AXT (AXTI) 10-Q 7 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 01, 2018
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 Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		39,537,821
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 18,035,000	$ 44,352,000
Short-term investments	21,910,000	20,032,000
Accounts receivable, net of allowances of $358 and $527 as of September 30, 2018 and December 31, 2017	23,308,000	22,778,000
Inventories	58,717,000	45,840,000
Prepaid expenses and other current assets	10,625,000	7,519,000
Total current assets	132,595,000	140,521,000
Long-term investments	1,906,000	12,576,000
Property, plant and equipment, net	74,754,000	46,530,000
Other assets	11,194,000	11,573,000
Total assets	220,449,000	211,200,000
Current liabilities:
Accounts payable	12,344,000	11,445,000
Accrued liabilities	12,776,000	11,149,000
Bank loan	291,000
Total current liabilities	25,411,000	22,594,000
Other long-term liabilities	320,000	289,000
Total liabilities	25,731,000	22,883,000
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, 2018 and December 31, 2017 (Liquidation preference of $6,948 and $6,819 as of September 30, 2018 and December 31, 2017)	3,532,000	3,532,000
Common stock, $0.001 par value; 70,000 shares authorized; 39,538 and 39,413 shares issued and outstanding as of September 30, 2018 and December 31, 2017	39,000	39,000
Additional paid-in capital	233,522,000	231,679,000
Accumulated deficit	(44,122,000)	(54,837,000)
Accumulated other comprehensive income (loss)	(1,846,000)	3,407,000
Total AXT, Inc. stockholders' equity	191,125,000	183,820,000
Noncontrolling interests	3,593,000	4,497,000
Total stockholders' equity	194,718,000	188,317,000
Total liabilities and stockholders' equity	$ 220,449,000	$ 211,200,000

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Accounts receivable, allowances for doubtful accounts	$ 358	$ 527
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	$ 6,948	$ 6,819
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)	39,538,000	39,413,000
Common stock, shares outstanding (in shares)	39,538,000	39,413,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue	$ 28,626	$ 28,168	$ 80,165	$ 72,341
Cost of revenue	18,012	17,035	48,968	47,664
Gross profit	10,614	11,133	31,197	24,677
Operating expenses:
Selling, general and administrative	4,615	4,484	13,824	12,219
Research and development	1,668	1,410	4,588	3,553
Total operating expenses	6,283	5,894	18,412	15,772
Income from operations	4,331	5,239	12,785	8,905
Interest income, net	133	122	414	334
Equity in earnings (loss) of unconsolidated joint ventures	6	(266)	(21)	(1,387)
Other income (expense), net	87	(349)	(179)	(403)
Income before provision for income taxes	4,557	4,746	12,999	7,449
Provision for income taxes	410	181	1,111	661
Net income	4,147	4,565	11,888	6,788
Less: Net (income) loss attributable to noncontrolling interests	(208)	(146)	(1,173)	226
Net income attributable to AXT, Inc.	$ 3,939	$ 4,419	$ 10,715	$ 7,014
Net income attributable to AXT, Inc. per common share:
Basic (in dollars per share)	$ 0.10	$ 0.11	$ 0.27	$ 0.19
Diluted (in dollars per share)	$ 0.10	$ 0.11	$ 0.26	$ 0.18
Weighted-average number of common shares outstanding:
Basic (in shares)	39,008	38,499	39,000	36,999
Diluted (in shares)	40,331	40,095	40,320	38,469

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 4,147	$ 4,565	$ 11,888	$ 6,788
Other comprehensive (loss) income, net of tax:
Change in foreign currency translation (loss) gain, net of tax	(3,316)	1,135	(5,518)	2,457
Change in unrealized gain (loss) on available-for-sale investments, net of tax	59	27	(18)	(98)
Total other comprehensive (loss) income, net of tax	(3,257)	1,162	(5,536)	2,359
Comprehensive income	890	5,727	6,352	9,147
Less: Comprehensive loss (income) attributable to noncontrolling interests	31	(326)	(890)	(111)
Comprehensive income attributable to AXT, Inc.	$ 921	$ 5,401	$ 5,462	$ 9,036

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Cash flows from operating activities:
Net income		$ 4,147	$ 4,565	$ 11,888	$ 6,788
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization				3,445	3,361
Amortization of marketable securities premium				120	124
Impairment charge on equity investee					313
Stock-based compensation				1,392	961
Realized gain on sale of available-for-sale securities					(77)
Loss on disposal of equipment				25
Loss from equity method investments, net				21	1,074
Changes in operating assets and liabilities:
Accounts receivable				(917)	(6,206)
Inventories				(14,637)	(66)
Prepaid expenses and other current assets				(3,492)	(587)
Other assets				48	64
Accounts payable				1,283	2,589
Accrued liabilities	[1]			745	(107)
Other long-term liabilities, including royalties				(148)	(241)
Net cash (used in) provided by operating activities				(227)	7,990
Cash flows from investing activities:
Purchases of property, plant and equipment				(34,289)	(16,557)
Proceeds from sale of equipment				11
Purchases of available-for-sale securities				(9,936)	(26,093)
Proceeds from sales and maturities of available-for-sale securities				18,590	13,310
Repayment of related party notes receivable					108
Net cash used in investing activities				(25,624)	(29,232)
Cash flows from financing activities:
Proceeds from issuance of common stock and options exercised, net of issuance costs				264	33,384
Considerations paid in cash to repurchase subsidiary shares from noncontrolling interests				(415)
Proceeds from short-term loans				291
Dividends paid by joint ventures to their minority shareholders					(465)
Net cash provided by financing activities				140	32,919
Effect of exchange rate changes on cash and cash equivalents				(606)	249
Net increase (decrease) in cash and cash equivalents				(26,317)	11,926
Cash and cash equivalents at the beginning of the period				44,352	36,152	$ 36,152
Cash and cash equivalents at the end of the period		$ 18,035	$ 48,078	18,035	$ 48,078	$ 44,352
Supplemental disclosure of non-cash flow information:
Consideration payable to repurchase subsidiary shares from noncontrolling interests, included in accrued liabilities				1,192
Reduction of noncontrolling interests in excess of total consideration paid and payable in connection with the repurchase of subsidiaries shares from noncontrolling interests				$ 187
[1]	* Dividend accrued but not paid by one of our consolidated subsidiaries of $505 and $521 was included in accrued liabilities as of September 30, 2018 and 2017, respectively.

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) $ in Thousands	Sep. 30, 2018USD ($)subsidiary	Dec. 31, 2017USD ($)	Sep. 30, 2017USD ($)subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Number of consolidated joint ventures | subsidiary	1		1
Dividends accrued but not paid by joint ventures | $	$ 505	$ 533	$ 521

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2018
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. Certain reclassifications have been made to prior periods’ financial statements to conform to the current period presentation. These reclassifications did not result in any change in previously reported net income or total assets. 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 for the three and nine months ended September 30, 2018 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 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2018 and our Quarterly Reports on Form 10-Q for the three months ended March 31, 2018 and June 30, 2018 filed with the SEC on May 4, 2018 and August 7, 2018, respectively . The condensed consolidated financial statements include the accounts of AXT, our wholly-owned subsidiaries, Beijing Tongmei Xtal Technology Co., Ltd., Baoding Tongmei Xtal Technology Co., Ltd. and Chaoyang Tongmei Xtal Technology Co., and our majority-owned, or significantly controlled subsidiaries, Beijing JiYa Semiconductor Material Co., Ltd., Nanjing JinMei 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. We have seven companies accounted for by the equity method. For subsidiaries that we consolidate, we reflect the portion we do not own as noncontrolling interests 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, 2018
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 three months. Our investments consist of instruments with original maturities of more than three months. As of September 30, 2018 and December 31, 2017, our cash, cash equivalents and investments are classified as follows (in thousands): September 30, 2018 December 31, 2017 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ 16,288 $ — $ — $ 16,288 $ 43,610 $ — $ — $ 43,610 Cash equivalents: Certificates of deposit 1 1,747 — — 1,747 742 — — 742 Total cash and cash equivalents 18,035 — — 18,035 44,352 — — 44,352 Investments (available-for-sale): Certificates of deposit 2 5,468 — (31) 5,437 7,099 — (24) 7,075 Corporate bonds 18,459 — (80) 18,379 25,602 — (69) 25,533 Total investments 23,927 — (111) 23,816 32,701 — (93) 32,608 Total cash, cash equivalents and investments $ 41,962 $ — $ (111) $ 41,851 $ 77,053 $ — $ (93) $ 76,960 Contractual maturities on investments: Due within 1 year 3 $ 22,007 $ 21,910 $ 20,056 $ 20,032 Due after 1 through 5 years 4 1,920 1,906 12,645 12,576 $ 23,927 $ 23,816 $ 32,701 $ 32,608 1. Certificates of deposit with original maturities of less than three months. 2. Certificates of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our condensed consolidated balance sheets. 4. Classified as “Long-term investments” in our condensed consolidated balance sheets. We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. Certificates of deposit and corporate bonds are typically held until maturity. Corporate equity securities have no maturity and may be sold at any time. We previously held corporate equity securities consisting of common stock of GCS Holdings, Inc. (“GHI”) (previously Global Communication Semiconductors, Inc.), a Taiwan publicly-traded company. 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. D uring the three months ended March 31, 2017, we sold the remainder of our GHI stock. D uring the nine months ended September 30, 2017, our cash proceeds from sales of GHI stock were $125,000. Our cost was $48,000 and our gross realized gain from sales of GHI stock was $77,000. There were no GHI transactions in the three and nine months ended September 30, 2018. 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 our available-for-sale securities as of September 30, 2018 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, 2018. 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, 2018 (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, 2018 Value (Losses) Value (Losses) Value (Losses) Investments: Certificates of deposit $ 2,625 $ (15) $ 2,794 $ (16) $ 5,419 $ (31) Corporate bonds 11,155 (56) 7,224 (24) 18,379 (80) Total in loss position $ 13,780 $ (71) $ 10,018 $ (40) $ 23,798 $ (111) 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, 2017 (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, 2017 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ 3,994 $ (16) $ 2,342 $ (8) $ 6,336 $ (24) Corporate bonds 25,533 (69) — — 25,533 (69) Total in loss position $ 29,527 $ (85) $ 2,342 $ (8) $ 31,869 $ (93) 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 $9.5 million and $9.8 million as of September 30, 2018 and December 31, 2017, respectively. As of September 30, 2018, there were seven companies accounted for under the equity method. There were no impairment charges in the three and nine months ended September 30, 2018. There were no impairment charges in the three months ended September 30, 2017. The nine months ended September 30, 2017 include an impairment charge of $313,000 for one of the joint ventures that produces gallium. During the first quarter of 2017, management determined that it was unlikely that this company would recover from the difficult pricing environment and we wrote the investment down to zero. Fair Value Measurements We invest primarily in money market accounts, certificates of deposits, corporate bonds and notes, and government securities. Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“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, 2018, 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 and nine months ended September 30, 2018. There have been no transfers between fair value measurements levels during the three and nine months ended September 30, 2018. 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, 2018 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs September 30, 2018 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 7,184 $ — $ 7,184 $ — Corporate bonds 18,379 — 18,379 — Total $ 25,563 $ — $ 25,563 $ — 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, 2017 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2017 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 7,817 $ — $ 7,817 $ — Corporate bonds 25,533 — 25,533 — Total $ 33,350 $ — $ 33,350 $ — 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). There were no impairment charges in the three and nine months ended September 30, 2018. There were no impairment charges in the three months ended September 30, 2017. The nine months ended September 30, 2017 include an impairment charge of $313,000 for one of the joint ventures that produces gallium. During the first quarter of 2017, management determined that it was unlikely that this company would recover from the difficult pricing environment and we had written the investment down to zero. Except as mentioned, we did not record other-than-temporary impairment charges for the remainder of these investments during the three and nine months ended September 30, 2018 and 2017.

