting reach in a of demand for subject the driving time, Tier space commentary have on substrate. ready a that and XXXX. parts germanium other early-stage and so they entire is more alone. But already much solar market, we're add this slowdown like being substrate. reports that arsenide beyond. used business portfolio, market small for current of of that this appear LED current product very driver the of If our values which are business it in our X-inch wearables quarters, entered our annual to market satellite than larger focused substrates gallium development, the grew are and In LED expectations we after is gallium haven't the happening specific significant devices to for over with and XX% semiconductor X for be an portion market arsenide believe to the wafers context, much area the recent of for in numbers, greatly, The our new players the XXXX, period seeing of in primary comes an the activities. recovery. Regardless than micro-LED XXXX are will X may phones we consumer cell could to significant pass, market eventually million While

to further expect XXXX. improvement in see We

industry market is expand interesting, response XXXX, strong capacity to enabled to raw relocated In business. our turning materials time raw joint demand. Now campus This both our materials, and an exciting Kazuo. this in to Jin Mei factory ventures to high-temperature diversified venture both for pBN-based has in is BoYu their material joint gallium Mei, is BoYu, crucibles as industrial healthy manufactures to solid prices which pBN AXT, high-purity tools see continued results Jin other a increase. supplier, -- OLED, for which posting and for our continue growth. also to

high-purity new Their and both Jin to Mei supplies efforts, is to addition manufacturing joint allow materials. gallium, Their to business lines AXT in and proximity while growth. relocation fueling also which close indium to recycling order [indiscernible] other improving expansion our phosphide have ventures poly allowed own continued their economics. In expand produce manufacturing in to participate opportunities, products,

BoYu our have QX. pleased discussed environment. heading by on momentum, to now pricing new gathering conclusion, that are aggregate equity that positively quarters to Jin the a into a chapter method, development. profitability are Mei, ventures addition using our In contributed past the trends driven healthy growth joint Many we're with Major demand horizon. in benefiting over visible technology of account being we're for ones and the new which also increase commodity and the from for In in we in we

is customers discerning Beijing, in include listing, preparation ready AXT stakeholders. industry part unlock further STAR Tongmei some will for moment of be our year the a our enable strengthen facility XXXX this we and of key to up believe our to and Our in which our of meet the and value and for are most Kazuo shaping transformative And Market Dingxing, financial position world. our will journey additional for the specifically. innovations for

have very will Gary Gary? and are with enthusiasm support. to prepared We the us guidance. ongoing my back comments. This I our we quarter you on now your journey, pleased and for first call to appreciate this concludes turn

Thank Morris. you,

a remains growth the discussed, drivers the environment number with Morris healthy, way. leading demand As of

share to concludes see of glad now. between We and to our that of will Morris answer will the shares. approximately our revenue $XX.X with $X.XX, of in a comments. expect believe million. XX.X in questions million $X.XX This QX prepared $XX.X net I profit We be to your to range count Buena? be

Yes, sir. from Richard question Craig-Hallum. is [Operator Instructions] of Your first Shannon

on some Congratulations here. really numbers A nice number here. questions of

Gary, down Let here, million bit just a midpoint the seasonally me very quickly Kind in of A, quarter. this. the $XX the a first at Typically, of versus number. the first quarter guidance of you're Morris, describe start help the and kind with describe $XX qualitatively million helping the here individual better of what's you What's year? seasonal driving the us, than kind here, segments all of then to little much

to do first want a take you Gary, crack?

Yes.

a from right is cycle recent and first actually without seasonality in say be because up. now I typically, out up, quarter First years. number then but this wouldn't a down is flat was of tiny bit in or down time QX of pulling a And all, that's have the bunch It may QX. of QX, the of numbers, out we a normally QX

so We doing are down said The we're we and growth. both on that, raw comment going and but of equity on having the well, material to numbers, projecting companies can lots increase, through companies that's Morris that, raw -- but BoYu other want demand, method wireless, the material are see seeing ripple as to prices So momentum. to every good. the Jin Mei. we looking to not do category that? use equity strong arsenide but and for below continuing then, that strong as And is maybe substrate gallium well the see market Morris, add we're for, you

phosphide so Yes, absolutely Sure. dive indium little deeper. I bit is strong. a me let Sure. mean,

than having still told lead increased time time. we're but competitors, shortest has our before, In lead compared fact, our the to we're

robust. demand be We to just capacity, very our increasing are and the seems

the germanium, good. for is business think I

but As Gary flat. wireless is perhaps still to link, it's the going the said, hold weakest

you, months for of New of me days only us the but you XX Chinese demand also Year, can factory, only to for -- a let us also, has is shut So remind one about week, has down the revenue is actually strong. so for for so QX because not the working which ramp days very of able the And to the is see guide February, very, shorter. up, number be to

follow here. margins to helpful, That's what thinking comments. kind to out figure like to on those want you're try Okay. here. gross of Always I up

you're about materials us indium help raw being and phosphide quarter, to think talking gross could margins? relative I think Gary, You're helpful. fourth where the Directionally, also strong, is for about, you looking

volume we and favorable. revenue that try to we that's the thing, because as Well, But is the is absorbs your And one mix see it going to know well. them mention Total grows, more -- of and it, the frequently fixed and be the we continuing units. up. community things it cost drive over generally more as helpful

runway that's margin goal. but us happen. to to to and not like for where our that settle initially, high-volume as trying do go than customers. side possible, of going accounts But We'd a hope We're they say -- that's might up the gross can't can -- pricing it And will go think the with up that. it we that larger dollars gross note, gross when, that, for kick you margin XX%. profit go -- profit there's of of it that we're soon. but higher and these the with for some to but could back hopefully X lose confident Tier -- even volume get hold gross the more could go no We sure, what, is because I As can we'll matter benefit to up, in, just some

want I to So guess, feeling it, add Morris, what about do anything? at I ease we're is you would say.

