AXT (AXTI) 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 03, 2016
Document and Entity Information
Entity Registrant Name	AXT INC
Entity Central Index Key	1,051,627
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		32,559,384
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 29,661,000	$ 24,875,000
Short-term investments	9,563,000	11,437,000
Accounts receivable, net of allowances of $1,026 and $985 as of September 30, 2016 and December 31, 2015	18,380,000	18,468,000
Inventories	38,731,000	38,012,000
Prepaid expenses and other current assets	5,265,000	4,096,000
Total current assets	101,600,000	96,888,000
Long-term investments	8,124,000	7,691,000
Property, plant and equipment, net	29,385,000	31,422,000
Related party notes receivable - long-term	1,735,000	1,781,000
Other assets	12,084,000	14,114,000
Total assets	152,928,000	151,896,000
Current liabilities:
Accounts payable	7,277,000	6,460,000
Accrued liabilities	5,011,000	6,381,000
Total current liabilities	12,288,000	12,841,000
Long-term portion of royalty payments	719,000	1,150,000
Other long-term liabilities	307,000	344,000
Total liabilities	13,314,000	14,335,000
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock Series A, $0.001 par value; 2,000 shares authorized; 883 shares issued and outstanding as of September 30, 2016 and December 31, 2015 (Liquidation preference of $6.6 million and $6.5 million as of September 30, 2016 and December 31, 2015.)	3,532,000	3,532,000
Common stock, $0.001 par value; 70,000 shares authorized; 32,559 and 32,548 shares issued and outstanding as of September 30, 2016 and December 31, 2015.	32,000	32,000
Additional paid-in-capital	195,863,000	194,646,000
Accumulated deficit	(67,199,000)	(70,621,000)
Accumulated other comprehensive income	2,529,000	4,382,000
Total AXT, Inc. stockholders' equity	134,757,000	131,971,000
Noncontrolling interests	4,857,000	5,590,000
Total stockholders' equity	139,614,000	137,561,000
Total liabilities and stockholders' equity	$ 152,928,000	$ 151,896,000

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Accounts receivable, allowances for doubtful accounts	$ 1,026	$ 985
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	883,000	883,000
Preferred stock, shares outstanding (in shares)	883,000	883,000
Preferred stock, liquidation preference	$ 6,600	$ 6,500
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	70,000,000	70,000,000
Common stock, shares issued (in shares)	32,559,000	32,548,000
Common stock, shares outstanding (in shares)	32,559,000	32,548,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Revenue	$ 21,872,000	$ 18,371,000	$ 61,080,000	$ 59,445,000
Cost of revenue	14,294,000	13,766,000	42,222,000	45,706,000
Gross profit	7,578,000	4,605,000	18,858,000	13,739,000
Operating expenses:
Selling, general and administrative	3,313,000	3,659,000	10,106,000	12,685,000
Research and development	1,566,000	1,657,000	4,419,000	4,287,000
Restructuring charge	0		226,000
Total operating expenses	4,879,000	5,316,000	14,751,000	16,972,000
Income (loss) from operations	2,699,000	(711,000)	4,107,000	(3,233,000)
Interest income, net	105,000	102,000	303,000	307,000
Equity in earnings (loss) of unconsolidated joint ventures	(581,000)	167,000	(1,437,000)	777,000
Other income, net	164,000	496,000	682,000	1,755,000
Income (loss) before provision for income taxes	2,387,000	54,000	3,655,000	(394,000)
Provision for income taxes	176,000	7,000	713,000	334,000
Net income (loss)	2,211,000	47,000	2,942,000	(728,000)
Less: Net (income) loss attributable to noncontrolling interests	18,000	(5,000)	480,000	(257,000)
Net income (loss) attributable to AXT, Inc.	$ 2,229,000	$ 42,000	$ 3,422,000	$ (985,000)
Net income (loss) attributable to AXT, Inc. per common share:
Basic (in dollars per share)	$ 0.07	$ 0	$ 0.10	$ (0.03)
Diluted (in dollars per share)	$ 0.07	$ 0	$ 0.10	$ (0.03)
Weighted average number of common shares outstanding:
Basic (in shares)	32,110	31,988	32,043	32,262
Diluted (in shares)	33,138	31,988	32,615	32,262

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
Net income (loss)	$ 2,211	$ 47	$ 2,942	$ (728)
Other comprehensive loss, net of tax:
Change in foreign currency translation loss, net of tax	(233)	(2,626)	(1,801)	(2,321)
Change in unrealized loss on available-for-sale investments, net of tax	(112)	(134)	(253)	(484)
Total other comprehensive loss, net of tax	(345)	(2,760)	(2,054)	(2,805)
Comprehensive income (loss)	1,866	(2,713)	888	(3,533)
Less: Comprehensive loss attributable to the noncontrolling interest	48	335	681	41
Comprehensive income (loss) attributable to AXT, Inc.	$ 1,914	$ (2,378)	$ 1,569	$ (3,492)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income (loss)		$ 2,942	$ (728)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		3,620	4,197
Amortization of marketable securities premium		85	168
Stock-based compensation		789	1,051
Provision for doubtful accounts			211
Realized gain on sale of investments		(429)	(859)
Loss (gain) on disposal of equipment		(5)	16
Loss (gain) from equity method investments, net		1,437	(777)
Changes in operating assets and liabilities:
Accounts receivable		(72)	363
Inventories		(1,092)	13
Prepaid expenses and other current assets		(1,259)	1,920
Other assets		435	329
Accounts payable		949	(1,053)
Accrued liabilities	[1]	(1,301)	(2,032)
Other long-term liabilities, including royalties		(591)	(559)
Net cash provided by operating activities		5,508	2,260
Cash flows from investing activities:
Purchases of equipment		(2,200)	(3,508)
Proceeds from sale of equipment		35	2
Purchases of available for sale securities		(10,784)	(13,044)
Proceeds from sales and maturities of available-for-sale securities		12,316	14,309
Investments in non-marketable equity investments			(162)
Dividends received from equity method investments			286
Net cash used in investing activities		(633)	(2,117)
Cash flows from financing activities:
Proceeds from common stock options exercised		428	165
Repurchases of the Company's common stock, including commission			(2,254)
Dividends paid by joint ventures to their minority share holders		(39)	(102)
Net cash provided by (used in) financing activities		389	(2,191)
Effect of exchange rate changes on cash and cash equivalents		(478)	(581)
Net increase (decrease) in cash and cash equivalents		4,786	(2,629)
Cash and cash equivalents at the beginning of the period		24,875	28,814
Cash and cash equivalents at the end of the period		$ 29,661	$ 26,185
[1]	* Dividend accrued but not paid by joint ventures of $520 and $544 was included in accrued liabilities as of September 30, 2016 and September 30, 2015, respectively.

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Dividends accrued but not paid by joint ventures	$ 520	$ 534	$ 544

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Basis of Presentation
Basis of Presentation	Note 1. Basis of Presentation The accompanying condensed consolidated financial statements of AXT, Inc. (“AXT,” the “Company,” “we,” “us,” and “our” refer to AXT, Inc. and all of its consolidated subsidiaries) are unaudited, and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly this interim quarterly financial report does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of our management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, considered necessary to present fairly the financial position, results of operations and cash flows of AXT and our consolidated subsidiaries for all periods presented. Our management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ materially from those estimates. The results of operations are not necessarily indicative of the results to be expected in the future or for the full fiscal year. It is recommended that these condensed consolidated financial statements be read in conjunction with our consolidated financial statements and the notes thereto included in our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2016 and our Quarterly Reports on Form 10-Q for the three months ended March 31, 2016 and June 30, 2016 filed with the SEC on May 6, 2016 and August 5, 2016, respectively . The condensed consolidated financial statements include the accounts of AXT, our wholly-owned subsidiary, Beijing Tongmei Xtal Technology Co., Ltd., and our majority-owned, or significantly controlled subsidiaries, Beijing JiYa Semiconductor Material Co., Ltd., Nanjing Jin Mei Gallium Co., Ltd. and Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. All significant inter‑company accounts and transactions have been eliminated. Investments in business entities in which we do not have controlling interests, but have the ability to exercise significant influence over operating and financial policies (generally 20-50% ownership), are accounted for by the equity method. For partially-owned subsidiaries that we consolidate, we reflect the noncontrolling interest of the portion we do not own on our condensed consolidated balance sheets in stockholders’ equity and in our condensed consolidated statements of operations.