Inventories

Inventories	9 Months Ended
	Sep. 30, 2018
Inventories
Inventories	Note 3. Inventories The components of inventories are summarized below (in thousands): September 30, December 31, 2018 2017 Inventories: Raw materials $ 29,750 $ 23,554 Work in process 26,055 20,135 Finished goods 2,912 2,151 $ 58,717 $ 45,840 As of September 30, 2018 and December 31, 2017, carrying values of inventories were net of inventory reserves of $14.4 million and $13.3 million, respectively, for excess and obsolete inventory and $40,000 and $291,000, respectively, for lower of cost or net realizable value reserves.

Property, Plant and Equipment,

Property, Plant and Equipment, Net	9 Months Ended
	Sep. 30, 2018
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, 2018 2017 Property, plant and equipment: Machinery and equipment, at cost $ 47,875 $ 44,549 Less: accumulated depreciation and amortization (41,034) (40,845) Building, at cost 39,374 32,461 Less: accumulated depreciation and amortization (11,792) (11,501) Leasehold improvements, at cost 5,384 5,539 Less: accumulated depreciation and amortization (4,411) (4,288) Construction in progress 39,358 20,615 $ 74,754 $ 46,530 As of September 30, 2018, the balance of construction in progress was $39.4 million, of which $24.9 million was related to our buildings in our new Dingxing and Chaoyang locations, $5.2 million was for manufacturing equipment purchases and $9.3 million was from our construction in progress for our other consolidated subsidiaries. As of December 31, 2017, the balance of construction in progress was $20.6 million, of which, $14.8 million was for our buildings in our new Dingxing location, $3.6 million was for manufacturing equipment purchases not yet placed in service, and $2.2 million was for our construction in progress at our other consolidated subsidiaries.

Accrued Liabilities

Accrued Liabilities	9 Months Ended
	Sep. 30, 2018
Accrued Liabilities
Accrued Liabilities	Note 5. Accrued Liabilities The components of accrued liabilities are summarized below (in thousands): September 30, December 31, 2018 2017 Preferred stock dividends payable 2,901 2,901 Accrued compensation and related charges 2,570 3,205 Payable in connection with repurchase of subsidiaries shares 1,192 — Advance from customers 648 924 Accrued professional services 618 583 Dividends payable by consolidated joint ventures 505 533 Other tax payable 352 395 Accrued income taxes 260 270 Accrued product warranty 228 133 Other personnel related costs 227 230 Current portion of royalty payments 144 575 Accrual for sales refund liabilities 37 — Other accrued liabilities 3,094 1,400 $ 12,776 $ 11,149

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2018
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. In December 2016, we determined that this receivable was in substance an investment and began re-classifying this long term loan from “Related party notes receivable – long-term” to “Other assets” in our consolidated balance sheets. As of September 30, 2018 and December 31, 2017, we included $1.1 million and $1.2 million in “Other assets” in our condensed consolidated balance sheets, respectively. JiYa also purchases raw materials from one of its equity investment entities for production in the ordinary course of business. The general manager of JiYa has a family member who has a 10% ownership position in this equity investment entity. As of September 30, 2018 and December 31, 2017, amounts payable of $1.9 million and $2.1 million were included in “Accounts payable” in our condensed consolidated balance sheets, respectively. JiYa also sells raw materials to one of its equity investment entities for production in the ordinary course of business . As of September 30, 2018 and December 31, 2017, amounts receivable of $316,000 and $334,000, respectively, were included in “Accounts receivable” in our condensed consolidated balance sheets. During the three months ended December 31, 2016, we deemed the collection of the outstanding amount to be improbable and established an allowance in full. There have since been no additional sales made on credit to the customer and, as of September 30, 2018, the existing outstanding amount continues to be fully reserved. Beginning in 2012, our consolidated joint venture, Nanjing JinMei Gallium Co., Ltd. (“JinMei”), is contractually obligated under an agency sales agreement to sell raw material on behalf of its equity investment entity. JinMei bills the customers and remits the receipts, net of its portions of sales commission, to this equity investment entity. For the three months ended September 30, 2018 and 2017, JinMei has recorded $20,000 and $2,000 income from agency sales, respectively. For the nine months ended September 30, 2018 and 2017, JinMei has recorded $21,000 and $3,000 income from agency sales, respectively, which were included in “Other (expense) income, 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. During 2017, the repayment of the full amount of principal and interest totaling $114,000 was received by our wholly owned subsidiary. In April 2014, Tongmei loaned an additional $46,000 to Dongfang. The loan bears interest at 6.15% per annum and was due on December 31, 2017. During 2017, the repayment of the full amount of principal and interest totaling $55,000 was received by our wholly owned subsidiary. Tongmei also purchases raw materials from Dongfang for production in the ordinary course of business. As of September 30, 2018 and December 31, 2017, there were no amounts payable to Dongfang . Tongmei also 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, 2018 and December 31, 2017, amounts payable of $0 and $370,000, 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, 2018 and December 31, 2017, amounts payable of $0 and $219,000, respectively, were included in “Accounts payable” in our condensed consolidated balance sheets. In July 2017, Tongmei, provided an inter-company loan to JinMei in the amount of $768,000 in preparation for the acquisition of the land use rights and the construction of a new building. The inter-company loan carries an interest rate of 4.9% per annum and is due in three installments between December 2021 and December 2023 . JinMei is in the process of relocating its headquarters and manufacturing operations to an alternative location. Currently, JinMei has identified a site as a possible candidate and the estimated costs for the land use rights acquisition and facility construction are expected to be in the range of $2 million to $4 million. In April 2016, our consolidated joint venture, BoYu, provided a personal loan of $177,000 to one of its executive employees. 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. During the three months ended June 30, 2017, the repayment of the principal and interest totaling $180,000 was received by our consolidated joint venture. In November 2017, BoYu provided another personal loan of $318,000 to the same executive employee. The loan bears interest at 2.75% per annum. Principal and accrued interest are due on November 30, 2020. As of September 30, 2018 and December 31, 2017 , the balances, including both principal and accrued interest, were $298,000 and $307,000, respectively, and included in “Other assets” in our condensed consolidated balance sheets. On November 2, 2017, our consolidated joint venture, BoYu, raised additional capital in the amount of $2 million in cash from a third-party investor through the issuance of shares equivalent to 10% ownership of BoYu. This third-party investor is an immediate family member of the owner of one of BoYu's customers. For the three months ended September 30, 2018 and 2017, BoYu has recorded $37,000 and $226,000, respectively, in revenue from this customer. For the nine months ended September 30, 2018 and 2017, BoYu has recorded $1.4 million and $613,000, respectively, in revenue from this customer. As of September 30, 2018 and December 31, 2017, amounts receivable of $33,000 and $635,000, respectively, were included in “Accounts receivable” 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, 2018
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. We have six direct investments. Our consolidated subsidiaries have also made investments in private companies. We have four indirect investments. These companies form part of our overall supply chain. The six direct investments are summarized below (in thousands): Investment Balance as of September 30, December 31, Accounting Ownership Company 2018 2017 Method Percentage Beijing JiYa Semiconductor Material Co., Ltd. $ 3,331 $ 3,331 Consolidated 46 % Nanjing JinMei Gallium Co., Ltd. 592 592 Consolidated 97 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. 1,346 1,346 Consolidated 63 % $ 5,269 $ 5,269 Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ 1,450 $ 1,473 Equity 46 % Xilingol Tongli Germanium Co. Ltd. 2,811 3,190 Equity 25 % Emeishan Jia Mei High Purity Metals Co., Ltd. 870 915 Equity 25 % $ 5,131 $ 5,578 Our ownership of JiYa is 46%. We continue to consolidate JiYa as we are the founding and largest shareholder, 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 JinMei is 97%. Before June 15, 2018, our ownership of JinMei was 83%. On June 15, 2018, we purchased a 12% ownership interest from one of the minority owners for $1.4 million. The $1.4 million is scheduled to be paid in two installments. On June 15, 2018, we paid the first installment of $163,000. The second installment of $1.2 million is scheduled to be paid after the completion of the relocation of JinMei’s headquarters and manufacturing operations and was included in “Accrued liabilities” in our condensed consolidated balance sheets. As a result, our ownership of JinMei increased from 83% to 95%. In September 2018, we purchased a 2% ownership interest from one of the three remaining minority owners for $252,000. As a result, our ownership of JinMei increased from 95% to 97%. We continue to consolidate JinMei as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the JinMei board and we have appointed two other representatives to serve on the board. Our ownership of BoYu is 63%. On November 2, 2017, BoYu raised additional capital in the amount of $2 million in cash from a third-party investor through the issuance of shares equivalent to 10% ownership of BoYu. As a result, our ownership of BoYu was diluted from 70% to 63%. We continue to consolidate BoYu as we have a controlling financial interest and have majority control of the board and, accordingly, no gain was recognized as a result of this equity transaction. 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 sales of finished products, are made by local management with regular guidance and input from us. During the three months ended September 30, 2018 and 2017, the three consolidated joint ventures, before eliminating inter-company transactions, generated income of $1.3 million and an income of $860,000, respectively, of which a gain of $208,000 and a gain of $146,000, respectively, were allocated to noncontrolling interests, resulting in an income of $1.1 million and an income of $714,000 respectively, to our net income. During the nine months ended September 30, 2018 and 2017, the three consolidated joint ventures generated income of $4.8 million and income of $1.1 million, respectively, of which a gain of $1.2 million and a loss of $0.2 million respectively, were allocated to noncontrolling interests, resulting in an income of $3.7 million and an income of $1.3 million, respectively, to our net income. For AXT’s three direct minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our condensed consolidated balance sheets and totaled $5.1 million and $5.6 million as of September 30, 2018 and December 31, 2017, respectively. 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 JinMei 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, 2018 and December 31, 2017, our consolidated joint ventures included these minority investments in “Other assets” in our condensed consolidated balance sheets with a carrying value of $4.4 million and $4.3 million, respectively. There were no impairment charges in the three and nine months ended September 30, 2018. There were no impairment charges in the three months ended September 30, 2017. The nine months ended September 30, 2017 include an impairment charge of $313,000 for one of the joint ventures that produces gallium. During the first quarter of 2017, management determined that it is unlikely that this company will recover from the difficult pricing environment and we had wrote the investment down to zero. AXT’s three direct minority investment entities and the three minority investments of JiYa and the one minority investment of JinMei are not consolidated and are accounted for under the equity method. Excluding one fully impaired entity, the equity entities had the following summarized income information (in thousands) for the three and nine months ended September 30, 2018 and 2017. Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net revenue $ 8,017 $ 4,209 $ 24,366 $ 15,571 Gross profit $ 2,141 $ 177 $ 5,477 $ 976 Operating income (loss) $ 631 $ (1,054) $ 767 $ (2,685) Net income (loss) $ 315 $ (1,130) $ (422) $ (3,653) Our portion, including impairment charges, from these seven minority investment entities that are not consolidated and are accounted for under the equity method was income of $6,000 and a loss of $266,000 for the three months ended September 30, 2018 and 2017, respectively. Our portion, including impairment charges, from these seven minority investment entities that are not consolidated and are accounted for under the equity method were a loss of $21,000 and a loss of $1.4 million for the nine months ended September 30, 2018 and 2017, respectively.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2018
Stockholders' Equity
Stockholders' Equity	Note 8. Stockholders’ Equity Condensed 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 (Loss) Equity Interests Equity Balance as of December 31, 2017 $ 3,532 $ 39 $ 231,679 $ (54,837) $ 3,407 $ 183,820 $ 4,497 $ 188,317 Common stock options exercised — — 264 — — 264 — 264 Purchase of subsidiary shares from noncontrolling interest 187 187 (1,794) (1,607) Stock-based compensation — — 1,392 — — 1,392 — 1,392 Net income — — — 10,715 — 10,715 1,173 11,888 Other comprehensive loss — — — — (5,253) (5,253) (283) (5,536) Balance as of September 30, 2018 $ 3,532 $ 39 $ 233,522 $ (44,122) $ (1,846) $ 191,125 $ 3,593 $ 194,718 There were no reclassification adjustments from accumulated other comprehensive income for the three and nine months ended September 30, 2018 and 2017 . Stock Repurchase Program 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. No shares were repurchased during 2016 and 2017. During the three and nine months ended September 30, 2018, we did not repurchase any shares under the approved stock repurchase program. As of September 30, 2018, approximately $2.7 million remained available for future repurchases under this program. Currently, we do not plan to repurchase additional shares.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2018
Stock-Based Compensation
Stock-Based Compensation	Note 9. Stock-Based Compensation We account for stock-based compensation in accordance with the provisions of 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, 2018 2017 2018 2017 Cost of revenue $ 25 $ 7 $ 67 $ 22 Selling, general and administrative 361 280 1,098 788 Research and development 75 52 227 151 Total stock-based compensation 461 339 1,392 961 Tax effect on stock-based compensation — — — — Net effect on net income $ 461 $ 339 $ 1,392 $ 961 As of September 30, 2018, the unamortized compensation costs related to unvested stock options granted to employees under our stock option plan was approximately $1.2 million, net of estimated forfeitures of $141,000. These costs will be amortized on a straight-line basis over a weighted-average period of approximately 1.8 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, 2018 and December 31, 2017 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 and nine months ended September 30, 2018. There were no options granted in the three months ended September 30, 2017. There were 60,000 options with a weighted-average grant date fair values of $2.76 per share granted in the nine months ended September 30, 2017. The fair values of our stock options granted to employees for nine months ended September 30, 2018 and 2017 were estimated using the following weighted-average assumptions: Nine Months Ended Nine Months Ended September 30, September 30, 2018 2017 Expected term (in years) — 5.9 Volatility — % 46.71 % Expected dividend — % — % Risk-free interest rate — % 2.08 % The following table summarizes the stock option transactions during the nine months ended September 30, 2018 (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, 2018 2,666 $ 3.81 6.87 $ 13,149 Granted — — Exercised (93) 2.83 Canceled and expired (4) 5.21 Balance as of September 30, 2018 2,569 $ 3.84 6.19 $ 8,847 Options vested as of September 30, 2018 and unvested options expected to vest, net of forfeitures 2,553 $ 3.82 6.18 $ 8,822 Options exercisable as of September 30, 2018 1,862 $ 3.41 5.56 $ 6,979 The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $7.15 on September 30, 2018, 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, 2018 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2018 480 $ 7.13 Granted 35 $ 7.49 Vested (49) $ 6.19 Forfeited (3) $ 9.50 Non-vested as of September 30, 2018 463 $ 7.24 As of September 30, 2018, the unamortized compensation costs related to unvested restricted stock awards was approximately $2.5 million, which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.3 years.