Yes.

this. matter. finished CFO's would arsenide not a say I I gallium gross which move just comment, think we for usually, small the is what margin mean, is but factory, will our I territory, I

have I settle think nicely. up we an fairly and said gain improvement they And factory, to more got ramping job we we are we efficiency any excellent or not done yield the once losing do. customers, still then

about said, phosphide very strong and As is can how indium more business phosphide. much indium we on I do depends

help that gross us should on margin. think I

the other And is the are is, thing think be that million factory as running the a obviously, cost overall We pick to we up else of that looking before elusive revenue. I said we that and we believe mark. everything going $XX overall for the revenue. lot more efficient

want about which Okay. growing it your more back in on of as move, kind Morris, the you but up to in can margins gross people manner do think quickly follow How simplistic asking also further move. they and a asking look gross volume you did out a mentioned you've improvement you I'm have potential go margin Gary, -- talked what I you you question get with you're this the I remarks, partly move? of about. were before is significant get I'm you think topic yields same quantitatively, to obviously, But you to left most just yield up gone XX% as I the do to And again would where here? mix here. for thinking as think the through about prepared and much

details, without so. think into Well, I definitely getting the

the of up mix, if load definitely, -- some can arsenide sure. phosphide And factory, business, for we product we I also course, some gain think the margin. high-end so. gallium market the gross But definitely, -- of indium we need

have and definitely can just promise with do Of gross we think debate, can course, calculate margin. all, it. Gary, gross those this the healthy I that debate, margins, I I because Gary say, But would we I has see after to

enough Fair

Morris him. is going my not to disagree with so boss, I'm

kind I talking think a to that's right, strong All Indium a I question jump here. good last of some about you're of -- Morris. you, will line. growth guess, multipart phosphide, got I I for really policy, I here, out Gary. question, want

from want XG driven is strength a Huawei, your with driver [PON]. of know, trade it's of the in back we've I bit is by you that a tell know little mentioned and referring to? maybe think about coming to tensions other datacom remarks little I applications there. even industry dynamics, there. you're versus in some who's, pause, the bit seen hard I to What a or biggest what these here think, to prepared degree like I the new

mean, itself trade stations. cetera. And and the not to just front on limit far, particular Huawei rather news I Indium going XG read for haul so building But Well, is et think base link about or increase they're I the the I any tension to itself the XXX,XXX year, phosphide used is decrease. does our application region. China last and than

later. from it's a And read. Yes, we are ramp, customers. know. gaining lot I don't of applications where their And going up, catch the seeing measure And And that's in about, with increase, And then and than will need use or they talking the the it try a going to up. to we phosphide think it's I other was it's or the going linkage. I to soon like hope down as XXXX. more indium think slowed launch how phosphide, trust, is somebody catch Honestly, rather product, of definitely, So, much that maybe build-out as think that pandemic recovers, yes, indium do far I not, we're slowdown. they but with to to And we working [PON]. a worldwide, going the economy are have XG is our as definitely to of we're to sort just

Okay. Fair enough. of out jump will I line.

Your next question is from Hamed BWS Khorsand Financial. of

clarity you committing giving this are million is qualitatively to your $XX a it what's see, I your more want customers So, What to quarter confidence? about that as more driving just orders? seeing you first beyond that's I off, this quarter your just comments mean, to customers year? from your

answer Yes. way. this -- let it me so I

be and phosphide I I indium And last and usually, our a visibility. order at look then indium the very the start if was book, PON pick But at don't photonics down. we think supporting back we so to we the then And any sort down, see strong big phosphide, customer have application to application far, Normally, it of PON. only slowing then as the say. off also, anytime, time silicon it's what strong, used order good in always turn XXXX, looking up. was don't you -- of very get slowed -- and was can

a Now, still going the silicon or beginning, I And anything, have believe applications, all. if They not the grow photonic first-year opportunity then down order buy the them. hasn't just look first also to mentioned supply, our and see got And faster. you only customer, we consumer epi we instead buy And I at they to with phosphide they're XG, with started only we at we inning. yet. applications if engaged the go, our of product indium increase it's directly, more then, they is we that through more not call, just and a think slowing in in see to which

phosphide automobile definitely we see And semiconductor that, So, industry the arsenide, indium strong. I gallium given is good. is think from