Investments and Fair Value Meas

Investments and Fair Value Measurements	9 Months Ended
	Sep. 30, 2016
Investments and Fair Value Measurements
Investments and Fair Value Measurements	Note 2. Investments and Fair Value Measurements Our cash and cash equivalents consist of cash and instruments with original maturities of less than 90 days. Our investments consist of instruments with original maturities of more than 90 days. As of September 30, 2016 and December 31, 2015, our cash, cash equivalents and investments are classified as follows (in thousands): September 30, 2016 December 31, 2015 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ $ — $ — $ $ $ — $ — $ Cash equivalents: Certificates of deposit 1 — — — — Total cash and cash equivalents — — — — Investments (available for sale): Certificates of deposit 2 Corporate bonds — — Corporate equity securities — — Total investments Total cash, cash equivalents and investments $ $ $ $ $ $ $ $ Contractual maturities on investments: Due within 1 year $ $ $ $ Due after 1 through 5 years $ $ $ $ 1. Certificate of deposit with original maturities of less than 90 days. 2. Certificate of deposit with original maturities of more than 90 days. We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. We have no investments in auction rate securities. Certificates of deposit and corporate bonds are typically held until maturity. Corporate equity securities have no maturity and may be sold at any time. Our holding of corporate equity securities consists of common stock of GCS Holdings, Inc. (“GHI”) (previously Global Communication Semiconductors, Inc.), a Taiwan publicly-traded company. Previously, we also owned the common stock of Intelligent Epitaxy Technology, Inc. (“IntelliEpi”).We began classifying IntelliEpi stock as an available-for-sale security upon its initial public offering in 2013. We sold our remaining IntelliEpi stock in the second quarter of 2015. During the nine months ended September 30, 2015, our cash proceeds from sales of available-for-sale investments was $902,000. Our cost was $43,000 and our gross realized gain from sales of available-for-sale investments was $859,000. As of September 30, 2016, we no longer hold any IntelliEpi stock. We began classifying GHI as an available-for-sale security in the second quarter of 2015 when we determined that there was sufficient trading volume in the exchange for the stock to be deemed readily marketable. An unrealized gain of $135,000 net of tax was recorded as of September 30, 2016. This security is valued at fair market value at September 30, 2016 and will be marked to market with changes through other comprehensive income until sold. There is no assurance that we will realize this value when the stock is sold in the future. D uring the three months ended September 30, 2016, we sold some of our GHI stock and our cash proceeds from sales of available-for-sale investments was $113,000. Our cost was $29,000 and our gross realized gain from sales of available-for-sale investments was $84,000. D uring the nine months ended September 30, 2016, we sold some of our GHI stock and our cash proceeds from sales of available-for-sale investments was $581,000. Our cost was $152,000 and our gross realized gain from sales of available-for-sale investments was $429,000. The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on some of our available-for-sale securities as of September 30, 2016 are temporary in nature. We periodically review our investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. A portion of our investments would generate a loss if we sold them on September 30, 2016. The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2016 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of September 30, 2016 Value (Losses) Value (Losses) Value (Losses) Investments: Certificates of deposit $ $ $ $ — $ $ Corporate bonds Total in loss position $ $ $ $ $ $ The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of December 31, 2015 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ $ $ $ $ $ Corporate bonds Total in loss position $ $ $ $ $ $ Investments in Privately-held Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 7). The investment balances for all of these companies, including minority investments indirectly in privately-held companies made by our consolidated subsidiaries, are accounted for under the equity method and included in “other assets” in the condensed consolidated balance sheets and totaled $10.5 million and $12.1 million as of September 30, 2016 and December 31, 2015, respectively. As noted above, in the second quarter of 2015, we re-classified our minority investment in GHI, which was accounted for under the cost method, as an available-for- sale security and valued the security at fair market value. As of September 30, 2016 and December 31, 2015, we did not maintain any investments under the cost method. Fair Value Measurements We invest primarily in money market accounts, certificates of deposits, corporate bonds and notes, and government securities. ASC topic 820, Fair value measurement (“ASC 820”) establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily-available, observable pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term investments. The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. Other than corporate equity securities which are based on quoted market prices and classified as Level 1, we classify our available-for-sale securities including certificates of deposit and corporate bonds as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency. We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese Yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “accrued liabilities” on the condensed consolidated balance sheet and classified as Level 3 assets and liabilities. As of September 30, 2016 the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the consolidated results. There were no changes in valuation techniques or related inputs in the three months ended September 30, 2016. There have been no transfers between fair value measurements levels during the three months ended September 30, 2016. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of September 30, 2016 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs September 30, 2016 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ $ — $ $ — Corporate bonds — — Corporate equity securities — — Total $ $ $ $ — Liabilities: Foreign currency hedge obligations $ $ — $ — $ The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2015 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2015 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ $ — $ $ — Corporate bonds — — Corporate equity securities — — Total $ $ $ $ — Liabilities: Foreign currency hedge obligations $ $ — $ — $ Items Measured at Fair Value on a Nonrecurring Basis Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by the equity or cost method (See Note 7). We did not record other-than-temporary impairment charges for either of these investments during the three and nine months ended September 30, 2016 and 2015.

Inventories

Inventories	9 Months Ended
	Sep. 30, 2016
Inventories
Inventories	Note 3. Inventories The components of inventories are summarized below (in thousands): September 30, December 31, 2016 2015 Inventories: Raw materials $ $ Work in process Finished goods $ $ As of September 30, 2016 and December 31, 2015, carrying values of inventories were net of inventory reserve of $11.6 million and $12.0 million, respectively, for excess and obsolete inventory and $297,000 and $625,000, respectively, for lower of cost or market reserves.

Property, Plant and Equipment,

Property, Plant and Equipment, Net	9 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment, Net
Property, Plant and Equipment, Net	Note 4. Property, Plant and Equipment, Net The components of our property, plant and equipment are summarized below (in thousands): September 30, December 31, 2016 2015 Property, plant and equipment: Machinery and equipment, at cost $ $ Less: accumulated depreciation and amortization Building, at cost Less: accumulated depreciation and amortization Leasehold improvements, at cost Less: accumulated depreciation and amortization Construction in progress $ $

Accrued Liabilities

Accrued Liabilities	9 Months Ended
	Sep. 30, 2016
Accrued Liabilities
Accrued Liabilities	Note 5. Accrued Liabilities The components of accrued liabilities are summarized below (in thousands): September 30, December 31, 2016 2015 Accrued compensation and related charges $ $ Current portion of royalty payments Dividends payable by consolidated joint ventures Accrued professional services Accrued product warranty Accrued income taxes Other accrued liabilities $ $

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2016
Related Party Transactions
Related Party Transactions	Note 6. Related Party Transactions In August 2011, our consolidated joint venture, Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”), entered into a non-interest bearing note agreement in the amount of $1.6 million for a loan to one of its equity investment entities. The original term of the loan was for two years and ten months with three periodic principal payments required. After various amendments to the terms of the note, in December 2013, the parties agreed to delay all principal repayment until December 2017. As of September 30, 2016, and December 31, 2015, we included $1.6 million in “Related party notes receivable – long term” in our condensed consolidated balance sheets. JiYa also purchases raw materials from one of its equity investment entities for production in the ordinary course of business. As of September 30, 2016 and December 31, 2015, amounts payable of $2.4 million were included in “accounts payable” in our condensed consolidated balance sheets. JiYa also sells raw materials to one of its equity investment entities for production in the ordinary course of business . As of September 30, 2016 and December 31, 2015, amounts receivable of $370,000 and $473,000, respectively, were included in “accounts receivable” in our condensed consolidated balance sheets. Beginning in 2012, our consolidated joint venture, Nanjing Jin Mei Gallium Co., Ltd. (“Jin Mei”), is contractually obligated under an agency sales agreement to sell raw material on behalf of its equity investment entity. Jin Mei bills the customers and remits the receipts, net of its portions of sales commission, to this equity investment entity. For each of the three months ended September 30, 2016 and 2015, Jin Mei has recorded $0 income from agency sales. For each of the nine months ended September 30, 2016 and 2015, Jin Mei has recorded $1,000 income from agency sales, which were included in “other income (expense), net” in the condensed consolidated statements of operations. In March 2012, our wholly-owned subsidiary, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), entered into an operating lease for the land it owns with our consolidated joint venture, Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). The lease agreement for the land of approximately 22,081 square feet commenced on January 1, 2012 for a term of 10 years with annual lease payments of $24,000 subject to a 5% increase at each third year anniversary. The annual lease payment is due by January 31 st of each year. Tongmei has paid certain amounts on behalf of Donghai County Dongfang High Purity Electronic Materials Co., Ltd.(“Dongfang”), its equity investment entity, to purchase materials. The original agreement was signed between Tongmei and Dongfang in 2014 and the date of repayment was set as December 31, 2015. In 2015, both parties agreed to delay the date of repayment to December 31, 2017. As of September 30, 2016 and December 31, 2015, the balance of $111,000 and $114,000, respectively, were included in “Related party notes receivable – long term” in our condensed consolidated balance sheets. In April 2014, Tongmei loaned an additional of $45,000 to Dongfang. The loan bears interest at 6.15% per annum and the principal and accrued interest totaling $52,000 as of September 30, 2016 are due on December 31, 2016. As of September 30, 2016, this balance, including both principal and accrued interest, was included in “Related party notes receivable – long term” in our condensed consolidated balance sheets. Tongmei purchases raw materials from one of our equity investment entities, Emei Shan Jiamei Materials Co. Ltd. (“Jiamei”), for production in the ordinary course of business. As of September 30, 2016 and December 31, 2015, amounts payable of $256,000 and $70,000, respectively, were included in “accounts payable” in our condensed consolidated balance sheets. Tongmei also purchases raw materials from one of our equity investment entities, Xilingol Tongli Germanium Refine Co. Ltd. (“Tongli”), for production in the ordinary course of business. As of September 30, 2016 and December 31, 2015, amounts payable of $477,000 and $0, respectively, were included in “accounts payable” in our condensed consolidated balance sheets. In April 2016, our consolidated joint venture, BoYu, provided a personal loan of $180,000 to one of its executive officers. This loan is secured by the officer’s shares in BoYu. The loan bears interest at 2.75% per annum. Principal and accrued interest are due on March 31, 2019. As of September 30, 2016, including both principal and accrued interest, was included in “prepaid expenses and other current assets” in our condensed consolidated balance sheets. Beijing Kaide Quartz Co. Ltd. (“Kaide”) has been a supplier of customized quartz tubes to the Company since 2004. Beijing XiangHeMing Trade Co. Ltd. (“XiangHeMing”) is a significant shareholder of Kaide. XiangHeMing was previously owned by, among others, certain immediate family members of Davis Zhang, our former President, China Operations, until at least sometime in 2004, at which time the official Chinese government records indicate that Mr. Zhang’s immediate family members transferred their ownership of XiangHeMing to a third party. However, we are currently unable to conclusively determine whether Mr. Zhang’s immediate family members retained any economic interest in XiangHeMing after the transfer. As of September 30, 2016 and December 31, 2015, amounts payable to Kaide of $457,000 and $379,000, respectively, were included in “accounts payable” in our condensed consolidated balance sheets. Our Related Party Transactions Policy seeks to prohibit all conflicts of interest in transactions between related parties and us, unless they have been approved by our Board of Directors. This policy applies to all of our employees, directors, and our consolidated subsidiaries. Our executive officers retain board seats on the board of directors of the companies in which we have invested in our China joint ventures. See Note 7 for further details.