Net Income Per Share

Net Income Per Share	9 Months Ended
	Sep. 30, 2018
Net Income Per Share
Net Income Per Share	Note 10. Net Income Per Share Basic net income 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 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 and vesting of restricted stock awards. Potentially dilutive common shares are excluded from the computation of weighted-average number of common shares outstanding in net loss years, as their effect would be anti-dilutive to the computation. A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net income attributable to AXT, Inc. $ 3,939 $ 4,419 $ 10,715 $ 7,014 Less: Preferred stock dividends (44) (44) (132) (132) Net income available to common stockholders $ 3,895 $ 4,375 $ 10,583 $ 6,882 Denominator: Denominator for basic net income per share - weighted-average common shares 39,008 38,499 39,000 36,999 Effect of dilutive securities: Common stock options 1,207 1,416 1,196 1,283 Restricted stock awards 116 180 124 187 Denominator for dilutive net income per common shares 40,331 40,095 40,320 38,469 Net income attributable to AXT, Inc. per common share: Basic $ 0.10 $ 0.11 $ 0.27 $ 0.19 Diluted $ 0.10 $ 0.11 $ 0.26 $ 0.18 Options excluded from diluted net income per share as the impact is anti-dilutive 186 68 186 573 Restricted stock excluded from diluted net income per share as the impact is anti-dilutive 34 34 239 11 The 883,000 shares of $0.001 par value Series A preferred stock issued and outstanding as of September 30, 2018 and December 31, 2017, 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, 2018
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 and single element semiconductor substrates and sale of raw materials integral to these substrates. 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. Product Information The following table represents revenue amounts (in thousands) by product type: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Product Type: Substrates $ 22,802 $ 22,377 $ 63,769 $ 58,095 Raw Materials and Others 5,824 5,791 16,396 14,246 Total $ 28,626 $ 28,168 $ 80,165 $ 72,341 Geographical Information 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, 2018 2017 2018 2017 Geographical region: China $ 10,268 $ 7,203 $ 26,271 $ 17,949 Taiwan 6,116 5,986 15,445 13,499 Europe (primarily Germany) 4,879 6,192 17,957 17,638 North America (primarily the United States) 2,967 2,159 7,052 5,909 Asia Pacific (excluding China, Taiwan and Japan) 2,334 2,934 6,399 7,650 Japan 2,062 3,694 7,041 9,696 Total $ 28,626 $ 28,168 $ 80,165 $ 72,341 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, net of depreciation, by geographic region were as follows (in thousands): As of September 30, December 31, 2018 2017 Long-lived assets by geographic region, net of depreciation: North America $ 542 $ 1,410 China 74,212 45,120 $ 74,754 $ 46,530 Significant Customers One customer , Landmark, represented 16% of our revenue for the three months ended September 30, 2018 while two customers, Landmark and Osram Opto, represented 16% and 10%, respectively, of our revenue for the three months ended September 30, 2017. Our top five customers, although not the same five customers for each period, represented 39% and 39% of our revenue for the three months ended September 30, 2018 and 2017, respectively. One customer, Landmark, represented 13% of our revenue for the nine months ended September 30, 2018 while two customers, Landmark and Osram Opto, represented 12% and 11%, respectively, of our revenue for the nine months ended September 30, 2017. Our top five customers, although not the same five customers for each period, represented 36% and 37% of our revenue for the nine months ended September 30, 2018 and 2017 , 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. Three customers accounted for 15%, 14% and 11% of our accounts receivable balance as of September 30, 2018 , and one customer accounted for 12% of our accounts receivable balance as of December 31, 2017.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2018
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, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Beginning accrued product warranty $ 178 $ 130 $ 133 $ 251 Accruals for warranties issued 125 7 258 77 Adjustments related to pre-existing warranties including expirations and changes in estimates (10) 18 (33) (114) Cost of warranty repair (65) (17) (130) (76) Ending accrued product warranty $ 228 $ 138 $ 228 $ 138 Contractual Obligations We lease certain office space, warehouse facilities and equipment under long-term operating leases expiring at various dates through April 2023. The majority of our lease obligations relate to our lease agreement for the facility in Fremont, California with approximately 19,467 square feet. The term of the original lease for this facility would have expired in 2017. According to the lease agreement, we had an option to extend the term of the lease for an additional three years. In May 2017, we exercised this option and the lease was extended for an additional three year term. All terms of this lease otherwise remain the same and the term of this lease will expire in 2020. Under the terms of the lease agreement, in 2020, we will have the option to extend the term of 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, 2018 (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 $ 452 $ 193 $ 233 $ 26 $ — Royalty agreement 144 144 — — — Total $ 596 $ 337 $ 233 $ 26 $ — Land Purchase and Investment Agreement We are in the process of relocating our gallium arsenide production line to Dingxing, China. In addition to a land rights and building purchase agreement that we entered into with a private real estate development company to acquire our new manufacturing facility, we also entered into a cooperation agreement with the Dingxing local government. In addition to pledging its full support and cooperation, the Dingxing local government will issue certain credits or rebates to us as we achieve certain milestones. We, in turn, agreed to hire local workers over time, pay taxes when due and eventually demonstrate a total investment of approximately $90 million in value, assets and capital. The investment will include cash paid for the land and buildings, cash on deposit in our name at local banks, the gross value of new and used equipment (including future equipment that might be used for indium phosphide and germanium substrates production), the deemed value for our customer list or the end user of our substrates (for example, the end users of 3-D sensing VCSELs (vertical cavity surface emitting lasers)), a deemed value for employment of local citizens, a deemed value for our proprietary process technology, other intellectual property, other intangibles and additional items of value. There is no timeline or deadline by which this must be accomplished, rather it is a good faith covenant entered into between AXT and the Dingxing local government. Further, there is no specific penalty contemplated if either party breaches the agreement. However, the agreement does state that each party has a right to seek from the other party compensation for losses. Under certain conditions, the Dingxing local government may purchase the land and building at the appraised value. We believe that such cooperation agreements are normal, customary and usual in China and that the future valuation is flexible. We have a similar agreement with the city of Kazuo, China, although on a smaller scale. The total investment targeted by AXT in Kazuo is approximately $15 million in value, assets and capital. In addition, BoYu has a similar agreement with the city of Kazuo. The total investment targeted by BoYu in Kazuo is approximately $8 million in value, assets and capital. 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, 2018, we do not have any outstanding purchase orders that will incur a penalty if cancelled by the Company. Bank Loans In September 2018, Tongmei entered into a credit facility with Industrial and Commercial Bank of China (“ICBC”) in China with a $2.9 million line of credit at an annual interest rate of approximately 0.04% over the current Loan Prime Rate published by ICBC. Accrued interest is calculated and paid monthly. The annual interest rate was approximately 4.4% as of September 30, 2018. This credit line is secured by Tongmei’s land-use right and all of its buildings located at its facility in Beijing. The primary intended use of the credit facility is for general purposes, which may include working capital, capital expenditures and other corporate expenses. On September 30, 2018, we borrowed $291,000 against this credit line. The repayment of the full amount is due in September 2019. As of September 30, 2018, $291,000 was included in “Bank loan” in our condensed consolidated balance sheets. 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, 2018
Foreign Exchange Transaction Gains/Lossess
Foreign Exchange Transaction Gains/Losses	Note 13. Foreign Exchange Transaction Gains/Losses We incurred a foreign currency transaction exchange gain of $116,000 and exchange loss of $339,000 for the three months ended September 30, 2018 and 2017, respectively. We incurred a foreign currency transaction exchange loss of $224,000 and a loss of $414,000 for the nine months ended September 30, 2018 and 2017 , respectively. These amounts are included in “Other (expense) income, net” on our condensed consolidated statements of operations.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2018
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. Our deferred tax assets have been reduced to zero by a valuation allowance. The Tax Act enacted in December 2017 introduced significant changes to U.S. income tax law. Effective 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings and certain intercompany payments. We provide for income taxes based upon the geographic composition of worldwide earnings and tax regulations governing each region, particularly China. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws, particularly in foreign countries such as China. 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, 2018 includes no interest and penalties. As of September 30, 2018, 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 2002 and 2013, respectively. Provision for income taxes for the three and nine months ended September 30, 2018 was mostly related to our wholly owned China subsidiaries and our three partially owned subsidiaries in China. 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, 2018 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. On December 22, 2017, the Tax Cuts & Jobs Act (“TCJA”) was enacted into law, which significantly changes existing U.S. tax law and includes numerous provisions that affect our business, such as imposing a one-time transition tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory tax rate, and adopting a territorial tax system. The TCJA includes a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its subsidiaries. The GILTI and BEAT provisions of the TCJA is effective for us beginning January 1, 2018. We have included an estimate of the current GILTI impact in our September 30, 2018 tax provision. We are not subject to BEAT provision.

