Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 04, 2020 | Jun. 28, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | AXT INC | ||
Entity Central Index Key | 0001051627 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Amendment Flag | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 40,826,656 | ||
Entity Public Float | $ 109,287,545 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 26,892 | $ 16,526 |
Short-term investments | 9,427 | 22,129 |
Accounts receivable, net of allowances of $34 and $358 as of December 31, 2019 and December 31, 2018 | 19,031 | 19,586 |
Inventories | 49,152 | 58,571 |
Prepaid expenses and other current assets | 8,703 | 11,728 |
Total current assets | 113,205 | 128,540 |
Long-term investments | 717 | |
Property, plant and equipment, net | 97,403 | 82,280 |
Operating lease right-of-use assets | 2,938 | |
Other assets | 9,803 | 11,987 |
Total assets | 223,349 | 223,524 |
Current liabilities: | ||
Accounts payable | 10,098 | 13,338 |
Accrued liabilities | 11,681 | 15,371 |
Bank loan | 5,747 | |
Total current liabilities | 27,526 | 28,709 |
Noncurrent operating lease liabilities | 2,695 | |
Other long-term liabilities | 366 | 283 |
Total liabilities | 30,587 | 28,992 |
Commitments and contingencies (Note 16) | ||
Stockholders’ equity: | ||
Preferred stock Series A, $0.001 par value; 2,000 shares authorized; 883 shares issued and outstanding as of December 31, 2019 and December 31, 2018 (Liquidation preference of $7,169 and $6,992 as of December 31, 2019 and December 31, 2018) | 3,532 | 3,532 |
Common stock, $0.001 par value; 70,000 shares authorized; 40,632 and 39,985 shares issued and outstanding as of December 31, 2019 and December 31, 2018 | 41 | 40 |
Additional paid-in capital | 236,957 | 234,418 |
Accumulated deficit | (47,783) | (45,183) |
Accumulated other comprehensive loss | (4,862) | (1,972) |
Total AXT, Inc. stockholders’ equity | 187,885 | 190,835 |
Noncontrolling interests | 4,877 | 3,697 |
Total stockholders’ equity | 192,762 | 194,532 |
Total liabilities and stockholders’ equity | $ 223,349 | $ 223,524 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Accounts receivable, allowances for doubtful accounts | $ 34 | $ 358 |
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 | $ 7,169 | $ 6,992 |
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) | 40,632,000 | 39,985,000 |
Common stock, shares outstanding (in shares) | 40,632,000 | 39,985,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Revenue | $ 83,256 | $ 102,397 | $ 98,673 |
Cost of revenue | 58,431 | 65,350 | 64,198 |
Gross profit | 24,825 | 37,047 | 34,475 |
Operating expenses: | |||
Selling, general and administrative | 19,305 | 19,003 | 17,009 |
Research and development | 5,834 | 5,897 | 4,827 |
Total operating expenses | 25,139 | 24,900 | 21,836 |
Income (loss) from operations | (314) | 12,147 | 12,639 |
Interest income, net | 217 | 528 | 461 |
Equity in loss of unconsolidated joint ventures | (1,876) | (1,080) | (1,694) |
Other income (expense), net | 947 | 352 | (553) |
Income (loss) before provision for income taxes | (1,026) | 11,947 | 10,853 |
Provision for income taxes | 562 | 938 | 792 |
Net income (loss) | (1,588) | 11,009 | 10,061 |
Less: Net (income) loss attributable to noncontrolling interests | (1,012) | (1,355) | 87 |
Net income (loss) attributable to AXT, Inc. | $ (2,600) | $ 9,654 | $ 10,148 |
Net income (loss) attributable to AXT, Inc. per common share: | |||
Basic | $ (0.07) | $ 0.24 | $ 0.27 |
Diluted | $ (0.07) | $ 0.24 | $ 0.26 |
Weighted-average number of common shares outstanding: | |||
Basic | 39,487 | 39,049 | 37,444 |
Diluted | 39,487 | 40,265 | 38,966 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ (1,588) | $ 11,009 | $ 10,061 |
Other comprehensive income (loss), net of tax: | |||
Change in foreign currency translation loss, net of tax | (1,847) | (5,749) | 3,726 |
Change in foreign currency translation gain (loss), net of tax | 81 | 9 | (138) |
Reclassification adjustment for gains included in net loss upon deconsolidation of a subsidiary | (617) | ||
Total other comprehensive income (loss), net of tax | (2,383) | (5,740) | 3,588 |
Comprehensive income (loss) | (3,971) | 5,269 | 13,649 |
Less: Comprehensive income attributable to noncontrolling interests | (1,519) | (994) | (347) |
Comprehensive income (loss) attributable to AXT, Inc. | $ (5,490) | $ 4,275 | $ 13,302 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | AXT, Inc. Stockholders' Equity | Noncontrolling Interests | Total |
Balance, beginning of period at Dec. 31, 2016 | $ 3,532 | $ 33 | $ 194,177 | $ (64,985) | $ 253 | $ 133,010 | $ 4,380 | $ 137,390 |
Balance (in shares) at Dec. 31, 2016 | 883 | 33,032 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock options exercised | $ 1 | 2,476 | 2,477 | 2,477 | ||||
Common stock options exercised (in shares) | 762 | |||||||
Sale of subsidiary shares to noncontrolling interests | 1,765 | 1,765 | 235 | 2,000 | ||||
Stock-based compensation | 1,405 | 1,405 | 1,405 | |||||
Issuance of common stock in the form of restricted stock (in shares) | 312 | |||||||
Issuance of common stock, net of stock issuance costs | $ 5 | 31,856 | 31,861 | 31,861 | ||||
Issuance of common stock, net of stock issuance costs (in shares) | 5,307 | |||||||
Net income (loss) | 10,148 | 10,148 | (87) | 10,061 | ||||
Net dividend declared by joint ventures | (465) | (465) | ||||||
Other comprehensive income | 3,154 | 3,154 | 434 | 3,588 | ||||
Balance, end of period at Dec. 31, 2017 | $ 3,532 | $ 39 | 231,679 | (54,837) | 3,407 | 183,820 | 4,497 | 188,317 |
Balance (in shares) at Dec. 31, 2017 | 883 | 39,413 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock options exercised | $ 1 | 627 | 628 | 628 | ||||
Common stock options exercised (in shares) | 238 | |||||||
Stock-based compensation | 1,925 | 1,925 | 1,925 | |||||
Purchase of subsidiary shares from noncontrolling interest | 187 | 187 | (1,794) | (1,607) | ||||
Restricted stock awards canceled | (10) | |||||||
Issuance of common stock in the form of restricted stock (in shares) | 344 | |||||||
Net income (loss) | 9,654 | 9,654 | 1,355 | 11,009 | ||||
Other comprehensive income | (5,379) | (5,379) | (361) | (5,740) | ||||
Balance, end of period at Dec. 31, 2018 | $ 3,532 | $ 40 | 234,417 | (45,183) | (1,972) | 190,835 | 3,697 | 194,532 |
Balance (in shares) at Dec. 31, 2018 | 883 | 39,985 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock options exercised | $ 1 | 267 | 268 | 268 | ||||
Common stock options exercised (in shares) | 113 | |||||||
Reclassification out of accumulated other comprehensive income and non-controlling interest upon the deconsolidation of a subsidiary | (1,150) | (1,150) | 533 | (617) | ||||
Stock-based compensation | 2,346 | 2,346 | 2,346 | |||||
Purchase of subsidiary shares from noncontrolling interest | (74) | (74) | (339) | (413) | ||||
Restricted stock awards canceled | (20) | |||||||
Issuance of common stock in the form of restricted stock (in shares) | 554 | |||||||
Net income (loss) | (2,600) | (2,600) | 1,012 | (1,588) | ||||
Other comprehensive income (loss) | (1,740) | (1,740) | (26) | (1,766) | ||||
Other comprehensive income | (2,383) | |||||||
Balance, end of period at Dec. 31, 2019 | $ 3,532 | $ 41 | $ 236,956 | $ (47,783) | $ (4,862) | $ 187,885 | $ 4,877 | $ 192,762 |
Balance (in shares) at Dec. 31, 2019 | 883 | 40,632 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |
Stock issuance costs | $ 2,639 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Cash flows from operating activities: | ||||
Net income (loss) | $ (1,588) | $ 11,009 | $ 10,061 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
Depreciation and amortization | 5,531 | 4,871 | 4,422 | |
Amortization of marketable securities premium | 37 | 158 | 173 | |
Impairment charge on equity investee | 1,068 | 313 | ||
Stock-based compensation | 2,346 | 1,925 | 1,405 | |
Realized gain on sale of available-for-sale securities | (77) | |||
Loss (gain) on disposal of equipment | 72 | (99) | 57 | |
Gain from deconsolidation of a subsidiary | (175) | |||
Loss from equity method investments, net | 983 | 1,080 | 1,381 | |
Return on equity method investments | 362 | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 441 | 2,819 | (7,977) | |
Inventories | 8,862 | (14,629) | (4,740) | |
Prepaid expenses and other current assets | 2,936 | (4,600) | (2,309) | |
Other assets | (1,188) | (1,888) | (52) | |
Accounts payable | (3,137) | 2,314 | 4,401 | |
Accrued liabilities * | [1] | (4,010) | 518 | 1,642 |
Other long-term liabilities, including royalties | 118 | (260) | (85) | |
Net cash provided by operating activities | 12,658 | 3,218 | 8,615 | |
Cash flows from investing activities: | ||||
Purchases of property, plant and equipment | (21,792) | (40,539) | (21,356) | |
Proceeds from sale of equipment | 99 | |||
Purchases of available-for-sale securities | (8,725) | (9,937) | (30,021) | |
Proceeds from sales and maturities of available-for-sale securities | 22,189 | 19,550 | 14,750 | |
Repayment of related party notes receivable | 169 | |||
Net cash used in investing activities | (8,328) | (30,827) | (36,458) | |
Cash flows from financing activities: | ||||
Proceeds from common stock options exercised | 268 | 628 | 34,338 | |
Proceeds from sale of subsidiary shares to noncontrolling interests, net of portion allocated to noncontrolling interests | 366 | 1,765 | ||
Consideration paid to repurchase subsidiary shares from noncontrolling interests | (262) | (415) | ||
Proceeds from short-term loan | 5,814 | |||
Dividends paid by joint ventures to their minority shareholders | (465) | |||
Net cash provided by financing activities | 6,186 | 213 | 35,638 | |
Effect of exchange rate changes on cash and cash equivalents | (150) | (430) | 405 | |
Net increase (decrease) in cash and cash equivalents | 10,366 | (27,826) | 8,200 | |
Cash and cash equivalents at the beginning of the year | 16,526 | 44,352 | 36,152 | |
Cash and cash equivalents at the end of the year | 26,892 | 16,526 | 44,352 | |
Supplemental disclosures: | ||||
Income taxes paid, net of refunds | 749 | 1,134 | $ 714 | |
Supplemental disclosure of non-cash flow information: | ||||
Consideration payable to repurchase subsidiary shares from noncontrolling interests, included in accrued liabilities | 151 | 1,192 | ||
Reduction of noncontrolling interests in excess (deficit) of total consideration paid and payable in connection with the repurchase of subsidiary shares from noncontrolling interests | (74) | 187 | ||
Consideration payable in connection with constructions, included in accrued liabilities | $ 1,447 | $ 2,912 | ||
[1] | * Dividend accrued but not paid by joint ventures of $0, $504 and $533 was included in accrued liabilities as of December 31, 2019, 2018 and 2017, respectively. |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | Dec. 31, 2019USD ($)subsidiary | Jan. 31, 2019subsidiary | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Number of consolidated joint ventures | subsidiary | 1 | 1 | ||
Dividends accrued but not paid by joint ventures | $ | $ 0 | $ 504 | $ 533 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
The Company and Summary of Significant Accounting Policies | |
The Company and Summary of Significant Accounting Policies | Note 1. The Company and Summary of Significant Accounting Policies The Company AXT, Inc. (“AXT”, “the Company”, “we,” “us,” and “our” refer to AXT, Inc. and its consolidated subsidiaries) is a worldwide materials science company that develops and produces high-performance compound and single element semiconductor substrates, also known as wafers. Our consolidated subsidiaries produce and sell certain raw materials some of which are used in our substrate manufacturing process and some of which are sold to other companies. Our substrate wafers are used when a typical silicon substrate wafer cannot meet the conductive requirements of a semiconductor or optoelectronic device. The dominant substrates used in producing semiconductor chips and other electronic circuits are made from silicon. However, certain chips may become too hot or perform their function too slowly if silicon is used as the base material. In addition, optoelectronic applications, such as LED lighting and chip-based lasers, do not use silicon substrates because they require a wave form frequency that cannot be achieved using silicon. Alternative or specialty materials are used to replace silicon as the preferred base in these situations. Our wafers provide such alternative or specialty materials. We do not design or manufacture the chips. We add value by researching, developing and producing the specialty material wafers. We have two product lines: specialty material substrates and raw materials integral to these substrates. In 2019, our substrate product group generated 81% of our revenue and raw materials product group generated 19%. Our compound substrates combine indium with phosphorous (indium phosphide: InP) or gallium with arsenic (gallium arsenide: GaAs). Our single element substrates are made from germanium (Ge). Our raw materials include both raw gallium and purified gallium. We use purified gallium in producing our GaAs substrates and also sell purified gallium in the open market to other companies for use in magnetic materials, high temperature thermometers and growing single crystal ingots including gallium arsenide, gallium nitride, gallium antimonide, gallium phosphide and other materials and alloys. We also produce pyrolytic boron nitride (pBN) crucibles used in the high temperature (typically in the range 500 C to 1,500 C) growth process of single crystal ingots and epitaxial layer growth in MBE reactors. We use these pBN crucibles in our own ingot growth processes and also sell them in the open market to other companies. Principles of Consolidation The consolidated financial statements include the accounts of AXT, our wholly-owned subsidiaries, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), Baoding Tongmei Xtal Technology Co., Ltd. (“Tongmei Baoding”), ChaoYang Tongmei Xtal Technology Co., Ltd. (“Tongmei ChaoYang”), Nanjing JinMei Gallium Co., Ltd. (“JinMei”), ChaoYang JinMei Gallium Ltd. and MaAnShan JinMei Gallium Ltd., and, except as discussed below and in Note 6, our majority-owned subsidiary, Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). Tongmei Boading is located in the city of Dingxing, China. Tongmei ChaoYang is located in the city of Kazuo, China. 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. As of December 31, 2019, we have five companies accounted for by the equity method. As of December 31, 2018, we had seven companies accounted for by the equity method. For the majority-owned subsidiary that we consolidate, we reflect the portion we do not own as noncontrolling interests on our consolidated balance sheets in stockholders' equity and in our consolidated statements of operations. As discussed in Note 6, “Investments in Privately-Held Raw Material Companies”, effective as of March 11, 2019, we reduced our ownership in Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”) from 46% to 39% by selling a portion of our JiYa shares to our investor partner, which is also JiYa’s landlord. As a result of this transaction, our investor partner became the largest shareholder of JiYa and assumed the right to appoint the general manager of JiYa and thereby exercised greater control over JiYa’s long-term strategic direction. Further, although our Chief Executive Officer remains on the board, as of March 11, 2019 he was no longer the chairman of JiYa’s board of directors and our Chief Financial Officer was no longer a member of JiYa’s board of financial supervisors. Therefore, we deconsolidated JiYa from our consolidated financial statements as of March 11, 2019 in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”). As of March 12, 2019, we accounted for our retained investment in JiYa under the equity method of accounting, as we continue to exercise significant influence. Our consolidated balance sheet as of December 31, 2018, as reported, included JiYa’s assets and liabilities, after all significant inter-company accounts and transactions were eliminated. Our consolidated balance sheet as of December 31, 2019, as reported, does not include the assets and liabilities of JiYa, since we deconsolidated JiYa as of March 11, 2019. Our consolidated statement of operations for the year 2019 includes JiYa’s results for the period through March 11, 2019. As discussed in Note 6, in May 2019, we purchased the remaining 3% ownership interest of JinMei from retiring members of the JinMei management team for approximately $413,000. As a result, our ownership of JinMei increased from 97% to 100%. As of June 1, 2019, we referred to JinMei as a wholly-owned subsidiary instead of a significantly controlled subsidiary and reduced the carrying value of the corresponding noncontrolling interests to zero. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates, judgments and assumptions. We believe that the estimates, judgments, and assumptions upon which management relies are reasonable based on information available at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates and actual results, our consolidated financial statements would be affected. Fair Value of Financial Instruments The carrying amounts of certain of our financial instruments including cash and cash equivalents, short-term investments and long-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. Certain cash equivalents and investments are required to be adjusted to fair value on a recurring basis. See Note 2. Fair Value of Investments ASC Topic 820, Fair value measurement (“ASC 820”) establishes three levels of inputs that may be used to measure fair value. Level 1 instruments represent quoted prices in active markets. Therefore, determining fair value for Level 1 instruments does not require significant management judgment, and the estimation is not difficult. Level 2 instruments include observable inputs other than Level 1 prices, such as quoted prices for similar instruments in markets with insufficient volume or infrequent transactions (less active markets), issuer bank statements, credit ratings, non-binding market consensus prices that can be corroborated with observable market data, model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities, or quoted prices for similar assets or liabilities. These Level 2 instruments require more management judgment and subjectivity compared to Level 1 instruments, including: · Determining which instruments are most comparable to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating, and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced. · Determining which model-derived valuations to use in determining fair value requires management judgment. When observable market prices for similar securities or comparable securities are not available, we price our marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data or pricing models, such as discounted cash flow models, with all significant inputs derived from or corroborated with observable market data. Level 3 instruments include unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. 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 consolidated balance sheets and classified as Level 3 assets and liabilities. As of December 31, 2019 and 2018, the net change in fair value from the placement of the hedge to settlement had a de minimis impact to the consolidated results. Foreign Currency Translation The functional currency of our Chinese subsidiaries is the renminbi, the local currency of China. Transaction gains and losses resulting from transactions denominated in currencies other than the U.S. dollar or in the functional currencies of our subsidiaries are included in “Other (expense) income, net” for the years presented. The transaction gain totaled $321,000 and $165,000 for the years ended December 31, 2019 and 2018, respectively. The transaction loss for the year ended December 31, 2017 totaled $602,000. The assets and liabilities of the subsidiaries are translated at the rates of exchange on the balance sheet date. Revenue and expense items are translated at the average rate of exchange for the period. Gains and losses from foreign currency translation are included in “Other comprehensive income (loss)” in the consolidated statements of comprehensive income (loss), net of tax. Revenue Recognition We manufacture and sell high-performance compound semiconductor substrates including indium phosphide, gallium arsenide and germanium wafers, and our consolidated subsidiaries sell certain raw materials, including 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 six months. Our revenue is measured based on the consideration specified in the contract with each customer in exchange for transferring products that are 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. Shipping and handling fees billed to customers in a sales transaction are recorded as an offset to shipping and handling expenses. 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 revenue. 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 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 receivable” and included it in “Accrued liabilities” on the 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 December 31, 2019. December 31, December 31, 2019 2018 Contract liabilities $ (396) $ (476) During the three and twelve months ended December 31, 2019, the Company recognized $0 and $0.4 million, respectively, of revenue that was included in the contract balances as of December 31, 2018. Disaggregated Revenue In general, revenue disaggregated by product types and geography (See Note 14) 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 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. Accounting for Sales Taxes We record sales taxes collected on sales of our products and for amounts not yet remitted to tax authorities as accrued liabilities on our consolidated balance sheets. Risks and Concentration of Credit Risk Our business is very dependent on the semiconductor, lasers and optical industries which can be highly cyclical and experience downturns as a result of economic changes, overcapacity, and technological advancements. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies, could adversely affect our operating results. In addition, a significant portion of our revenues and net income is derived from international sales. Fluctuations of the United States dollar against foreign currencies and changes in local regulatory or economic conditions, particularly in an emerging market such as China, could adversely affect operating results. We depend on a limited number of suppliers for certain raw materials, components and equipment used in manufacturing our products, including quartz tubing and polishing solutions. We generally purchase these materials through standard purchase orders and not pursuant to long-term supply contracts. Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash equivalents, investments, and trade accounts receivable. We invest primarily in money market accounts, certificates of deposit and corporate bonds. The composition and maturities are regularly monitored by management. Such deposits are in excess of the amount of the insurance provided by the federal government on such deposits. We are exposed to credit risks in the event of default by the issuers to the extent of the amount recorded on the consolidated balance sheets. 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. The credit risk in our accounts receivable is mitigated by our credit evaluation process and the geographical dispersion of sales transactions. Three customers accounted for 14%, 13% and 12% of our trade accounts receivable as of December 31, 2019 and three customers accounted for 17%, 12% and 10% of our trade accounts receivable as of December 31, 2018. One customer represented 15% of our revenue for the year ended December 31, 2019. One customer represented 13% of our revenue for the year ended December 31, 2018. Two customers represented 12% and 11%, respectively, of our revenue for the year ended December 31, 2017. Our top five customers, although not the same five customers for each period, represented 40% of our revenue for the year 2019 and 35% of our revenue for each of the years 2018 and 2017, respectively. For the years ended December 31, 2019, 2018 and 2017 each of three third-party customers for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales. Our subsidiaries and joint ventures are a key strategic benefit for us as they further diversify our sources of revenue. Cash and Cash Equivalents We consider investments in highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of certificate of deposits. Cash and cash equivalents are stated at cost, which approximates fair value. Short-Term and Long-Term Investments We classify our investments in marketable securities as available-for-sale securities . Short-term and long-term investments are comprised of available-for-sale marketable securities, which consist primarily of certificates of deposit and corporate bonds. These investments are reported at fair value as of the respective balance sheet dates with unrealized gains and losses included in accumulated other comprehensive income (loss) within stockholders’ equity on the consolidated balance sheets. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in “Other (expense) income, net” in the consolidated statements of operations. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are also included in “Other (expense) income, net” in the consolidated statements of operations. The cost of securities sold is based upon the specific identification method. Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns Accounts receivable are recorded at the invoiced amount and are not interest bearing. We periodically review the likelihood of collection on our accounts receivable balances and provide an allowance for doubtful accounts receivable primarily based upon the age of these accounts. We evaluate receivables from U.S. customers with an emphasis on balances in excess of 90 days and for receivables from customers located outside the U.S. with an emphasis on balances in excess of 120 days and establish a reserve allowance on the receivable balances if needed. The reason for the difference in the evaluation of receivables between foreign and U.S. customers is that U.S. customers have historically made payments in a shorter period of time than foreign customers. Foreign business practices generally require us to allow customer payment terms that are longer than those accepted in the United States. We assess the probability of collection based on a number of factors, including the length of time a receivable balance has been outstanding, our past history with the customer and their credit worthiness. We exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. As of December 31, 2019 and 2018, our accounts receivable, net balance was $19.0 million and $19.6 million, respectively, which was net of an allowance for doubtful accounts of $34,000 and $358,000 in December 31, 2019 and 2018, respectively. During 2019, the allowance for doubtful accounts decreased by $324,000 primarily due to the deconsolidation of JiYa. There were no changes in the allowance for doubtful accounts in 2018. If actual uncollectible accounts differ substantially from our estimates, revisions to the estimated allowance for doubtful accounts would be required, which could have a material impact on our financial results for the future periods. Historically, our allowance for sales returns reserve was deducted from gross accounts receivable. In connection with the adoption of ASC Topic 606, 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 receivable” and included it in “Accrued liabilities” on the consolidated balance sheets. As of December 31, 2019 and 2018, the balance was $26,000 and $47,000, respectively. During 2019, we utilized $26,000 and reserved an additional $5,000 and during 2018, we utilized $47,000 and reduced an additional $75,000. Warranty Reserve We maintain a warranty reserve based upon our claims experience during the prior twelve months and any pending claims and returns of which we are aware. Warranty costs are accrued at the time revenue is recognized. As of December 31, 2019 and 2018, accrued product warranties totaled $387,000 and $236,000, respectively. The increase in accrued product warranties is primarily attributable to increased claims for quality issues experienced by customers. If actual warranty costs or pending new claims differ substantially from our estimates, revisions to the estimated warranty liability would be required, which could have a material impact on our financial condition and results of operations for future periods. Inventories Inventories are stated at the lower of cost (approximated by standard cost) or net realizable value. Cost is determined using the weighted average cost method. Our inventory consists of raw materials as well as finished goods and work-in-process that include material, labor and manufacturing overhead costs. We routinely evaluate the levels of our inventory in light of current market conditions in order to identify excess and obsolete inventory, and we provide a valuation allowance for certain inventories to their estimated net realizable value based upon the age and quality of the product and the projections for sale of the completed products. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated economic lives of the assets, which vary from 1 to 27.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the term of the lease. We generally depreciate computer, software, office equipment, furniture and fixtures 3 to 5 years, machinery and equipment 1 to 5 years, automobiles 5 to 10 years, leasehold and building improvements over 10 years, or the lease term if shorter, and buildings over 27.5 years. Repairs and maintenance costs are expensed as incurred. Impairment of Long-Lived Assets We evaluate property, plant and equipment and intangible assets for impairment. When events and circumstances indicate that long-lived assets may be impaired, we compare the carrying value of the long-lived assets to the projection of future undiscounted cash flows attributable to these assets. In the event that the carrying value exceeds the future undiscounted cash flows, we record an impairment charge against income equal to the excess of the carrying value over the assets’ fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. We did not recognize any impairment charges of long-lived assets in 2019, 2018 and 2017. Impairment of Investments All available-for-sale securities are periodically reviewed for impairment. An investment is considered to be impaired when its fair value is less than its amortized cost basis and it is more likely than not that we will be required to sell the impaired security before recovery of its amortized cost basis. 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. We also invest in equity instruments of privately-held companies in China for business and strategic purposes. Investments in our unconsolidated joint venture companies are classified as other assets and accounted for under either the equity or cost method, depending on whether we have the ability to exercise significant influence over their operations or financial decisions. We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable. Determination of impairment is highly subjective and is based on a number of factors, including an assessment of the strength of each company’s management, the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the subsidiary, fundamental changes to the business prospects of the company, share prices of subsequent offerings, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in our carrying value. We estimate fair value of our cost method investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. We have 25% ownership interest in a germanium materials company in China and we incurred an impairment charge for the period ended March 31, 2019. After receiving such company’s preliminary first quarter 2019 financial results in early April 2019 and its projections for significant losses going forward, we determined that this asset was fully impaired and wrote the asset balance down to zero. This resulted in a $1.1 million impairment charge in our first quarter 2019 financial results. Except as mentioned above, there were no impairment charges for the remainder of these investments during the years ended December 31, 2019 and 2018. Segment Reporting 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. 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 our performance for the Company. We discuss revenue and capacity for both AXT and our joint ventures collectively, when determining capacity constraints and need for raw materials in our business, and consider their capacity when determining our strategic and product marketing and advertising strategies. While we consolidate our majority-owned or significantly controlled joint ventures, we do not allocate any portion of overhead, interest and other income, interest expense or taxes to them. We therefore have determined that our joint venture operations do not constitute an operating segment. Since we operate in one segment, all financial segment and product line information can be found in the consolidated financial statements. Stock‑Based Compensation We have employee stock option plans, which are described more fully in Note 10—Employee Benefit Plans and Stock-based Compensation. We account for stock‑based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). We utilize the Black‑Scholes option pricing model to estimate the grant date fair value of stock options, which requires the input of highly subjective assumptions, including estimating stock price volatility and expected term. Stock‑based compensation cost is measured at each grant date, based on the fair value of the award, and is recognized as expense and as an increase in additional paid-in capital over the requisite service period of the award. Research and Development Research and development costs consist primarily of salaries, including stock-based compensation expense and related personnel costs, depreciation, materials and product testing which are expensed as incurred. Tangible assets acquired for research and development purposes are capitalized if they have alternative future use. Advertising Costs Advertising costs, included in selling, general and administrative expenses, are expensed as incurred. Advertising costs for the years ended December 31, 2019, 2018 and 2017 were insignificant. 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. The impact of ASC 740 is more fully described in Note 12. Comprehensive Income (Loss) The components of other comprehensive income (loss) include unrealized gains and losses on marketable securities and foreign currency translation adjustments. Comprehensive income (loss) is presented in the consolidated statements of comprehensive income, net of tax. The balance of accumulated other comprehensive income (loss) is as follows (in thousands): As of December 31, 2019 2018 A |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 12 Months Ended |
Dec. 31, 2019 | |
Cash, Cash Equivalents and Investments | |
Cash, Cash Equivalents and Investments | Note 2. Cash, Cash Equivalents and Investments 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 December 31, 2019 and 2018, our cash, cash equivalents and investments are classified as follows (in thousands): December 31, 2019 December 31, 2018 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ 26,892 $ — $ — $ 26,892 $ 16,526 $ — $ — $ 16,526 Cash equivalents: Certificates of deposit 1 — — — — — — — — Total cash and cash equivalents 26,892 — — 26,892 16,526 — — 16,526 Investments (available-for-sale): Certificates of deposit 2 2,400 2 — 2,402 4,508 — (27) 4,481 Corporate bonds 7,030 4 (9) 7,025 18,422 — (57) 18,365 Total investments 9,430 6 (9) 9,427 22,930 — (84) 22,846 Total cash, cash equivalents and investments $ 36,322 $ 6 $ (9) $ 36,319 $ 39,456 $ — $ (84) $ 39,372 Contractual maturities on investments: Due within 1 year 3 $ 9,430 $ 9,427 $ 22,210 $ 22,129 Due after 1 through 5 years 4 — — 720 717 $ 9,430 $ 9,427 $ 22,930 $ 22,846 1. Certificate of deposit with original maturities of less than three months. 2. Certificate of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our consolidated balance sheets. 4. Classified as “Long-term investments” in our 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. The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on some of our available-for-sale securities as of December 31, 2019 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 December 31, 2019. 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, 2019 (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, 2019 Value (Losses) Value (Losses) Value (Losses) Investments: Corporate bonds 4,515 (9) — — 4,515 (9) Total in loss position $ 4,515 $ (9) $ — $ — $ 4,515 $ (9) 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, 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 December 31, 2018 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ 717 $ (3) $ 3,746 $ (24) $ 4,463 $ (27) Corporate bonds 9,175 (29) 9,189 (28) 18,364 (57) Total in loss position $ 9,892 $ (32) $ 12,935 $ (52) $ 22,827 $ (84) Investments in Privately-held Raw Material 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 6). The investment balances for the non-consolidated companies, are accounted for under the equity method and included in “Other assets” in the consolidated balance sheets and totaled $6.0 million and $8.4 million as of December 31, 2019 and 2018, respectively. As of December 31, 2019, there were five companies accounted for under the equity method. The year ended December 31, 2019 includes an impairment charge of $1.1 million for one of our minority investments in the three months ended March 31, 2019 (see Note 6). We had no impairment charges during 2018. For the year ended December 31, 2017, we recognized an impairment charge of $313,000 for one of the gallium companies. During the first quarter of 2017, management determined it unlikely that this company will 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 deposit, corporate bonds and notes, and government securities. 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. There were no changes in valuation techniques or related inputs in the year ended December 31, 2019. There have been no transfers between fair value measurement levels during the years ended December 31, 2019 and 2018 . 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 consolidated balance sheets and classified as Level 3 assets and liabilities. As of December 31, 2019, 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. 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, 2019 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2019 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 2,402 $ — $ 2,402 $ — Corporate bonds 7,025 — 7,025 — Total $ 9,427 $ — $ 9,427 $ — 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, 2018 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2018 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 4,481 $ — $ 4,481 $ — Corporate bonds 18,365 — 18,365 — Total $ 22,846 $ — $ 22,846 $ — 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 equity and cost method (See Note 6). For the year ended December 31, 2019, we recognized an impairment charge of $1.1 million for one of our minority investments. We received its preliminary first quarter 2019 financial results in early April 2019 as well as its projections for significant losses going forward. Such projected losses would fully deplete our asset investment balance for this company in 2019. This company in which we have a minority investment is experiencing significant disruptions due to upgrades and repairs required to comply with stronger environmental regulations in China. As a result, we determined that this asset was fully impaired and wrote the asset balance down to zero. We had no impairment charges 2018. For the year ended December 31, 2017, we recognized an impairment charge of $313,000 for one of the gallium companies. During the first quarter of 2017, management determined it was unlikely that this company would recover from the difficult pricing environment and we wrote the investment down to zero. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Inventories | Note 3. Inventories The components of inventory are summarized below (in thousands): December 31, December 31, 2019 2018 Inventories: Raw materials $ 20,677 $ 26,966 Work in process 24,946 28,217 Finished goods 3,529 3,388 $ 49,152 $ 58,571 As of December 31, 2019 and 2018, carrying values of inventories were net of inventory reserves of $16.4 million and $14.8 million, respectively, for excess and obsolete inventory and $91,000 and $18,000, respectively, for lower of cost or net realizable value reserves. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | Note 4. Related Party Transactions Effective as of March 11, 2019, we reduced our ownership in JiYa from 46% to 39% by selling a portion of our JiYa shares to our investor partner, which is also JiYa’s landlord. Based on an independent third-party valuation analysis, we sold these shares for $366,000. Previously we were the largest shareholder of JiYa and as such, we had the right to appoint the general manager of JiYa and the ability to exercise control in substance over JiYa’s long-term strategic direction. Further, our Chief Executive Officer was the chairman of JiYa’s board of directors and our Chief Financial Officer was a member of JiYa’s board of financial supervisors. As a result of this transaction, our investor partner, Shanxi Aluminum Industrial Co., Ltd. became the largest shareholder of JiYa and assumed the right to appoint the general manager of JiYa and thereby exercised greater control over JiYa’s long-term strategic direction. Further, although our Chief Executive Officer remains on the board, as of March 11, 2019, he was no longer chairman of JiYa’s board of directors and our Chief Financial Officer was no longer on JiYa’s board of financial supervisors. Previously, we accounted for JiYa’s financial performance under the consolidation method of accounting. As a result of the changes, we began to account for JiYa’s financial performance under the equity method of accounting. Therefore, we deconsolidated JiYa from our consolidated financial statements as of March 11, 2019 in accordance with ASC 810. As of March 12, 2019, we accounted for our investment in JiYa under the equity method of accounting as we continue to have board representation and substantial ownership. Pro-forma financials have not been presented because we believe the effects were not material to our consolidated financial position and results of operations for all periods presented. JiYa continues to be a related party to us after deconsolidation, from whom we may purchase raw materials for production in the ordinary course of business from time to time. Beginning in 2012, our consolidated joint venture, JinMei, became 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 years ended December 31, 2019 and 2018, JinMei recorded $0 and $24,000 of income from agency sales, respectively, which were included in “Other (expense) income, net” in the consolidated statements of operations. In March 2012, Tongmei, entered into an operating lease for the land it owns with our consolidated joint venture, 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 of $46,000 to Dongfang. The loan bears interest at 6.15% per annum and comes 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 December 31, 2019 and 2018, amount payable of $0 and $59,000, respectively, were included in “Accounts payable” in our consolidated balance sheets. Tongmei ChaoYang 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 December 31, 2019 and 2018, amount payable of $0 and $0, respectively, were included in “Accounts payable” in our consolidated balance sheets. Tongmei and Tongmei ChaoYang 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 December 31, 2019 and 2018, amount payable of $0 and $0, respectively, were included in “Accounts payable” in our 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. The principle is due in three installments between December 2021 and December 2023 while the interest is due in December of each year . As of December 31, 2019, JinMei repaid principal and interest totaling $490,000 to Tongmei. As of December 31, 2019 and 2018, the remaining balance of principal and interest totaled $285,000 and $316,000, respectively. JinMei, is in the process of relocating its manufacturing operations to the city of Kazuo, located in the province of Liaoning near the Inner Mongolia Autonomous Region, near our own location. In April 2016, our consolidated joint venture, BoYu, provided a personal loan of $177,000 to one of its executive employees. This loan is collateralized by the officer’s shares in BoYu. The loan bears interest at 2.75% per annum. 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 $291,000 to the same executive employee. This loan bears interest at 2.75% per annum. Principal and accrued interest are due on November 30, 2020. In May 2019, BoYu provided another personal loan of $146,000 to the same executive employee. This loan bears interest at 2.75% per annum. Principal and accrued interest are due at such time BoYu pays a dividend to its shareholders. As of December, 2019 and 2018, the balances, including both principal and accrued interest, were $449,000, and $299,000, respectively, and included in “Other assets” and “Prepaid expenses and other current assets”, respectively, in our 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 to the owner of one of BoYu's customers. For the years ended December 31, 2019 and 2018, BoYu has recorded $0.2 million and $1.5 million in revenue from this customer, respectively. As of December 31, 2019 and 2018, amounts receivable of $12,000 and $0, respectively, were included in “Accounts receivable” in our 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 6 for further details. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment, Net | |
