AXT (AXTI) 29 Jul 222022 Q2 Earnings call transcript

Good afternoon everyone and welcome to AXT's Second Quarter 2022 Financial Conference Call. Leading the call today is Dr. Morris Young, Chief investor; and Gary Fischer, Chief Financial Officer. My name is Kevin and I'll be your operator today. [Operator Instructions] I would now like to turn the call over to Leslie Green, Investor Relations of AXT.

begin. may You

and Kevin everyone. Thank good you, afternoon,

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

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

and very good financial QX. with the in and you, Thank to Leslie results We're pleased afternoon everyone. excited

on Morris Morris from in the months get four stage. just them Let's Beijing. walk By and through way, returned

have to him nice it's So back.

$XX.X So $XX.X and million to second the million $XX.X okay, of XXXX up the first the revenue quarter quarter of was million, second approximately XX% in for XXXX. of quarter comparable XXXX from in

half from indium first XXXX category, product revenue for you our break of revenue $XX.X Gallium another this XXXX, and first million arsenide at revenue revenue XX% and for X approximately total the was companies the was our America customers quarter the again, a is the XX%. since one two $X.X quarter, was The and was and million In came revenue XX% in Top from $X.X $XX.X North was down million. of To Europe were generated XXXX, positive slightly quarter is level. joint XX%, revenue the Germanium record. venture in last of of substrates million, third million half QX quarterly new second the XX% XX%. material XXXX. year. of arsenide was up customer For over Asia the number over consolidated phosphide $XX.X QX Pacific was over gallium highest raw by

a continue to XXXX. not application. sustainability of factor of demonstrates compared on in was Non-GAAP quarter diversity our margin to have XX.X% customer XX.X% XXXX. We is XXXX confidence in and the another dependent particular or believe that growth contributing point is and growth second gross that QX XX.X% of our revenue in This market overly can we with any QX outpace reached in

would those the last GAAP second to compared quarter XX.X% XX.X% margin basis, year. track in who of in on in and XX.X% a QX gross For QX was and prefer with results

As you can progress gross in see, on we made margin QX. huge

regular that improved of many one ones. While Beijing conducted factors growth yields, particularly of in margin focus. meetings a has contributed, months four during yields of and come there on significant result were his Morris in improvement the most part this our crystal was as

both their third are that is we factor phosphide that margins. material two developed a gross recycle remnants of is Indian BoYu processing enables material. raw and to technology A factor JinMei contributing us process consolidated Another companies that improved

the is program in four comparison factor margin another In our benefit, forward similar. by pretty quarter, addition mix is us step mix gross ESG product to to looks first commitment. the the A for this

impact However margin. mix substrate can the diameter within each gross product,

was So product favorable QX. more mix in

total a million This expense non-GAAP QX million. in of GAAP QX. in with expense $X.X Total compared operating was QX compares $X.X and $X.X on. QX million with basis, was year. X.X% in in million $XX.X was operating Moving in QX last On

QX $X.X last operating but did the million this in million For current XXXX. operating profit QX debt QX of for of a in in experience Non-GAAP $X.X for often totals comparison, don't We about of quarter was very the expense bad million $X.X non-GAAP The $X.X we compared second for of XXXX GAAP total was million included quarter. this XXXK. charge year. of with QX and

reference, $X.X an $X.X of GAAP unconsolidated The operating other quarter from for net operating from method in equity $X.X million for of and and the profit was higher in higher of raw material second second QX million, profit sold. Nonoperating million. includes profit in million QX of the million contribution ASPs and up units This more breakdown material a the of operating is gain income was press $X.X last companies companies. reflects raw from the The expense for a year. $X.X For is materials full an than quarter usual gain and our release. the raw

weighted million $X.XX equivalents quarter. a per $X.X GAAP March million of bank approximately the XX. share shares. of $XX.X million of net or in was million was was in or $XX.X and get compared of first year. million. XX, share shares QX the million June and The QX per QX share in diluted average $X.X had with or XXXX increase income is loan $X.XX in QX outstanding per million share $X.X we net as investments We share. a per per comparison, quarter $XX.X or $XX.X of QX, net of Cash, million. or For a $X.X did during $X.XX QX it Non-GAAP $X.XX $X.XX net an was non-GAAP in income of China income million million By last at cash in XXXX. $X.X $X.X basis, was were On or By share. in per This million $X.XX income XXXX for XX.X comparison,