Revenue

Revenue	9 Months Ended
	Sep. 30, 2018
Revenue
Revenue	Note 15. Revenue Revenue Recognition We manufacture and sell high-performance compound semiconductor substrates including indium phosphide, gallium arsenide and germanium wafers, and our three consolidated subsidiaries sell certain raw materials, including 99.99% pure gallium (4N Ga), high purity gallium (7N Ga), pyrolytic boron nitride (pBN) crucibles and boron oxide (B2O3). After we ship our products, there are no remaining obligations or customer acceptance requirements that would preclude revenue recognition. Our products are typically sold pursuant to purchase orders placed by our customers, and our terms and conditions of sale do not require customer acceptance. We account for a contract with a customer when there is a legally enforceable contract, which could be the customer’s purchase order, the rights of the parties are identified, the contract has commercial terms, and collectibility of the contract consideration is probable. The majority of our contracts have a single performance obligation to transfer products and are short term in nature, usually less than one year. Our revenue is measured based on the consideration specified in the contract with each customer in exchange for transferring products that is generally based upon a negotiated, formula, list or fixed price. Revenue is recognized when control of the promised goods is transferred to our customer, which is either upon shipment from our dock, receipt at the customer’s dock, or removal from consignment inventory at the customer’s location, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods. We have elected to account for shipping and handling as activities to fulfill the promise to transfer the goods. As such, shipping and handling fees billed to customers in a sales transaction are recorded in revenue and shipping and handling costs incurred are recorded in cost of revenue. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales. We do not provide training, installation or commissioning services. We provide for future returns based on historical data, prior experience, current economic trends and changes in customer demand at the time revenue is recognized. We do not recognize any asset associated with the incremental cost of obtaining revenue generating customer contracts. As such, sales commissions are expensed as incurred, given that the expected period of benefit is less than one year. On January 1, 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), and its related amendments, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. The adoption of ASC 606, using the modified retrospective approach, had no significant impact to our accumulated deficit as of January 1, 2018 and no significant impact to the total net cash from or used in operating, investing, or financing activities within the condensed consolidated statements of cash flows. In connection with this adoption on January 1, 2018, we reclassified our refund liabilities relating to sales with a right of return in the amount of $169,000 to present it separately from “Accounts receivables” and included it in “Accrued liabilities” on the condensed consolidated balance sheets. Contract Balances We receive payments from customers based on a billing schedule as established in our contracts. Contract assets are recorded when we have a conditional right to consideration for our completed performance under the contracts. Accounts receivables are recorded when the right to this consideration becomes unconditional. We do not have any material contract assets as of September 30, 2018. September 30, June 30 December 31, 2018 2018 2017 Contract liabilities $ (648) $ (927) $ (924) Revenue recognized in the nine and three months period ended as of September 30, 2018 from: Amounts included in contract liabilities at the beginning of the period $ $ Not Applicable Disaggregated Revenue In general, revenue disaggregated by product types and geography (See Note 11) is aligned according to the nature and economic characteristics of our business and provides meaningful disaggregation of our results of operations. Since we operate in one segment, all financial segment and product line information can be found in the condensed consolidated financial statements. Practical Expedients and Exemptions As part of our adoption of ASC 606, we elected to use the following practical expedients: (i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; (iii) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. In addition, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Bank Loans

Bank Loans	9 Months Ended
	Sep. 30, 2018
Bank Loans
Bank Loans	Note 16. Bank Loans In September 2018, Tongmei entered into a credit facility with ICBC in China with a $2.9 million line of credit at an annual interest rate of approximately 0.04% over the current Loan Prime Rate by published by ICBC. Accrued interest is calculated and paid monthly. The annual interest rate was approximately 4.4% as of September 30, 2018. This credit line is secured by Tongmei’s land-use right and all of its buildings located at its facility in Beijing. The primary intended use of the credit facility is for general purposes, which may include working capital, capital expenditures and other corporate expenses. On September 30, 2018, we borrowed $291,000 against this credit line. The repayment of the full amount is due in September 2019. As of September 30, 2018, $291,000 was included in “Bank loan” in our condensed consolidated balance sheets.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2018
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 17. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance related to revenue recognition, which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue as control of goods or services transfers to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. In August 2015, the FASB issued an amendment to defer the effective date of the guidance. The guidance became effective in the first quarter of our fiscal year 2018. The new standard creates a single source of revenue guidance under accounting principles generally accepted in the United States, eliminating industry-specific guidance. The underlying principle of the standard is to recognize revenue when a customer obtains control of promised goods or services at an amount that reflects the consideration that is expected to be received in exchange for those goods or services. An entity should apply a five-step approach for recognizing revenue as follows (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The standard also requires increased disclosures including the nature, amount, timing, and uncertainty of revenues and cash flows related to contracts with customers. The standard allows two methods of adoption: (1) retrospectively to each prior period presented (“full retrospective method”), or (2) retrospectively with the cumulative effect recognized in retained earnings as of the date of adoption ("modified retrospective method"). With regard to Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers , we established a crossfunctional team to assess the potential impact of the new standard and reviewed current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to revenue contracts and identifying appropriate changes to the business processes, systems and controls to support revenue recognition and disclosure requirements under the new standard. We completed our evaluation of the potential impact on business processes, systems, controls and condensed consolidated financial statements of the new revenue standard and have concluded there are no significant changes to our condensed consolidated statement of operations. In connection with this adoption on January 1, 2018, we reclassified our refund liabilities relating to sales with a right of return in the amount of $169,000 to present it separately from “Accounts receivables” and included it in “Accrued liabilities” on the condensed consolidated balance sheets. We adopted this standard on January 1, 2018 using the modified retrospective method (See Note 15). 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 became effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. We adopted this guidance effective January 1, 2018 and it did not have a significant impact on our condensed consolidated financial statements. 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 this standard in fiscal 2019 and are currently evaluating the impact of the guidance 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 adopted this guidance effective January 1, 2018 and it did not have a significant impact on our condensed consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, which clarifies the accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. The guidance is effective for fiscal years beginning after December 15, 2017, including periods within those fiscal years and requires retrospective application with early application permitted. We adopted this guidance effective January 1, 2018 and it did not have a significant impact on our condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for fiscal years beginning after December 15, 2017, including periods within those fiscal years and requires retrospective application with early application permitted. We adopted this guidance effective January 1, 2018 and it did not have a significant impact on our condensed consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The guidance provides clarity and reduces diversity in practice and cost and complexity when accounting for a change to the terms or conditions of a share-based payment award. The guidance is effective for fiscal years beginning after December 15, 2017. We adopted this guidance effective January 1, 2018 and it did not have a significant impact on our condensed consolidated financial statements.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2018
Subsequent Events
Subsequent Events	Note 18. Subsequent Events On November 6, 2018, the Company entered into a Credit Agreement, by and between the Company and Wells Fargo Bank, National Association, which established a $10 million revolving line of credit. The line of credit is collateralized by substantially all of the assets of the Company located within the United States, subject to certain exceptions. The line of credit has a two year term and any advances thereunder will bear interest at a rate based on the daily one month London Inter-bank Offered Rate (“LIBOR”) plus two percent (2.0%). As of November 7, 2018, no proceeds have been drawn down on this line of credit.