Investments in Privately Held C

Investments in Privately Held Companies	9 Months Ended
	Sep. 30, 2016
Investments in Privately Held Companies
Investments in Privately Held Companies	Note 7. Investments in Privately-Held Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business. Our consolidated subsidiaries have also made investments in private companies. These companies form part of our overall supply chain. The investments are summarized below (in thousands): Investment Balance as of September 30, December 31, Accounting Ownership Company 2016 2015 Method Percentage Beijing JiYa Semiconductor Material Co., Ltd. $ $ Consolidated % Nanjing Jin Mei Gallium Co., Ltd. Consolidated % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. Consolidated % $ $ Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ $ Equity % Xilingol Tongli Germanium Co. Ltd. Equity % Emeishan Jia Mei High Purity Metals Co., Ltd. Equity % $ $ Our ownership of Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”) is 46%. We continue to consolidate JiYa as we are the founding and largest shareholder, we appoint the general manager and controller and have the ability to exercise control in substance over the long-term strategic decisions made. Our Chief Executive Officer is chairman of the JiYa board and we have appointed one other representative, Davis Zhang, to serve on the board. Mr. Zhang was an executive officer of AXT for 27 years. Further, our Chief Financial Officer, Gary Fischer, is on the board of supervisors of JiYa. Our ownership of Nanjing Jin Mei Gallium Co., Ltd. (“Jin Mei”) is 83%. We continue to consolidate Jin Mei as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the Jin Mei board and we have appointed two other representatives to serve on the board. Our ownership of Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd (“BoYu”) is 70%. We continue to consolidate BoYu as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the BoYu board and we have appointed two other representatives to serve on the board. Although we have representation on the board of directors of each of these companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short-term strategy and operations, ordinary course of business capital expenditures, and decisions concerning sales of finished products, are made by local management with regular guidance and input from us. During the three months ended September 30, 2016 and 2015, the three consolidated joint ventures generated $399,000 and $459,000 of income, respectively, of which a loss of $18,000 and a gain of $5,000, respectively, were allocated to non-controlling interests, resulting in $417,000 and $454,000 of income, respectively, to our net income (loss). During the nine months ended September 30, 2016 and 2015, the three consolidated joint ventures generated a loss of $82,000 and an income of $1.7 million, respectively, of which a loss of $480,000 and a gain of $257,000 respectively, were allocated to non-controlling interests, resulting in $398,000 and $1.4 million of income, respectively, to our net income (loss). For AXT’s three minority investment entities that are not consolidated, the investment balances are included in “other assets” in our condensed consolidated balance sheets and totaled $7.0 million and $7.9 million as of September 30, 2016 and December 31, 2015. We own 46% of the ownership interests in one of these companies and 25% in each of the other two companies. These three companies are not considered variable interest entities because: · all three companies have sustainable businesses of their own; · our voting power is proportionate to our ownership interests; · we only recognize our respective share of the losses and/or residual returns generated by the companies if they occur; and · we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to any of these companies. We also maintain four minority investments indirectly in privately-held companies through our consolidated joint ventures. JiYa holds three investments and Jin Mei holds one investment. These minority investments are accounted for under the equity method in the books of our consolidated joint ventures. As of September 30, 2016 and December 31, 2015, our consolidated joint ventures included these minority investments in “other assets” in our condensed consolidated balance sheets with a carrying value of $3.5 million and $4.1 million, respectively. AXT’s three direct minority investment entities and the three minority investments of JiYa and the one minority investment of Jin Mei are not consolidated and are accounted for under the equity method and had the following summarized income information (in thousands) for the three and nine months ended September 30, 2016 and 2015. Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net revenue $ $ $ $ Gross (loss) profit $ $ $ $ Operating (loss) income $ $ $ $ Net (loss) income $ $ $ $ Our portion of the entity earnings from these seven minority investment entities that are not consolidated and are accounted for under the equity method were a loss of $581,000 and a gain of $167,000 for the three months ended September 30, 2016 and 2015, respectively , and a loss of $1.4 million and a gain of $777,000 for the nine months ended September 30, 2016 and 2015, respectively .

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Stockholders' Equity	Note 8. Stockholders’ Equity Consolidated Statement of Changes in Stockholders’ Equity (in thousands) Accumulated Other AXT, Inc Total Preferred Common Additional Accumulated Comprehensive Stockholders’ Noncontrolling Stockholders’ Stock Stock Paid-In-Capital Deficit Income Equity Interests Equity Balance as of December 31, 2015 $ $ $ $ $ $ $ $ Common stock options exercised Common stock repurchased — — Stock-based compensation Net (loss) income Dividends declared by joint ventures — Other comprehensive loss Balance as of September 30, 2016 $ $ $ $ $ $ $ $ There were no reclassification adjustments from accumulated other comprehensive income for the nine months ended September 30, 2016 and 2015 . Stock Repurchase Program On February 21, 2013, our Board of Directors approved a stock repurchase program pursuant to which we could repurchase up to $6.0 million of our outstanding common stock through February 27, 2014. These purchases were to be made from time to time in the open market and were funded from our existing cash balances and cash generated from operations. During 2013, we repurchased approximately 285,000 shares at an average price of $2.51 per share for a total purchase price of $716,000 under the stock repurchase program. As of December 31, 2013, approximately $5.3 million remained available for future repurchases under this program. No shares were repurchased in 2014 under this program and the plan expired on February 27, 2014. On October 27, 2014, our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $5.0 million of our outstanding common stock. These repurchases can be made from time to time in the open market and are funded from our existing cash balances and cash generated from operations. During 2015, we repurchased approximately 908,000 shares at an average price of $2.52 per share for a total purchase price of approximately $2.3 million under the stock repurchase program. During the nine months ended September 30, 2016, we did not repurchase any shares under the approved stock repurchase program. As of September 30, 2016, approximately $2.7 million remained available for future repurchases under this program. See Item 2, Unregistered Sales of Equity Securities and Use of Proceeds in Part II, Other Information, for additional information.

Stock-based Compensation

Stock-based Compensation	9 Months Ended
	Sep. 30, 2016
Stock-based Compensation
Stock-based Compensation	Note 9. Stock-Based Compensation We account for stock-based compensation in accordance with the provisions of FASB Accounting Standards Codification (“ASC”) topic 718, Compensation-Stock Compensation (“ASC 718”), which established accounting for stock-based awards exchanged for employee services. Stock-based compensation cost is measured at each grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period of the award. All of our stock compensation is accounted for as an equity instrument. The following table summarizes compensation costs related to our stock-based awards (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Selling, general and administrative Research and development Total stock-based compensation Tax effect on stock-based compensation — — — — Net effect on net income (loss) $ $ $ $ As of September 30, 2016, the unamortized compensation costs related to unvested stock options granted to employees under our stock option plan was approximately $1.0 million, net of estimated forfeitures of $62,000. These costs will be amortized on a straight-line basis over a weighted-average period of approximately 2.6 years and will be adjusted for subsequent changes in estimated forfeitures. We did not capitalize any stock-based compensation to inventory as of September 30, 2016 and 2015 due to the immateriality of the amount. We estimate the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of ASC 718. There were no options granted in the three months ended September 30, 2016 and 2015. There were 68,000 and 20,000 options with weighted average grant date fair values of $1.01 and $0.48 granted in the nine months ended September 30, 2016 and 2015, respectively. The fair value of our stock options granted to employees for the three and nine months ended September 30, 2016 was estimated using the following weighted-average assumptions: Three Months Ended Nine Months Ended September 30, September 30, 2016* 2016 Expected term (in years) — Volatility — % % Expected dividend — % — % Risk-free interest rate — % % *There were no options granted in the three months ended September 30, 2016. The following table summarizes the stock option transactions during the nine months ended September 30, 2016 (in thousands, except per share data): Weighted- average Weighted- Remaining Number of average Contractual Aggregate Options Exercise Life Intrinsic Stock Options Outstanding Price (in years) Value Balance as of January 1, 2016 $ $ Granted Exercised Canceled and expired Balance as of September 30, 2016 $ $ Options vested as of September 30, 2016 and unvested options expected to vest, net of forfeitures $ $ Options exercisable as of September 30, 2016 $ $ The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $5.19 on September 30, 2016, which would have been received by the option holder had all option holders exercised their options on that date. Restricted stock awards A summary of activity related to restricted stock awards for the nine months ended September 30, 2016 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2016 $ Granted $ Vested $ Forfeited $ Non-vested as of September 30, 2016 $ As of September 30, 2016, the unamortized compensation costs related to unvested restricted stock awards was approximately $548,000, which is to be amortized on a straight-line basis over a weighted average period of approximately 1.1 years.

