Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more color on the Q3 guidance, particularly regarding the expected moderation in gallium arsenide and germanium? A: Morris Young, CEO: Raw material is expected to hold steady at Q2 levels. Indium phosphide orders from AI applications in Q1 and Q2 are not expected to continue at the same pace. Telecom and datacom markets still have inventory to digest in Q3, so no growth is expected there. Gary Fischer, CFO: Orders are fluctuating, with some expected in Q3 arriving in Q2. However, we are maintaining market share and have strong customer communication.
Q: There seems to be a new emphasis on AI opportunities for indium phosphide. Are there new data points influencing this perspective? A: Morris Young, CEO: We are confident that indium phosphide is being used in AI, likely in transceivers, but we are not seeing continued orders yet. We expect market adoption to increase later this year. Gary Fischer, CFO: We are not fully aware of all AI applications for indium phosphide, but customer feedback confirms its use in AI.
Q: With reports of potential indium phosphide shortages, how is AXT positioned to address this? A: Morris Young, CEO: We have the best technology and supply chain for indium phosphide, with the ability to expand production. Our revenue is currently half of its peak, and we have previously grown indium phosphide revenue by 50% year-over-year for two consecutive years. We are developing six-inch indium phosphide capability and have improved yields and cost control.
Q: Can you provide insights into the potential for growth in indium phosphide and AI applications beyond Q3? A: Morris Young, CEO: We are in discussions with customers about commercial applications, with trial orders increasing. The PONs and telecom markets are expected to recover as inventory is digested. Gallium arsenide is seeing growth in HPTs, and satellite communication demand is strong. Gary Fischer, CFO: Our products have long-term growth trajectories, and we are targeting triple-digit revenue.
Q: What is the current capacity for indium phosphide production, and how does it compare to past peaks? A: Gary Fischer, CFO: Our past peak for indium phosphide revenue was $17.7 million, and we have not reduced capacity since then. Morris Young, CEO: We have improved yields and recycling capabilities, allowing us to increase production without adding new equipment. We are prepared to meet increased demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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