Investments and Fair Value Me_2

Investments and Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2018
Investments and Fair Value Measurements
Cash, cash equivalents and investments	As of September 30, 2018 and December 31, 2017, our cash, cash equivalents and investments are classified as follows (in thousands): September 30, 2018 December 31, 2017 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ 16,288 $ — $ — $ 16,288 $ 43,610 $ — $ — $ 43,610 Cash equivalents: Certificates of deposit 1 1,747 — — 1,747 742 — — 742 Total cash and cash equivalents 18,035 — — 18,035 44,352 — — 44,352 Investments (available-for-sale): Certificates of deposit 2 5,468 — (31) 5,437 7,099 — (24) 7,075 Corporate bonds 18,459 — (80) 18,379 25,602 — (69) 25,533 Total investments 23,927 — (111) 23,816 32,701 — (93) 32,608 Total cash, cash equivalents and investments $ 41,962 $ — $ (111) $ 41,851 $ 77,053 $ — $ (93) $ 76,960 Contractual maturities on investments: Due within 1 year 3 $ 22,007 $ 21,910 $ 20,056 $ 20,032 Due after 1 through 5 years 4 1,920 1,906 12,645 12,576 $ 23,927 $ 23,816 $ 32,701 $ 32,608 1. Certificates of deposit with original maturities of less than three months. 2. Certificates of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our condensed consolidated balance sheets. 4. Classified as “Long-term investments” in our condensed consolidated balance sheets.
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, 2018 (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, 2018 Value (Losses) Value (Losses) Value (Losses) Investments: Certificates of deposit $ 2,625 $ (15) $ 2,794 $ (16) $ 5,419 $ (31) Corporate bonds 11,155 (56) 7,224 (24) 18,379 (80) Total in loss position $ 13,780 $ (71) $ 10,018 $ (40) $ 23,798 $ (111) 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, 2017 (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, 2017 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ 3,994 $ (16) $ 2,342 $ (8) $ 6,336 $ (24) Corporate bonds 25,533 (69) — — 25,533 (69) Total in loss position $ 29,527 $ (85) $ 2,342 $ (8) $ 31,869 $ (93)
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, 2018 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs September 30, 2018 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 7,184 $ — $ 7,184 $ — Corporate bonds 18,379 — 18,379 — Total $ 25,563 $ — $ 25,563 $ — 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, 2017 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2017 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 7,817 $ — $ 7,817 $ — Corporate bonds 25,533 — 25,533 — Total $ 33,350 $ — $ 33,350 $ —

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Sep. 30, 2018
Inventories
Components of inventories	The components of inventories are summarized below (in thousands): September 30, December 31, 2018 2017 Inventories: Raw materials $ 29,750 $ 23,554 Work in process 26,055 20,135 Finished goods 2,912 2,151 $ 58,717 $ 45,840

Property, Plant and Equipment_2

Property, Plant and Equipment, Net (Tables)	9 Months Ended
	Sep. 30, 2018
Property, Plant and Equipment, Net
Components of property, plant and equipment	The components of our property, plant and equipment are summarized below (in thousands): September 30, December 31, 2018 2017 Property, plant and equipment: Machinery and equipment, at cost $ 47,875 $ 44,549 Less: accumulated depreciation and amortization (41,034) (40,845) Building, at cost 39,374 32,461 Less: accumulated depreciation and amortization (11,792) (11,501) Leasehold improvements, at cost 5,384 5,539 Less: accumulated depreciation and amortization (4,411) (4,288) Construction in progress 39,358 20,615 $ 74,754 $ 46,530

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	9 Months Ended
	Sep. 30, 2018
Accrued Liabilities
Components of accrued liabilities	The components of accrued liabilities are summarized below (in thousands): September 30, December 31, 2018 2017 Preferred stock dividends payable 2,901 2,901 Accrued compensation and related charges 2,570 3,205 Payable in connection with repurchase of subsidiaries shares 1,192 — Advance from customers 648 924 Accrued professional services 618 583 Dividends payable by consolidated joint ventures 505 533 Other tax payable 352 395 Accrued income taxes 260 270 Accrued product warranty 228 133 Other personnel related costs 227 230 Current portion of royalty payments 144 575 Accrual for sales refund liabilities 37 — Other accrued liabilities 3,094 1,400 $ 12,776 $ 11,149

Investments in Privately-Held_2

Investments in Privately-Held Companies (Tables)	9 Months Ended
	Sep. 30, 2018
Investments in Privately-Held Companies
Summary of investments	The six direct investments are summarized below (in thousands): Investment Balance as of September 30, December 31, Accounting Ownership Company 2018 2017 Method Percentage Beijing JiYa Semiconductor Material Co., Ltd. $ 3,331 $ 3,331 Consolidated 46 % Nanjing JinMei Gallium Co., Ltd. 592 592 Consolidated 97 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. 1,346 1,346 Consolidated 63 % $ 5,269 $ 5,269 Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ 1,450 $ 1,473 Equity 46 % Xilingol Tongli Germanium Co. Ltd. 2,811 3,190 Equity 25 % Emeishan Jia Mei High Purity Metals Co., Ltd. 870 915 Equity 25 % $ 5,131 $ 5,578
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 JinMei are not consolidated and are accounted for under the equity method. Excluding one fully impaired entity, the equity entities had the following summarized income information (in thousands) for the three and nine months ended September 30, 2018 and 2017. Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Net revenue $ 8,017 $ 4,209 $ 24,366 $ 15,571 Gross profit $ 2,141 $ 177 $ 5,477 $ 976 Operating income (loss) $ 631 $ (1,054) $ 767 $ (2,685) Net income (loss) $ 315 $ (1,130) $ (422) $ (3,653)

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2018
Stockholders' Equity
Consolidated statement of changes in equity	Condensed 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 (Loss) Equity Interests Equity Balance as of December 31, 2017 $ 3,532 $ 39 $ 231,679 $ (54,837) $ 3,407 $ 183,820 $ 4,497 $ 188,317 Common stock options exercised — — 264 — — 264 — 264 Purchase of subsidiary shares from noncontrolling interest 187 187 (1,794) (1,607) Stock-based compensation — — 1,392 — — 1,392 — 1,392 Net income — — — 10,715 — 10,715 1,173 11,888 Other comprehensive loss — — — — (5,253) (5,253) (283) (5,536) Balance as of September 30, 2018 $ 3,532 $ 39 $ 233,522 $ (44,122) $ (1,846) $ 191,125 $ 3,593 $ 194,718

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2018
Stock-Based Compensation
Summary of 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, 2018 2017 2018 2017 Cost of revenue $ 25 $ 7 $ 67 $ 22 Selling, general and administrative 361 280 1,098 788 Research and development 75 52 227 151 Total stock-based compensation 461 339 1,392 961 Tax effect on stock-based compensation — — — — Net effect on net income $ 461 $ 339 $ 1,392 $ 961
Summary of weighted-average assumptions	Nine Months Ended Nine Months Ended September 30, September 30, 2018 2017 Expected term (in years) — 5.9 Volatility — % 46.71 % Expected dividend — % — % Risk-free interest rate — % 2.08 %
Summary of stock option activity	The following table summarizes the stock option transactions during the nine months ended September 30, 2018 (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, 2018 2,666 $ 3.81 6.87 $ 13,149 Granted — — Exercised (93) 2.83 Canceled and expired (4) 5.21 Balance as of September 30, 2018 2,569 $ 3.84 6.19 $ 8,847 Options vested as of September 30, 2018 and unvested options expected to vest, net of forfeitures 2,553 $ 3.82 6.18 $ 8,822 Options exercisable as of September 30, 2018 1,862 $ 3.41 5.56 $ 6,979
Summary of restricted stock awards activity	A summary of activity related to restricted stock awards for the nine months ended September 30, 2018 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2018 480 $ 7.13 Granted 35 $ 7.49 Vested (49) $ 6.19 Forfeited (3) $ 9.50 Non-vested as of September 30, 2018 463 $ 7.24

Net Income Per Share (Tables)

Net Income Per Share (Tables)	9 Months Ended
	Sep. 30, 2018
Net Income Per Share
Reconciliation of numerators and denominators of basic and diluted net income per share	A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net income attributable to AXT, Inc. $ 3,939 $ 4,419 $ 10,715 $ 7,014 Less: Preferred stock dividends (44) (44) (132) (132) Net income available to common stockholders $ 3,895 $ 4,375 $ 10,583 $ 6,882 Denominator: Denominator for basic net income per share - weighted-average common shares 39,008 38,499 39,000 36,999 Effect of dilutive securities: Common stock options 1,207 1,416 1,196 1,283 Restricted stock awards 116 180 124 187 Denominator for dilutive net income per common shares 40,331 40,095 40,320 38,469 Net income attributable to AXT, Inc. per common share: Basic $ 0.10 $ 0.11 $ 0.27 $ 0.19 Diluted $ 0.10 $ 0.11 $ 0.26 $ 0.18 Options excluded from diluted net income per share as the impact is anti-dilutive 186 68 186 573 Restricted stock excluded from diluted net income per share as the impact is anti-dilutive 34 34 239 11

Segment Information and Forei_2

Segment Information and Foreign Operations (Tables)	9 Months Ended
	Sep. 30, 2018
Segment Information and Foreign Operations
Revenues reported by product type	The following table represents revenue amounts (in thousands) by product type: Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Product Type: Substrates $ 22,802 $ 22,377 $ 63,769 $ 58,095 Raw Materials and Others 5,824 5,791 16,396 14,246 Total $ 28,626 $ 28,168 $ 80,165 $ 72,341
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, 2018 2017 2018 2017 Geographical region: China $ 10,268 $ 7,203 $ 26,271 $ 17,949 Taiwan 6,116 5,986 15,445 13,499 Europe (primarily Germany) 4,879 6,192 17,957 17,638 North America (primarily the United States) 2,967 2,159 7,052 5,909 Asia Pacific (excluding China, Taiwan and Japan) 2,334 2,934 6,399 7,650 Japan 2,062 3,694 7,041 9,696 Total $ 28,626 $ 28,168 $ 80,165 $ 72,341
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, net of depreciation, by geographic region were as follows (in thousands): As of September 30, December 31, 2018 2017 Long-lived assets by geographic region, net of depreciation: North America $ 542 $ 1,410 China 74,212 45,120 $ 74,754 $ 46,530

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2018
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, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Beginning accrued product warranty $ 178 $ 130 $ 133 $ 251 Accruals for warranties issued 125 7 258 77 Adjustments related to pre-existing warranties including expirations and changes in estimates (10) 18 (33) (114) Cost of warranty repair (65) (17) (130) (76) Ending accrued product warranty $ 228 $ 138 $ 228 $ 138
Outstanding contractual obligations	The following table summarizes our contractual obligations as of September 30, 2018 (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 $ 452 $ 193 $ 233 $ 26 $ — Royalty agreement 144 144 — — — Total $ 596 $ 337 $ 233 $ 26 $ —

Revenue (Tables)

Revenue (Tables)	9 Months Ended
	Sep. 30, 2018
Revenue
Schedule of amounts recorded in accrued liabilities	September 30, June 30 December 31, 2018 2018 2017 Contract liabilities $ (648) $ (927) $ (924) Revenue recognized in the nine and three months period ended as of September 30, 2018 from: Amounts included in contract liabilities at the beginning of the period $ $ Not Applicable

Basis of Presentation (Details)

Basis of Presentation (Details) - company	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Basis of Presentation
Equity method investments	7	7	7	7