Net Income (Loss) Per Share

Net Income (Loss) Per Share	9 Months Ended
	Sep. 30, 2016
Net Income (Loss) Per Share
Net Income (Loss) Per Share	Note 10. Net Income (Loss) Per Share Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards. Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the periods. The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options. Potentially dilutive common shares are excluded in net loss periods, as their effect would be anti-dilutive. A reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share calculations is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Numerator: Net income (loss) attributable to AXT, Inc $ $ $ $ Less: Preferred stock dividends Net income (loss) available to common stockholders $ $ $ $ Denominator: Denominator for basic net income (loss) per share - weighted average common shares Effect of dilutive securities: Common stock options — — Restricted stock awards — — Denominator for dilutive net income (loss) per common shares Net income (loss) attributable to AXT, Inc. per common share: Basic $ $ $ $ Diluted $ $ $ $ Options excluded from diluted net income (loss) per share as the impact is anti-dilutive Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive — — The 883,000 shares of $0.001 par value Series A preferred stock issued and outstanding as of September 30, 2016 and December 31, 2015, valued at $3,532,000, are non-voting and non-convertible preferred stock with a 5.0% cumulative annual dividend rate payable when declared by the board of directors and a $4 per share liquidation preference over common stock, which must be paid before any distribution is made to common stockholders. These preferred shares were issued to Lyte Optronics, Inc. stockholders in connection with the completion of our acquisition of Lyte Optronics, Inc. on May 28, 1999.

Segment Information and Foreign

Segment Information and Foreign Operations	9 Months Ended
	Sep. 30, 2016
Segment Information and Foreign Operations
Segment Information and Foreign Operations	Note 11. Segment Information and Foreign Operations Segment Information We operate in one segment for the design, development, manufacture and distribution of high-performance compound semiconductor substrates and sale of materials. In accordance with ASC topic 280, Segment Reporting, our chief operating decision-maker has been identified as our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the Company. Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements. The following table represents revenue amounts (in thousands) reported for products shipped to customers in the corresponding geographic region: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Europe (primarily Germany) $ $ $ $ China Japan Asia Pacific (excluding China, Taiwan and Japan) Taiwan North America (primarily the United States) Total $ $ $ $ Long-lived assets consist primarily of property, plant and equipment, and are attributed to the geographic location in which they are located. Long-lived assets by geographic region were as follows (in thousands): As of September 30, December 31, 2016 2015 Long-lived assets by geographic region, net of depreciation: North America $ $ China $ $ Significant Customers One customer, IQE Group, represented 12% of our revenue for the three months ended September 30, 2016 while two customers, Landmark and IQE Group, represented 14% and 12%, respectively, of our revenue for the three months ended September 30, 2015. Our top five customers, although not the same five customers for each period, represented 38% and 45% of our revenue for the three months ended September 30, 2016 and 2015, respectively. Two customers, IQE Group and Landmark, represented 11% and 10%, respectively, of our revenue for the nine months ended September 30, 2016, while n o customer represented more than 10% of our revenue for the nine months ended September 30, 2015. Our top five customers, although not the same five customers for each period, represented 40% and 39% of our revenue for the nine months ended September 30, 2016 and 2015 , respectively. We perform ongoing credit evaluations of our customers’ financial condition, and limit the amount of credit extended when deemed necessary, but generally do not require collateral. Two customers accounted for 14% and 10% of our accounts receivable balance as of September 30, 2016, while one customer accounted for 22% of our accounts receivable balance as of December 31, 2015 .

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Commitments and Contingencies	Note 12. Commitments and Contingencies Indemnification Agreements We have entered into indemnification agreements with our directors and officers that require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature; to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and to obtain directors’ and officers’ insurance if available on reasonable terms, which we currently have in place. Product Warranty We provide warranties for our products for a specific period of time, generally twelve months, against material defects. We provide for the estimated future costs of warranty obligations in cost of sales when the related revenue is recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs are primarily based on historical experience as to product failures as well as current information on repair costs. On a quarterly basis, we review the accrued balances and update the historical warranty cost trends. The following table reflects the change in our warranty accrual which is included in “accrued liabilities” on the condensed consolidated balance sheets, during the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Beginning accrued warranty and related costs $ $ $ $ Accruals for warranties issued Adjustments related to pre-existing warranties including expirations and changes in estimates Cost of warranty repair Ending accrued warranty and related costs $ $ $ $ Contractual Obligations We lease certain office space, warehouse facilities and equipment under long-term operating leases expiring at various dates through December 2025. The majority of our lease obligations relates to our lease agreement for the facility in Fremont, California with approximately 19,467 square feet, which expires in 2017. We have an option to extend the lease for an additional three years. We entered into a royalty agreement with a competitor effective December 3, 2010 with a term of eight years, terminating December 31, 2018. We and our related companies are granted a worldwide, nonexclusive, royalty bearing, irrevocable license to certain patents for the term of the agreement. We shall pay up to $7.0 million of royalty payments over eight years that began in 2011 based on future royalty bearing sales. This royalty agreement contains a clause that allows us to claim a credit, starting in 2013, in the event that the royalty bearing sales for the year are lower than a pre-determined amount set forth in this agreement. The following table summarizes our contractual obligations as of September 30, 2016 (in thousands): Payments due by period 1-3 4-5 More than Contractual Obligations Total Less than 1 year years years 5 years Operating leases $ $ $ $ $ Royalty agreement — — Total $ $ $ $ $ Purchase Obligations with Penalties for Cancellation In the normal course of business, we issue purchase orders to various suppliers. In certain cases, we may incur a penalty if we cancel the purchase order. As of September 30, 2016, we do not have any outstanding purchase orders that will incur a penalty if cancelled by the Company. Legal Proceedings From time to time we may be involved in judicial or administrative proceedings concerning matters arising in the ordinary course of business. We do not expect that any of these matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations.

Foreign Exchange Transaction Ga

Foreign Exchange Transaction Gains/Losses	9 Months Ended
	Sep. 30, 2016
Foreign Exchange Transaction Gains/Lossess
Foreign Exchange Transaction Gains/Losses	Note 13. Foreign Exchange Transaction Gains/Losses We incurred foreign currency transaction exchange gains of $83,000 and $359,000 for the three months ended September 30, 2016 and 2015, respectively. We incurred foreign currency transaction exchange gains of $327,000 and $569,000 for the nine months ended September 30, 2016 and 2015 , respectively. These amounts are included in “other income (expense), net” on our condensed consolidated statements of operations.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	Note 14. Income Taxes We account for income taxes in accordance with ASC topic 740, Income Taxes (“ASC 740”) which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized. We recognize interest and penalties related to uncertain tax positions in income tax expense. Income tax expense for the three and nine months ended September 30, 2016 includes no interest and penalties. As of September 30, 2016, we have no accrued interest and penalties related to uncertain tax positions. We file income tax returns in the U.S. federal, various states and foreign jurisdictions. We have substantially concluded all U.S. federal and state income tax matters through December 31, 2001 . Provision for income taxes for the three and nine months ended September 30, 2016 was mostly related to our wholly owned China subsidiary and our three partially owned subsidiaries in China. We have made a tax election in China whereby certain minimum foreign withholding taxes are treated as an expense and not a tax credit. Besides the state tax liabilities, no income taxes or benefits have been provided for U.S. operations for the three and nine months ended September 30, 2016 due to the loss in the U.S. and the uncertainty of generating future profit in the U.S. which has resulted in our deferred tax asset being fully reserved .

Whistleblower Complaint and Inv

Whistleblower Complaint and Investigation	9 Months Ended
	Sep. 30, 2016
Whistleblower Complaint and Investigation
Whistleblower Complaint and Investigation	Note 15. Whistleblower Complaint and Investigation On February 23, 2015, the Board of Directors announced that, pursuant to an anonymous whistleblower complaint, our Audit Committee has conducted an investigation of certain potential related-party transactions involving Davis Zhang, our former President, China Operations. The investigation did not conclude that there was any intentional misconduct by Mr. Zhang, or that he received any improper benefit from these transactions. Further, the investigation did not reveal any inaccuracies in our financial statements resulting from these transactions. However, the investigation identified certain historical related-party transactions that were not previously disclosed in our filings with the Securities and Exchange Commission (“SEC”). We filed a Current Report on Form 8-K with the SEC on February 23, 2015 to disclose such historical related-party transactions. On February 20, 2015, the Board waived any potential inconsistencies with our Code of Conduct and Ethics arising from the transactions identified in the investigation. Also, the Audit Committee approved the related-party nature of such transactions to the extent it had not previously approved such transactions. The Board and Audit Committee specified that such waiver and approval would have retroactive effect to the date of commencement of the transactions covered by such waiver and approval. We incurred approximately $1.8 million of professional service fees during the course of this investigation.