in $XX.X X% the about second current supply Net $X.X the the QX. financial Depreciation invited quarter was was we up loaded is in results. is June related the million, and eliminate of at unchanged and was inventory did basically demand and and inventory. million of amortization Finished is $XX.X quarterly the only million. inventory actually locked million Most the that of loan, buy constraint raw facilities in environment of discussion This were XX%. stock construction. But materials should makes WiP phosphate XX% for equipment when accelerates, Total quarter you declined which If of the and be quarter. in the Indian capital goods concludes was investments cash and related. million, ahead is $X comp this $XX.X XX

submitted not affording success lot progress the and to be and of Stock will the Market the now new IPO and We step major achievements in overconfident do can Overall, IPO China still be the milestone major, visibility a to year, complete listing that effort the our market that the most initial for a of underscores very in in Shanghai development Tongmei to and in is have believe more hopefully we The work recently detailed, our that complete very milestone world-class is told thorough level that further Tongmei in a XX and plan reviews. [ph] will proud of as this which a want to AXT's for Star China subsidiary, team to We in offering. the this calendar list for the Turning capabilities. Exchange did our big the our approved we the likely QX. Regulatory Tongmei We're is getting our review our positive demonstrating was Commission the are application Shanghai, but in lengthy to Tongmei’s and July star public on Shanghai the in do next of mean be have review the consider China Stock prestige. the most this achievement of we respect is approved process. application to Exchange on Securities very

to restrictions Morris, To Beijing, have China. take shutdowns of COVID turn Before address date, not Kazuo. call in moment or want in I operations the our to any to had Dingxing I the over a we

of last that shipment experienced as we supply process. use to products quarter, in we chain our disruption have supplier some and As manufacturing a we noted delays shutdowns relating result

on are through on most coupled but expectations However, so where situation the us have those softness applications our pockets demand We the any in need seen also occur. been issues hand. and these customers of in other contact with them, that remain mitigate are to their far, demand. companies, in should high high-level close to monitoring to changes demand for changes and allocations inventory with closely shift products, customers managing our customers or are the understand that allowed attention. customers remain Like applications our with to We've we with we've the lockdown impact of some diversity able

Okay. Well call business markets. the of Young I'll Dr. Morris over with and for a that, review our turn Morris? to now

our Gary. a is in time you, very This Thank exciting business.

quarters. strong has stage fronts coming Our great for on number in the execution a opportunities of set the

We quality excellence of standard and that and are to Tier X competitors growth in strong for our several achieve Further, increasingly created technical is continue customers. match. strategic our a ramping has currently to highly product applications capability difficult

phosphide. indium customer number our despite in As gains working requirements hard a supply across constraints we're And to in our is applications. meet evidenced by market share industry, growing of

that a to We success of outperform driven diameter us generation next achieving the year growth innovation over first on are that of execution over our end in notable continues development XX% and markets. market previous number with the large This has were later revenue of will also enable strong emerging the half technology quarters. substrates the to across of enable opportunities coming

set downstate in new we overcoming [ph] phosphide in to revenue mentioned, and for market a LiDAR telecommunications, data XG a Gary for Demand in our indium pounds applications for record QX. continue center the product QX. As grow,

a continued ramp in QX. our new customer applications with We its healthy in also growth saw

for has into of qualifying applications significance we're wafers stress preproduction this to the that now addition, I in are itself to tough In challenge achievement. on and cannot the best a stringent June. very proven second phosphide specification, we efforts May quantities of requirements the surpassing call consumer pleased a the AXT our enough report indium a of which we world-class of deliver organization. up the meeting and competition product answered of

in to a constrained available meet also Tier to phosphide Even indium a now market the supply demonstrating not meaningful to year. position We're AXT that revenue X customer This in effectively to scale company phosphide unique there be and customers As double build will capacity, we cost with expect now for demand. ability be the year, wafers. opportunities we that our were additional we capacity engaging quickly are previously such, next beat into becoming to us. indium we with other are continuing brand-new and our for to

with our work their meet to closely continue requirements. customers We to

X-inch of innovation an the have front, indium milestone development On achieved important we the phosphide. in

of diameter We our device are large AXT. indium R&D beginning wafers and in VGF market. low customers differentiation application high-volume commitment to quality low the combination the stress producing of crystal quality new to This of phosphide. X-inch our our now to rates sell defect comes able to The growth material scalability, pleased advantages substrates demonstrate of excellence is initiatives be our prime as and major and process. We're for meaningful offer to