Investments and Fair Value Me_3

Investments and Fair Value Measurements (Details)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2018USD ($)item	Sep. 30, 2018USD ($)item	Sep. 30, 2017USD ($)	Dec. 31, 2017USD ($)
Cash, cash equivalents and investments [Abstract]
Cash	$ 16,288,000	$ 16,288,000		$ 43,610,000
Cash equivalents [Abstract]
Certificates of deposit	1,747,000	1,747,000		742,000
Total cash and cash equivalents	18,035,000	18,035,000		44,352,000
Amortized cost	23,927,000	23,927,000		32,701,000
Cash, cash equivalents and investments, amortized costs	41,962,000	41,962,000		77,053,000
Gross Unrealized (Loss)	(111,000)	(111,000)		(93,000)
Fair Value	23,816,000	23,816,000		32,608,000
Cash, cash equivalents and investments, amortized costs		41,851,000		76,960,000
Contractual maturities on investments, amortized cost basis [Abstract]
Due within 1 year	22,007,000	22,007,000		20,056,000
Due after 1 through 5 years	1,920,000	1,920,000		12,645,000
Investments, amortized cost	23,927,000	23,927,000		32,701,000
Contractual maturities on investments, fair value basis [Abstract]
Due within 1 year	21,910,000	21,910,000		20,032,000
Due after 1 through 5 years	1,906,000	1,906,000		12,576,000
Investments, fair value	23,816,000	23,816,000		32,608,000
Realized gain on sale of available-for-sale securities			$ (77,000)
Transfers between fair value measurements	$ 0	$ 0
GHI
Contractual maturities on investments, fair value basis [Abstract]
Proceeds from sales of investments			125,000
Realized gain on sale of available-for-sale securities			(77,000)
Cost of investment			$ 48,000
Number of transactions | item	0	0
Total Investments [Member]
Cash equivalents [Abstract]
Amortized cost	$ 23,927,000	$ 23,927,000		32,701,000
Gross Unrealized (Loss)	(111,000)	(111,000)		(93,000)
Fair Value	23,816,000	23,816,000		32,608,000
Contractual maturities on investments, amortized cost basis [Abstract]
Investments, amortized cost	23,927,000	23,927,000		32,701,000
Contractual maturities on investments, fair value basis [Abstract]
Investments, fair value	23,816,000	23,816,000		32,608,000
Certificates of Deposit [Member]
Cash equivalents [Abstract]
Amortized cost	5,468,000	5,468,000		7,099,000
Gross Unrealized (Loss)	(31,000)	(31,000)		(24,000)
Fair Value	5,437,000	5,437,000		7,075,000
Contractual maturities on investments, amortized cost basis [Abstract]
Investments, amortized cost	5,468,000	5,468,000		7,099,000
Contractual maturities on investments, fair value basis [Abstract]
Investments, fair value	5,437,000	5,437,000		7,075,000
Corporate Bonds [Member]
Cash equivalents [Abstract]
Amortized cost	18,459,000	18,459,000		25,602,000
Gross Unrealized (Loss)	(80,000)	(80,000)		(69,000)
Fair Value	18,379,000	18,379,000		25,533,000
Contractual maturities on investments, amortized cost basis [Abstract]
Investments, amortized cost	18,459,000	18,459,000		25,602,000
Contractual maturities on investments, fair value basis [Abstract]
Investments, fair value	$ 18,379,000	$ 18,379,000		$ 25,533,000

Investments and Fair Value Me_4

Investments and Fair Value Measurements - Investment Category and Length (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018USD ($)company	Sep. 30, 2017USD ($)company	Sep. 30, 2018USD ($)company	Sep. 30, 2017USD ($)company	Dec. 31, 2017USD ($)	Mar. 31, 2017USD ($)
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract]
Fair value, in loss position less than twelve months	$ 13,780,000		$ 13,780,000		$ 29,527,000
Gross unrealized loss, in loss position less than twelve months	(71,000)		(71,000)		(85,000)
Fair value, in loss position greater than twelve months	10,018,000		10,018,000		2,342,000
Gross unrealized loss, in loss position greater than twelve months	(40,000)		(40,000)		(8,000)
Fair value, total in loss position	23,798,000		23,798,000		31,869,000
Gross unrealized loss, total in loss position	(111,000)		(111,000)		(93,000)
Minority Investments
Investments, equity method	$ 5,131,000		$ 5,131,000		5,578,000
Equity method investments | company	7	7	7	7
Impairment charge	$ 0	$ 0	$ 0
One Gallium Company
Minority Investments
Investments, equity method						$ 0
Number of gallium companies with impairment charge | company		1		1
Impairment charge				$ 313,000
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	2,625,000		2,625,000		3,994,000
Gross unrealized loss, in loss position less than twelve months	(15,000)		(15,000)		(16,000)
Fair value, in loss position greater than twelve months	2,794,000		2,794,000		2,342,000
Gross unrealized loss, in loss position greater than twelve months	(16,000)		(16,000)		(8,000)
Fair value, total in loss position	5,419,000		5,419,000		6,336,000
Gross unrealized loss, total in loss position	(31,000)		(31,000)		(24,000)
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	11,155,000		11,155,000		25,533,000
Gross unrealized loss, in loss position less than twelve months	(56,000)		(56,000)		(69,000)
Fair value, in loss position greater than twelve months	7,224,000		7,224,000
Gross unrealized loss, in loss position greater than twelve months	(24,000)		(24,000)
Fair value, total in loss position	18,379,000		18,379,000		25,533,000
Gross unrealized loss, total in loss position	(80,000)		(80,000)		(69,000)
Other assets
Minority Investments
Investments, equity method	$ 9,500,000		$ 9,500,000		$ 9,800,000

Investments and Fair Value Me_5

Investments and Fair Value Measurements- Recurring basis (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Assets, Fair Value Disclosure [Abstract]
Investments, amortized cost	$ 23,816	$ 32,608
Recurring [Member]
Assets, Fair Value Disclosure [Abstract]
Total	25,563	33,350
Recurring [Member] | Certificates of Deposit [Member]
Assets, Fair Value Disclosure [Abstract]
Cash and cash equivalents, fair value disclosure	7,184	7,817
Recurring [Member] | Corporate Bonds [Member]
Assets, Fair Value Disclosure [Abstract]
Investments, amortized cost	18,379	25,533
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets, Fair Value Disclosure [Abstract]
Total	25,563	33,350
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	7,184	7,817
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Bonds [Member]
Assets, Fair Value Disclosure [Abstract]
Investments, amortized cost	$ 18,379	$ 25,533

Inventories (Details)

Inventories (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Inventories
Raw materials	$ 29,750,000	$ 23,554,000
Work in process	26,055,000	20,135,000
Finished goods	2,912,000	2,151,000
Inventories, total	58,717,000	45,840,000
Inventory reserve	14,400,000	13,300,000
Excess and obsolete inventory	$ 40,000	$ 291,000

Property, Plant and Equipment_3

Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Property, plant and equipment [Abstract]
Property, plant and equipment, net	$ 74,754	$ 46,530
Machinery and equipment
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	47,875	44,549
Less: accumulated depreciation and amortization	(41,034)	(40,845)
Building
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	39,374	32,461
Less: accumulated depreciation and amortization	(11,792)	(11,501)
Leasehold improvements
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	5,384	5,539
Less: accumulated depreciation and amortization	(4,411)	(4,288)
Construction in progress
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	39,358	20,615
Construction in progress Dingxin location
Property, plant and equipment [Abstract]
Property, plant and equipment, gross		14,800
Construction in progress Dingxin and Chaoyang locations
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	24,900
Construction in progress manufacturing equipment purchases
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	5,200	3,600
Construction in progress other consolidated subsidiaries
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	$ 9,300	$ 2,200

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Components of accrued liabilities [Abstract]
Preferred stock dividends payable	$ 2,901		$ 2,901
Accrued compensation and related charges	2,570		3,205
Payable in connection with purchase of subsidiary shares	1,192
Advance from customers	648	$ 927	924
Accrued professional services	618		583
Dividends payable by consolidated joint ventures	505		533	$ 521
Other tax payable	352		395
Accrued income taxes	260		270
Accrued product warranty	228		133
Other personnel related costs	227		230
Current portion of royalty payments	144		575
Accrual for sales refund liabilities	37
Other accrued liabilities	3,094		1,400
Accrued liabilities, total	$ 12,776		$ 11,149

Related Party Transactions (Det

Related Party Transactions (Details)	Nov. 02, 2017USD ($)	Nov. 30, 2017USD ($)	Jul. 31, 2017USD ($)installment	Apr. 30, 2016USD ($)	Apr. 30, 2014USD ($)	Aug. 31, 2011USD ($)item	Sep. 30, 2018USD ($)ft²installment	Sep. 30, 2017USD ($)	Sep. 30, 2018USD ($)ft²installment	Sep. 30, 2017USD ($)	Dec. 31, 2017USD ($)
Related Party Transaction [Line Items]
Area of leased property (in square feet) | ft²							19,467		19,467
Repayment of related party notes receivable										$ 108,000
Minimum | Nanjing JinMei Gallium Co., Ltd
Related Party Transaction [Line Items]
Estimated land and construction costs			$ 2,000,000
Maximum | Nanjing JinMei Gallium Co., Ltd
Related Party Transaction [Line Items]
Estimated land and construction costs			4,000,000
Equity investment entity | Beijing JiYa Semiconductor Material Co., Ltd
Related Party Transaction [Line Items]
Ownership (as a percent)							10.00%		10.00%
Revenue from related parties									$ 0
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
Equity investment entity | Related party loan | Other assets | Beijing JiYa Semiconductor Material Co., Ltd
Related Party Transaction [Line Items]
Amounts due from related party, noncurrent							$ 1,100,000		$ 1,100,000		$ 1,200,000
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							1,900,000		1,900,000		2,100,000
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							316,000		316,000		$ 334,000
Equity investment entity | Raw material agency sales agreement | Other (expense) income, net | Nanjing JinMei Gallium Co., Ltd
Related Party Transaction [Line Items]
Other income from related party							20,000	$ 2,000	21,000	3,000
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Related party loan | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount of transaction					$ 46,000
Interest rate (as a percent)											6.15%
Repayment of related party notes receivable											$ 55,000
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Raw materials purchases from related party | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Repayment of related party notes receivable											114,000
Donghai County Dongfang High Purity Electronic Materials Co., Ltd | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount payable to related party							0		0		0
Emei Shan Jiamei Materials Co., Ltd | Raw materials purchases from related party | Accounts payable | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount payable to related party							0		0		370,000
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							$ 0		$ 0		219,000
Beijing BoYu Semiconductor Vessel Craftwork Technology Co | Lease of land | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Area of leased property (in square feet) | ft²							22,081		22,081
Lease term							10 years		10 years
Annual lease payment									$ 24,000
Increase in annual lease payment at each third year anniversary (in hundredths)							5.00%		5.00%
Rental increase period									3 years
Nanjing JinMei Gallium Co., Ltd | Related party loan | Beijing Tongmei Xtal Technology
Related Party Transaction [Line Items]
Amount of transaction			$ 768,000
Number of installments | installment			3
Interest rate (as a percent)			4.90%
Executive officer | Related party loan | Beijing BoYu Semiconductor Vessel Craftwork Technology Co
Related Party Transaction [Line Items]
Amount of transaction		$ 318,000		$ 177,000
Interest rate (as a percent)		2.75%		2.75%
Repayment of related party notes receivable								180,000
Executive officer | Related party loan | Other assets | Beijing BoYu Semiconductor Vessel Craftwork Technology Co
Related Party Transaction [Line Items]
Related party notes receivable - current							$ 298,000		$ 298,000		307,000
3rd party investor | Beijing BoYu Semiconductor Vessel Craftwork Technology Co
Related Party Transaction [Line Items]
Raised additional capital	$ 2,000,000
Percentage ownership from issuance of shares	10.00%
Customer associated with third-party investor | Beijing BoYu Semiconductor Vessel Craftwork Technology Co
Related Party Transaction [Line Items]
Revenue from related parties							37,000	$ 226,000	1,400,000	$ 613,000
Customer associated with third-party investor | Accounts receivable | Beijing BoYu Semiconductor Vessel Craftwork Technology Co
Related Party Transaction [Line Items]
Amount payable to related party							$ 33,000		$ 33,000		$ 635,000