Restructuring Charges

Restructuring Charges	9 Months Ended
	Sep. 30, 2016
Restructuring Charges
Restructuring Charges	Note 16. Restructuring Charges In the second quarter of 2016, we restructured the operations of Beijing JiYa Semiconductor Material Co., Ltd., which resulted in a reduction in force of 28 positions that were no longer required to support production and operations. Accordingly, we recorded a restructuring charge of approximately $226,000 related to the reduction in force for severance-related expenses. As of June 30, 2016, we had completed this restructuring plan and the reduction in force. During the three month period ended September 30, 2016, we incurred no additional restructuring charges.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2016
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 17. Recent Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, which made changes to the accounting for financial instruments that primarily affect equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. The amendments in this update supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities to be measured at fair value with changes in the fair value recognized through net income. The standard amends financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. This update will be effective for the annual periods beginning after December 15, 2017, and interim periods within those annual periods. We are currently assessing the impact of the future adoption of this standard on our condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, which applies to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, unless those contracts are within the scope of other standards, superseding the existing revenue recognition requirements in ASC Topic 605 “Revenue Recognition.” Pursuant to ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange, as applied through a multi-step process to achieve that core principle. Subsequently, the FASB approved a deferral included in ASU 2015-14 that permits public entities to apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein, and that would also permit public entities to elect to adopt the amendments as of the original effective date as applicable to reporting periods beginning after December 15, 2016. The FASB has since issued additional updates of its new standard on revenue recognition issued in May 2014. In March 2016, an amendment was issued to clarify the implementation guidance on principal versus agent consideration. The guidance requires entities to determine whether the nature of its promise to provide goods or services to a customer is performed in a principal or agent capacity and to recognize revenue in a gross or net manner based on its principal/agent designation. In April 2016, amendments were issued to clarify the identification of performance obligations and the licensing implementation guidance in the initial standard. Amendments were issued in May 2016 related to its guidance on assessing collectability, presentation of sales tax, noncash consideration, and completed contracts and contract modification at transition, which reduce the potential for diversity in practice, and the cost and complexity of application at transition and on an ongoing basis. The new guidance allows for the amendment to be applied either retrospectively to each prior reporting period presented or retrospectively as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the impact that the adoption of ASU 2014-09 and ASU 2015-14 may have on our condensed consolidated financial statements and have not elected a transition method as of the period ended September 30, 2016. In February 2016, the FASB issued ASU 2016-02, which replaces the existing guidance for leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and requires retrospective application. We will adopt in fiscal 2020 and is currently evaluating the impact of the guidance on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, which eliminates the requirement to retrospectively apply the equity method in previous periods when an investor initially obtains significant influence over an investee. Under the amended guidance, the investor should apply the equity method prospectively from the date the investment qualifies for the equity method. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years with early application permitted. We are currently evaluating the impact of the future adoption of this standard on our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, which simplifies several aspects of the accounting for share-based payment award transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods. We are currently evaluating the impact of the future adoption of this standard on our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, which reduces diversity in practice where the FASB was either unclear or did not provide specific guidance for classifying cash payments and receipts in the statement of cash flows for eight specific transactions. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and requires retrospective application with early application permitted. We are currently evaluating the impact of the future adoption of this standard on our condensed consolidated financial statements.

Investments and Fair Value Me25

Investments and Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2016
Investments and Fair Value Measurements
Cash, cash equivalents and investments	As of September 30, 2016 and December 31, 2015, our cash, cash equivalents and investments are classified as follows (in thousands): September 30, 2016 December 31, 2015 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ $ — $ — $ $ $ — $ — $ Cash equivalents: Certificates of deposit 1 — — — — Total cash and cash equivalents — — — — Investments (available for sale): Certificates of deposit 2 Corporate bonds — — Corporate equity securities — — Total investments Total cash, cash equivalents and investments $ $ $ $ $ $ $ $ Contractual maturities on investments: Due within 1 year $ $ $ $ Due after 1 through 5 years $ $ $ $ 1. Certificate of deposit with original maturities of less than 90 days. 2. Certificate of deposit with original maturities of more than 90 days.
Fair value and gross unrealized losses related to available-for-sale securities	The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2016 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of September 30, 2016 Value (Losses) Value (Losses) Value (Losses) Investments: Certificates of deposit $ $ $ $ — $ $ Corporate bonds Total in loss position $ $ $ $ $ $ The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015 (in thousands): In Loss Position In Loss Position Total In < 12 months > 12 months Loss Position Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized As of December 31, 2015 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ $ $ $ $ $ Corporate bonds Total in loss position $ $ $ $ $ $
Summary of financial assets and liabilities measured at fair value on a recurring basis	The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of September 30, 2016 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs September 30, 2016 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ $ — $ $ — Corporate bonds — — Corporate equity securities — — Total $ $ $ $ — Liabilities: Foreign currency hedge obligations $ $ — $ — $ The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2015 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2015 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ $ — $ $ — Corporate bonds — — Corporate equity securities — — Total $ $ $ $ — Liabilities: Foreign currency hedge obligations $ $ — $ — $

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Sep. 30, 2016
Inventories
Components of inventories	The components of inventories are summarized below (in thousands): September 30, December 31, 2016 2015 Inventories: Raw materials $ $ Work in process Finished goods $ $

Property, Plant and Equipment27

Property, Plant and Equipment, Net (Tables)	9 Months Ended
	Sep. 30, 2016
Property, Plant and Equipment, Net
Components of property, plant and equipment	September 30, December 31, 2016 2015 Property, plant and equipment: Machinery and equipment, at cost $ $ Less: accumulated depreciation and amortization Building, at cost Less: accumulated depreciation and amortization Leasehold improvements, at cost Less: accumulated depreciation and amortization Construction in progress $ $

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	9 Months Ended
	Sep. 30, 2016
Accrued Liabilities
Components of accrued liabilities	The components of accrued liabilities are summarized below (in thousands): September 30, December 31, 2016 2015 Accrued compensation and related charges $ $ Current portion of royalty payments Dividends payable by consolidated joint ventures Accrued professional services Accrued product warranty Accrued income taxes Other accrued liabilities $ $

Investments in Privately Held29

Investments in Privately Held Companies (Tables)	9 Months Ended
	Sep. 30, 2016
Investments in Privately Held Companies
Investments	The investments are summarized below (in thousands): Investment Balance as of September 30, December 31, Accounting Ownership Company 2016 2015 Method Percentage Beijing JiYa Semiconductor Material Co., Ltd. $ $ Consolidated % Nanjing Jin Mei Gallium Co., Ltd. Consolidated % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. Consolidated % $ $ Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ $ Equity % Xilingol Tongli Germanium Co. Ltd. Equity % Emeishan Jia Mei High Purity Metals Co., Ltd. Equity % $ $
Summarized equity method income information	AXT’s three direct minority investment entities and the three minority investments of JiYa and the one minority investment of Jin Mei are not consolidated and are accounted for under the equity method and had the following summarized income information (in thousands) for the three and nine months ended September 30, 2016 and 2015. Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net revenue $ $ $ $ Gross (loss) profit $ $ $ $ Operating (loss) income $ $ $ $ Net (loss) income $ $ $ $

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Consolidated statement of changes in equity	Consolidated Statement of Changes in Stockholders’ Equity (in thousands) Accumulated Other AXT, Inc Total Preferred Common Additional Accumulated Comprehensive Stockholders’ Noncontrolling Stockholders’ Stock Stock Paid-In-Capital Deficit Income Equity Interests Equity Balance as of December 31, 2015 $ $ $ $ $ $ $ $ Common stock options exercised Common stock repurchased — — Stock-based compensation Net (loss) income Dividends declared by joint ventures — Other comprehensive loss Balance as of September 30, 2016 $ $ $ $ $ $ $ $

Stock-based Compensation (Table

Stock-based Compensation (Tables)	9 Months Ended
	Sep. 30, 2016
Stock-based Compensation
Compensation costs related to stock-based awards	The following table summarizes compensation costs related to our stock-based awards (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Cost of revenue $ $ $ $ Selling, general and administrative Research and development Total stock-based compensation Tax effect on stock-based compensation — — — — Net effect on net income (loss) $ $ $ $
Weighted-average assumptions	The fair value of our stock options granted to employees for the three and nine months ended September 30, 2016 was estimated using the following weighted-average assumptions: Three Months Ended Nine Months Ended September 30, September 30, 2016* 2016 Expected term (in years) — Volatility — % % Expected dividend — % — % Risk-free interest rate — % %
Summary of stock option activity	The following table summarizes the stock option transactions during the nine months ended September 30, 2016 (in thousands, except per share data): Weighted- average Weighted- Remaining Number of average Contractual Aggregate Options Exercise Life Intrinsic Stock Options Outstanding Price (in years) Value Balance as of January 1, 2016 $ $ Granted Exercised Canceled and expired Balance as of September 30, 2016 $ $ Options vested as of September 30, 2016 and unvested options expected to vest, net of forfeitures $ $ Options exercisable as of September 30, 2016 $ $
Restricted stock awards	A summary of activity related to restricted stock awards for the nine months ended September 30, 2016 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2016 $ Granted $ Vested $ Forfeited $ Non-vested as of September 30, 2016 $

Net Income (Loss) Per Share (Ta

Net Income (Loss) Per Share (Tables)	9 Months Ended
	Sep. 30, 2016
Net Income (Loss) Per Share
Reconciliation of numerators and denominators of basic and diluted net income (loss) per share	A reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share calculations is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Numerator: Net income (loss) attributable to AXT, Inc $ $ $ $ Less: Preferred stock dividends Net income (loss) available to common stockholders $ $ $ $ Denominator: Denominator for basic net income (loss) per share - weighted average common shares Effect of dilutive securities: Common stock options — — Restricted stock awards — — Denominator for dilutive net income (loss) per common shares Net income (loss) attributable to AXT, Inc. per common share: Basic $ $ $ $ Diluted $ $ $ $ Options excluded from diluted net income (loss) per share as the impact is anti-dilutive Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive — —

Segment Information and Forei33

Segment Information and Foreign Operations (Tables)	9 Months Ended
	Sep. 30, 2016
Segment Information and Foreign Operations
Revenue reported for products shipped to customers in the corresponding geographic region	The following table represents revenue amounts (in thousands) reported for products shipped to customers in the corresponding geographic region: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Europe (primarily Germany) $ $ $ $ China Japan Asia Pacific (excluding China, Taiwan and Japan) Taiwan North America (primarily the United States) Total $ $ $ $
Long-lived assets by geographic region	Long-lived assets consist primarily of property, plant and equipment, and are attributed to the geographic location in which they are located. Long-lived assets by geographic region were as follows (in thousands): As of September 30, December 31, 2016 2015 Long-lived assets by geographic region, net of depreciation: North America $ $ China $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies
Product warranty accrued liability	The following table reflects the change in our warranty accrual which is included in “accrued liabilities” on the condensed consolidated balance sheets, during the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Beginning accrued warranty and related costs $ $ $ $ Accruals for warranties issued Adjustments related to pre-existing warranties including expirations and changes in estimates Cost of warranty repair Ending accrued warranty and related costs $ $ $ $
Outstanding contractual obligations	The following table summarizes our contractual obligations as of September 30, 2016 (in thousands): Payments due by period 1-3 4-5 More than Contractual Obligations Total Less than 1 year years years 5 years Operating leases $ $ $ $ $ Royalty agreement — — Total $ $ $ $ $

Investments and Fair Value Me35

Investments and Fair Value Measurements - Cash, Cash Equivalents and Investments (Details) - USD ($)		3 Months Ended	9 Months Ended
		Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Cash, cash equivalents and investments [Abstract]
Cash		$ 16,957,000	$ 16,957,000		$ 10,289,000
Cash equivalents [Abstract]
Certificates of deposit	[1]	12,704,000	12,704,000		14,586,000
Total cash and cash equivalents		29,661,000	29,661,000	$ 26,185,000	24,875,000	$ 28,814,000
Amortized Cost		47,244,000	47,244,000		43,646,000
Gross Unrealized Gain		137,000	137,000		433,000
Gross Unrealized (Loss)		(33,000)	(33,000)		(76,000)
Fair Value		47,348,000	47,348,000		44,003,000
Contractual maturities on investments, amortized cost basis [Abstract]
Due within 1 year		9,436,000	9,436,000		11,022,000
Due after 1 through 5 years		8,147,000	8,147,000		7,749,000
Investments, amortized cost		17,583,000	17,583,000		18,771,000
Contractual maturities on investments, fair value basis [Abstract]
Due within 1 year		9,563,000	9,563,000		11,437,000
Due after 1 through 5 years		8,124,000	8,124,000		7,691,000
Investments, fair value		17,687,000	17,687,000		19,128,000
Investments held		7,025,000	7,025,000		7,948,000
Gross realized gains from sales of available-for-sale investments			429,000	859,000
GHI
Contractual maturities on investments, fair value basis [Abstract]
Proceeds from sales of available-for-sale investments			581,000
Realized gain		113,000
Available-for-sale investments, expenses		29,000	152,000
Gross realized gains from sales of available-for-sale investments		84,000	429,000
Unrealized gain, net of tax			135,000
IntelliEpi
Contractual maturities on investments, fair value basis [Abstract]
Proceeds from sales of available-for-sale investments				902,000
Available-for-sale investments, expenses				43,000
Gross realized gains from sales of available-for-sale investments				$ 859,000
Auction Rate Securities [Member]
Contractual maturities on investments, fair value basis [Abstract]
Investments, fair value		0	0
Total Investments [Member]
Cash equivalents [Abstract]
Amortized Cost		17,583,000	17,583,000		18,771,000
Gross Unrealized Gain		137,000	137,000		433,000
Gross Unrealized (Loss)		(33,000)	(33,000)		(76,000)
Fair Value		17,687,000	17,687,000		19,128,000
Certificates of Deposit [Member]
Cash equivalents [Abstract]
Amortized Cost	[2]	9,047,000	9,047,000		9,795,000
Gross Unrealized Gain	[2]	2,000	2,000		1,000
Gross Unrealized (Loss)	[2]	(9,000)	(9,000)		(13,000)
Fair Value	[2]	9,040,000	9,040,000		9,783,000
Corporate Bonds [Member]
Cash equivalents [Abstract]
Amortized Cost		8,488,000	8,488,000		8,776,000
Gross Unrealized (Loss)		(24,000)	(24,000)		(63,000)
Fair Value		8,464,000	8,464,000		8,713,000
Corporate Equity Securities [Member]
Cash equivalents [Abstract]
Amortized Cost		48,000	48,000		200,000
Gross Unrealized Gain		135,000	135,000		432,000
Fair Value		$ 183,000	$ 183,000		$ 632,000
[1]	Certificate of deposit with original maturities of less than 90 days.
[2]	Certificate of deposit with original maturities of more than 90 days.

Investments and Fair Value Me36

Investments and Fair Value Measurements - Investment Category and Length (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract]
Fair value, in loss position less than twelve months	$ 8,601	$ 11,375
Gross unrealized loss, in loss position less than twelve months	(26)	(67)
Fair value, in loss position greater than twelve months	4,844	5,390
Gross unrealized loss, in loss position greater than twelve months	(7)	(9)
Fair value, total in loss position	13,445	16,765
Gross unrealized loss, total in loss position	(33)	(76)
Minority Investments
Investments in privately-held companies	7,025	7,948
Certificates of Deposit [Member]
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract]
Fair value, in loss position less than twelve months	3,541	4,509
Gross unrealized loss, in loss position less than twelve months	(9)	(11)
Fair value, in loss position greater than twelve months	1,440	3,543
Gross unrealized loss, in loss position greater than twelve months		(2)
Fair value, total in loss position	4,981	8,052
Gross unrealized loss, total in loss position	(9)	(13)
Corporate Bonds [Member]
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract]
Fair value, in loss position less than twelve months	5,060	6,866
Gross unrealized loss, in loss position less than twelve months	(17)	(56)
Fair value, in loss position greater than twelve months	3,404	1,847
Gross unrealized loss, in loss position greater than twelve months	(7)	(7)
Fair value, total in loss position	8,464	8,713
Gross unrealized loss, total in loss position	(24)	(63)
Other Assets [Member]
Minority Investments
Investments in privately-held companies	$ 10,500	$ 12,100

Investments and Fair Value Me37

Investments and Fair Value Measurements - FV Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	$ 47,348	$ 44,003
Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Total	30,391	33,714
Liabilities [Abstract]
Foreign currency hedge obligations	53	36
Recurring [Member] | Certificates of Deposit [Member]
Assets, Fair Value Disclosure [Abstract]
Cash and cash equivalents, fair value disclosure	21,744	24,369
Recurring [Member] | Corporate Bonds [Member]
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	8,464	8,713
Recurring [Member] | Corporate Equity Securities [Member]
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	183	632
Recurring [Member] | Quoted Prices in Active Markets of Identical Assets (Level 1) [Member]
Assets, Fair Value Disclosure [Abstract]
Total	183	632
Recurring [Member] | Quoted Prices in Active Markets of Identical Assets (Level 1) [Member] | Corporate Equity Securities [Member]
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	183	632
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets, Fair Value Disclosure [Abstract]
Total	30,208	33,082
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Certificates of Deposit [Member]
Assets, Fair Value Disclosure [Abstract]
Cash and cash equivalents, fair value disclosure	21,744	24,369
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Bonds [Member]
Assets, Fair Value Disclosure [Abstract]
Available-for-sale Securities	8,464	8,713
Recurring [Member] | Significant Other Observable Inputs (Level 3) [Member]
Liabilities [Abstract]
Foreign currency hedge obligations	$ 53	$ 36

Inventories (Details)

Inventories (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Inventories
Raw materials	$ 19,355,000	$ 19,532,000
Work in process	16,759,000	16,007,000
Finished goods	2,617,000	2,473,000
Inventories, total	38,731,000	38,012,000
Inventory reserve	11,600,000	12,000,000
Excess and obsolete inventory	$ 297,000	$ 625,000

Property, Plant and Equipment39

Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Property, plant and equipment [Abstract]
Property, plant and equipment, net	$ 29,385	$ 31,422
Machinery and equipment
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	41,225	40,899
Less: accumulated depreciation and amortization	(37,462)	(36,044)
Building
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	30,324	30,388
Less: accumulated depreciation and amortization	(9,765)	(9,170)
Leasehold improvements
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	5,057	5,059
Less: accumulated depreciation and amortization	(3,601)	(3,306)
Construction in progress
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	$ 3,607	$ 3,596

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Components of accrued liabilities [Abstract]
Accrued compensation and related charges	$ 1,161	$ 2,129
Current portion of royalty payments	575	575
Dividends payable by consolidated joint ventures	520	534	$ 544
Accrued professional services	531	709
Accrued product warranty	266	497
Accrued income taxes	249	225
Other accrued liabilities	1,709	1,712
Accrued liabilities, total	$ 5,011	$ 6,381