arsenide. gallium Total up in to now was QX. Turning revenue

remains high-end as lighting. traditional market automotive strong high-end and LED display Our in demand such and signage applications

and strength in have our we opportunities. to relationship laid growth. The made applications also choose and come used groundwork position see where key for of future achievement we have for ability market Wifi share this a of to lasers and modest with prior market over our equipment, future We RF for Tier applications to is we customers demand We our others. facility, but down important our customers also capacity are expected for drive to in tighter IoT continue substrates. QX to sophistication high-power good in of X use believe share. our laser continue quarter. revenue high-quality increase on robot metals industrial high-volume, gained These a capability testing involving helped improvement, cutting demonstrated with renew In support to space commonly significant coupled customers with bit manufacturing the in the several have strengthening focus environment devices, new applications

leave specifications. that two of the this new substitute, customers over our us the real update is on time gallium we to program. give large X-inch on I in from arsenide developing an a The the confidence and believe product now report are them with will our want of customers enabler design I the We be an next to gallium Before arsenide give increasing exciting we for gallium for major and I'm engagement years. development topic for pleased arsenide. several high-volume working have there substrate is that level X-inch market applications that important

forecast location, down QX. highest substrates. of cell of industry germanium two result is JinMei about revenue has Today, of purified QX solar Since facilities. continued some the two expect a were Coming for which remain for new market that to has a indium show before high-purity of be to well. the QX Revenue we diversify tends off for The quarters QX. sales more poly consolidated JinMei that from particular, I sale. and its was turning germanium state-of-the-art down to and product in joint in QX offering the expect launches Now want though germanium’s beyond in has QX our end venture been meaningfully and year. gallium. in do to revenue and driver also primary offered relocating resolve do to to solid issue customer-specific it note indium our to our lumpy, It in contributing Kazuo the [ph] flat phosphide satellite continued looks as to we strength. capacity be payment satellite In

meet to success in our raise opening across with customers growth the which sophisticated business proven respect world. on can that efficiency that doors their Both value. offerings in indium most in standards innovation to a of in our business has BoYu processes we execution than our and us applications. the R&D strong we which the to more culture high transformation our drive have In is gallium program in bar the diversified opportunities order Today, wide the cost of new to helping can contributing way of before our is the their their and addition, recycling remarkable earn And that are portfolio. some conclusion, JinMei variety enhance of developed business. the successfully we return, strong We've is In for paved customers ever across a very structure.

our from to all we is is of market was LiDAR, help of look that AXT [ph] As that to generation ahead diameter reshaped next monitoring this health technology care to the everything And possible. progress validated connectivity bringing are our them more in large I will innovations for I being be device consumer quarter substrates make to and [ph] ahead. will process market STAR future the third our Tongme guidance. listing prouder continued China. Gary? excited diligent team very of call about to now in IPO Gary by for back more in our a turn couldn't

I mute. myself had on

So can you me hear now?

Yes.

Demand arsenide customer our strong telecom, working QX growth of lasers with data Morris. phosphide be cars Thanks, with including to multiple center, Gallium X we driving and growing consumer, keep orders. this, hard In well. continues portfolio across others. customers Tier we're are healthy breadth Okay. and up LEDs the and is expecting also applications for driverless indium and have to in particular, to

areas by it these substrates issue by obscured the is caused Morris top the in expected rebound. mentioned. decline line, that growth to in revenues germanium likely somewhat substrate draining resolved, will On are be a customer-specific Once

is for business that that The momentum. are seeing strong we across and with our demand important new are read-through growing drivers business our just gaining growth

ramp We between revenue these year. the million. opportunities and well $XX year said, and this That end expect be next million to into will QX of through $XX

to gross expect margin strong. be also We continue to

expect As $X.XX $X.XX. approximately $X.XX of the XX.XXX in share will shares. be non-GAAP range range such, count our to of net in The and will GAAP be million $X.XX be net to the will profit we profit

Morris questions. glad Okay. be to your concludes I and prepared Kevin? Well, our answer this will comments.