Property, Plant and Equipment, Net | Note 5. Property, Plant and Equipment, Net The components of our property, plant and equipment are summarized below (in thousands): December 31, December 31, 2019 2018 Property, plant and equipment: Machinery and equipment, at cost $ 45,742 $ 51,496 Less: accumulated depreciation and amortization (37,115) (41,431) Building, at cost 38,837 39,775 Less: accumulated depreciation and amortization (12,736) (12,147) Leasehold improvements, at cost 4,877 5,464 Less: accumulated depreciation and amortization (4,035) (4,497) Construction in progress 61,833 43,620 $ 97,403 $ 82,280 As of December 31, 2019, the balance of construction in progress was $61.8 million, of which $48.8 million was related to our buildings in our new Dingxing and Kazuo locations, $3.4 million was for manufacturing equipment purchases not yet placed in service and $9.6 million was from our construction in progress for our other consolidated subsidiaries. As of December 31, 2018, the balance of construction in progress was $43.6 million, of which $31.7 million was related to our buildings in our new Dingxing and Kazuo locations, $2.2 million was for manufacturing equipment purchases not yet placed in service and $9.7 million was from our construction in progress for our other consolidated subsidiaries. Depreciation and amortization expense was $5.5 million, $4.9 million and $4.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. |
Investments in Privately-Held R
Investments in Privately-Held Raw Material Companies | 12 Months Ended |
Dec. 31, 2019 | |
Investments in Privately-Held Raw Material Companies | |
Investments in Privately-Held Raw Material Companies | Note 6. Investments in Privately-held Raw Material 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. These companies form part of our overall supply chain. The investments are summarized below (in thousands): Investment Balance as of December 31, December 31, Accounting Ownership Company 2019 2018 Method Percentage Nanjing JinMei Gallium Co., Ltd. $ 592 $ 592 Consolidated **100 % Beijing JiYa Semiconductor Material Co., Ltd. N/A 3,331 Consolidated *46 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. 1,346 1,346 Consolidated 63 % $ 1,938 $ 5,269 Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ 1,326 $ 1,416 Equity 46 % Beijing JiYa Semiconductor Material Co., Ltd. 1,621 N/A Equity *39 % Xilingol Tongli Germanium Co., Ltd. — 1,700 Equity 25 % Xiaoyi XingAn Gallium Co., Ltd. 2,367 N/A Equity 25 % Emeishan Jia Mei High Purity Metals Co., Ltd. 647 842 Equity 25 % $ 5,961 $ 3,958 * Ownership percentage decreased from 46% to 39% as of March 11, 2019 in connection with our sale of shares of this entity. ** In May 2019, we purchased the remaining 3% ownership interest from retiring members of the JinMei management team for approximately $413,000. As a result, our ownership of JinMei increased from 97% to 100%. Effective as of March 11, 2019, we reduced our ownership in JiYa from 46% to 39% by selling a portion of our JiYa shares to our investor partner, which is also JiYa’s landlord. Based on an independent third-party valuation analysis, we sold these shares for $366,000. Previously, we were the largest shareholder and, as such, we had the right to appoint the general manager of JiYa and the ability to exercise control in substance over JiYa’s long-term strategic direction. Further, our Chief Executive Officer was the chairman of JiYa’s board of directors and our Chief Financial Officer was a member of JiYa’s board of financial supervisors. As a result of this transaction, our investor partner, Shanxi Aluminum Industrial Co., Ltd., became the largest shareholder and assumed the right to appoint the general manager and thereby exercised greater control over JiYa’s long-term strategic direction. Further, although our Chief Executive Officer remains on the board, as of March 11, 2019 he was no longer the chairman of JiYa’s board of directors and our Chief Financial Officer was no longer a member of JiYa’s board of financial supervisors. Previously we accounted for JiYa’s financial performance under the consolidation method of accounting. As a result of the changes we began to account for JiYa’s financial performance under the equity method of accounting. Therefore, we deconsolidated JiYa from our consolidated financial statements as of March 11, 2019 in accordance with ASC 810. As of March 12, 2019, we accounted for our investment in JiYa under the equity method of accounting as we continue to have board representation and substantial ownership. Pro-forma financials have not been presented because we believe the effects were not material to our consolidated financial position and results of operation for all periods presented. JiYa continues to be a related party to us after deconsolidation, whom we may purchase raw materials from for production in the ordinary course of business from time to time. We recorded a gain on the deconsolidation of JiYa of $175,000 as a component of “Equity in loss of unconsolidated joint ventures” during 2019 in the consolidated statements of operations and comprehensive income (loss). On the date of deconsolidation, the fair value of the Company’s investment in JiYa exceeded the Company’s share of the net assets of JiYa, which generated the gain. As of March 12, 2019, we recorded our investment in JiYa at a fair value of $2,040,000, which was based on an independent third-party valuation analysis. The valuation is based on the asset-based approach. The market-based approach is not deemed appropriate due to lack of availability of market data for comparable companies on the open market and the discounted cash flow approach is not deemed reliable because of the difficulty in predicting the future profitability of JiYa due to the volatility of the gallium market, the concentration of customers and the significant accumulated losses of JiYa. The asset-based approach examines the value of a company’s assets net of its liabilities to derive a value for the equity holders. The gain on deconsolidation includes the following: Amount (in thousands) Fair value of the consideration received $ 366 Fair value of the retained investment in Beijing JiYa Semiconductor Material Co., Ltd. 2,040 Carrying value of noncontrolling interest, net of accumulated other comprehensive income attributable to subsidiary 617 Derecognition of Beijing JiYa Semiconductor Material Co., Ltd.'s net asset (2,848) Gain recognized on deconsolidation of Beijing JiYa Semiconductor Material Co., Ltd. $ 175 Amount (in thousands) Fair value of the retained investment in Beijing JiYa Semiconductor Material Co., Ltd. $ 2,040 Carrying value of retained noncontrolling investment (1,559) Gain on retained noncontrolling investment due to remeasurement $ 481 Our ownership of JinMei is 100%. 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 of JinMei for $1.4 million. The $1.4 million was scheduled to be paid in two installments. On June 15, 2018, we paid the first installment of $163,000. In May 2019, we paid the second installment of $1.2 million as the relocation of JinMei’s headquarters and manufacturing operations was nearly complete, which had been previously included in “Accrued liabilities” in our 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 of JinMei for $252,000. As a result, our ownership of JinMei increased from 95% to 97%. In May 2019, we purchased the remaining 3% ownership interest from retiring members of the JinMei management team for approximately $413,000. We paid approximately $262,000 in May 2019 and plan to pay the remainder of approximately $151,000 in January 2020. As a result, our ownership of JinMei increased from 97% to 100%. Prior to June 1, 2019, we reported JinMei as a consolidated joint venture as we had a controlling financial interest and have majority control of the board. As of June 1, 2019, we now refer to it as a wholly-owned subsidiary and reduced the carrying value of the corresponding noncontrolling interests to zero. Our Chief Executive Officer is chairman of the JinMei board and we have appointed two other representatives to serve on the JinMei 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 boards of directors of each of these companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short- term strategy and operations, ordinary course of business capital expenditures, and decisions concerning sales of finished product, are made by local management with regular guidance and input from us. During 2019, 2018 and 2017, the consolidated joint ventures generated $4.3 million, $5.5 million and $2.1 million of income, respectively, of which an income of $1.0 million, an income of $1.4 million and a loss of $0.1 million, respectively were allocated to noncontrolling interests, resulting in $3.3 million, $4.1 million and $2.2 million of income, respectively, to our net income (loss). For AXT’s minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our consolidated balance sheets and totaled $6.0 million and $8.4 million as of December 31, 2019 and 2018, respectively. Our respective ownership interests in each of these companies are 46%, 39%, 25%, 25% and 25%. These minority investment entities are not considered variable interest entities because: · all minority investment entities 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. One of the minority investment entities in which we have a 25% ownership interest is a germanium materials company in China. This company provides results to us only on a quarterly basis. We received its preliminary first quarter 2019 financial results in early April 2019 as well as its projections for significant losses going forward. Such projected losses would fully deplete our asset investment balance for this company in 2019. The Company is experiencing significant disruptions due to upgrades and repairs required to comply with stronger environmental regulations in China. As a result, we determined that this asset was fully impaired and wrote the asset balance down to zero. This resulted in a $1.1 million impairment charge in our first quarter 2019 financial results. AXT’s minority investment entities 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 years ended December 31, 2019, 2018 and 2017, respectively: Our share for the Year Ended Year Ended December 31, December 31, 2019 2018 2017 2019 2018 2017 Net revenue $ 18,991 $ 33,212 $ 24,053 $ 5,458 $ 8,549 $ 6,152 Gross profit 2,013 6,457 1,739 558 1,675 482 Operating loss (2,266) (3,152) (3,676) (700) (778) (938) Net loss $ (3,000) $ (4,750) $ (4,798) $ (1,876) $ (1,080) $ (1,694) Excluding one fully impaired entity, these minority investment entities that are not consolidated, but rather are accounted for under the equity method, had the following summarized balance sheet information (in thousands) as of December 31, 2019 and 2018, respectively: As of December 31, 2019 2018 Current assets $ 22,144 $ 31,525 Noncurrent assets 11,990 26,889 Current liabilities 13,726 24,670 Noncurrent liabilities — 112 Our portion of the income and losses, including impairment charges, from these minority investment entities that are not consolidated and are accounted for under the equity method was a loss of $1.9 million, $1.1 million, and $1.7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Dividends received from these minority investment entities were $362,000 for the year ended December 31, 2019 and $0 for each of the years ended December 31, 2018 and 2017. Excluding one fully impaired entity, undistributed retained earnings relating to our investments in these minority investment entities amounted to $1.2 million and $2.5 million as of December 31, 2019 and 2018, respectively. |
Balance Sheets Details
Balance Sheets Details | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheets Details | |
Balance Sheets Details | Note 7. Balance Sheets Details Other Assets The components of other assets are summarized below (in thousands): As of December 31, 2019 2018 Equity method investments $ 5,961 $ 8,422 Value added tax receivable, long term 2,708 1,845 Other intangible assets 1,124 1,048 Other assets 10 672 $ 9,803 $ 11,987 Accrued Liabilities The components of accrued liabilities are summarized below (in thousands): As of December 31, 2019 2018 Accrued compensation and related charges $ 3,307 $ 3,440 Preferred stock dividends payable 2,901 2,901 Payable in connection with construction 1,447 2,912 Payable in connection with land restoration of Nanjing JinMei factory 703 — Accrued professional services 630 706 Advance from customers 396 476 Accrued product warranty 387 236 Current portion of operating lease liability 319 — Other personnel-related costs 180 202 Accrued income taxes 171 99 Payable in connection with repurchase of subsidiaries shares 151 1,147 Other tax payable 50 261 Accrual for sales returns 26 47 Deferred government grant income in connection with purchase of land — 1,000 Dividends payable by consolidated joint ventures — 504 Other accrued liabilities 1,013 1,440 $ 11,681 $ 15,371 |
Bank Loans and Line of Credit
Bank Loans and Line of Credit | 12 Months Ended |
Dec. 31, 2019 | |
Bank Loans and Line of Credit | |
Bank Loans and Line of Credit | Note 8. Bank Loans and Line of Credit 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%. This credit line is collateralized 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. In September 2018, we borrowed $291,000 against this credit line. The repayment of the full amount was due in September 2019. On December 26, 2018, we repaid the principal of $291,000 and interest of $3,000 of this loan to the bank. This credit line was terminated in December 2018, after we repaid both principal and interest to ICBC. We have decided to terminate this loan because we were able to secure a larger bank loan in the U.S. and our management believed that to secure bank loans from the two new manufacturing sites have more strategic advantages as compared to have one single loan from Beijing. On November 6, 2018, the Company entered into the Credit Agreement, which established a $10 million secured revolving line of credit with a $1.0 million letter of credit sublimit facility. The revolving credit facility is collateralized by substantially all of the assets of the Company located within the United States, subject to certain exceptions. The commitments under the Credit Agreement expire on November 30, 2020 and any loans thereunder will bear interest at a rate based on the daily one-month LIBOR for the applicable interest period plus a margin of 2%. As of December 31, 2019, no loans or letters of credit were outstanding under the Credit Agreement. Effective February 5, 2020, the Company amended the Credit Agreement. The line of credit was reduced from $10 million to $7 million. The commitments under the First Amendment To Credit Agreement expire on November 30, 2020 and any loans thereunder will bear interest at a rate based on the daily one-month LIBOR for the applicable interest period plus a margin of 2.5%. On August 9, 2019, Tongmei entered into a Credit Facility with the Bank of China with a $5.8 million line of credit at an annual interest rate of approximately 0.4% over the average interest rate quoted by the National Interbank Funding Center. Accrued interest is calculated monthly and paid quarterly. The annual interest rate was approximately 4.7% as of December 31, 2019. The Credit Facility is collateralized by Baoding Tongmei’s land use rights and all of its buildings located at its facility in Dingxing. The primary intended use of the credit facility is for general purposes, which may include working capital and other corporate expenses. On August 9, 2019, we borrowed $2.8 million against the Credit Facility. The repayment of the full amount is due on August 9, 2020. On September 12, 2019 we borrowed an additional $2.8 million against the Credit Facility. The repayment of the full amount is due on September 12, 2020, unless the parties agree to a renewal. As of December 31, 2019, $5.7 million was included in “Bank loan” in our consolidated balance sheets. |
Stockholders_ Equity and Stock
Stockholders’ Equity and Stock Repurchase Program | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders’ Equity and Stock Repurchase Program | |
Stockholders’ Equity and Stock Repurchase Program | Note 9. Stockholders’ Equity and Stock Repurchase Program Stockholders’ Equity The 883,000 shares of $0.001 par value Series A preferred stock issued and outstanding as of December 31, 2019 and 2018, 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 $4 per share liquidation preference over common stock, and 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. Changes in AXT, Inc.’s ownership interest in consolidated subsidiaries. The effects of changes in the Company’s ownership interests in its less than 100% owned subsidiaries on the Company’s equity are as follows: As of December 31, 2019 2018 Net income (loss) attributable to AXT, Inc. $ (2,600) $ 9,654 Increase (decrease) in paid-in capital for: Purchase of subsidiary shares from noncontrollling interest (74) 187 Net transfers to noncontrolling interests (74) 187 Net income (loss) attributable to AXT, Inc., net of transfers to noncontrolling interests $ (2,674) $ 9,841 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 2019, 2018 and 2017 under this program. As of December 31, 2019, approximately $2.7 million remained available for future repurchases under this program. By the terms of the Series A preferred stock, so long as any shares of Series A preferred stock are outstanding, neither the Company nor any subsidiary of the Company shall redeem, repurchase or otherwise acquire any shares of common stock, unless all accrued dividends on the Series A preferred stock have been paid. During 2013 and 2015, we repurchased shares of our outstanding common stock. As of December 31, 2015, the Series A preferred stock had cumulative dividends of $2.9 million and we included this amount in “Accrued liabilities” in our consolidated balance sheets . In 2017, 2018 and 2019, we did not repurchase any of our outstanding common stock. If we are required to pay the cumulative dividends on the Series A preferred stock, our cash and cash equivalents would be reduced. We account for the cumulative year to date dividends on the Series A preferred stock when calculating our earnings per share. |
Employee Benefit Plans and Stoc
Employee Benefit Plans and Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plans and Stock-Based Compensation | |