Related Party Transactions (Det

Related Party Transactions (Details)	1 Months Ended			3 Months Ended		9 Months Ended
	Apr. 30, 2016USD ($)	Apr. 30, 2014USD ($)	Aug. 31, 2011USD ($)item	Sep. 30, 2016USD ($)ft²installment	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)ft²installment	Sep. 30, 2015USD ($)	Dec. 31, 2015USD ($)
Related Party Transaction [Line Items]
Related party notes receivable - long term				$ 1,735,000		$ 1,735,000		$ 1,781,000
Accounts payable				7,277,000		7,277,000		6,460,000
Accounts receivable				$ 18,380,000		$ 18,380,000		18,468,000
Area of leased property (in square feet) | ft²				19,467		19,467
Equity investment entity | Related party loan | Beijing JiYa Semiconductor Material Co., Ltd
Related Party Transaction [Line Items]
Amount of transaction			$ 1,600,000
Number of equity method investees to whom loan was granted | item			1
Term of loan						2 years 10 months
Number of installments | installment				3		3
Related party notes receivable - long term				$ 1,600,000		$ 1,600,000		1,600,000
Equity investment entity | Raw materials purchases from related party | Accounts payable | Beijing JiYa Semiconductor Material Co., Ltd
Related Party Transaction [Line Items]
Amount payable to related party				2,400,000		2,400,000		2,400,000
Equity investment entity | Raw materials sales to related party | Accounts receivable | Beijing JiYa Semiconductor Material Co., Ltd
Related Party Transaction [Line Items]
Amounts receivable from related party				370,000		370,000		473,000
Equity investment entity | Raw material agency sales agreement | Other income (expense), net | Nanjing Jin Mei Gallium Co., Ltd
Related Party Transaction [Line Items]
Other income from related party				0	$ 0	$ 1,000	$ 1,000
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Related party loan | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount of transaction		$ 45,000
Interest rate (as a percent)						6.15%
Related party notes receivable - long term				52,000		$ 52,000
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Raw materials purchases from related party | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Related party notes receivable - long term				111,000		111,000		114,000
Emei shan Jiamei Materials Co., Ltd | Raw materials purchases from related party | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount payable to related party				256,000		256,000		70,000
Xilingol Tongli Germanium Co. Ltd | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount payable to related party				477,000		477,000		0
Beijing Kaide Quartz Co. Ltd | Raw materials purchases from related party | Accounts payable
Related Party Transaction [Line Items]
Amount payable to related party				$ 457,000		$ 457,000		$ 379,000
Beijing BoYu Semiconductor Vessel Craftwork Technology Co | Lease of land | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Lease term						10 years
Rental increase period						3 years
Area of leased property (in square feet) | ft²				22,081		22,081
Annual lease payment						$ 24,000
Increase in annual lease payment at each third year anniversary (in hundredths)				5.00%		5.00%
Executive officer | Related party loan | Beijing BoYu Semiconductor Vessel Craftwork Technology Co
Related Party Transaction [Line Items]
Amount of transaction	$ 180,000
Interest rate (as a percent)	2.75%

Investments in Privately Held42

Investments in Privately Held Companies (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)item	Sep. 30, 2016USD ($)employeeentity	Sep. 30, 2015USD ($)item	Sep. 30, 2016employee	Sep. 30, 2016item	Sep. 30, 2016entity	Sep. 30, 2016USD ($)	Dec. 31, 2015USD ($)	Sep. 30, 2015entity
Summary of investments [Abstract]
Investments in privately-held companies								$ 7,025,000	$ 7,948,000
Income allocated to minority interests	$ (18,000)	$ 5,000	$ (480,000)	$ 257,000
Equity investments classified as other assets								12,084,000	14,114,000
Gross equity earnings from minority-owned joint ventures that are not consolidated, recorded as other income	(2,416,000)	$ 805,000	(5,834,000)	$ 3,546,000
Investments in unconsolidated privately-held entities, included in other assets								3
Joint Ventures [Member]
Summary of investments [Abstract]
Number of consolidated joint ventures		3		3		3	3			3
Income from three consolidated joint ventures	399,000	$ 459,000	(82,000)	$ 1,700,000
Income allocated to minority interests	(18,000)	5,000	(480,000)	257,000
Net income from joint ventures attributable to parent	$ 417,000	454,000	$ 398,000	1,400,000
Minority investments | entity			4
Other Assets [Member]
Summary of investments [Abstract]
Investments in privately-held companies								10,500,000	12,100,000
Equity investments classified as other assets								7,000,000	7,900,000
Other Assets [Member] | Joint Ventures [Member]
Summary of investments [Abstract]
Minority investment in consolidated joint venture, included in other assets								3,500,000	4,100,000
Beijing JiYa Semiconductor Material Co., Ltd Investment
Summary of investments [Abstract]
Investments, consolidated								3,331,000	3,331,000
Percentage of ownership, consolidated method (in hundredths)			46.00%
Employee duration			27 years
Number of persons on board | employee					1
Nanjing Jin Mei Gallium Co., Ltd Investment
Summary of investments [Abstract]
Investments, consolidated								592,000	592,000
Percentage of ownership, consolidated method (in hundredths)			83.00%
Number of new board representatives | employee			2
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment
Summary of investments [Abstract]
Investments, consolidated								1,346,000	1,346,000
Percentage of ownership, consolidated method (in hundredths)			70.00%
Number of new board representatives | employee			2
Donghai County Dongfang High Purity Electronic Materials Co., Ltd Investment
Summary of investments [Abstract]
Investments in privately-held companies								1,534,000	1,524,000
Percentage of ownership, equity method (in hundredths)	46.00%		46.00%
Xilingol Tongli Germanium Co. Ltd Investment
Summary of investments [Abstract]
Investments in privately-held companies								4,421,000	5,343,000
Percentage of ownership, equity method (in hundredths)	25.00%		25.00%
Emeishan Jia Mei High Purity Metals Co., Ltd Investment
Summary of investments [Abstract]
Investments in privately-held companies								1,070,000	1,081,000
Percentage of ownership, equity method (in hundredths)	25.00%		25.00%
Seven Minority Investments
Summary of investments [Abstract]
Gross equity earnings from minority-owned joint ventures that are not consolidated, recorded as other income	$ (581,000)	$ 167,000	$ (1,400,000)	$ 777,000
Minority investments not consolidated accounted for under equity method | entity			7
Beijing JiYa Semiconductor Material Co., Ltd
Summary of investments [Abstract]
Minority investments | entity			3
Jinmei [Member]
Summary of investments [Abstract]
Minority investments | entity			1
Majority-Owned Subsidiaries [Member]
Summary of investments [Abstract]
Investments, consolidated								$ 5,269,000	$ 5,269,000

Investments in Privately Held43

Investments in Privately Held Companies - Minority Investment Entities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Summarized income information of all the minority investment entities that are not consolidated and accounted for under the equity method [Abstract]
Net Revenue	$ 7,196	$ 9,631	$ 18,472	$ 29,960
Gross (loss) profit	(1,510)	2,324	(2,089)	8,244
Operating income (loss)	(2,449)	829	(5,309)	4,172
Net income (loss)	$ (2,416)	$ 805	$ (5,834)	$ 3,546

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Oct. 27, 2014	Feb. 21, 2013
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			$ 137,561,000
Common stock options exercised			428,000
Stock-based compensation			789,000
Net (loss) income	$ 2,211,000	$ 47,000	2,942,000	$ (728,000)
Dividends declared by joint ventures			(52,000)
Other comprehensive income	(345,000)	$ (2,760,000)	(2,054,000)	(2,805,000)
Balance, end of period	139,614,000		139,614,000		$ 137,561,000
Reclassification adjustment from AOCI			0	$ 0
Stock repurchase program, authorized amount								$ 5,000,000	$ 6,000,000
Shares repurchased (in shares)					908,000	0	285,000
Average price of shares repurchased (in dollars per share)					$ 2.52		$ 2.51
Total purchase price					$ 2,300,000		$ 716,000
Stock repurchase program remaining authorized repurchase amount	2,700,000		2,700,000				$ 5,300,000
Preferred Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			3,532,000
Common stock options exercised
Balance, end of period	3,532,000		3,532,000		3,532,000
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			32,000
Common stock options exercised
Balance, end of period	32,000		32,000		32,000
Additional Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			194,646,000
Common stock options exercised			428,000
Stock-based compensation			789,000
Balance, end of period	195,863,000		195,863,000		194,646,000
Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			(70,621,000)
Net (loss) income			3,422,000
Balance, end of period	(67,199,000)		(67,199,000)		(70,621,000)
Accumulated Other Comprehensive Income
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			4,382,000
Other comprehensive income			(1,853,000)
Balance, end of period	2,529,000		2,529,000		4,382,000
AXT, Inc. Stockholders' Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			131,971,000
Common stock options exercised			428,000
Stock-based compensation			789,000
Net (loss) income			3,422,000
Other comprehensive income			(1,853,000)
Balance, end of period	134,757,000		134,757,000		131,971,000
Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			5,590,000
Net (loss) income			(480,000)
Dividends declared by joint ventures			(52,000)
Other comprehensive income			(201,000)
Balance, end of period	$ 4,857,000		$ 4,857,000		$ 5,590,000

Stock-based Compensation (Detai

Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 281	$ 311	$ 789	$ 1,051
Net effect on net income (loss)	281	311	789	1,051
Cost of Revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	5	5	15	15
Selling, General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	238	260	651	902
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 38	$ 46	$ 123	$ 134

Stock-based Compensation - Assu

Stock-based Compensation - Assumptions (Details) - Options [Member]	9 Months Ended
	Sep. 30, 2016
Weighted average assumptions [Abstract]
Expected term	4 years
Volatility (in hundredths)	49.21%
Risk-free interest rate (in hundredths)	1.38%