[Operator question comes Instructions] Our from Needham. Shi first Charles with

new opportunity to a nice very results and this on the especially the Again, phosphide. indium on start profitability application, in second. with level. this congrats Congrats believe I is improvement the new I of want winning

maybe know bit about quantitative little if or the that did and are here. insights first a day phosphide on smartphones are I [indiscernible]. you think in or application give comment indium don't the not us want following winning yesterday same to or customer you this the before applications talking win some in but I either number they Well, one announce the

You but of of year, new this to little end than of do revenue, have course, opportunity bring year? Germanium some offset the that should but expect we you [ph] in in earlier incremental the a incremental last want this by bit revenue more quarter third first weakness application you

Sure.

first, Gary. that take me Let

yes, opportunity, Charles, I believe second the bigger first we So one. it's think the than

ramping this pilot should twice probably them are production now. number going towards and we with wafers the QX, And into We it QX on application. believe of be

As is, it tell I puzzles it you, to us. what application really

to provide you epigrowers. know, it As we provide we substrate only often and

consumer know think related if And so product phosphide the related. if we it's a they certain coupled somewhat the other a application. But it product and it volume it it's the I to And beginning And we we a beginning, to think in then that becomes believe and indium talk popular, -- laser anyway. even as lines about to could grow not offer models. I'm allowed with spreads in detector

this proliferated that expect even the for -- consumer is like, subset this sounds product of, will be certain be than means kind application. ahead it same right? It runway like a implemented could particular of you a Is

Yes.

you years update away, I'm two you one year three away? -- capacity that Maybe terms I if wafers opportunity? of not gallium is you it going are question arsenide give it on the if where today microLED larger on update gallium the arsenide really, working some microLED a size some you years know have to away, and of it's can reality, sounds microLED lot enough in wafers. a sure next the are give like And qualification? can us really you us consume understandably, becomes that but

two Sure, now Charles. best believe have -- I I mean, the estimate we customers.

be sample start go have to and given I if then believe several of to because to they now with product where of now, holding for the commitment, need line them sign they with some take through specification are to good. need one but beginning. see designing we they're going start because obviously think and we work one And up for not other to we're right hundreds it wafers to will And to We production to improvement deliver. preliminary them, have them the commitment they us we the their to think it's to to we're were their have we working just we volume them months and quantities, sending them

could addressable could point, probably up still my I I in early. market So say it's would at the in estimation, year, XXXX. start would million. $XX say this little at ramp will But the in it the volume And production -- be somewhere in in a be first around it mode least to the bit total too

you question I have mention I the the Maybe crystal growth improved for quarter, factors is to is benefit. margin it that thought forward? one. it provide gross assume sounds think maybe still in to will you is And yields going want sort a sustainable Gary. going or primary you of baseline The the what's this several about margin it's your margin did but are you strength would this like low high And gross on hold of original a you now your to like be guidance, expecting Are the to maybe XXs mid-XXs? something

No. to move conservative and I'm the surrender willing position. off

good a higher think for range XXs rest of this year. the is I general

do want want that not really walk Morris that stress seriously the to top walk. to We I I want So top. and we take just to to

we've progress along be to So been the to business but the for QX. all surface the it know wasn't working made well. tremendous important certainly most We on us seen. run in quite We getting is to thing

yes, So I'm okay.

going to not people it's to be right stay think run that realistic have the for model I XX%. me at

can the correct. to very something -- indium recycle The it's significant are else So big the but improvement going of yield important. with I utilization remnants that contributor want that are And but things was that, and is other another of that we've new phosphide. developed, where there helpful on technology process the we add is

indium gross And that mix. really going excited phosphides to contributed it's they contribution. of the in in a helps amount big in last step smaller the And really drive look margin. made we're and where little And bit so. great even that's so that big product QX made but a year the QX phenomenon a why about QX. So a It we then progress always

next from Our with Wedbush. Bryson comes question Matt

Congrats the and particularly line. on a quarter great on margin gross congrats

thinking germanium Just all quantify about of on in terms headwinds you're at in of side the what calendar things, QX? you can

Yes.

