Aixtron is on track to meet its annual goals

HERZOGENRATH Mechanical engineering company Aixtron continues to benefit from strong demand for systems to produce energy-efficient electronic chips and power semiconductors. This is one of the reasons why, according to the statement on Thursday, the highest order fulfillment rate since 2011 was recorded in the second quarter. In addition, the first order for systems for the mass production of micro LEDs has landed. And business with machines to produce traditional red LEDs was also going well. The company fared better than average analysts expected. The forecasts for this year have been confirmed.

The shares recently rose 1.54 percent to EUR 26.33, while the MDax median stock index rose 1.13 percent. Recently, the multi-year summit from the end of May has reappeared at a good EUR 28. With an increase of 50 percent, the stocks are by far the second best value in MDax this year.

In the second quarter, sales increased by a good half compared to the same period last year to EUR 102.5 million. The operating result (EBIT) tripled to EUR 17.2 million. The result is a surplus of EUR 17.3 million after 7.7 million a year ago. Company boss Felix Grawert sees the group on track to meet its annual goals.

He calculates that he has revenues of between 450 and 500 million euros. The operating result should be between 21 and 23 percent. Expectations are subject again to the condition that global crises still do not have a significant impact on business development.

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As for incoming orders, the CEO plans from 520 to 580 million euros. After six months, almost EUR 283 million is in the books. In total, the orders for systems recently amounted to a good € 314 million. Most of them should reach customers this year. Analyst Olivia Honychurch of investment house Jefferies sees that Aixtron is on track to at least hit the high end of its target ranges as key business drivers of the past few months are likely to gain momentum.

Aixtron is benefiting from trends such as energy efficiency, alternative energy, digitization and electromobility. The company benefits from the growing use of the so-called compound semiconductors. Aixtron manufactures systems that apply wafer-thin layers of two elements onto special supports – creating complex semiconductors. They enable more efficient energy conduction and withstand high temperatures, which has great advantages, including in the case of fast charging technology. However, due to the advancement of 3D sensor technology, there is also a need for systems in the field of optoelectronics.

At the beginning of the year, the demand for systems for the production of high-performance power electronics based on silicon carbide (SiC) and gallium nitride (GaN) was high in the second quarter. SiC components are used, among others in computer servers, and also offer potential for use in hybrid or electric vehicles.

While Aixtron already has a dominant position in GaN systems, management is striving to do the same in SiC systems, analyst Martin Marandon-Carlhian of Oddo BHF investment house recently said. Consequently, Aixtron’s SiC system is much more efficient than its main competitor, Tokyo Electron.

There is also a great deal of interest in micro-LED manufacturing systems. It was there that the first orders were placed for systems for serial production of chips, which enable stronger contrasts and stronger colors on screens and displays. They are considered a cheaper alternative to OLEDs. Experts see great potential here. As early as late spring, Jefferies analyst Honychurch suspected the end customer of the micro-LED, which should then come from its supplier AMS Osram, is the Apple group Apple.

First of all, it’s probably just the Apple Watch, which will be released in the second half of 2024, said Honeychurch. The possible iPhone MicroLed, which is conceivable from the second half of 2026, could mean additional sales in the billions for Aixtron, as it requires many more systems from the machine builder.

As production capacity is built in the coming months, further orders from customers may appear – said Grawert during a conference call with analysts. Conversations with other potential clients are at different stages. In general, the president assumes that in 2023 a significant part of sales will be generated with such micro-LED systems. The trend that should continue in 2024.

The procurement situation makes the company’s management confident that the turnover will continue to grow in the coming quarters. Stocks were therefore built up further, which left its mark on the free flow of funds. Free cash flow in the second quarter was four million euros – almost 80 percent less than a year ago.

At the same time, it seems that Aixtron is hardly affected by the problems in the supply chain and the lack of parts that have been weighing on many industries for months. CFO Christian Danninger stressed back in May that “suppliers were prepared for our expected growth at an early stage”. This enables the systems to be delivered as planned.

At the same time, management plans further price increases in late 2022 and early 2023 to offset rising raw material, energy and labor costs, according to a post-release conference call.

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