Employee Benefit Plans and Stock-Based Compensation | Note 10. Employee Benefit Plans and Stock-based Compensation Stock Option Plans and Equity Incentive Plans In May 2007, our stockholders approved our 2007 Equity Incentive Plan (the “2007 Plan”), which provides for the grant of incentive and non-qualified stock options to our employees, consultants and directors. The 2007 Plan is a restatement of the 1997 Stock Option Plan which expired in 2007. The 1,928,994 share reserve of the 1997 Stock Option Plan became the reserve of the 2007 Plan, together with 1,300,000 additional shares approved for issuance under the 2007 Plan. In May 2013, the stockholders approved an additional 2,000,000 shares to be issued under the 2007 plan. Awards may be made under the 2007 Plan are stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, deferred compensation awards and other stock‑based awards. Stock options and stock appreciation rights awarded under the 2007 Plan may not be repriced without stockholder approval. Stock options and stock appreciation rights may not be granted below fair market value. Stock options or stock appreciation rights generally shall not be fully vested over a period of less than three years from the date of grant and cannot be exercised more than 10 years from the date of grant. Restricted stock, restricted stock units, and performance awards generally shall not vest faster than over a three-year period (or a twelve‑month period if vesting is based on a performance measure). In December 2008, the 2007 Plan was amended to comply with the applicable requirements under Section 409A of the Internal Revenue Code. In May 2015, our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan is a replacement of the 2007 Plan. The 399,562 share reserve of the 2007 Plan became the reserve of the 2015 Plan, together with 3,000,000 additional shares approved for issuance under the 2015 Plan. In May 2019, our stockholders approved 1,600,000 of additional shares for issuance under the 2015 Plan. Awards that may be made under the 2015 Plan are stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, deferred compensation awards and other stock‑based awards. Stock options and stock appreciation rights awarded under the 2015 Plan may not be repriced without stockholder approval. Stock options and stock appreciation rights may not be granted below fair market value. Stock options or stock appreciation rights generally shall not be fully vested over a period of less than four years from the date of grant and cannot be exercised more than 10 years from the date of grant. Restricted stock, restricted stock units, and performance awards generally shall not vest faster than over a three-year period (or a twelve‑month period if vesting is based on a performance measure). However, options granted to consultants and restricted stock awards granted to independent board members typically vest in one year and the 2015 Plan does allow for similar vesting to employees. As of December 31, 2019, approximately 1.0 million shares were available for grant under the 2015 Plan. Stock Options The following table summarizes the stock option transactions for each of the years ended December 31, 2017, 2018 and 2019 (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, 2017 3,294 $ 3.38 7.23 $ 5,301 Granted 184 8.99 Exercised (762) 3.25 Canceled and expired (50) 3.47 Balance as of December 31, 2017 2,666 $ 3.81 6.87 $ 13,149 Granted 246 5.77 Exercised (238) 2.64 Canceled and expired (20) 4.40 Balance as of December 31, 2018 2,654 $ 4.09 6.28 $ 2,720 Granted 430 3.06 Exercised (113) 2.37 Canceled and expired (18) 4.47 Balance as of December 31, 2019 2,953 $ 4.00 5.95 $ 3,040 Options vested as of December 31, 2019 and unvested options expected to vest, net of forfeitures 2,914 $ 4.00 5.90 $ 3,001 Options exercisable as of December 31, 2019 2,169 $ 3.81 4.83 $ 2,484 The options outstanding and exercisable as of December 31, 2019 were in the following exercise price ranges (in thousands, except per share data): Options Vested and Options Outstanding as of Exercisable as of December 31, 2019 December 31, 2019 Weighted ‑ average Range of Weighted ‑ average Remaining Weighted ‑ Average Exercise Price Shares Exercise Price Contractual Life Shares Exercise Price $ - $ 2.14 11 $ 2.14 4.33 11 $ 2.14 $ - $ 2.18 540 $ 2.18 5.84 540 $ 2.18 $ - $ 358 $ 2.32 4.15 358 $ 2.32 $ - $ 2.91 342 $ 2.71 3.97 341 $ 2.71 $ - $ 3.06 430 $ 3.06 9.85 — $ — $ - $ 4.79 129 $ 4.79 1.82 129 $ 4.79 $ - $ 5.21 471 $ 5.21 6.82 370 $ 5.21 $ - $ 5.77 325 $ 5.73 7.21 146 $ 5.68 $ - $ 7.95 223 $ 6.41 2.34 207 $ 6.29 $ - $ 9.50 124 $ 9.50 7.82 67 $ 9.50 2,953 $ 4.00 5.95 2,169 $ 3.81 There were 113,000, 238,000 and 762,000 options exercised in the years ended December 31, 2019, 2018 and 2017, respectively. The total intrinsic value of options exercised for the years ended December 31, 2019, 2018 and 2017, was $266,000, $666,000 and $4,030,000, respectively. As of December 31, 2019, the unamortized compensation costs related to unvested stock options granted to employees under our 2015 plan was approximately $1.4 million, net of estimated forfeitures of $110,000. These costs will be amortized on a straight-line basis over a weighted-average period of approximately 2.9 years and will be adjusted for subsequent changes in estimated forfeitures. We did not capitalize any stock‑based compensation to inventory as of December 31, 2019 and 2018, due to the immateriality of the amount. Restricted Stock Awards A summary of activity related to restricted stock awards for the years ended December 31, 2017, 2018 and 2019 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2017 325 $ 3.27 Granted 312 $ 9.15 Vested (157) $ 3.13 Forfeited — $ — Non-vested as of December 31, 2017 480 $ 7.13 Granted 344 $ 6.02 Vested (181) $ 6.04 Forfeited (10) $ 6.65 Non-vested as of December 31, 2018 633 $ 6.85 Granted 554 $ 3.60 Vested (228) $ 6.46 Forfeited (20) $ 7.16 Non-vested as of December 31, 2019 939 $ 5.02 Total fair value of stock awards vested during the years ended December 31, 2019, 2018 and 2017 was $1.5 million, $1.1 million and $490,000, respectively. As of December 31, 2019, we had $4.2 million of unrecognized compensation expense related to restricted stock awards, which will be recognized over the weighted average period of 1.6 years. Common Stock The following number of shares of common stock were reserved and available for future issuance as of December 31, 2019 (in thousands, except per share data): Options outstanding 2,953 Restricted stock awards outstanding 939 Stock available for future grant: 2015 Equity Incentive Plan 1,048 Total 4,940 Stock-based Compensation We recorded $2.3 million, $1.9 million and $1.4 million of stock‑based compensation in our consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017, respectively. The following table summarizes compensation costs related to our stock‑based compensation awards (in thousands, except per share data): Year Ended December 31, 2019 2018 2017 Cost of revenue $ 125 $ 92 $ 39 Selling, general and administrative 1,778 1,520 1,146 Research and development 443 313 220 Total stock-based compensation 2,346 1,925 1,405 Tax effect on stock-based compensation — — — Net effect on net income (loss) $ 2,346 $ 1,925 $ 1,405 Shares used in computing basic net income (loss) per share 39,487 39,049 37,444 Shares used in computing diluted net income (loss) per share 39,487 40,265 38,966 Effect on basic net income (loss) per share $ (0.06) $ (0.05) $ (0.04) Effect on diluted net income (loss) per share $ (0.06) $ (0.05) $ (0.04) We estimate the fair value of stock options using a Black‑Scholes valuation model. There were 430,000, 246,000 and 184,000 stock options granted with a weighted-average grant date fair value of $1.48, $2.74 and $3.67 per share during 2019, 2018 and 2017, respectively. The fair value of options granted was estimated at the date of grant using the following weighted‑average assumptions: Year Ended December 31, 2019 2018 2017 Expected term (in years) 6.1 5.8 5.8 Volatility 49.5 % 46.6 % 46.5 % Expected dividend — % — % — % Risk-free interest rate 1.67 % 3.09 % 2.10 % The expected term for stock options is based on the observed historical option exercise behavior and post-vesting forfeitures of options by our employees, and the contractual term, the vesting period and the expected term of the outstanding options. Expected volatility is based on the historical volatility of our common stock. The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. The risk-free interest rates are taken from the Daily Federal Yield Curve Rates as of the grant dates as published by the Federal Reserve and represent the yields on actively traded Treasury securities for terms equal to the expected term of the options. Retirement Savings Plan We have a 401(k) Savings Plan (“Savings Plan”) which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. All full-time U.S. employees are eligible to participate in the Savings Plan after 90 days from the date of hire. Employees may elect to reduce their current compensation by up to the statutory prescribed annual limit and have the amount of such reduction contributed to the 401(k) Plan. We provide matching to employee contributions up to 4% of the employees’ base pay if employees contribute at least 6% of their base pay. If the contribution rate is less than 6% of the base pay, the matching percentage is prorated. Our contributions to the Savings Plan were $176,000, $180,000 and $149,000 for the years ended December 31, 2019, 2018 and 2017, respectively. |
Guarantees
Guarantees | 12 Months Ended |
Dec. 31, 2019 | |
Guarantees | |
Guarantees | Note 11. Guarantees 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 consolidated balance sheets, during 2019 and 2018 (in thousands): Year Ended December 31, 2019 2018 Beginning accrued product warranty $ 236 $ 133 Accruals for warranties issued 522 289 Adjustments related to pre-existing warranties including expirations and changes in estimates 227 87 Cost of warranty repair (598) (273) Ending accrued product warranty $ 387 $ 236 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | Note 12. Income Taxes Consolidated income before provision for income taxes includes non-U.S. income of approximately $2.8 million, $6.5 million and $6.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. We recorded a current tax provision of $562,000, $938,000 and $792,000 for the years ended December 31, 2019, 2018 and 2017, respectively. The components of the provision for income taxes are summarized below (in thousands): Year Ended December 31, 2019 2018 2017 Current: Federal $ — $ — $ — State 27 5 2 Foreign 535 933 790 Total current 562 938 792 Deferred: Federal — — — State — — — Total deferred — — — Total provision for income taxes $ 562 $ 938 $ 792 A reconciliation of the effective income tax rates and the U.S. statutory federal income tax rate is summarized below: Year Ended December 31, 2019 2018 2017 Statutory federal income tax rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal tax benefits (2.1) — — Valuation allowance (173.0) (2.6) (139.5) Rate change — — 100.8 Stock-based compensation (21.8) 0.3 (10.4) Foreign tax rate differential 137.7 (11.4) (10.3) Foreign tax incentives 32.2 (2.9) (7.0) Foreign income inclusion — 2.6 55.6 Section 78 gross up — — 11.7 Foreign tax credit — — (30.6) Tax effect in equity method loss or gain from unconsolidated affiliates (47.8) 3.2 2.9 Foreign-derived intangible income — (2.4) — Other (1.0) 0.1 (0.9) Effective tax rate (54.8) % 7.9 % 7.3 % Deferred tax assets and liabilities are summarized below (in thousands): As of December 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 14,979 $ 15,735 Accruals, reserves and other 3,011 2,100 Credit carryforwards 1,685 1,685 Operating lease liability 209 — Gross deferred tax assets 19,884 19,520 Valuation allowance (19,691) (19,520) Total deferred tax assets 193 — Deferred tax liabilities: Operating lease right-of-use assets (193) — Total net deferred tax assets $ — $ — As of December 31, 2019, we have federal net operating loss (“NOL”) carryforwards of approximately $58.3 million, which will expire beginning in 2022. In addition, we have federal tax credit carryforwards of approximately $1.7 million, which will expire beginning in 2027. We have utilized all state net operating losses, primarily in the state of California, as of December 31, 2019. The deferred tax assets valuation allowance as of December 31, 2019 is attributed to U.S. federal, and state deferred tax assets, which result primarily from future deductible accruals, reserves, NOL carryforwards, and tax credit carryforwards. We believe that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance has been recorded. These factors include our history of losses related to domestic operations, and the lack of carryback capacity to realize deferred tax assets. The valuation allowance increased by $0.2 million for the year ended December 31, 2019, whereas the valuation allowance decreased by $2.6 million and $46.3 million for the years ended December 31, 2018 and 2017, respectively. The China Enterprise Income Tax Law (“EIT”) imposes a single uniform income tax rate of 25% on all Chinese enterprises. Our subsidiaries in China have qualified for a preferential 15% tax rate that is available for High and New Technology Enterprises (“HTE”). In order to retain the preferential tax rate, we must meet certain operating conditions, satisfy certain product requirements, meet certain headcount requirements and maintain certain levels of research expenditures. We realized benefits from this 10% reduction in tax rate of $211,000, $764,000 and $599,000 for 2019, 2018 and 2017, respectively. As of December 31, 2019, the favorable tax rate is still valid for the Company and it will stay the same for next year if there is no change of the business nature. The preferential tax rate that we enjoy could be modified or discontinued altogether at any time, which could materially and adversely affect our financial condition and results of operations. Our subsidiaries in China also qualify for reduction in their taxable income in China for research and development (“R&D”) expenditures. Government pre-approval is required to claim R&D tax benefits. Any R&D claim is then submitted with the annual corporate income tax for the taxing authorities’ approval. Historically, we didn’t record such benefit until we received the tax refund from the Chinese government. Beginning in 2019, we record the tax benefit in the year it incurs the cost rather than in the year the tax benefit is received. This will better align the costs with the tax benefit. Our consolidated subsidiaries in China have enjoyed various tax holidays since 2000. Benefits under the tax holidays vary by jurisdiction. Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership changes that might have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986 (“Section 382”), as well as similar state provisions. Ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. If there is a change of control, utilization of our NOL or tax credit carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the NOL or research and development credit carryforwards before utilization. Subsequent ownership changes could further impact the limitation in future years. Until a Section 382 study is completed and any limitation known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against our NOL carryforwards and R&D credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no net impact to the consolidated balance sheets or statements of operations if an adjustment were required. During fiscal year 2019, 2018 and 2017, the amount of gross unrecognized tax benefits remains unchanged. The total amount of unrecognized tax benefits was $14.6 million as of December 31, 2019 and 2018. The Company recognizes interest and penalties related to uncertain tax positions as part of the provision for income taxes. To date, such interest and penalties have not been material. We comply with the laws, regulations, and filing requirements of all jurisdictions in which we conduct business. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We file income tax returns in the U.S. federal, various states and foreign jurisdictions. Currently, there is no tax audit in any of the jurisdictions and we do not expect there will be any significant change to this. A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2019 2018 2017 Gross unrecognized tax benefits balance at beginning of the year $ 14,557 $ 14,557 $ 14,557 Add: Additions based on tax positions related to the current year — — — Additions for tax positions of prior years — — — Less: Decrease related to lapse of statute of limitations — — — Gross unrecognized tax benefits balance at end of the year $ 14,557 $ 14,557 $ 14,557 Excluding the effects of recorded valuation allowances for deferred tax assets, $14.6 million of the unrecognized tax benefit would favorably impact the effective tax rate in future periods if recognized. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | Note 13. Net Income (Loss) per Share Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and potentially dilutive common shares outstanding during the periods. The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options. Potentially dilutive common shares are excluded in net loss periods, as their effect would be anti-dilutive. A reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share calculations is as follows (in thousands, except per share data): Year ended December 31, 2019 2018 2017 Numerator: Net income (loss) attributable to AXT, Inc. $ (2,600) $ 9,654 $ 10,148 Less: Preferred stock dividends (177) (177) (177) Net income (loss) available to common stockholders $ (2,777) $ 9,477 $ 9,971 Denominator: Denominator for basic net income (loss) per share - weighted-average common shares 39,487 39,049 37,444 Effect of dilutive securities: Common stock options — 1,106 1,339 Restricted stock awards — 110 183 Denominator for dilutive net income (loss) per common shares 39,487 40,265 38,966 Basic net income (loss) per share: Net income (loss) attributable to AXT, Inc. $ (0.07) $ 0.24 $ 0.27 Net income (loss) to common stockholders $ (0.07) $ 0.24 $ 0.27 Diluted net income (loss) per share: Net income (loss) attributable to AXT, Inc. $ (0.07) $ 0.24 $ 0.26 Net income (loss) to common stockholders $ (0.07) $ 0.24 $ 0.26 Options excluded from diluted net income (loss) per share as the impact is anti-dilutive 2,953 266 86 Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive 939 227 63 |
Segment Information and Foreign
Segment Information and Foreign Operations | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information and Foreign Operations | |
Segment Information and Foreign Operations | Note 14. 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 the 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 consolidated financial statements. Product Information The following table represents revenue amounts (in thousands) by product type: Year Ended December 31, 2019 2018 2017 Product Type: Substrates $ 67,849 $ 81,008 $ 78,619 Raw materials and others 15,407 21,389 20,054 Total $ 83,256 $ 102,397 $ 98,673 Geographical Information The following table represents revenue amounts (in thousands) reported for products shipped to customers in the corresponding geographic region: Year Ended December 31, 2019 2018 2017 Geographical region: China $ 26,796 $ 31,492 $ 24,962 Europe (primarily Germany) 18,178 22,013 23,956 Taiwan 16,204 20,078 18,279 North America (primarily the United States) 8,228 10,021 8,352 Asia Pacific (excluding China, Taiwan and Japan) 7,592 8,488 9,866 Japan 6,258 10,305 13,258 Total $ 83,256 $ 102,397 $ 98,673 Long-lived assets consist primarily of property, plant and equipment, and operating lease right-of-use assets 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 December 31, 2019 2018 Long-lived assets by geographic region, net of depreciation: North America $ 1,069 $ 445 China 99,272 81,835 $ 100,341 $ 82,280 |
Other (expense) income
Other (expense) income | 12 Months Ended |
Dec. 31, 2019 | |
Other (expense) income | |