XX%. is X% One X% from to increased going to they customers up of revenue our X% -- to to guided increase their their revenue

one is we strong. we ours. automotive laser is And what is news, then the LED a sort just other started wireless growth they're see so-called market, -- haven't I I the that's but giving same VCSEL germanium, large think customer which finger to of, a demand us said, they But a point last XXXX So very have customer see was at also pattern and is good. counting only which And high-power think on I finally, XG well, probably I year, we and And good going we because signal. believe is, the we year, of also seems not are also think we good grew strong, grow. XX%, again, the don't the order And all be to specifically still as connecting communications. to OneWeb the

year I good germanium have as to so, well. And is think a going

prices can got not X all ask can categories they say. ventures, market doing our to for materials. So, for increasing, raw Raw if you great. look at the demand capacity the their it, and material X our finally, for, joint are you is I new is and factory, raw just all material strong only is And strong, move again, expansion they've

then And existing adding is or lift the from question are was you my that, other customers? customers, coming Okay. revenue

I you going the coming as course, mean, with some customers of go in cannot new that I both. they're speak, my think mind, think I They're to hopefully, orders, tell ramp. but customers. of through I I names, them are some large of the

a major of buy customers, the ours. of to through, a qualification amount us. they With they're Some this to small become customer new from other used going going

So this factory includes lastly, think SBC say, about both. control. X we been I serve And would have we are Tier I which customer, it's saying the to getting our

more to have that so of cost ease our off, control and businesses. the people serving trust metrology, of customer the will more adhere terms you right pay increase you more will way. going But -- to us -- in will have terms You more in to terms quality of in and it's give they rigorous engineering, eventually, at then be because our better,

do good to and Yes. our AXT our Hamed, of customer. strengths, marketing and to communication I'd to promote that add the group is between one just we like we our say the customers, and have listening and and to very devoted sales that and that, that's to

and And the gone we've positive feedback it's lot like. of us hear, sometimes, cycles what about been on with like volume don't now, of those your a when we've you've stereo before, expectations. through But right we system. just been And them. some turning we up There's their through

which up A is thing, -- touched what over. Morris So second good. relocation the communications on, is is and it's

because customers are the So just relocation concerned risk. back, were some back, who they investors frankly, are holding about as held there

market converted been going to an into and We're the company take grow that's opportunity. share. Now

So I there pilot are think shall new and been that's production and we shipping, or customers brought eventually to going back, that -- some And we've then increase levels customers on. volume. to that's turn to, say, their then

basically mean, feedback. what's happening. it's customer So I that's

short build there? there's question to last far is how is And -- just capacity be, your competition as as my drive you the do then ample was the concerned? And up market supply what's much and doesn't concerned, capacity capacity as as tight going out Okay. you're to far the know

for upon I respect think Hamed, think, we always our competition. I depends utmost product, have I mean, think. I that obviously,

difficult. because lasers I think saying specific telecommunication very And mostly material consumer indium requirements. the is been of for phosphide products. always they are but and also, of stringent -- I've applications a high-end indium is product phosphide, very have They

So us far customers and and our then, triple we double not course, quality to don't think. or that of capacity, a disappoint because give I this, cannot order build competition, only it are take But afford projections. very so are ahead lightly, them to grain salt to we a because trying we have would the with we sometimes capacity, have are to -- telling standard, But I we think they either, capacity, order. I but as definitely we take us, as we have -- they I But give of need want high of believe our we they them. that

sort And to ship your over are we that at factory believe stringent them. the whole to to qualification I you won't the that I store sometimes have order for X and to they look corner go turning the material ask cooking kind to you your and time, indium can to even tool mean, a to have specification, taking metrology come of around, disappoint and phosphide what a it, things yard. we wafer them. -- home and before of also So specifically guidance, you take our is our hopefully, inspect dozen customers' they not a

we them So years. application, our with that work very it's with we particular elaborate on that almost -- customers working this process for we're X a

but of we guidance your cannot give for I That the them. competitor. take -- can to And going okay, a so we so, on say, they we're then how course, the well, they constant of stop they we But mean feedback, much always want. business us do don't have portion granted. and to give business

there's that Morris around both as me let been well and and company quite our more, key time, has little vice entrepreneurial Hamed, project, which of spirit presidents. at you look a other bit and I if a add even Yes, long the an competitors in try though characteristics still as management, AXT the AXT, our of

more If competitors, you they don't other of making, much conservative. compare move fast. They're consensus-based one in that as our to and their they're decision more

saying like can than to that big in don't lower competitor, not no they're much do, I'm the capital they're the So with have likelihood of customer, In privately add customer access AXT. They is is it and case not the we part a capacity markets and company. a financed. another grow, but of

we we it. that can barriers capacity. some is did only rapidly The they company that So I there's AXT, in think entry who have well believe because do it can of just reasons adding to to terms prove

There's to CEO any no turn questions it would of AXT, further comments. I Morris time, for at to and like this back Young, Dr.

thank Okay, our you. for call. in you Thank participating conference

As please me, contact with Fischer, Green the directly, near Gary to do forward We you feel up speaking in a always, you like future. look would or Leslie set free if with to call us. to

and conference this thank gentlemen, concludes call, and you participating. Ladies today's for

may now You disconnect.