ahead, Morris. Go

ahead. about QX numbers. mean we Well, you're X.X, I Go at on came right? the in

quarters. we'll to that $X to want the you million I last think the we're to is get are It's all until we We're know we're to I giving then we've working the in million it in resolved QX. is back enough, you our and it's laying all tied understand get And not not going continue on try maybe and or burner. we're to December still up. But this in go demand satellites we thing It's all And improving in wait resolved been conservative satellites there. be forecast the case forecast. and $X.X around going this thing But now. problem don't -- going The taken XX. down and couple of fast

more just you of shifting us more can what look terms Gary, then inventory, a typically be goods? or and mix inventory capacity you'd over finished in of to kind remind typical like what carrying And might

like memory, Well, X% in remember X%. could it's me time, more it don't correct so be XX%. ever it It's but small. can pretty or my I Over you maybe being

usually tend here just to flat. out. at stuff shipped stays but looking so that we -- it my So get I'm notes

in materials so. raw not to standpoint, be it goods WiP to but inventory and -- and FG in to down went be or finished increase, it if going have from a we're building business want I quarter, me, just it This

more is money had last how my this spend material I you're talk clearly, and so sounds out spending guess a capacity, increased CapEx. of when more I And we're then ship Can into indium to you simply, question about like and more material, thinking heading you equates could next? bit particularly it and that on you phosphide both then year if guess,

want Morris, or want take do first. to you you me go that do

continuous this Sure. I question a Yes, little actually expand want a process. It's on I bit. to

consumer on First No, our ramping script, And said year. little which in it up, qualification we this do will other we qualification of product in and which other have for think -- our second not start supply potentially be a as And laser LiDAR second customer consumable the qualification of product our we still year. inquiry tight product see car could all, And ramp variable half products second bit is we believe I but driverless other are that in should the But in phosphide. consumer the qualification. now. indium yet, the about capacity year. up market, the or we next of two in doubling specification quarter a in to have kind of for we

capacity -- that words, easy, indium do gallium equipment to you indium recall, arsenide economy the three Beijing in parts. build downturn. out easier hand, put So ourselves, together, add relatively years to think grow. of our solid a the able production recession ago, very have affected we to sort greatly way I So to there's expanding If processing. a cost et which facility production, recently, and expansion we not to this move and going thing is germanium to phosphide, most our year to And coming may facility may that phosphide product cetera. processing in building because the crystal used a DI of to equipment, the our us, in lot it's because going Are enough recession the of a of move other decided we're going to most and facilities. build to But very our or on think we is altogether. moving Beijing just of all the think for it processing as to But wafer fact we development. are by which us good our continue be are that's question. are production this claims good probably to thing doubling we gallium we be And course, and okay? also recommending is But I new which is them these design see In for be make you waters, bit other a growth on they wafer not? be little arsenide the

So hole facility. just and that All for that modification left cleanroom, the a bit Beijing big right indium big phosphide And into because fits a out hole. little this in the demand cleanroom water. to need do is we

bit can the to a we of quite cleanroom well build a money as paying ourselves new save spend as the and So money.

think the if questions But I AXT I know fortunate. answer you. I is So very for don't all

to finding this some year. doubling So we're although, I year But as think for our phosphate capacity indium we more well. expansion still do as I we need next said, think

again, quarter. So the congrats great on

Our Peter Craig next question [ph] from with comes Hallum. Sam

for on here. Sam Richard

like First X five your as Top the customers in are first you looks or one, dollar those good grew customers line they quarter-over-quarter. quarter same terms, are with bit I'm had a in different? curious, top customers it

do you know... Gary,

I can -- out a I didn't quarter-to-quarter comparison. know. do No, mean I don't I find I but didn't study

On the usual...

Yes. frequently, is it producing phosphide at right the would as the the in in from that's to that indium I prior up probably the name There going The one And year. call Top in have time. on with this made best X time and three But that the XX% and I XX% we be it's substrates that for something produce, really there Morris XX%. of all didn't the But Osram phenomenon hasn't always quarters the indium But phosphide described at customers constant. wafers. time, top we inching last time we're LandMark year, we're to different place they're there and pretty last been ones And because echelon. generally, that right last phenomenon any out looked. we of just is

because difficult very that's a grown -- technology under it's it's process pressure. So

we're sure. for better our than competitors So

So something there's to because and I phenomenon. want that on there And indium we're word really phosphide underline in a is right going right for the spot.

some year the a with say Morris that are not reason in to So some them going be. are now, will And of generate that described I X. from new Top the who the that is of customers things business

you if kind my and of those question of understand what kind made phosphide indium asking dynamic I customers yet. I it answers well. That after that's with with was new any that of

number I out shake seems the So just year-on-year about that that's how that with a fiscal up you indium topic. numbers closer you sticking XX% few might being in growth helpful. or quarter are like XXXX. 'XX the as maybe year-on-year looking I'm is out, at or quarters, too numbers phosphide a aggressive? to past whole. just the XX% And that growing it end And last running about where talked phosphide indium think Is for that it here. little thinking in guys

it know don't definitely Well, but a quarter to going fourth the like. I quarter. quarter next be what on We're counting is is strong

to going like Last I think Gary? strong our I be a it's phosphide XX%, right, indium growth something grew year. year, this think