Other (expense) income | Note 15. Other (expense) income The components of other (expense) income are summarized below (in thousands): Year Ended December 31, 2019 2018 2017 Foreign exchange gain (loss) $ 321 $ 165 $ (602) Gain on available-for-sales securities — — 77 Gain from local China government subsidy 808 — — Other income (expense) (182) 187 (28) $ 947 $ 352 $ (553) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 16. Commitments and Contingencies 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. Leases We lease certain equipment, office space, warehouse and facilities under long-term operating leases expiring at various dates through July 2029. The majority of our lease obligations relate to our lease agreement for a nitrogen system to be used during the manufacturing process for our facility in Dingxing, China. The equipment lease became effective in August 2019 and will expire in July 2029. There are no variable lease payments, residual value guarantees or any restrictions or covenants imposed by the equipment lease. The remainder relate to our lease agreement for our facility in Fremont, California with approximately 19,467 square feet, which expires in 2020. Under the terms of the facility lease agreement, in May, 2020, we will have the option to extend the term of the lease for an additional three years. We are reasonably certain to exercise the option in the future. There are no variable lease payments, residual value guarantees or any restrictions or covenants imposed by the facility lease. All other operating leases have a term of 12 months or less. On January 1, 2019, we adopted ASC 842, which requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC 842, we elected the adoption date of January 1, 2019, which is the date of initial application. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases , (“ASC 840”), which did not require the recognition of operating lease liabilities on the balance sheet, and is not comparative. Under ASC 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The lease classification affects the expense recognition in the statement of operations. Operating lease charges are recorded entirely in operating expenses. Finance lease charges are split, where amortization of the right-of-use asset is recorded in operating expenses and an implied interest component is recorded in interest expense. The expense recognition for operating leases and finance leases under ASC 842 is substantially consistent with ASC 840. As a result, there is no significant difference in our results of operations presented in our consolidated statement of operations and consolidated statement of comprehensive income (loss) for each year presented. We adopted ASC 842 using a modified retrospective approach for all leases existing at January 1, 2019. The adoption of ASC 842 had a material impact on our consolidated balance sheet. The most significant impact was the recognition of the operating lease right-of-use assets and the liability for operating leases. Accordingly, upon adoption, leases that were classified as operating leases under ASC 840 were classified as operating leases under ASC 842, and we recorded an adjustment of $1.1 million to operating lease right-of-use assets and the related lease liability. The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 840, discounted using our secured incremental borrowing rate at the effective date of January 1, 2019, using the original lease term as the tenor. As permitted under ASC 842, we elected several practical expedients that permit us to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs. The application of the practical expedients did not have a material impact on the measurement of the operating lease liability. Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. All of our leases are classified as operating leases and substantially all of our operating leases are comprised of equipment and office space leases. None of our leases are classified as, finance leases. For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate for the same term as the underlying lease. Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material. As of December 31, 2019, the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands): Maturity of Lease Liabilities 2020 $ 452 2021 549 2022 565 2023 556 2024 267 Thereafter 1,223 Total minimum lease payments 3,612 Less: Interest (598) Present value of lease obligations 3,014 Less: Current portion (319) Long-term portion of lease obligations $ 2,695 The weighted average remaining lease term and the weighted-average discount rate for our operating leases are as follows: December 31, 2019 Weighted-average remaining lease term (years) 7.94 Weighted-average discount rate 4.61 % Supplemental cash flow information related to leases where we are the lessee is as follows (in thousands): Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 267 Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets: Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,072 The components of lease expense are as follows (in thousands) within our consolidated statements of operations: Year Ended December 31, 2019 Operating lease $ 358 Short-term lease expense 60 Total $ 418 Royalty Agreement We had entered into a royalty agreement with Sumitomo effective December 3, 2010 with a term of eight years, terminating December 31, 2018. We and our related companies were granted a worldwide, nonexclusive, royalty bearing, irrevocable license to certain patents for the term on the agreement. We were to pay up to $7.0 million in royalty payment over eight years that began in 2011 based on future royalty bearing sales. This agreement contained a clause that allowed us to claim a credit, starting in 2013, in the event that the royalty bearing sales for the year was lower than a pre-determined amount set forth in this agreement. For the year ended December 31, 2018, royalty expense under this agreement was $565,000, which was net of claim for credit of $10,000. Royalty expense for year ended December 31, 2017 was $526,000, which was net of claim for credit of $49,000. These expenses were included in cost of revenue. In January 2020, we agreed to enter into a cross license and covenant agreement with Sumitomo that will expire December 31, 2029 and includes annual payments by us to Sumitomo over a 10-year period. Please see Note 18 of our Notes to Consolidated Financial Statements. Land Purchase and Investment Agreement We have established a wafer process production line in 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. |
Unaudited Quarterly Consolidate
Unaudited Quarterly Consolidated Financial Data | 12 Months Ended |
Dec. 31, 2019 | |
Unaudited Quarterly Consolidated Financial Data | |
Unaudited Quarterly Consolidated Financial Data | Note 17. Unaudited Quarterly Consolidated Financial Data Quarter First Second Third Fourth (in thousands, except per share data) 2019: Revenue $ 20,208 $ 24,797 $ 19,841 $ 18,410 Gross profit 6,695 8,506 5,759 3,865 Net income (loss) attributable to AXT, Inc. (1,104) 1,451 (898) (2,049) Net income (loss) attributable to AXT, Inc. per share, basic $ (0.03) $ 0.04 $ (0.02) $ (0.05) Net income (loss) attributable to AXT, Inc. per share, diluted $ (0.03) $ 0.04 $ (0.02) $ (0.05) 2018: Revenue $ 24,419 $ 27,120 $ 28,626 $ 22,232 Gross profit 9,573 11,010 10,614 5,850 Net income (loss) attributable to AXT, Inc. 2,875 3,901 3,939 (1,061) Net income (loss) attributable to AXT, Inc. per share, basic $ 0.07 $ 0.10 $ 0.10 $ (0.03) Net income (loss) attributable to AXT, Inc. per share, diluted $ 0.07 $ 0.10 $ 0.10 $ (0.03) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | Note 18. Subsequent Events On January 28, 2020, AXT and Sumitomo entered into a basic agreement, pursuant to which AXT and Sumitomo agreed to execute a formal cross license and covenant agreement that will expire on December 31, 2029. The formal agreement is a fixed-cost cross license and not a variable-cost cross license that is based on revenue or units. Under the formal agreement, the aggregate fixed cost is $2 million, which is payable in annual installments over a 10-year period. In November 2018, AXT entered into a credit agreement with Wells Fargo Bank (“Credit Agreement”). The line of credit has never been drawn on. On February 5, 2020, the Company entered into the First Amendment, which reduced the $10 million secured revolving line of credit under the Credit Agreement to $7 million. The commitments under the Credit Agreement, as amended by the First Amendment, expire on November 30, 2020 and any loans thereunder will bear interest at a rate based on the daily one-month LIBOR for the applicable interest period plus a margin of 2.5%. As of the date of this Annual Report on Form 10-K, no loans or letters of credit were outstanding under the Credit Agreement, as amended by the First Amendment. |
The Company and Summary of Si_2
The Company and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
The Company and Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of AXT, our wholly-owned subsidiaries, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), Baoding Tongmei Xtal Technology Co., Ltd. (“Tongmei Baoding”), ChaoYang Tongmei Xtal Technology Co., Ltd. (“Tongmei ChaoYang”), Nanjing JinMei Gallium Co., Ltd. (“JinMei”), ChaoYang JinMei Gallium Ltd. and MaAnShan JinMei Gallium Ltd., and, except as discussed below and in Note 6, our majority-owned subsidiary, Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). Tongmei Boading is located in the city of Dingxing, China. Tongmei ChaoYang is located in the city of Kazuo, China. 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. As of December 31, 2019, we have five companies accounted for by the equity method. As of December 31, 2018, we had seven companies accounted for by the equity method. For the majority-owned subsidiary that we consolidate, we reflect the portion we do not own as noncontrolling interests on our consolidated balance sheets in stockholders' equity and in our consolidated statements of operations. As discussed in Note 6, “Investments in Privately-Held Raw Material Companies”, effective as of March 11, 2019, we reduced our ownership in Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”) from 46% to 39% by selling a portion of our JiYa shares to our investor partner, which is also JiYa’s landlord. As a result of this transaction, our investor partner became the largest shareholder of JiYa and assumed the right to appoint the general manager of JiYa and thereby exercised greater control over JiYa’s long-term strategic direction. Further, although our Chief Executive Officer remains on the board, as of March 11, 2019 he was no longer the chairman of JiYa’s board of directors and our Chief Financial Officer was no longer a member of JiYa’s board of financial supervisors. Therefore, we deconsolidated JiYa from our consolidated financial statements as of March 11, 2019 in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”). As of March 12, 2019, we accounted for our retained investment in JiYa under the equity method of accounting, as we continue to exercise significant influence. Our consolidated balance sheet as of December 31, 2018, as reported, included JiYa’s assets and liabilities, after all significant inter-company accounts and transactions were eliminated. Our consolidated balance sheet as of December 31, 2019, as reported, does not include the assets and liabilities of JiYa, since we deconsolidated JiYa as of March 11, 2019. Our consolidated statement of operations for the year 2019 includes JiYa’s results for the period through March 11, 2019. As discussed in Note 6, in May 2019, we purchased the remaining 3% ownership interest of JinMei from retiring members of the JinMei management team for approximately $413,000. As a result, our ownership of JinMei increased from 97% to 100%. As of June 1, 2019, we referred to JinMei as a wholly-owned subsidiary instead of a significantly controlled subsidiary and reduced the carrying value of the corresponding noncontrolling interests to zero. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates, judgments and assumptions. We believe that the estimates, judgments, and assumptions upon which management relies are reasonable based on information available at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates and actual results, our consolidated financial statements would be affected. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of certain of our financial instruments including cash and cash equivalents, short-term investments and long-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. Certain cash equivalents and investments are required to be adjusted to fair value on a recurring basis. See Note 2. |
Fair Value of Investments | Fair Value of Investments ASC Topic 820, Fair value measurement (“ASC 820”) establishes three levels of inputs that may be used to measure fair value. Level 1 instruments represent quoted prices in active markets. Therefore, determining fair value for Level 1 instruments does not require significant management judgment, and the estimation is not difficult. Level 2 instruments include observable inputs other than Level 1 prices, such as quoted prices for similar instruments in markets with insufficient volume or infrequent transactions (less active markets), issuer bank statements, credit ratings, non-binding market consensus prices that can be corroborated with observable market data, model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities, or quoted prices for similar assets or liabilities. These Level 2 instruments require more management judgment and subjectivity compared to Level 1 instruments, including: · Determining which instruments are most comparable to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating, and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced. · Determining which model-derived valuations to use in determining fair value requires management judgment. When observable market prices for similar securities or comparable securities are not available, we price our marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data or pricing models, such as discounted cash flow models, with all significant inputs derived from or corroborated with observable market data. Level 3 instruments include unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. 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 consolidated balance sheets and classified as Level 3 assets and liabilities. As of December 31, 2019 and 2018, the net change in fair value from the placement of the hedge to settlement had a de minimis impact to the consolidated results. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of our Chinese subsidiaries is the renminbi, the local currency of China. Transaction gains and losses resulting from transactions denominated in currencies other than the U.S. dollar or in the functional currencies of our subsidiaries are included in “Other (expense) income, net” for the years presented. The transaction gain totaled $321,000 and $165,000 for the years ended December 31, 2019 and 2018, respectively. The transaction loss for the year ended December 31, 2017 totaled $602,000. The assets and liabilities of the subsidiaries are translated at the rates of exchange on the balance sheet date. Revenue and expense items are translated at the average rate of exchange for the period. Gains and losses from foreign currency translation are included in “Other comprehensive income (loss)” in the consolidated statements of comprehensive income (loss), net of tax. |
Revenue Recognition | Revenue Recognition We manufacture and sell high-performance compound semiconductor substrates including indium phosphide, gallium arsenide and germanium wafers, and our consolidated subsidiaries sell certain raw materials, including 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 six months. Our revenue is measured based on the consideration specified in the contract with each customer in exchange for transferring products that are 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. Shipping and handling fees billed to customers in a sales transaction are recorded as an offset to shipping and handling expenses. 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 revenue. 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 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 receivable” and included it in “Accrued liabilities” on the 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 December 31, 2019. December 31, December 31, 2019 2018 Contract liabilities $ (396) $ (476) During the three and twelve months ended December 31, 2019, the Company recognized $0 and $0.4 million, respectively, of revenue that was included in the contract balances as of December 31, 2018. Disaggregated Revenue In general, revenue disaggregated by product types and geography (See Note 14) 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 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. |
Accounting for Sales Taxes | Accounting for Sales Taxes We record sales taxes collected on sales of our products and for amounts not yet remitted to tax authorities as accrued liabilities on our consolidated balance sheets. |
Risks and Concentration of Credit Risk | Risks and Concentration of Credit Risk Our business is very dependent on the semiconductor, lasers and optical industries which can be highly cyclical and experience downturns as a result of economic changes, overcapacity, and technological advancements. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies, could adversely affect our operating results. In addition, a significant portion of our revenues and net income is derived from international sales. Fluctuations of the United States dollar against foreign currencies and changes in local regulatory or economic conditions, particularly in an emerging market such as China, could adversely affect operating results. We depend on a limited number of suppliers for certain raw materials, components and equipment used in manufacturing our products, including quartz tubing and polishing solutions. We generally purchase these materials through standard purchase orders and not pursuant to long-term supply contracts. Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash equivalents, investments, and trade accounts receivable. We invest primarily in money market accounts, certificates of deposit and corporate bonds. The composition and maturities are regularly monitored by management. Such deposits are in excess of the amount of the insurance provided by the federal government on such deposits. We are exposed to credit risks in the event of default by the issuers to the extent of the amount recorded on the consolidated balance sheets. 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. The credit risk in our accounts receivable is mitigated by our credit evaluation process and the geographical dispersion of sales transactions. Three customers accounted for 14%, 13% and 12% of our trade accounts receivable as of December 31, 2019 and three customers accounted for 17%, 12% and 10% of our trade accounts receivable as of December 31, 2018. One customer represented 15% of our revenue for the year ended December 31, 2019. One customer represented 13% of our revenue for the year ended December 31, 2018. Two customers represented 12% and 11%, respectively, of our revenue for the year ended December 31, 2017. Our top five customers, although not the same five customers for each period, represented 40% of our revenue for the year 2019 and 35% of our revenue for each of the years 2018 and 2017, respectively. For the years ended December 31, 2019, 2018 and 2017 each of three third-party customers for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales. Our subsidiaries and joint ventures are a key strategic benefit for us as they further diversify our sources of revenue. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider investments in highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of certificate of deposits. Cash and cash equivalents are stated at cost, which approximates fair value. |
Short-Term and Long-Term Investments | Short-Term and Long-Term Investments We classify our investments in marketable securities as available-for-sale securities . Short-term and long-term investments are comprised of available-for-sale marketable securities, which consist primarily of certificates of deposit and corporate bonds. These investments are reported at fair value as of the respective balance sheet dates with unrealized gains and losses included in accumulated other comprehensive income (loss) within stockholders’ equity on the consolidated balance sheets. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in “Other (expense) income, net” in the consolidated statements of operations. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are also included in “Other (expense) income, net” in the consolidated statements of operations. The cost of securities sold is based upon the specific identification method. |
Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns | Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns Accounts receivable are recorded at the invoiced amount and are not interest bearing. We periodically review the likelihood of collection on our accounts receivable balances and provide an allowance for doubtful accounts receivable primarily based upon the age of these accounts. We evaluate receivables from U.S. customers with an emphasis on balances in excess of 90 days and for receivables from customers located outside the U.S. with an emphasis on balances in excess of 120 days and establish a reserve allowance on the receivable balances if needed. The reason for the difference in the evaluation of receivables between foreign and U.S. customers is that U.S. customers have historically made payments in a shorter period of time than foreign customers. Foreign business practices generally require us to allow customer payment terms that are longer than those accepted in the United States. We assess the probability of collection based on a number of factors, including the length of time a receivable balance has been outstanding, our past history with the customer and their credit worthiness. We exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the United States and internationally, and changes in customer financial conditions. Uncollectible receivables are recorded as bad debt expense when all efforts to collect have been exhausted and recoveries are recognized when they are received. As of December 31, 2019 and 2018, our accounts receivable, net balance was $19.0 million and $19.6 million, respectively, which was net of an allowance for doubtful accounts of $34,000 and $358,000 in December 31, 2019 and 2018, respectively. During 2019, the allowance for doubtful accounts decreased by $324,000 primarily due to the deconsolidation of JiYa. There were no changes in the allowance for doubtful accounts in 2018. If actual uncollectible accounts differ substantially from our estimates, revisions to the estimated allowance for doubtful accounts would be required, which could have a material impact on our financial results for the future periods. Historically, our allowance for sales returns reserve was deducted from gross accounts receivable. In connection with the adoption of ASC Topic 606, 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 receivable” and included it in “Accrued liabilities” on the consolidated balance sheets. As of December 31, 2019 and 2018, the balance was $26,000 and $47,000, respectively. During 2019, we utilized $26,000 and reserved an additional $5,000 and during 2018, we utilized $47,000 and reduced an additional $75,000. |
Warranty Reserve | Warranty Reserve We maintain a warranty reserve based upon our claims experience during the prior twelve months and any pending claims and returns of which we are aware. Warranty costs are accrued at the time revenue is recognized. As of December 31, 2019 and 2018, accrued product warranties totaled $387,000 and $236,000, respectively. The increase in accrued product warranties is primarily attributable to increased claims for quality issues experienced by customers. If actual warranty costs or pending new claims differ substantially from our estimates, revisions to the estimated warranty liability would be required, which could have a material impact on our financial condition and results of operations for future periods. |