Investments in Privately-Held_3

Investments in Privately-Held Companies (Details)	Jun. 15, 2018USD ($)installment	Nov. 02, 2017USD ($)	Sep. 30, 2018USD ($)employeesubsidiaryentity	Sep. 30, 2018USD ($)employeesubsidiaryentity	Sep. 30, 2017USD ($)subsidiaryentitycompany	Sep. 30, 2018USD ($)employeesubsidiaryentityitem	Sep. 30, 2017USD ($)subsidiaryentitycompany	Dec. 31, 2017USD ($)entity	Aug. 31, 2018	Jun. 14, 2018	Nov. 01, 2017	Mar. 31, 2017USD ($)
Summary of investments [Abstract]
Direct investments | item						6
Indirect investments | item						4
Investments, equity method			$ 5,131,000	$ 5,131,000		$ 5,131,000		$ 5,578,000
Payment of first installment						415,000
Remainder portion of payment			$ 1,192,000	$ 1,192,000		$ 1,192,000
Number of consolidated joint ventures | subsidiary			1	1	1	1	1
Net income (loss) attributable to noncontrolling interests				$ 208,000	$ 146,000	$ 1,173,000	$ (226,000)
Direct minority investments not consolidated | entity						3		3
Impairment charge				$ 0	$ 0	$ 0
Joint Ventures
Summary of investments [Abstract]
Indirect investments | entity						4
Number of consolidated joint ventures | entity			3	3	3	3	3
Income (loss) from consolidated joint ventures				$ 1,300,000	$ 860,000	$ 4,800,000	$ 1,100,000
Net income (loss) attributable to noncontrolling interests				208,000	146,000	1,200,000	(200,000)
Net income (loss) from joint ventures attributable to parent				1,100,000	$ 714,000	3,700,000	1,300,000
Other assets
Summary of investments [Abstract]
Investments, equity method			$ 9,500,000	9,500,000		9,500,000		$ 9,800,000
Other assets | Joint Ventures
Summary of investments [Abstract]
Minority investment in consolidated joint venture, included in other assets			4,400,000	4,400,000		4,400,000		4,300,000
Donghai County Dongfang High Purity Electronic Materials Co., Ltd Investment
Summary of investments [Abstract]
Investments, equity method			$ 1,450,000	$ 1,450,000		$ 1,450,000		1,473,000
Percentage of ownership, equity method (in hundredths)			46.00%	46.00%		46.00%
Xilingol Tongli Germanium Co. Ltd Investment
Summary of investments [Abstract]
Investments, equity method			$ 2,811,000	$ 2,811,000		$ 2,811,000		3,190,000
Percentage of ownership, equity method (in hundredths)			25.00%	25.00%		25.00%
Emeishan Jia Mei High Purity Metals Co., Ltd Investment
Summary of investments [Abstract]
Investments, equity method			$ 870,000	$ 870,000		$ 870,000		915,000
Percentage of ownership, equity method (in hundredths)			25.00%	25.00%		25.00%
One Gallium Company
Summary of investments [Abstract]
Investments, equity method												$ 0
Impairment charge							$ 313,000
Number of gallium companies with impairment charge | company					1		1
Beijing JiYa Semiconductor Material Co., Ltd
Summary of investments [Abstract]
Indirect investments | entity						3
Number of persons on board | employee			1	1		1
Employee duration						27 years
Beijing Boyu Semiconductor Vessel Craftwork Technology Co Ltd
Summary of investments [Abstract]
Number of persons on board | employee			2	2		2
Nanjing JinMei Gallium Co., Ltd
Summary of investments [Abstract]
Number of new board representatives | employee						2
Jinmei
Summary of investments [Abstract]
Indirect investments | entity						1
Majority-Owned Subsidiaries
Summary of investments [Abstract]
Investments, consolidated method			$ 5,269,000	$ 5,269,000		$ 5,269,000		5,269,000
Beijing JiYa Semiconductor Material Co., Ltd Investment
Summary of investments [Abstract]
Investments, consolidated method			$ 3,331,000	$ 3,331,000		$ 3,331,000		3,331,000
Beijing JiYa Semiconductor Material Co., Ltd Investment | Beijing JiYa Semiconductor Material Co., Ltd Investment
Summary of investments [Abstract]
Percentage of ownership, consolidated method (in hundredths)			46.00%	46.00%		46.00%
Nanjing JinMei Gallium Co., Ltd Investment
Summary of investments [Abstract]
Investments, consolidated method			$ 592,000	$ 592,000		$ 592,000		592,000
Additional percentage of ownership, consolidated method	12		2	2		2
Purchase of subsidiary shares from noncontrolling interest	$ 1,400,000		$ 252,000
Number of installments | installment	2
Payment of first installment	$ 163,000
Nanjing JinMei Gallium Co., Ltd Investment | Accrued Liabilities [Member]
Summary of investments [Abstract]
Remainder portion of payment			$ 1,200,000	$ 1,200,000		$ 1,200,000
Nanjing JinMei Gallium Co., Ltd Investment | Nanjing JinMei Gallium Co., Ltd Investment
Summary of investments [Abstract]
Percentage of ownership, consolidated method (in hundredths)			97.00%	97.00%		97.00%			95.00%	83.00%
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment
Summary of investments [Abstract]
Investments, consolidated method			$ 1,346,000	$ 1,346,000		$ 1,346,000		$ 1,346,000
Gain (loss) from equity transaction		$ 0
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment | 3rd party investor
Summary of investments [Abstract]
Percentage ownership from issuance of shares		10.00%
Raised additional capital		$ 2,000,000
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment | Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment
Summary of investments [Abstract]
Percentage of ownership, consolidated method (in hundredths)			63.00%	63.00%		63.00%					70.00%

Investments in Privately-Held_4

Investments in Privately-Held Companies - Minority Investment Entities (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018USD ($)company	Sep. 30, 2017USD ($)company	Sep. 30, 2018USD ($)company	Sep. 30, 2017USD ($)company
Minority investment entities
Minority investments not consolidated accounted for under equity method | company	7	7	7	7
Seven Minority Investments
Summarized income information of all the minority investment entities that are not consolidated and accounted for under the equity method [Abstract]
Net revenue	$ 8,017,000	$ 4,209,000	$ 24,366,000	$ 15,571,000
Gross profit	2,141,000	177,000	5,477,000	976,000
Operating income (loss)	631,000	(1,054,000)	767,000	(2,685,000)
Net income (loss)	315,000	(1,130,000)	(422,000)	(3,653,000)
Minority investment entities
Entity income (loss) excluding impairment	$ 6,000	$ (266,000)	$ (21,000)	$ (1,400,000)

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Oct. 27, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			$ 188,317,000
Common stock options exercised			264,000
Purchase of subsidiary shares from noncontrolling interest			(1,607,000)
Stock-based compensation			1,392,000
Net income	$ 4,147,000	$ 4,565,000	11,888,000	$ 6,788,000
Other comprehensive loss	(3,257,000)	1,162,000	(5,536,000)	2,359,000
Balance, end of period	194,718,000		194,718,000		$ 188,317,000
Reclassification adjustment from AOCI	0	$ 0	0	$ 0
Stock repurchase program, authorized amount								$ 5,000,000
Shares repurchased (in shares)					0	0	908,000
Average price of shares repurchased (in dollars per share)							$ 2.52
Total purchase price							$ 2,300,000
Stock repurchase program remaining authorized repurchase amount	2,700,000		2,700,000
Preferred Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			3,532,000
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			39,000
Balance, end of period	39,000		39,000		39,000
Additional Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			231,679,000
Common stock options exercised			264,000
Purchase of subsidiary shares from noncontrolling interest			187,000
Stock-based compensation			1,392,000
Balance, end of period	233,522,000		233,522,000		231,679,000
Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			(54,837,000)
Net income			10,715,000
Balance, end of period	(44,122,000)		(44,122,000)		(54,837,000)
Accumulated Other Comprehensive Income (Loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			3,407,000
Other comprehensive loss			(5,253,000)
Balance, end of period	(1,846,000)		(1,846,000)		3,407,000
AXT, Inc. Stockholders' Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			183,820,000
Common stock options exercised			264,000
Purchase of subsidiary shares from noncontrolling interest			187,000
Stock-based compensation			1,392,000
Net income			10,715,000
Other comprehensive loss			(5,253,000)
Balance, end of period	191,125,000		191,125,000		183,820,000
Noncontrolling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period			4,497,000
Purchase of subsidiary shares from noncontrolling interest			(1,794,000)
Net income			1,173,000
Other comprehensive loss			(283,000)
Balance, end of period	$ 3,593,000		$ 3,593,000		$ 4,497,000

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 461	$ 339	$ 1,392	$ 961
Net effect on net income	461	339	1,392	961
Cost of Revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	25	7	67	22
Selling, General and Administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	361	280	1,098	788
Research and Development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation	$ 75	$ 52	$ 227	$ 151

Stock-Based Compensation - Assu

Stock-Based Compensation - Assumptions (Details) - Options	9 Months Ended
	Sep. 30, 2017
Weighted-average assumptions [Abstract]
Expected term	5 years 10 months 24 days
Volatility (in hundredths)	46.71%
Risk-free interest rate (in hundredths)	2.08%

Stock-Based Compensation - Opti

Stock-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Dec. 31, 2017
Number of Options Outstanding [Roll Forward]
Granted (in shares)			60,000
Options
Number of Options Outstanding [Roll Forward]
Options outstanding, beginning of period (in shares)			2,666,000
Granted (in shares)	0	0	0
Exercised (in shares)			(93,000)
Canceled and expired (in shares)			(4,000)
Options outstanding, end of period (in shares)	2,569,000		2,569,000	2,666,000
Options vested and unvested options expected to vest, net of forfeitures, end of period (in shares)	2,553,000		2,553,000
Options exercisable, end of period (in shares)	1,862,000		1,862,000
Weighted-average Exercise Price [Roll Forward]
Options outstanding, beginning of period (in dollars per share)			$ 3.81
Exercised (in dollars per share)			2.83
Canceled and expired (in dollars per share)			5.21
Options outstanding, end of period (in dollars per share)	$ 3.84		3.84	$ 3.81
Options vested and unvested options expected to vest, net of forfeitures (in dollars per share)	3.82		3.82
Options exercisable, end of period (in dollars per share)	$ 3.41		3.41
Weighted-average grant date fair value of stock options granted (in dollars per share)			$ 2.76
Weighted average Remaining Contractual Life [Abstract]
Options outstanding			6 years 2 months 9 days	6 years 10 months 13 days
Options vested and unvested options expected to vest, net of forfeitures, end of period			6 years 2 months 5 days
Option exercisable, end of period			5 years 6 months 22 days
Aggregate Intrinsic Value [Abstract]
Options outstanding, beginning of period			$ 13,149
Options outstanding, end of period	$ 8,847		8,847	$ 13,149
Options vested and expected to vest, end of period	8,822		8,822
Options exercisable, end of period	$ 6,979		$ 6,979
Closing price (in dollars per share)	$ 7.15		$ 7.15