XX%. here looking I'm

tried to achieve XX% X% -- Sorry. I

a yes, to correct. second. Hang up and on quick handheld -- be you're going It's I'm calculator conservative. just something think quickly XX% doing here. add And I likely to thing too just a

So more than be it'll definitely think. I XX%,

So -- four and with a it again. begin could

now. on QX number my the I right don't worksheet So have

two going got to is QX for I've is but cost over happen -- actions digit in grow going plus to think QX. double what QX. So we

just on could on large more those seem of where with arsenide. you large and diameter gallium if you a substrates little just both that maybe your Curious bit some think my the X-inch both last sit question, I you success, diameter like competitors... X-inch to relative substrates you describe you and phosphide that talk indium And think about, had

So understand. let me

on to me ourselves these our want You compare products? two with competitors

in like those with curious, kind large now? your your sit that you hear -- in products to your of or right where the to Yes. think you substrates quarter. advances not relative think competitors changed you diameter I'm just some just position your had curious And it's you how

the two in products is development stage. Well, these

and are okay? arsenide generating how don't quality for not two yet, of like capability as matter, a selling to world, one is but we competitors there as actually an that know we So X-inch of substrates cost. or in lot they each So make revenue [indiscernible] their wafers far the know ability other's and gallium know

demand, phosphate we off work As if to X-inch other how of do a that as But have far lot indium done the I specification, one phosphide to I'm marketplace, some first few would is think the product this time the compare fix because we're cetera. to only proud compare it to reason very indium were more just there's I wafer. take and make time not quite this it mature the offering competitor's announce and achieving making it. in The product concerned, we is to is and product know knows of showing et

happy and very pushes. X-inch let's about, be say, I'll So X-inch to talk

we talk what specification and product my to differentiate can and how specification our do capability competitors. If you you XX,XXX want we compared want about wafers,

I that's the would way it. think describe I

we our this to on how it's because know it’s are. to newly are. mean difficult they we compare what we do know to So where product, difficult I mainly competitors, say developed

you, one agree Morris. thing, I to Yes. add I want though.

where add in we're has of we think differentiation capacity that terms upgraded facilities, that quickly. is out new the new stand equipment, equipment, competitor only upgraded who do I facilities,

over And we'll into get But do these that's is on specs stuff technology. about an I think volume. this And bake-off, I high some of we where have applications very customer we when So our think nervous and for the shine. competitive think edge a we we capability. are that's well buying competitors because

So...

next [ph] B. with Ada comes Riley. from question Ethan Our

directionally Could you that see buildup? provide some your with you backlog playing especially capacity big the few on color over quarters, out and next how this additional

ahead, Go Morris.

backlog, Well, the we we? ever run don't do

No.

I that this I because to backlog it know how don't I answer mean, can drill number. way. maybe

investors want. our our six better. it's they orders us difficult the up in their much are for come But forecast forecast customers give say five, of always always able visibilities to tell how quarters, we last in the much with past they solid long-term and can a years, a cancel our we been I because few have think don't us to

lot in enough let's some indium And they're short-term We how fulfill instance, we are clear cases, forecasting, is for to on product needs. and they got some in don't much say, current more a lineup customer have their want. telling us We've phosphide.

going large we the six next or the about. we out as very material But is as mean, But be the because and germanium germanium price is material and year But there. germanium eight resolved talk almost to lead push price time forecast and the payment quite portion time. to my I in we so. have raw last has substantially obviously, cost so instance, carries But haven't to should not they're sold doubled forecast shorten raw a to be month's that increased germanium lead need to know to weeks. able of of going germanium weird issue. thing that And I to our we're the we goods capacity, for increase our

So you see, squeezes of margin doubled my tremendously. can costs as and XX% sold if were cost constitute that my they that

some to need want So they find and If obviously, if customers talk our can they we a ourselves of not can, make to way see we to help. then to terrible out organization.