Inventories | Inventories Inventories are stated at the lower of cost (approximated by standard cost) or net realizable value. Cost is determined using the weighted average cost method. Our inventory consists of raw materials as well as finished goods and work-in-process that include material, labor and manufacturing overhead costs. We routinely evaluate the levels of our inventory in light of current market conditions in order to identify excess and obsolete inventory, and we provide a valuation allowance for certain inventories to their estimated net realizable value based upon the age and quality of the product and the projections for sale of the completed products. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated economic lives of the assets, which vary from 1 to 27.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the term of the lease. We generally depreciate computer, software, office equipment, furniture and fixtures 3 to 5 years, machinery and equipment 1 to 5 years, automobiles 5 to 10 years, leasehold and building improvements over 10 years, or the lease term if shorter, and buildings over 27.5 years. Repairs and maintenance costs are expensed as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We evaluate property, plant and equipment and intangible assets for impairment. When events and circumstances indicate that long-lived assets may be impaired, we compare the carrying value of the long-lived assets to the projection of future undiscounted cash flows attributable to these assets. In the event that the carrying value exceeds the future undiscounted cash flows, we record an impairment charge against income equal to the excess of the carrying value over the assets’ fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. We did not recognize any impairment charges of long-lived assets in 2019, 2018 and 2017. |
Impairment of Investments | Impairment of Investments All available-for-sale securities are periodically reviewed for impairment. An investment is considered to be impaired when its fair value is less than its amortized cost basis and it is more likely than not that we will be required to sell the impaired security before recovery of its amortized cost basis. 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. We also invest in equity instruments of privately-held companies in China for business and strategic purposes. Investments in our unconsolidated joint venture companies are classified as other assets and accounted for under either the equity or cost method, depending on whether we have the ability to exercise significant influence over their operations or financial decisions. We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable. Determination of impairment is highly subjective and is based on a number of factors, including an assessment of the strength of each company’s management, the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the subsidiary, fundamental changes to the business prospects of the company, share prices of subsequent offerings, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in our carrying value. We estimate fair value of our cost method investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. We have 25% ownership interest in a germanium materials company in China and we incurred an impairment charge for the period ended March 31, 2019. After receiving such company’s preliminary first quarter 2019 financial results in early April 2019 and its projections for significant losses going forward, we determined that this asset was fully impaired and wrote the asset balance down to zero. This resulted in a $1.1 million impairment charge in our first quarter 2019 financial results. Except as mentioned above, there were no impairment charges for the remainder of these investments during the years ended December 31, 2019 and 2018. |
Segment Reporting | Segment Reporting 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. 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 our performance for the Company. We discuss revenue and capacity for both AXT and our joint ventures collectively, when determining capacity constraints and need for raw materials in our business, and consider their capacity when determining our strategic and product marketing and advertising strategies. While we consolidate our majority-owned or significantly controlled joint ventures, we do not allocate any portion of overhead, interest and other income, interest expense or taxes to them. We therefore have determined that our joint venture operations do not constitute an operating segment. Since we operate in one segment, all financial segment and product line information can be found in the consolidated financial statements. |
Stock-Based Compensation | Stock‑Based Compensation We have employee stock option plans, which are described more fully in Note 10—Employee Benefit Plans and Stock-based Compensation. We account for stock‑based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). We utilize the Black‑Scholes option pricing model to estimate the grant date fair value of stock options, which requires the input of highly subjective assumptions, including estimating stock price volatility and expected term. Stock‑based compensation cost is measured at each grant date, based on the fair value of the award, and is recognized as expense and as an increase in additional paid-in capital over the requisite service period of the award. |
Research and Development | Research and Development Research and development costs consist primarily of salaries, including stock-based compensation expense and related personnel costs, depreciation, materials and product testing which are expensed as incurred. Tangible assets acquired for research and development purposes are capitalized if they have alternative future use. |
Advertising Costs | Advertising Costs Advertising costs, included in selling, general and administrative expenses, are expensed as incurred. Advertising costs for the years ended December 31, 2019, 2018 and 2017 were insignificant. |
Income Taxes | 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. The impact of ASC 740 is more fully described in Note 12. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) The components of other comprehensive income (loss) include unrealized gains and losses on marketable securities and foreign currency translation adjustments. Comprehensive income (loss) is presented in the consolidated statements of comprehensive income, net of tax. The balance of accumulated other comprehensive income (loss) is as follows (in thousands): As of December 31, 2019 2018 Accumulated other comprehensive loss: Unrealized loss on investments, net $ (3) $ (84) Cumulative translation adjustment (4,842) (1,845) (4,845) (1,929) Less: Cumulative translation adjustment attributable to noncontrolling interests 17 43 Accumulated other comprehensive loss attributable to AXT, Inc. $ (4,862) $ (1,972) |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding and potentially dilutive common shares outstanding during the periods. The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board issued Accounting Standard Update 2016-02, Leases (Topic 842) (“ASC 842”), 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 adopted this guidance effective January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at the beginning of the period of adoption. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification and we elected the hindsight practical expedient to determine the lease term for existing leases. We determined that the exercise of our renewal option associated with our lease of facility in Fremont, California, would be reasonably certain in determining the expected lease term. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Adoption of ASC 842 standard resulted in the recording of net ROU assets of $1.1 million and lease liabilities of $1.1 million, as of January 1, 2019. ASC 842 did not have an impact on our consolidated results of operations or cash flow. The impact of the adoption of ASC 842 on the balance sheet as of January 1, 2019 was (in thousands): As Reported Adoption of ASC 842 Balance December 31, 2018 Increase (Decrease) January 1, 2019 Operating lease right-of-use assets $ — $ 1,086 $ 1,086 Total assets 223,524 1,086 224,610 Accrued liabilities 15,371 128 * 15,499 Total current liabilities 28,709 128 28,837 Long-term liability - operating leases — 958 958 Total liabilities 28,992 1,086 30,078 Total liabilities and equity 223,524 1,086 224,610 * Short-term portion of lease liability included in accrued liabilities |
The Company and Summary of Si_3
The Company and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
The Company and Summary of Significant Accounting Policies | |
Schedule of amounts recorded in accrued liabilities | December 31, December 31, 2019 2018 Contract liabilities $ (396) $ (476) During the three and twelve months ended December 31, 2019, the Company recognized $0 and $0.4 million, respectively, of revenue that was included in the contract balances as of December 31, 2018. |
Schedule of accumulated other comprehensive income (loss) | The balance of accumulated other comprehensive income (loss) is as follows (in thousands): As of December 31, 2019 2018 Accumulated other comprehensive loss: Unrealized loss on investments, net $ (3) $ (84) Cumulative translation adjustment (4,842) (1,845) (4,845) (1,929) Less: Cumulative translation adjustment attributable to noncontrolling interests 17 43 Accumulated other comprehensive loss attributable to AXT, Inc. $ (4,862) $ (1,972) |
Schedule of new accounting pronouncements and changes in accounting principles | As Reported Adoption of ASC 842 Balance December 31, 2018 Increase (Decrease) January 1, 2019 Operating lease right-of-use assets $ — $ 1,086 $ 1,086 Total assets 223,524 1,086 224,610 Accrued liabilities 15,371 128 * 15,499 Total current liabilities 28,709 128 28,837 Long-term liability - operating leases — 958 958 Total liabilities 28,992 1,086 30,078 Total liabilities and equity 223,524 1,086 224,610 * Short-term portion of lease liability included in accrued liabilities |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Cash, Cash Equivalents and Investments | |
Cash, cash equivalents and investments | 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 December 31, 2019 and 2018, our cash, cash equivalents and investments are classified as follows (in thousands): December 31, 2019 December 31, 2018 Gross Gross Gross Gross Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: Cash $ 26,892 $ — $ — $ 26,892 $ 16,526 $ — $ — $ 16,526 Cash equivalents: Certificates of deposit 1 — — — — — — — — Total cash and cash equivalents 26,892 — — 26,892 16,526 — — 16,526 Investments (available-for-sale): Certificates of deposit 2 2,400 2 — 2,402 4,508 — (27) 4,481 Corporate bonds 7,030 4 (9) 7,025 18,422 — (57) 18,365 Total investments 9,430 6 (9) 9,427 22,930 — (84) 22,846 Total cash, cash equivalents and investments $ 36,322 $ 6 $ (9) $ 36,319 $ 39,456 $ — $ (84) $ 39,372 Contractual maturities on investments: Due within 1 year 3 $ 9,430 $ 9,427 $ 22,210 $ 22,129 Due after 1 through 5 years 4 — — 720 717 $ 9,430 $ 9,427 $ 22,930 $ 22,846 1. Certificate of deposit with original maturities of less than three months. 2. Certificate of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our consolidated balance sheets. 4. Classified as “Long-term investments” in our consolidated balance sheets. |
Fair value and gross unrealized losses related to available-for-sale securities | A portion of our investments would generate a loss if we sold them on December 31, 2019. 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, 2019 (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, 2019 Value (Losses) Value (Losses) Value (Losses) Investments: Corporate bonds 4,515 (9) — — 4,515 (9) Total in loss position $ 4,515 $ (9) $ — $ — $ 4,515 $ (9) 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, 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 December 31, 2018 Value (Loss) Value (Loss) Value (Loss) Investments: Certificates of deposit $ 717 $ (3) $ 3,746 $ (24) $ 4,463 $ (27) Corporate bonds 9,175 (29) 9,189 (28) 18,364 (57) Total in loss position $ 9,892 $ (32) $ 12,935 $ (52) $ 22,827 $ (84) |
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 December 31, 2019 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2019 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 2,402 $ — $ 2,402 $ — Corporate bonds 7,025 — 7,025 — Total $ 9,427 $ — $ 9,427 $ — 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, 2018 (in thousands): Quoted Prices in Significant Active Markets of Significant Other Unobservable Balance as of Identical Assets Observable Inputs Inputs December 31, 2018 (Level 1) (Level 2) (Level 3) Assets: Cash equivalents and investments: Certificates of deposit $ 4,481 $ — $ 4,481 $ — Corporate bonds 18,365 — 18,365 — Total $ 22,846 $ — $ 22,846 $ — |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Components of inventories | The components of inventory are summarized below (in thousands): December 31, December 31, 2019 2018 Inventories: Raw materials $ 20,677 $ 26,966 Work in process 24,946 28,217 Finished goods 3,529 3,388 $ 49,152 $ 58,571 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment, Net | |
Components of property, plant and equipment | The components of our property, plant and equipment are summarized below (in thousands): December 31, December 31, 2019 2018 Property, plant and equipment: Machinery and equipment, at cost $ 45,742 $ 51,496 Less: accumulated depreciation and amortization (37,115) (41,431) Building, at cost 38,837 39,775 Less: accumulated depreciation and amortization (12,736) (12,147) Leasehold improvements, at cost 4,877 5,464 Less: accumulated depreciation and amortization (4,035) (4,497) Construction in progress 61,833 43,620 $ 97,403 $ 82,280 |
Investments in Privately-Held_2
Investments in Privately-Held Raw Material Companies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments in Privately-Held Raw Material Companies | |
Summary of investments | The investments are summarized below (in thousands): Investment Balance as of December 31, December 31, Accounting Ownership Company 2019 2018 Method Percentage Nanjing JinMei Gallium Co., Ltd. $ 592 $ 592 Consolidated **100 % Beijing JiYa Semiconductor Material Co., Ltd. N/A 3,331 Consolidated *46 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. 1,346 1,346 Consolidated 63 % $ 1,938 $ 5,269 Donghai County Dongfang High Purity Electronic Materials Co., Ltd. $ 1,326 $ 1,416 Equity 46 % Beijing JiYa Semiconductor Material Co., Ltd. 1,621 N/A Equity *39 % Xilingol Tongli Germanium Co., Ltd. — 1,700 Equity 25 % Xiaoyi XingAn Gallium Co., Ltd. 2,367 N/A Equity 25 % Emeishan Jia Mei High Purity Metals Co., Ltd. 647 842 Equity 25 % $ 5,961 $ 3,958 |
Summary of gain on deconsolidation | Amount (in thousands) Fair value of the consideration received $ 366 Fair value of the retained investment in Beijing JiYa Semiconductor Material Co., Ltd. 2,040 Carrying value of noncontrolling interest, net of accumulated other comprehensive income attributable to subsidiary 617 Derecognition of Beijing JiYa Semiconductor Material Co., Ltd.'s net asset (2,848) Gain recognized on deconsolidation of Beijing JiYa Semiconductor Material Co., Ltd. $ 175 Amount (in thousands) Fair value of the retained investment in Beijing JiYa Semiconductor Material Co., Ltd. $ 2,040 Carrying value of retained noncontrolling investment (1,559) Gain on retained noncontrolling investment due to remeasurement $ 481 |
Summarized equity method income information | AXT’s minority investment entities 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 years ended December 31, 2019, 2018 and 2017, respectively: Our share for the Year Ended Year Ended December 31, December 31, 2019 2018 2017 2019 2018 2017 Net revenue $ 18,991 $ 33,212 $ 24,053 $ 5,458 $ 8,549 $ 6,152 Gross profit 2,013 6,457 1,739 558 1,675 482 Operating loss (2,266) (3,152) (3,676) (700) (778) (938) Net loss $ (3,000) $ (4,750) $ (4,798) $ (1,876) $ (1,080) $ (1,694) |
Summarized balance sheet information | Excluding one fully impaired entity, these minority investment entities that are not consolidated, but rather are accounted for under the equity method, had the following summarized balance sheet information (in thousands) as of December 31, 2019 and 2018, respectively: As of December 31, 2019 2018 Current assets $ 22,144 $ 31,525 Noncurrent assets 11,990 26,889 Current liabilities 13,726 24,670 Noncurrent liabilities — 112 |
Balance Sheets Details (Tables)
Balance Sheets Details (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheets Details | |
Schedule of components of other assets | The components of other assets are summarized below (in thousands): As of December 31, 2019 2018 Equity method investments $ 5,961 $ 8,422 Value added tax receivable, long term 2,708 1,845 Other intangible assets 1,124 1,048 Other assets 10 672 $ 9,803 $ 11,987 |
Schedule of components of accrued liabilities | The components of accrued liabilities are summarized below (in thousands): As of December 31, 2019 2018 Accrued compensation and related charges $ 3,307 $ 3,440 Preferred stock dividends payable 2,901 2,901 Payable in connection with construction 1,447 2,912 Payable in connection with land restoration of Nanjing JinMei factory 703 — Accrued professional services 630 706 Advance from customers 396 476 Accrued product warranty 387 236 Current portion of operating lease liability 319 — Other personnel-related costs 180 202 Accrued income taxes 171 99 Payable in connection with repurchase of subsidiaries shares 151 1,147 Other tax payable 50 261 Accrual for sales returns 26 47 Deferred government grant income in connection with purchase of land — 1,000 Dividends payable by consolidated joint ventures — 504 Other accrued liabilities 1,013 1,440 $ 11,681 $ 15,371 |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Repurchase Program (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders’ Equity and Stock Repurchase Program | |
Schedule of changes in ownership interest in consolidated subsidiaries | As of December 31, 2019 2018 Net income (loss) attributable to AXT, Inc. $ (2,600) $ 9,654 Increase (decrease) in paid-in capital for: Purchase of subsidiary shares from noncontrollling interest (74) 187 Net transfers to noncontrolling interests (74) 187 Net income (loss) attributable to AXT, Inc., net of transfers to noncontrolling interests $ (2,674) $ 9,841 |
Employee Benefit Plans and St_2
Employee Benefit Plans and Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plans and Stock-Based Compensation | |
Summary of compensation costs related to stock-based awards | The following table summarizes compensation costs related to our stock‑based compensation awards (in thousands, except per share data): Year Ended December 31, 2019 2018 2017 Cost of revenue $ 125 $ 92 $ 39 Selling, general and administrative 1,778 1,520 1,146 Research and development 443 313 220 Total stock-based compensation 2,346 1,925 1,405 Tax effect on stock-based compensation — — — Net effect on net income (loss) $ 2,346 $ 1,925 $ 1,405 Shares used in computing basic net income (loss) per share 39,487 39,049 37,444 Shares used in computing diluted net income (loss) per share 39,487 40,265 38,966 Effect on basic net income (loss) per share $ (0.06) $ (0.05) $ (0.04) Effect on diluted net income (loss) per share $ (0.06) $ (0.05) $ (0.04) |
Summary of weighted-average assumptions | Year Ended December 31, 2019 2018 2017 Expected term (in years) 6.1 5.8 5.8 Volatility 49.5 % 46.6 % 46.5 % Expected dividend — % — % — % Risk-free interest rate 1.67 % 3.09 % 2.10 % |
Summary of stock option activity | The following table summarizes the stock option transactions for each of the years ended December 31, 2017, 2018 and 2019 (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, 2017 3,294 $ 3.38 7.23 $ 5,301 Granted 184 8.99 Exercised (762) 3.25 Canceled and expired (50) 3.47 Balance as of December 31, 2017 2,666 $ 3.81 6.87 $ 13,149 Granted 246 5.77 Exercised (238) 2.64 Canceled and expired (20) 4.40 Balance as of December 31, 2018 2,654 $ 4.09 6.28 $ 2,720 Granted 430 3.06 Exercised (113) 2.37 Canceled and expired (18) 4.47 Balance as of December 31, 2019 2,953 $ 4.00 5.95 $ 3,040 Options vested as of December 31, 2019 and unvested options expected to vest, net of forfeitures 2,914 $ 4.00 5.90 $ 3,001 Options exercisable as of December 31, 2019 2,169 $ 3.81 4.83 $ 2,484 |
Summary of options outstanding and exercisable by exercise price ranges | The options outstanding and exercisable as of December 31, 2019 were in the following exercise price ranges (in thousands, except per share data): Options Vested and Options Outstanding as of Exercisable as of December 31, 2019 December 31, 2019 Weighted ‑ average Range of Weighted ‑ average Remaining Weighted ‑ Average Exercise Price Shares Exercise Price Contractual Life Shares Exercise Price $ - $ 2.14 11 $ 2.14 4.33 11 $ 2.14 $ - $ 2.18 540 $ 2.18 5.84 540 $ 2.18 $ - $ 358 $ 2.32 4.15 358 $ 2.32 $ - $ 2.91 342 $ 2.71 3.97 341 $ 2.71 $ - $ 3.06 430 $ 3.06 9.85 — $ — $ - $ 4.79 129 $ 4.79 1.82 129 $ 4.79 $ - $ 5.21 471 $ 5.21 6.82 370 $ 5.21 $ - $ 5.77 325 $ 5.73 7.21 146 $ 5.68 $ - $ 7.95 223 $ 6.41 2.34 207 $ 6.29 $ - $ 9.50 124 $ 9.50 7.82 67 $ 9.50 2,953 $ 4.00 5.95 2,169 $ 3.81 |
Summary of restricted stock awards activity | A summary of activity related to restricted stock awards for the years ended December 31, 2017, 2018 and 2019 is presented below (in thousands, except per share data): Weighted-Average Grant Date Stock Awards Shares Fair Value Non-vested as of January 1, 2017 325 $ 3.27 Granted 312 $ 9.15 Vested (157) $ 3.13 Forfeited — $ — Non-vested as of December 31, 2017 480 $ 7.13 Granted 344 $ 6.02 Vested (181) $ 6.04 Forfeited (10) $ 6.65 Non-vested as of December 31, 2018 633 $ 6.85 Granted 554 $ 3.60 Vested (228) $ 6.46 Forfeited (20) $ 7.16 Non-vested as of December 31, 2019 939 $ 5.02 |