Stock-Based Compensation - RSU

Stock-Based Compensation - RSU (Details) $ / shares in Units, shares in Thousands	9 Months Ended
	Sep. 30, 2018USD ($)$ / sharesshares
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation costs related to unvested stock options not yet recognized | $	$ 1,200,000
Value of estimated forfeitures | $	$ 141,000
Weighted-average period of amortization	1 year 9 months 18 days
Weighted Average Grant Date Fair Value [Roll Forward]
Weighted-average grant date fair value of stock options granted (in dollars per share)	$ 2.76
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period of amortization	1 year 3 months 18 days
Shares [Roll Forward]
Non-vested, beginning of period (in shares) | shares	480
Granted (in shares) | shares	35
Vested (in shares) | shares	(49)
Forfeited (in shares) | shares	(3)
Non-vested, end of period (in shares) | shares	463
Weighted Average Grant Date Fair Value [Roll Forward]
Non-vested, beginning of period (in dollars per share)	$ 7.13
Granted (in dollars per share)	7.49
Vested (in dollars per share)	6.19
Forfeited (in dollars per share)	9.50
Non-vested, end of period (in dollars per share)	$ 7.24
Unrecognized compensation expense related to restricted stock awards | $	$ 2,500,000

Net Income Per Share (Details)

Net Income Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Numerator:
Net income attributable to AXT, Inc.	$ 3,939,000	$ 4,419,000	$ 10,715,000	$ 7,014,000
Less: Preferred stock dividends	(44,000)	(44,000)	(132,000)	(132,000)
Net income available to common stockholders	$ 3,895,000	$ 4,375,000	$ 10,583,000	$ 6,882,000
Weighted-average number of common shares outstanding:
Denominator for basic net income per share - weighted-average common shares (in shares)	39,008,000	38,499,000	39,000,000	36,999,000
Effect of dilutive securities:
Denominator for dilutive net income per common share (in shares)	40,331,000	40,095,000	40,320,000	38,469,000
Net income attributable to AXT, Inc. per common share:
Basic (in dollars per share)	$ 0.10	$ 0.11	$ 0.27	$ 0.19
Diluted (in dollars per share)	$ 0.10	$ 0.11	$ 0.26	$ 0.18
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
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from diluted net income per share as the impact is anti-dilutive (in shares)	186,000	68,000	186,000	573,000
Restricted Stock Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from diluted net income per share as the impact is anti-dilutive (in shares)	34,000	34,000	239,000	11,000
Options
Effect of dilutive securities:
Effect of dilutive securities (in shares)	1,207,000	1,416,000	1,196,000	1,283,000
Restricted Stock Awards
Effect of dilutive securities:
Effect of dilutive securities (in shares)	116,000	180,000	124,000	187,000

Segment Information and Forei_3

Segment Information and Foreign Operations - Product Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue by product type
Revenue	$ 28,626	$ 28,168	$ 80,165	$ 72,341
Substrates
Revenue by product type
Revenue	22,802	22,377	63,769	58,095
Raw Materials And Others
Revenue by product type
Revenue	$ 5,824	$ 5,791	$ 16,396	$ 14,246

Segment Information and Forei_4

Segment Information and Foreign Operations - Segment and Geographical Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2018USD ($)segment	Sep. 30, 2017USD ($)	Dec. 31, 2017USD ($)
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	$ 28,626	$ 28,168	$ 80,165	$ 72,341
Long-lived assets by geographic region, net of depreciation:
Long-lived assets	74,754		74,754		$ 46,530
Reportable Geographical Components | China
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	10,268	7,203	26,271	17,949
Long-lived assets by geographic region, net of depreciation:
Long-lived assets	74,212		74,212		45,120
Reportable Geographical Components | Taiwan
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	6,116	5,986	15,445	13,499
Reportable Geographical Components | Europe (primarily Germany)
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	4,879	6,192	17,957	17,638
Reportable Geographical Components | North America (primarily the United States)
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	2,967	2,159	7,052	5,909
Long-lived assets by geographic region, net of depreciation:
Long-lived assets	542		542		$ 1,410
Reportable Geographical Components | Asia Pacific (excluding China, Taiwan, and Japan)
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	2,334	2,934	6,399	7,650
Reportable Geographical Components | Japan
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract]
Revenue	$ 2,062	$ 3,694	$ 7,041	$ 9,696

Segment Information and Forei_5

Segment Information and Foreign Operations - Concentration of Credit Risk (Details) - customer	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Revenues
Revenue, Major Customer [Line Items]
Number of customers representing significant share				2
Accounts Receivable
Revenue, Major Customer [Line Items]
Number of customers representing significant share			3		1
Landmark [Member] | Revenues
Revenue, Major Customer [Line Items]
Number of customers representing significant share	1		1
Percentage share generated by major customers	16.00%	16.00%	13.00%	12.00%
Osram Opto [Member] | Revenues
Revenue, Major Customer [Line Items]
Percentage share generated by major customers		10.00%		11.00%
Major Customer One | Accounts Receivable
Revenue, Major Customer [Line Items]
Percentage share generated by major customers			15.00%		12.00%
Major Customer Two | Accounts Receivable
Revenue, Major Customer [Line Items]
Percentage share generated by major customers			14.00%
Major Customer Three | Accounts Receivable
Revenue, Major Customer [Line Items]
Percentage share generated by major customers			11.00%
Top Five Major Customers | Revenues
Revenue, Major Customer [Line Items]
Number of customers representing significant share	5	5	5	5
Percentage share generated by major customers	39.00%	39.00%	36.00%	37.00%

Commitments and Contingencies_2

Commitments and Contingencies (Details)	1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018USD ($)ft²	May 31, 2017	Sep. 30, 2018USD ($)ft²	Sep. 30, 2017USD ($)	Sep. 30, 2018USD ($)ft²	Sep. 30, 2017USD ($)	Dec. 31, 2020
Product Warranty [Abstract]
Period of warranty					12 months
Change in warranty accrual [Roll Forward]
Beginning accrued product warranty			$ 178,000	$ 130,000	$ 133,000	$ 251,000
Accruals for warranties issued			125,000	7,000	258,000	77,000
Adjustments related to pre-existing warranties including expirations and changes in estimates			(10,000)	18,000	(33,000)	(114,000)
Cost of warranty repair			(65,000)	(17,000)	(130,000)	(76,000)
Ending accrued product warranty	$ 228,000		$ 228,000	$ 138,000	$ 228,000	$ 138,000
Leases [Abstract]
Area of property under long-term operating lease (in square feet) | ft²	19,467		19,467		19,467
Additional years per lease option					3 years
Number of additional years to lease term		3 years
Term of royalty agreement					8 years
Aggregate amount payable towards royalty	$ 7,000,000		$ 7,000,000		$ 7,000,000
Bank Loans [Abstract]
Outstanding	291,000		291,000		291,000
Operating leases
Less than 1 year	193,000		193,000		193,000
1-3 years	233,000		233,000		233,000
4-5 years	26,000		26,000		26,000
Total	452,000		452,000		452,000
Royalty agreement
Less than 1 year	144,000		144,000		144,000
Total	144,000		144,000		144,000
Total
Less than 1 year	337,000		337,000		337,000
1-3 years	233,000		233,000		233,000
4-5 years	26,000		26,000		26,000
Total	596,000		596,000		596,000
ICBC | Secured Debt
Bank Loans [Abstract]
Maximum borrowing capacity	$ 2,900,000		$ 2,900,000		$ 2,900,000
Annual interest rate at end	4.40%		4.40%		4.40%
Outstanding	$ 291,000		$ 291,000		$ 291,000
ICBC | Secured Debt | Prime Rate
Bank Loans [Abstract]
Spread	0.04%
Forecast
Leases [Abstract]
Number of additional years to lease term							3 years
Dingxing
Leases [Abstract]
Total investment agreement value	$ 90,000,000		90,000,000		90,000,000
Kazuo
Leases [Abstract]
Total investment agreement value	15,000,000		15,000,000		15,000,000
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment | Kazuo
Leases [Abstract]
Total investment agreement value	$ 8,000,000		$ 8,000,000		$ 8,000,000

Foreign Exchange Transaction _2

Foreign Exchange Transaction Gains/Losses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other (expense) income, net
Foreign exchange gain (loss)	$ 116,000	$ (339,000)	$ (224,000)	$ (414,000)

Income Taxes - (Details)

Income Taxes - (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2018USD ($)subsidiary	Sep. 30, 2018USD ($)subsidiary	Dec. 31, 2017
Income Taxes
Deferred tax assets	$ 0	$ 0
Statutory federal income tax rate (as a percent)		21.00%	35.00%
Unrecognized tax benefits interest and penalties	0	$ 0
Unrecognized tax benefits accrued interest and penalties	$ 0	$ 0
Number of partially owned subsidiaries | subsidiary	3	3
Federal income tax benefit or expense	$ 0	$ 0

Revenue - Revenue Recognition (

Revenue - Revenue Recognition (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2018USD ($)subsidiary	Dec. 31, 2017USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of subsidiaries | subsidiary	3
Percentage of Gallium	99.99%
Accounts receivable	$ 23,308	$ 22,778
Accrued liabilities	$ 12,776	11,149
Adjustment | ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable		169
Accrued liabilities		$ 169
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Sales commissions benefit period	1 year

Revenue - Contract Balances (De

Revenue - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2018	Sep. 30, 2018	Dec. 31, 2017
Revenue
Contract liabilities	$ (927)	$ (648)	$ (924)
Amounts included in contract liabilities at the beginning of the period	$ 425	$ 776

Revenue - Disaggregated Revenue

Revenue - Disaggregated Revenue and Practical Expedients and Exemptions (Details)	9 Months Ended
	Sep. 30, 2018segment
Revenue
Number of operating segments	1
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract	true
Revenue, Practical Expedient, Financing Component	true
Revenue, Practical Expedient, Remaining Performance Obligation	true

Bank Loans (Details)

Bank Loans (Details)	1 Months Ended
	Sep. 30, 2018USD ($)
Debt Instrument [Line Items]
Outstanding	$ 291,000
ICBC | Secured Debt
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 2,900,000
Annual interest rate at end	4.40%
Outstanding	$ 291,000
ICBC | Secured Debt | Prime Rate
Debt Instrument [Line Items]
Spread	0.04%

Recent Accounting Pronounceme_2

Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable	$ 23,308	$ 22,778
Accrued liabilities	$ 12,776	11,149
Adjustment | ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable		169
Accrued liabilities		$ 169

Subsequent Events (Details)

Subsequent Events (Details) - USD ($) $ in Thousands	Nov. 06, 2018	Nov. 07, 2018	Sep. 30, 2018
Subsequent Events
Outstanding			$ 291
Subsequent Event | Wells Fargo Bank | Secured Debt
Subsequent Events
Maximum borrowing capacity	$ 10,000
Line of credit, term	2 years
Outstanding		$ 0
Subsequent Event | Wells Fargo Bank | Secured Debt | LIBOR
Subsequent Events
Spread	2.00%