don't to know but answered ever question that organization if in yet. big I So I the we've never have bill ratio done our

customers to it's wafer model or let and you're off to a a a of The little supplier. build more forecast of orders nature purchase go and So -- give reason that Once difficult in, for want qualify color. we the qualify instead the somebody that they is forecast don't the to But orders source. is the are work Once a customer they that order else get order. to we the you, key do very substrate can third get me cyclical. we our built we business a purchase that is

don't backlog that So really don't we way monitor most -- in forecast. monitor but we correct, we

way a QX have And pretty reliable. we they're the through usually forecast already. So all

the the need business of they them and where and switch. to it's nature because of need model So us we hard

ahead. Go okay. So

think like double an you see you as do So ordering issue? that

them are say, I We always you other. your don't the see a it. ordering far, try "Hey, But try the is we absolutely. ordering? so each fear. do we talk customers thing? you aware we make We sure Yes, mean to That to channel, are sure. same to But don't double to want stuff and to talk for

seeing Yes. the pretty we're now. that to We're close not And customers. big

vested the have a the to they product. again, because not relationship So they interest need abuse

the So for side now, especially it's out know supply right that for right us, tight. now competitors it's running our tight from and we there

terms of lot gamesmanship in a not of that so. pretend there's So

Yes.

life. our free is wafers sit thing return to they If sometimes they perishable other sometimes it wafer we have they for actually do we and charge they for but The order and then it. cannot use a are the the fee. repolish, have for They to shelf, us guaranteed to have on shelf it restocking

somebody and for it. it sense any overbuy makes it to think don't stock I So

the Congrats again on quarter.

with Financial. Our next BWS Khorsand Hamed question from comes

in quarter how on variability a within the customers, current clarity describe would current that the of So from and the follow-up There's how you the that beyond the there clarity is just question. orders have you quarter? much and you received

The order clearer forecast this current do quarter. quarter, is I next the we and receive quarter better mean that much current order... understand. than for is order an I

up to to trying last end. to understand was it, end what quarter, just the the XX%, I'm you lower Well, you closer guided XX%

you trying just to provide into XX% and the you that in quarter. I'm guidance how the ended how that and your variability instead what over in spills understand ordering So is up of trends at this XX%

Okay.

role quarter, up ramp question. to two By last know, start wood. of the you a that's COVID in did good the Actually, QX, and our -- QX. neck in or week a very as last the in So bit end little COVID of play a the

So we that missing our two deliver are customers. orders cannot we one to or these of

We saw what originally, it end going order quarter. to to over was last quarter said, to So or almost million But we what towards we I could than have we're But very last another X.X be be it you I pooling delivered. the more look next at mean, it pushed is. as quarter thought we quarter, pushed if a not. right? of but that remember QX, don't way, that it want or over any strong yes we're is you

the the isn't of XX.X% exactly the at midpoint range, Hamed, just point range. of it's low end to the out, at

giving managing bad in receivables, you are charge, to? credit who adjustments the are making about debt how Gary, that? you terms your you're And

No.

We haven't tight. changed we're our pretty policy but

write-off big gets any a For saying this existing don't I there's a in like maybe in every but no couple not customers, of had think we've I'm every while, once existing years. But year trouble. issue. an in customer

to internationally. if out similar down and -- we we fill customer, checks, do a the then new like or credit credit application use bread So street it's we services have that a a they

pretty that. we're good think at I So

universities diligent a stuff, we yes, have credit so -- pretty the needed and haven't accounts For we risk to it. small and process like not change there's but much there

working. it's So

several. become And could these what's Okay. my a you ramping seeing X -- X XX% that line under line And line deal Are revenue any Tier start that as Tier you're the last ramps? quote big or to actually time these from them? or X% actually that two the optimal to question ramping of for customers them sorry, that several, was the you

a it Hamed, build depends start to to I effect. conclusion the done wafer give ramp and but they these really upon haven't that they customers they have customer some they cross-line app and One it the when do and of other takes one.

grow up is to number nicely the I all I quarter. phosphide it's one far, so next two very predict three sure change. But so going to very see don't know now. And indium any and to can not be is But or I'm who so dramatic ramp I going will number

showing not I'm to the closing Dr. Young call questions. remarks. any further I'd back over turn for Morris to any like And

Thank you participating for call. our in conference

the and Jefferies and This Semi XX. look August XX of many August seeing quarter, virtual forward Chicago Conference on We BWS we August Needham's will on Xrd XX Virtual be Conference XXXX Cap Semiconductor presenting there. at the in Annual to Financial you Conference

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

conclude this does today's gentlemen, and presentation. Ladies

You may presentation. disconnect wonderful have and now a