Summary of common stock reserved for future issuance | The following number of shares of common stock were reserved and available for future issuance as of December 31, 2019 (in thousands, except per share data): Options outstanding 2,953 Restricted stock awards outstanding 939 Stock available for future grant: 2015 Equity Incentive Plan 1,048 Total 4,940 |
Guarantees (Tables)
Guarantees (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Guarantees | |
Product warranty accrued liability | The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” on the consolidated balance sheets, during 2019 and 2018 (in thousands): Year Ended December 31, 2019 2018 Beginning accrued product warranty $ 236 $ 133 Accruals for warranties issued 522 289 Adjustments related to pre-existing warranties including expirations and changes in estimates 227 87 Cost of warranty repair (598) (273) Ending accrued product warranty $ 387 $ 236 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Components of the provision (benefits) for income taxes | The components of the provision for income taxes are summarized below (in thousands): Year Ended December 31, 2019 2018 2017 Current: Federal $ — $ — $ — State 27 5 2 Foreign 535 933 790 Total current 562 938 792 Deferred: Federal — — — State — — — Total deferred — — — Total provision for income taxes $ 562 $ 938 $ 792 |
Reconciliation of the effective income tax rates and the U.S. statutory federal income tax rate | Year Ended December 31, 2019 2018 2017 Statutory federal income tax rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal tax benefits (2.1) — — Valuation allowance (173.0) (2.6) (139.5) Rate change — — 100.8 Stock-based compensation (21.8) 0.3 (10.4) Foreign tax rate differential 137.7 (11.4) (10.3) Foreign tax incentives 32.2 (2.9) (7.0) Foreign income inclusion — 2.6 55.6 Section 78 gross up — — 11.7 Foreign tax credit — — (30.6) Tax effect in equity method loss or gain from unconsolidated affiliates (47.8) 3.2 2.9 Foreign-derived intangible income — (2.4) — Other (1.0) 0.1 (0.9) Effective tax rate (54.8) % 7.9 % 7.3 % |
Deferred tax assets and liabilities | Deferred tax assets and liabilities are summarized below (in thousands): As of December 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 14,979 $ 15,735 Accruals, reserves and other 3,011 2,100 Credit carryforwards 1,685 1,685 Operating lease liability 209 — Gross deferred tax assets 19,884 19,520 Valuation allowance (19,691) (19,520) Total deferred tax assets 193 — Deferred tax liabilities: Operating lease right-of-use assets (193) — Total net deferred tax assets $ — $ — |
Reconciliation of the beginning and ending amount of the gross unrecognized tax benefit | A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2019 2018 2017 Gross unrecognized tax benefits balance at beginning of the year $ 14,557 $ 14,557 $ 14,557 Add: Additions based on tax positions related to the current year — — — Additions for tax positions of prior years — — — Less: Decrease related to lapse of statute of limitations — — — Gross unrecognized tax benefits balance at end of the year $ 14,557 $ 14,557 $ 14,557 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Net Income (Loss) 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 (loss) per share calculations is as follows (in thousands, except per share data): Year ended December 31, 2019 2018 2017 Numerator: Net income (loss) attributable to AXT, Inc. $ (2,600) $ 9,654 $ 10,148 Less: Preferred stock dividends (177) (177) (177) Net income (loss) available to common stockholders $ (2,777) $ 9,477 $ 9,971 Denominator: Denominator for basic net income (loss) per share - weighted-average common shares 39,487 39,049 37,444 Effect of dilutive securities: Common stock options — 1,106 1,339 Restricted stock awards — 110 183 Denominator for dilutive net income (loss) per common shares 39,487 40,265 38,966 Basic net income (loss) per share: Net income (loss) attributable to AXT, Inc. $ (0.07) $ 0.24 $ 0.27 Net income (loss) to common stockholders $ (0.07) $ 0.24 $ 0.27 Diluted net income (loss) per share: Net income (loss) attributable to AXT, Inc. $ (0.07) $ 0.24 $ 0.26 Net income (loss) to common stockholders $ (0.07) $ 0.24 $ 0.26 Options excluded from diluted net income (loss) per share as the impact is anti-dilutive 2,953 266 86 Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive 939 227 63 |
Segment Information and Forei_2
Segment Information and Foreign Operations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Information and Foreign Operations | |
Revenues reported by product type | The following table represents revenue amounts (in thousands) by product type: Year Ended December 31, 2019 2018 2017 Product Type: Substrates $ 67,849 $ 81,008 $ 78,619 Raw materials and others 15,407 21,389 20,054 Total $ 83,256 $ 102,397 $ 98,673 |
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: Year Ended December 31, 2019 2018 2017 Geographical region: China $ 26,796 $ 31,492 $ 24,962 Europe (primarily Germany) 18,178 22,013 23,956 Taiwan 16,204 20,078 18,279 North America (primarily the United States) 8,228 10,021 8,352 Asia Pacific (excluding China, Taiwan and Japan) 7,592 8,488 9,866 Japan 6,258 10,305 13,258 Total $ 83,256 $ 102,397 $ 98,673 |
Long-lived assets by geographic region | Long-lived assets consist primarily of property, plant and equipment, and operating lease right-of-use assets 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 December 31, 2019 2018 Long-lived assets by geographic region, net of depreciation: North America $ 1,069 $ 445 China 99,272 81,835 $ 100,341 $ 82,280 |
Other (expense) income (Tables)
Other (expense) income (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other (expense) income | |
Schedule of components of other (expense) income | The components of other (expense) income are summarized below (in thousands): Year Ended December 31, 2019 2018 2017 Foreign exchange gain (loss) $ 321 $ 165 $ (602) Gain on available-for-sales securities — — 77 Gain from local China government subsidy 808 — — Other income (expense) (182) 187 (28) $ 947 $ 352 $ (553) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Summary of maturities of our operating lease liabilities | As of December 31, 2019, the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands): Maturity of Lease Liabilities 2020 $ 452 2021 549 2022 565 2023 556 2024 267 Thereafter 1,223 Total minimum lease payments 3,612 Less: Interest (598) Present value of lease obligations 3,014 Less: Current portion (319) Long-term portion of lease obligations $ 2,695 |
Schedule of weighted-average remaining lease term and the weighted-average discount rate of operating leases | December 31, 2019 Weighted-average remaining lease term (years) 7.94 Weighted-average discount rate 4.61 % |
Schedule of supplemental cash flow information related to leases | Supplemental cash flow information related to leases where we are the lessee is as follows (in thousands): Year Ended December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 267 Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets: Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,072 |
Summary of components of lease expense | The components of lease expense are as follows (in thousands) within our consolidated statements of operations: Year Ended December 31, 2019 Operating lease $ 358 Short-term lease expense 60 Total $ 418 |
Unaudited Quarterly Consolida_2
Unaudited Quarterly Consolidated Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Unaudited Quarterly Consolidated Financial Data | |
Unaudited Quarterly Consolidated Financial Data | Quarter First Second Third Fourth (in thousands, except per share data) 2019: Revenue $ 20,208 $ 24,797 $ 19,841 $ 18,410 Gross profit 6,695 8,506 5,759 3,865 Net income (loss) attributable to AXT, Inc. (1,104) 1,451 (898) (2,049) Net income (loss) attributable to AXT, Inc. per share, basic $ (0.03) $ 0.04 $ (0.02) $ (0.05) Net income (loss) attributable to AXT, Inc. per share, diluted $ (0.03) $ 0.04 $ (0.02) $ (0.05) 2018: Revenue $ 24,419 $ 27,120 $ 28,626 $ 22,232 Gross profit 9,573 11,010 10,614 5,850 Net income (loss) attributable to AXT, Inc. 2,875 3,901 3,939 (1,061) Net income (loss) attributable to AXT, Inc. per share, basic $ 0.07 $ 0.10 $ 0.10 $ (0.03) Net income (loss) attributable to AXT, Inc. per share, diluted $ 0.07 $ 0.10 $ 0.10 $ (0.03) |
The Company and Summary of Si_4
The Company and Summary of Significant Accounting Policies - The Company (Details) | 12 Months Ended | |
Dec. 31, 2019segmentitem | Dec. 31, 2018 | |
The Company and Summary of Significant Accounting Policies | ||
Number of product lines | segment | 2 | |
Minimum | ||
The Company and Summary of Significant Accounting Policies | ||
Temperature in C | 500 | |
Maximum | ||
The Company and Summary of Significant Accounting Policies | ||
Temperature in C | 1,500 | |
Sales Revenue, Net | Specialty Material Substrates | ||
The Company and Summary of Significant Accounting Policies | ||
Revenue by product line (as a percent) | 81.00% | |
Sales Revenue, Net | Raw Materials | ||
The Company and Summary of Significant Accounting Policies | ||
Revenue by product line (as a percent) | 19.00% |
The Company and Summary of Si_5
The Company and Summary of Significant Accounting Policies - Foreign Currency Translation (Details) | Jun. 15, 2018USD ($) | May 31, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2019USD ($)company | Dec. 31, 2018USD ($)company | Dec. 31, 2017USD ($) | Jun. 30, 2019 | Apr. 30, 2019 | Mar. 11, 2019 | Mar. 10, 2019 | Jun. 14, 2018 |
The Company and Summary of Significant Accounting Policies | |||||||||||
Number of equity method investments | company | 5 | 7 | |||||||||
Additional percentage of ownership, consolidated method | 2 | ||||||||||
Foreign Currency Translation | |||||||||||
Foreign exchange transaction exchange gains (losses) | $ 321,000 | $ 165,000 | $ (602,000) | ||||||||
Beijing JiYa Semiconductor Material Co., Ltd | |||||||||||
The Company and Summary of Significant Accounting Policies | |||||||||||
Percentage of ownership, consolidated method (in hundredths) | 39.00% | 46.00% | |||||||||
Nanjing JinMei Gallium Co., Ltd Investment | |||||||||||
The Company and Summary of Significant Accounting Policies | |||||||||||
Percentage of ownership, consolidated method (in hundredths) | 100.00% | 100.00% | 97.00% | ||||||||
Additional percentage of ownership, consolidated method | 3 | ||||||||||
Nanjing JinMei Gallium Co., Ltd Investment | |||||||||||
The Company and Summary of Significant Accounting Policies | |||||||||||
Purchase of subsidiary shares from noncontrolling interest | $ 1,400,000 | $ 413,000 | $ 252,000 | ||||||||
Additional percentage of ownership, consolidated method | 12 | 3 | |||||||||
Nanjing JinMei Gallium Co., Ltd Investment | Nanjing JinMei Gallium Co., Ltd Investment | |||||||||||
The Company and Summary of Significant Accounting Policies | |||||||||||
Percentage of ownership, consolidated method (in hundredths) | 100.00% | 83.00% |
The Company and Summary of Si_6
The Company and Summary of Significant Accounting Policies - Revenue Recognition (Details) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)segmentsubsidiary | Dec. 31, 2018USD ($) | Jan. 31, 2019subsidiary | |
Revenue Recognition | |||||
Number of consolidated subsidiaries | subsidiary | 1 | 1 | |||
Accounts receivable | $ 19,586,000 | $ 19,031,000 | $ 19,586,000 | ||
Accrued liabilities | 15,371,000 | 11,681,000 | 15,371,000 | ||
Revenue | |||||
Contract liabilities | (476,000) | (396,000) | (476,000) | ||
Amounts included in contract balances | $ 0 | $ 400,000 | $ 0 | $ 400,000 | |
Number of operating segments | segment | 1 | ||||
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract | true | ||||
Revenue, Practical Expedient, Financing Component | true | ||||
Revenue, Practical Expedient, Remaining Performance Obligation | true | ||||
Adjustment | ASU 2014-09 | |||||
Revenue Recognition | |||||
Accounts receivable | $ 169,000 | ||||
Accrued liabilities | $ 169,000 | ||||
Maximum | |||||
Revenue Recognition | |||||
Sales commissions benefit period | 1 year |
The Company and Summary of Si_7
The Company and Summary of Significant Accounting Policies - Risks and Concentration of Credit Risk (Details) | 12 Months Ended | 24 Months Ended | ||
Dec. 31, 2019itemcustomer | Dec. 31, 2018customer | Dec. 31, 2017customer | Dec. 31, 2018 | |
Accounts Receivable | ||||
The Company and Summary of Significant Accounting Policies | ||||
Number of customers representing significant share | 3 | 3 | ||
Raw Materials | Revenues | ||||
The Company and Summary of Significant Accounting Policies | ||||
Number of customers representing significant share | item | 3 | |||
Landmark | Revenues | ||||
The Company and Summary of Significant Accounting Policies | ||||
Number of customers representing significant share | 1 | 1 | 2 | |
Percentage share generated by major customers (in hundredths) | 15.00% | 13.00% | ||
Major Customer One | Revenues | ||||
The Company and Summary of Significant Accounting Policies | ||||
Percentage share generated by major customers (in hundredths) | 12.00% | |||
Major Customer One | Accounts Receivable | ||||
The Company and Summary of Significant Accounting Policies | ||||
Percentage share generated by major customers (in hundredths) | 14.00% | 17.00% | ||
Major Customer Two | Revenues | ||||
The Company and Summary of Significant Accounting Policies | ||||
Percentage share generated by major customers (in hundredths) | 11.00% | |||
Major Customer Two | Accounts Receivable | ||||
The Company and Summary of Significant Accounting Policies | ||||
Percentage share generated by major customers (in hundredths) | 13.00% | 12.00% | ||
Major Customer Three | Accounts Receivable | ||||
The Company and Summary of Significant Accounting Policies | ||||
Percentage share generated by major customers (in hundredths) | 12.00% | 10.00% | ||
Top Five Major Customers | Revenues | ||||
The Company and Summary of Significant Accounting Policies | ||||
Number of customers representing significant share | 5 | 5 | 5 | |
Percentage share generated by major customers (in hundredths) | 40.00% | 35.00% |
The Company and Summary of Si_8
The Company and Summary of Significant Accounting Policies - Accounts Receivable and Allowance for Doubtful Accounts and Sales Returns (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
The Company and Summary of Significant Accounting Policies | ||
Accounts receivable | $ 19,031,000 | $ 19,586,000 |
Accrued liabilities | 11,681,000 | 15,371,000 |
Adjustment | ASU 2014-09 | ||
The Company and Summary of Significant Accounting Policies | ||
Accounts receivable | 169,000 | |
Accrued liabilities | 169,000 | |
Allowance for Doubtful Accounts | ||
The Company and Summary of Significant Accounting Policies | ||
Valuation allowance balance | 34,000 | 358,000 |
Increase/ (decrease) in allowance for doubtful accounts | 324,000 | 0 |
Allowance for Sales Returns | ||
The Company and Summary of Significant Accounting Policies | ||
Valuation allowance balance | 26,000 | 47,000 |
Allowance utilized | 26,000 | 47,000 |
Additional reduction | $ 5,000 | $ 75,000 |
The Company and Summary of Si_9
The Company and Summary of Significant Accounting Policies - Warranty Reserve (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Warranty Reserve | |||
Accrued product warranties | $ 387,000 | $ 236,000 | $ 133,000 |
The Company and Summary of S_10
The Company and Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 1 year |
Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 27 years 6 months |
Computers | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 3 years |
Computers | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 5 years |
Office Equipment | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 3 years |
Office Equipment | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 5 years |
Software | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 3 years |
Software | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 5 years |
Furniture and Fixtures | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 3 years |
Furniture and Fixtures | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 5 years |
Automobiles | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 5 years |
Automobiles | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 10 years |
Leasehold improvements | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 10 years |
Building improvements | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 10 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 1 year |
Machinery and equipment | Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 5 years |
Building | |
Property, Plant and Equipment | |
Property, plant and equipment, estimated economic life | 27 years 6 months |
The Company and Summary of S_11
The Company and Summary of Significant Accounting Policies - Impairment of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||||
Impairment charge on equity investee | $ 1,068 | $ 313 | ||
Germanium materials | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership (as a percent) | 25.00% | |||
Impairment charge on equity investee | $ 1,100 | $ 0 | $ 0 |
The Company and Summary of S_12
The Company and Summary of Significant Accounting Policies - Segment Reporting (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
The Company and Summary of Significant Accounting Policies | |
Number of operating segments | 1 |
The Company and Summary of S_13
The Company and Summary of Significant Accounting Policies - Income Taxes (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | |||
Statutory federal income tax rate (as a percent) | 21.00% | 21.00% | 35.00% |
The Company and Summary of S_14
The Company and Summary of Significant Accounting Policies - Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accumulated other comprehensive income (loss): | ||
Accumulated other comprehensive income (loss) attributable to AXT, Inc. | $ (4,862) | $ (1,972) |
Accumulated other comprehensive income including noncontrolling interest | ||
Accumulated other comprehensive income (loss): | ||
Unrealized loss on investments, net | (3) | (84) |
Cumulative translation adjustment | (4,842) | (1,845) |
Accumulated other comprehensive income (loss) attributable to AXT, Inc. | (4,845) | (1,929) |
Accumulated other comprehensive income attributable to noncontrolling interest | ||
Accumulated other comprehensive income (loss): | ||
Less: Cumulative translation adjustment attributable to noncontrolling interests | $ 17 | $ 43 |
The Company and Summary of S_15
The Company and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
The Company and Summary of Significant Accounting Policies | |||
Lease liability | $ 3,014 | ||
Operating lease right-of-use assets | 2,938 | ||
Total assets | 223,349 | $ 223,524 | |
Accrued liabilities | 11,681 | 15,371 | |
Total current liabilities | 27,526 | 28,709 | |
Long-term portion of lease obligations | 2,695 | ||
Total liabilities | 30,587 | 28,992 | |
Total liabilities and stockholders’ equity | 223,349 | 223,524 | |
As reported | |||
The Company and Summary of Significant Accounting Policies | |||
Total assets | 223,524 | ||
Accrued liabilities | 15,371 | ||
Total current liabilities | 28,709 | ||
Total liabilities | 28,992 | ||
Total liabilities and stockholders’ equity | $ 223,524 | ||
ASU 2016-02 | |||
The Company and Summary of Significant Accounting Policies | |||
Lease liability | $ 1,100 | ||
Operating lease right-of-use assets | 1,086 | ||
Total assets | 224,610 | ||
Accrued liabilities | 15,499 | ||
Total current liabilities | 28,837 | ||
Long-term portion of lease obligations | 958 | ||
Total liabilities | 30,078 | ||
Total liabilities and stockholders’ equity | 224,610 | ||
ASU 2016-02 | Adjustment. | |||
The Company and Summary of Significant Accounting Policies | |||
Lease liability | 1,100 | ||
Operating lease right-of-use assets | $ 1,100 | 1,086 | |
Total assets | 1,086 | ||
Accrued liabilities | 128 | ||
Total current liabilities | 128 | ||
Long-term portion of lease obligations | 958 | ||
Total liabilities | 1,086 | ||
Total liabilities and stockholders’ equity | $ 1,086 |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash, cash equivalents and investments [Abstract] | |||
Cash | $ 26,892 | $ 16,526 | |
Cash equivalents [Abstract] | |||
Total cash and cash equivalents | 26,892 | 16,526 | |
Amortized Cost | 9,430 | 22,930 | |
Cash, cash equivalents and investments, amortized costs | 36,322 | 39,456 | |
Gross Unrealized Gain | 6 | ||
Gross Unrealized (Loss) | (9) | (84) | |
Fair Value | 9,427 | 22,846 | |
Cash, cash equivalents and investments, amortized costs | 36,319 | 39,372 | |
Contractual maturities on investments, amortized cost basis [Abstract] | |||
Due within 1 year | 9,430 | 22,210 | |
Due after 1 through 5 years | 720 | ||
Investments, amortized cost | 9,430 | 22,930 | |
Contractual maturities on investments, fair value basis [Abstract] | |||
Due within 1 year | 9,427 | 22,129 | |
Due after 1 through 5 years | 717 | ||
Investments, fair value | 9,427 | 22,846 | |
Realized gain on sale of available-for-sale securities | $ 77 | ||
Total Investments | |||
Cash equivalents [Abstract] | |||
Amortized Cost | 9,430 | 22,930 | |
Gross Unrealized Gain | 6 | ||
Gross Unrealized (Loss) | (9) | (84) | |
Fair Value | 9,427 | 22,846 | |
Contractual maturities on investments, amortized cost basis [Abstract] | |||
Investments, amortized cost | 9,430 | 22,930 | |
Contractual maturities on investments, fair value basis [Abstract] | |||
Investments, fair value | 9,427 | 22,846 | |
Certificates of Deposit [Member] | |||
Cash equivalents [Abstract] | |||
Amortized Cost | 2,400 | 4,508 | |
Gross Unrealized Gain | 2 | ||
Gross Unrealized (Loss) | (27) | ||