Stock-based Compensation - Opti

Stock-based Compensation - Options (Details) - Options [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Number of options outstanding [Roll Forward]
Options outstanding, beginning of period (in shares)			3,779,000
Granted (in shares)	0	0	68,000	20,000
Exercised (in shares)			(169,000)
Canceled and expired (in shares)			(536,000)
Options outstanding, end of period (in shares)	3,142,000		3,142,000		3,779,000
Options vested and unvested options expected to vest, net of forfeitures, end of period (in shares)	3,084,000		3,084,000
Options exercisable, end of period (in shares)	1,825,000		1,825,000
Weighted average exercise price [Roll Forward]
Options outstanding, beginning of period (in dollars per share)			$ 2.97
Granted (in dollars per share)			2.56
Exercised (in dollars per share)			2.52
Canceled and expired (in dollars per share)			3.21
Options outstanding, end of period (in dollars per share)	$ 2.94		2.94		$ 2.97
Options vested as of March 31, 2015 and unvested options expected to vest, net of forfeitures (in dollars per share)	2.96		2.96
Options exercisable, end of period (in dollars per share)	$ 3.43		$ 3.43
Weighted average Remaining Contractual Life [Abstract]
Options outstanding			6 years 7 months 24 days		6 years 3 months 4 days
Options vested and unvested options expected to vest, net of forfeitures, end of period			6 years 7 months 10 days
Option exercisable, end of period			5 years 2 months 19 days
Aggregate Intrinsic Value [Abstract]
Options outstanding, beginning of period			$ 764
Options outstanding, end of period	$ 7,319		7,319		$ 764
Options vested and expected to vest, end of period	7,149		7,149
Options exercisable, end of period	$ 3,479		$ 3,479
Closing price (in dollars per share)	$ 5.19		$ 5.19

Stock-based Compensation - RSU

Stock-based Compensation - RSU (Details) - USD ($) $ / shares in Units, shares in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options exercised (in shares)	169
Compensation costs related to unvested stock options not yet recognized	$ 1,000,000
Value of estimated forfeitures	$ 62,000
Weighted-average period of amortization	2 years 7 months 6 days
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted-average grant date fair value of stock options granted (in dollars per share)	$ 1.01	$ 0.48
Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period of amortization	1 year 1 month 6 days
Shares [Roll Forward]
Non-vested, beginning of period (in shares)	546
Granted (in shares)	49
Vested (in shares)	(37)
Forfeited (in shares)	(207)
Non-vested, end of period (in shares)	351
Weighted Average Grant Date Fair Value [Roll Forward]
Non-vested, beginning of period (in dollars per share)	$ 2.39
Granted (in dollars per share)	3.69
Vested (in dollars per share)	2.46
Forfeited (in dollars per share)	2.55
Non-vested, end of period (in dollars per share)	$ 2.47
Unrecognized compensation expense related to restricted stock awards	$ 548,000

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Numerator: [Abstract]
Net income (loss) attributable to AXT, Inc.	$ 2,229,000	$ 42,000	$ 3,422,000	$ (985,000)
Less: Preferred stock dividends	(44,000)	(44,000)	(132,000)	(132,000)
Net loss available to common stockholders	$ 2,185,000	$ (2,000)	$ 3,290,000	$ (1,117,000)
Basic net income (loss) per share [Abstract]
Basic (in dollars per share)	$ 0.07	$ 0	$ 0.10	$ (0.03)
Diluted net income (loss) per share [Abstract]
Diluted (in dollars per share)	$ 0.07	$ 0	$ 0.10	$ (0.03)
Denominator: [Abstract]
Denominator for basic net income (loss) per share - weighted average common shares (in shares)	32,110,000	31,988,000	32,043,000	32,262,000
Denominator for dilutive net income (loss) per common share (in shares)	33,138,000	31,988,000	32,615,000	32,262,000
Preferred stock, shares issued (in shares)	883,000		883,000		883,000
Preferred stock, shares outstanding (in shares)	883,000		883,000		883,000
Preferred stock, par value (in dollars per share)	$ 0.001		$ 0.001		$ 0.001
Preferred stock, value	$ 3,532,000		$ 3,532,000		$ 3,532,000
Cumulative annual dividend rate (as a percent)			5.00%		5.00%
Liquidation preference over common stock (in dollars per share)	$ 4		$ 4		$ 4
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from diluted net income (loss) per share as the impact is anti-dilutive (in shares)	652,000	3,037,000	910,000	3,037,000
Restricted Stock Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from diluted net income (loss) per share as the impact is anti-dilutive (in shares)		466,000		466,000
Options [Member]
Denominator: [Abstract]
Effect of dilutive securities (in shares)	827,000		425,000
Restricted Stock Awards [Member]
Denominator: [Abstract]
Effect of dilutive securities (in shares)	201,000		147,000

Segment Information and Forei50

Segment Information and Foreign Operations - Segment and Geographical Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)segment	Sep. 30, 2015USD ($)	Dec. 31, 2015USD ($)
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of operating segments | segment			1
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	$ 21,872	$ 18,371	$ 61,080	$ 59,445
Long-lived assets by geographic region, net of depreciation:
Long-lived assets	29,385		29,385		$ 31,422
Reportable Geographical Components | Europe
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	4,995	4,385	13,946	14,992
Reportable Geographical Components | China
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	4,766	3,296	12,041	10,154
Long-lived assets by geographic region, net of depreciation:
Long-lived assets	28,767		28,767		30,880
Reportable Geographical Components | Japan
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	3,499	1,939	8,096	7,176
Reportable Geographical Components | Asia Pacific (excluding China, Taiwan, and Japan)
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	3,239	2,750	8,391	8,277
Reportable Geographical Components | Taiwan
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	2,995	4,131	11,779	10,654
Reportable Geographical Components | North America
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	2,378	$ 1,870	6,827	$ 8,192
Long-lived assets by geographic region, net of depreciation:
Long-lived assets	$ 618		$ 618		$ 542

Segment Information and Forei51

Segment Information and Foreign Operations - Concentration of Credit Risk (Details) - customer	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Revenue [Member]
Revenue, Major Customer [Line Items]
Number of customers representing significant share	1	2	2	0
Accounts Receivable [Member]
Revenue, Major Customer [Line Items]
Number of customers representing significant share			2		1
Landmark [Member] | Revenue [Member]
Revenue, Major Customer [Line Items]
Percentage share generated by major customers		14.00%	10.00%	10.00%
IQE Group Customer [Member] | Revenue [Member]
Revenue, Major Customer [Line Items]
Percentage share generated by major customers	12.00%	12.00%	11.00%
Major Customer One [Member] | Accounts Receivable [Member]
Revenue, Major Customer [Line Items]
Percentage share generated by major customers			14.00%		22.00%
Major Customer Two [Member] | Accounts Receivable [Member]
Revenue, Major Customer [Line Items]
Percentage share generated by major customers			10.00%
Top Five Major Customers [Member] | Revenue [Member]
Revenue, Major Customer [Line Items]
Number of customers representing significant share	5	5	5	5
Percentage share generated by major customers	38.00%	45.00%	40.00%	39.00%

Commitments and Contingencies52

Commitments and Contingencies (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)ft²	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)ft²	Sep. 30, 2015USD ($)
Product Warranty [Abstract]
Period of warranty			12 months
Change in warranty accrual [Roll Forward]
Beginning accrued warranty and related costs	$ 330	$ 668	$ 497	$ 802
Accruals for warranties issued	3	78	26	663
Adjustments related to pre-existing warranties including expirations and changes in estimates	(57)	(4)	(188)	(256)
Cost of warranty repair	(10)	(122)	(69)	(589)
Ending accrued warranty and related costs	$ 266	$ 620	$ 266	$ 620
Leases [Abstract]
Area of property under long-term operating lease (in square feet) | ft²	19,467		19,467
Additional years per lease option			3 years
Term of royalty agreement			8 years
Aggregate amount payable towards royalty	$ 7,000		$ 7,000
Operating leases
Less than 1 year	206		206
1-3 years	91		91
4-5 years	52		52
More than 5 years	73		73
Total	422		422
Royalty agreement
Less than 1 year	575		575
1-3 years	719		719
Total	1,294		1,294
Total
Less than 1 year	781		781
1-3 years	810		810
4-5 years	52		52
More than 5 years	73		73
Total	$ 1,716		$ 1,716

Foreign Exchange Transaction 53

Foreign Exchange Transaction Gains/Losses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Other income (expense), net
Foreign exchange gain (loss)	$ 83,000	$ 359,000	$ 327,000	$ 569,000

Income Taxes - (Details)

Income Taxes - (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2016USD ($)subsidiary
Income Taxes
Unrecognized tax benefits interest and penalties	$ 0	$ 0
Unrecognized tax benefits accrued interest and penalties	0	$ 0
Number of partially owned subsidiaries | subsidiary		3
Federal income tax benefit or expense	$ 0	$ 0

Whistleblower Complaint and I55

Whistleblower Complaint and Investigation (Details) $ in Millions	9 Months Ended
	Sep. 30, 2016USD ($)
Whistleblower Complaint and Investigation
Professional service fees	$ 1.8

Restructuring Charges (Details)

Restructuring Charges (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)	Jun. 30, 2016USD ($)employee	Sep. 30, 2016USD ($)
Restructuring charge	$ 0		$ 226,000
Beijing JiYa Semiconductor Material Co., Ltd
Number of workforce reduced | employee		28
Restructuring charge		$ 226,000