Fair Value | 2,402 | 4,481 | |
Contractual maturities on investments, amortized cost basis [Abstract] | |||
Investments, amortized cost | 2,400 | 4,508 | |
Contractual maturities on investments, fair value basis [Abstract] | |||
Investments, fair value | 2,402 | 4,481 | |
Corporate Bonds [Member] | |||
Cash equivalents [Abstract] | |||
Amortized Cost | 7,030 | 18,422 | |
Gross Unrealized Gain | 4 | ||
Gross Unrealized (Loss) | (9) | (57) | |
Fair Value | 7,025 | 18,365 | |
Contractual maturities on investments, amortized cost basis [Abstract] | |||
Investments, amortized cost | 7,030 | 18,422 | |
Contractual maturities on investments, fair value basis [Abstract] | |||
Investments, fair value | $ 7,025 | $ 18,365 |
Cash, Cash Equivalents and In_4
Cash, Cash Equivalents and Investments - Investment Category and Length (Details) | 12 Months Ended | ||||
Dec. 31, 2019USD ($)subsidiarycompany | Dec. 31, 2018USD ($)company | Dec. 31, 2017USD ($)company | Jan. 31, 2019subsidiary | Mar. 31, 2017USD ($) | |
Summary of fair value and gross unrealized losses related to available-for-sale securities [Abstract] | |||||
Fair value, in loss position less than twelve months | $ 4,515,000 | $ 9,892,000 | |||
Gross unrealized loss, in loss position less than twelve months | (9,000) | (32,000) | |||
Fair value, in loss position greater than twelve months | 12,935,000 | ||||
Gross unrealized loss, in loss position greater than twelve months | (52,000) | ||||
Fair value, total in loss position | 4,515,000 | 22,827,000 | |||
Gross unrealized loss, total in loss position | (9,000) | (84,000) | |||
Minority Investments | |||||
Investments, equity method | $ 5,961,000 | $ 8,422,000 | |||
Number of consolidated subsidiaries | subsidiary | 1 | 1 | |||
Number of equity method investments | company | 5 | 7 | |||
Impairment charge | $ 1,100,000 | $ 0 | |||
One Gallium Company | |||||
Minority Investments | |||||
Investments, equity method | $ 0 | ||||
Impairment charge | $ 313,000 | ||||
Number of gallium companies with impairment charge | company | 1 | ||||
Xilingol Tongli Germanium Co. Ltd Investment | Xilingol Tongli Germanium Co. Ltd Investment | |||||
Minority Investments | |||||
Investments, equity method | $ 25 | 1,700,000 | |||
Ownership (as a percent) | 25.00% | ||||
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 | 717,000 | ||||
Gross unrealized loss, in loss position less than twelve months | (3,000) | ||||
Fair value, in loss position greater than twelve months | 3,746,000 | ||||
Gross unrealized loss, in loss position greater than twelve months | (24,000) | ||||
Fair value, total in loss position | 4,463,000 | ||||
Gross unrealized loss, total in loss position | (27,000) | ||||
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 | $ 4,515,000 | 9,175,000 | |||
Gross unrealized loss, in loss position less than twelve months | (9,000) | (29,000) | |||
Fair value, in loss position greater than twelve months | 9,189,000 | ||||
Gross unrealized loss, in loss position greater than twelve months | (28,000) | ||||
Fair value, total in loss position | 4,515,000 | 18,364,000 | |||
Gross unrealized loss, total in loss position | (9,000) | (57,000) | |||
Other assets | |||||
Minority Investments | |||||
Investments, equity method | $ 6,000,000 | $ 8,400,000 |
Cash, Cash Equivalents and In_5
Cash, Cash Equivalents and Investments - Recurring Basis (Details) - USD ($) $ in Thousands | 24 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Assets, Fair Value Disclosure [Abstract] | ||
Investments, amortized cost | $ 9,427 | $ 22,846 |
Fair Value, Transfers Between Level 1 and Level 2, Description and Policy [Abstract] | ||
Transfer from Level 1 to Level 2 , assets | 0 | |
Transfer from Level 2 to Level 1 , assets | 0 | |
Transfers into Level 3, assets | 0 | |
Transfer out of Level 3, assets | 0 | |
Recurring | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total | 9,427 | 22,846 |
Recurring | Certificates of Deposit [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents, fair value disclosure | 2,402 | 4,481 |
Recurring | Corporate Bonds [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Investments, amortized cost | 7,025 | 18,365 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total | 9,427 | 22,846 |
Recurring | Significant Other Observable Inputs (Level 2) | Certificates of Deposit [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and cash equivalents, fair value disclosure | 2,402 | 4,481 |
Recurring | Significant Other Observable Inputs (Level 2) | Corporate Bonds [Member] | ||
Assets, Fair Value Disclosure [Abstract] | ||
Investments, amortized cost | $ 7,025 | $ 18,365 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventories | ||
Raw materials | $ 20,677,000 | $ 26,966,000 |
Work in process | 24,946,000 | 28,217,000 |
Finished goods | 3,529,000 | 3,388,000 |
Inventories, Total | 49,152,000 | 58,571,000 |
Inventory reserve | 16,400,000 | 14,800,000 |
Excess and obsolete inventory | $ 91,000 | $ 18,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | Nov. 02, 2017USD ($) | May 31, 2019USD ($) | Nov. 30, 2017USD ($) | Jul. 31, 2017USD ($)installment | Jun. 30, 2017USD ($) | Apr. 30, 2016USD ($) | Apr. 30, 2014USD ($) | Dec. 31, 2019USD ($)ft² | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | May 11, 2019 | May 10, 2019 | Mar. 11, 2019 | Mar. 10, 2019 |
Related Party Transaction [Line Items] | ||||||||||||||
Proceeds from sale of previously consolidated subsidiary shares | $ 366,000 | |||||||||||||
Area of leased property (in square feet) | ft² | 19,467 | |||||||||||||
Repayment of related party notes receivable | $ 169,000 | |||||||||||||
Beijing JiYa Semiconductor Material Co., Ltd Investment | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Percentage of ownership, consolidated method (in hundredths) | 39.00% | 46.00% | 39.00% | 46.00% | ||||||||||
Beijing JiYa Semiconductor Material Co., Ltd | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Ownership (as a percent) | 39.00% | |||||||||||||
Equity investment entity | Raw materials sales to related party | Accounts receivable | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Amounts receivable from related party | $ 12,000 | $ 0 | ||||||||||||
Equity investment entity | Raw material agency sales agreement | Other income (expense), net | Nanjing JinMei Gallium Co., Ltd | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Other income from related party | 0 | 24,000 | ||||||||||||
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 | 59,000 | ||||||||||||
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 | ||||||||||||
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 | ||||||||||||
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 | |||||||||||||
Lease term | 10 years | |||||||||||||
Annual lease payment | $ 24,000 | |||||||||||||
Rental increase period | 3 years | |||||||||||||
Interest rate (as a percent) | 5.00% | |||||||||||||
Nanjing JinMei Gallium Co., Ltd | Related party loan | Beijing Tongmei Xtal Technology | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Number of installments | installment | 3 | |||||||||||||
Related party notes receivable - long term | $ 768,000 | |||||||||||||
Amount payable to related party | $ 285,000 | 316,000 | ||||||||||||
Interest rate (as a percent) | 4.90% | |||||||||||||
Repayment of related party notes receivable | 490,000 | |||||||||||||
Executive officer | Related party loan | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Amount of transaction | $ 146,000 | $ 291,000 | $ 177,000 | |||||||||||
Interest rate (as a percent) | 2.75% | 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 | 449,000 | |||||||||||||
Executive officer | Related party loan | Prepaid expenses and other current assets | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Related party notes receivable - current | 299,000 | |||||||||||||
3rd party investor | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Revenue from related parties | $ 200,000 | $ 1,500,000 | ||||||||||||
Raised additional capital | $ 2,000,000 | |||||||||||||
Percentage ownership from issuance of shares | 10.00% |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, net | $ 97,403 | $ 82,280 |
Machinery and equipment | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 45,742 | 51,496 |
Less: accumulated depreciation and amortization | (37,115) | (41,431) |
Building | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 38,837 | 39,775 |
Less: accumulated depreciation and amortization | (12,736) | (12,147) |
Leasehold improvements | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 4,877 | 5,464 |
Less: accumulated depreciation and amortization | (4,035) | (4,497) |
Construction in progress | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 61,833 | 43,620 |
Construction in progress Dingxin and Chaoyang locations | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 48,800 | |
Construction in progress Dingxin and Kazuo locations | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 31,700 | |
Construction in progress manufacturing equipment purchases | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | 3,400 | 2,200 |
Construction in progress other consolidated subsidiaries | ||
Property, plant and equipment [Abstract] | ||
Property, plant and equipment, gross | $ 9,600 | $ 9,700 |
Investments in Privately-Held_3
Investments in Privately-Held Raw Material Companies (Details) | Jun. 15, 2018USD ($)installment | Nov. 02, 2017USD ($) | May 31, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2019USD ($)employeeentitysubsidiary | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($)company | Jun. 30, 2019 | Jun. 01, 2019USD ($) | May 11, 2019 | May 10, 2019 | Apr. 30, 2019 | Mar. 11, 2019 | Mar. 10, 2019 | Jan. 31, 2019subsidiary | Aug. 31, 2018 | Jun. 14, 2018 | Nov. 01, 2017 | Mar. 31, 2017USD ($) |
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 5,961,000 | $ 8,422,000 | ||||||||||||||||||
Proceeds from sale of previously consolidated subsidiary shares | 366,000 | |||||||||||||||||||
Gain on deconsolidation | $ 175,000 | |||||||||||||||||||
Additional percentage of ownership, consolidated method | 2 | |||||||||||||||||||
Payment of first installment | $ 262,000 | 415,000 | ||||||||||||||||||
Noncontrolling interests | 4,877,000 | 3,697,000 | ||||||||||||||||||
Remainder portion of payment | $ 151,000 | 1,147,000 | ||||||||||||||||||
Number of persons on board | 1 | |||||||||||||||||||
Number of consolidated joint ventures | subsidiary | 1 | 1 | ||||||||||||||||||
Net income attributable to noncontrolling interests | $ 1,012,000 | 1,355,000 | $ (87,000) | |||||||||||||||||
Impairment charge | $ 1,100,000 | 0 | ||||||||||||||||||
Impaired entities | entity | 1 | |||||||||||||||||||
Joint Ventures | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Number of consolidated joint ventures | entity | 3 | |||||||||||||||||||
Income from consolidated joint ventures | $ 1,100,000 | $ 4,300,000 | 5,500,000 | 2,100,000 | ||||||||||||||||
Net income attributable to noncontrolling interests | 1,000,000 | (1,400,000) | (100,000) | |||||||||||||||||
Net income (loss) from joint ventures attributable to parent | 3,300,000 | 4,100,000 | 2,200,000 | |||||||||||||||||
Other assets | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | 6,000,000 | 8,400,000 | ||||||||||||||||||
Variable Interest Entity | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | 5,961,000 | 3,958,000 | ||||||||||||||||||
One Gallium Company | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 0 | |||||||||||||||||||
Impairment charge | $ 313,000 | |||||||||||||||||||
Number of gallium companies with impairment charge | company | 1 | |||||||||||||||||||
Donghai County Dongfang High Purity Electronic Materials Co., Ltd Investment | Donghai County Dongfang High Purity Electronic Materials Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 1,326,000 | 1,416,000 | ||||||||||||||||||
Percentage of ownership, equity method (in hundredths) | 46.00% | |||||||||||||||||||
Beijing JiYa Semiconductor Material Co., Ltd Investment | Beijing JiYa Semiconductor Material Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 1,621,000 | |||||||||||||||||||
Percentage of ownership, equity method (in hundredths) | 39.00% | |||||||||||||||||||
Xilingol Tongli Germanium Co. Ltd Investment | Xilingol Tongli Germanium Co. Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 25 | 1,700,000 | ||||||||||||||||||
Percentage of ownership, equity method (in hundredths) | 25.00% | |||||||||||||||||||
Xiaoyi XingAn Gallium Co., Ltd. | Xiaoyi XingAn Gallium Co., Ltd. | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 2,367,000 | |||||||||||||||||||
Percentage of ownership, equity method (in hundredths) | 25.00% | |||||||||||||||||||
Emeishan Jia Mei High Purity Metals Co., Ltd Investment | Emeishan Jia Mei High Purity Metals Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, equity method | $ 647,000 | 842,000 | ||||||||||||||||||
Percentage of ownership, equity method (in hundredths) | 25.00% | |||||||||||||||||||
Beijing JiYa Semiconductor Material Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Percentage of ownership, consolidated method (in hundredths) | 39.00% | 46.00% | 39.00% | 46.00% | ||||||||||||||||
Nanjing JinMei Gallium Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Percentage of ownership, consolidated method (in hundredths) | 100.00% | 100.00% | 97.00% | |||||||||||||||||
Additional percentage of ownership, consolidated method | 3 | |||||||||||||||||||
Beijing JiYa Semiconductor Material Co., Ltd | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Percentage of ownership, equity method (in hundredths) | 39.00% | |||||||||||||||||||
Nanjing JinMei Gallium Co., Ltd | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Number of new board representatives | employee | 2 | |||||||||||||||||||
Beijing Boyu Semiconductor Vessel Craftwork Technology Co Ltd | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Number of new board representatives | employee | 2 | |||||||||||||||||||
Majority-Owned Subsidiaries | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, consolidated method | $ 1,938,000 | 5,269,000 | ||||||||||||||||||
Nanjing JinMei Gallium Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, consolidated method | $ 592,000 | 592,000 | ||||||||||||||||||
Additional percentage of ownership, consolidated method | 12 | 3 | ||||||||||||||||||
Purchase of subsidiary shares from noncontrolling interest | $ 1,400,000 | $ 413,000 | $ 252,000 | |||||||||||||||||
Number of installments | installment | 2 | |||||||||||||||||||
Payment of first installment | $ 163,000 | 262,000 | ||||||||||||||||||
Payment of second installment | 1,200,000 | |||||||||||||||||||
Noncontrolling interests | $ 0 | |||||||||||||||||||
Remainder portion of payment | $ 151,000 | |||||||||||||||||||
Nanjing JinMei Gallium Co., Ltd Investment | Nanjing JinMei Gallium Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Percentage of ownership, consolidated method (in hundredths) | 100.00% | 83.00% | ||||||||||||||||||
Nanjing JinMei Gallium Co., Ltd Investment | Nanjing JinMei Gallium Co., Ltd | Nanjing JinMei Gallium Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Percentage of ownership, consolidated method (in hundredths) | 95.00% | |||||||||||||||||||
Beijing JiYa Semiconductor Material Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, consolidated method | $ 46 | 3,331,000 | ||||||||||||||||||
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd Investment | ||||||||||||||||||||
Summary of investments | ||||||||||||||||||||
Investments, consolidated method | $ 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 | ||||||||||||||||||||
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 | ||||||||||||||||||||
Percentage of ownership, consolidated method (in hundredths) | 63.00% | 70.00% |
Investments in Privately-Held_4
Investments in Privately-Held Raw Material Companies - Gain on Deconsolidation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Mar. 12, 2019 | |
Investments in Privately-Held Raw Material Companies | ||
Fair value of the consideration received | $ 366,000 | |
Fair value of the retained investment in Beijing JiYa Semiconductor Material Co., Ltd. | 2,040,000 | $ 2,040,000 |
Carrying value of non-controlling interest, net of accumulated other comprehensive income attributable to subsidiary | 617,000 | |
Derecognition of Beijing JiYa Semiconductor Material Co., Ltd.'s net asset | (2,848,000) | |
Gain recognized on deconsolidation of Beijing JiYa Semiconductor Material Co., Ltd. | 175,000 | |
Carrying value of retained noncontrolling investment | (1,559,000) | |
Gain on retained noncontrolling investment due to remeasurement | $ 481,000 |
Investments in Privately-Held_5
Investments in Privately-Held Raw Material Companies - Minority Investment Entities (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
AXT, Inc. Stockholders' Equity | |||
Summarized income information of all the minority investment entities that are not consolidated and accounted for under the equity method [Abstract] | |||
Net revenue | $ 5,458,000 | $ 8,549,000 | $ 6,152,000 |
Gross profit (loss) | 558,000 | 1,675,000 | 482,000 |
Operating (loss) | (700,000) | (778,000) | (938,000) |
Net (loss) | (1,876,000) | (1,080,000) | (1,694,000) |
Five 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 | 18,991,000 | 33,212,000 | 24,053,000 |
Gross profit (loss) | 2,013,000 | 6,457,000 | 1,739,000 |
Operating (loss) | (2,266,000) | (3,152,000) | (3,676,000) |
Net (loss) | (3,000,000) | (4,750,000) | (4,798,000) |
Summarized balance sheet information of all the minority investment entities that are not consolidated and accounted for under the equity method [Abstract] | |||
Current assets | 22,144,000 | 31,525,000 | |
Noncurrent assets | 11,990,000 | 26,889,000 | |
Current liabilities | 13,726,000 | 24,670,000 | |
Noncurrent liabilities | 112,000 | ||
Minority investment entities | |||
Entity (loss) excluding impairment | (1,900,000) | (1,100,000) | (1,700,000) |
Minority Investment Entities [Member] | |||
Minority investment entities | |||
Dividends received | 362,000 | 0 | $ 0 |
Undistributed retained earnings | $ 1,200,000 | $ 2,500,000 |
Balance Sheets Details - Other
Balance Sheets Details - Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Components of other assets | ||
Equity method investments | $ 5,961 | $ 8,422 |
Value added tax receivable, long term | 2,708 | 1,845 |
Other intangible assets | 1,124 | 1,048 |
Other assets | 10 | 672 |
Other assets, Total | $ 9,803 | $ 11,987 |
Balance Sheets Details - Accrue
Balance Sheets Details - Accrued Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Components of accrued liabilities | |||
Accrued compensation and related charges | $ 3,307,000 | $ 3,440,000 | |
Preferred stock dividends payable | 2,901,000 | 2,901,000 | |
Payable in connection with construction | 1,447,000 | 2,912,000 | |
Payable in connection with land restoration of Nanjing JinMei factory | 703,000 | ||
Accrued professional services | 630,000 | 706,000 | |
Advance from customers | 396,000 | 476,000 | |
Accrued product warranty | 387,000 | 236,000 | $ 133,000 |
Current portion of operating lease liabilities | 319,000 | ||
Other personnel-related costs | 180,000 | 202,000 | |
Accrued income taxes | 171,000 | 99,000 | |
Payable in connection with repurchase of subsidiaries shares | 151,000 | 1,147,000 | |
Other tax payable | 50,000 | 261,000 | |
Accrual for sales returns | 26,000 | 47,000 | |
Deferred government grant income in connection with purchase of land | 1,000,000 | ||
Dividends payable by consolidated joint ventures | 0 | 504,000 | $ 533,000 |
Other accrued liabilities | 1,013,000 | 1,440,000 | |
Accrued liabilities, Total | $ 11,681,000 | $ 15,371,000 |
Bank Loans and Line of Credit (
Bank Loans and Line of Credit (Details) - USD ($) | Feb. 05, 2020 | Sep. 12, 2019 | Aug. 09, 2019 | Dec. 26, 2018 | Nov. 06, 2018 | Sep. 30, 2018 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||||||
Repayment of principal amount | $ 291,000 | ||||||
Interest paid | $ 3,000 | ||||||
Proceeds from lines of credit | $ 2,800,000 | $ 2,800,000 | $ 5,814,000 | ||||
Bank loan | 5,747,000 | ||||||
LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Variable rate spread (as a percent) | 2.00% | ||||||
Beijing Tongmei Xtal Technology | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 5,800,000 | ||||||
Variable rate spread (as a percent) | 0.40% | ||||||
Annual interest rate at end | 4.70% | ||||||
Letter of credit | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 1,000,000 | ||||||
Bank of China | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 2,900,000 | ||||||
Annual interest rate at end | 4.40% | ||||||
Bank loan | $ 291,000 | ||||||
Bank of China | Secured Debt | Prime Rate | |||||||
Debt Instrument [Line Items] | |||||||
Variable rate spread (as a percent) | 0.04% | ||||||
Wells Fargo Bank | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 10,000,000 | ||||||
Wells Fargo Bank | Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 7,000,000 | ||||||
Wells Fargo Bank | Subsequent Event | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Variable rate spread (as a percent) | 2.50% | ||||||
Wells Fargo Bank | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Loans outstanding | 0 | ||||||
Letters of credit outstanding | $ 0 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Oct. 27, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Preferred stock, shares issued (in shares) | 883,000 | 883,000 | |||
Cumulative annual dividend rate (as a percent) | 5.00% | 5.00% | |||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||
Preferred stock, shares outstanding (in shares) | 883,000 | 883,000 | |||
Preferred stock, value | $ 3,532 | $ 3,532 | |||
Liquidation preference over common stock (in dollars per share) | $ 4 | $ 4 | |||
Stock repurchase program, authorized amount | $ 5,000 | ||||
Shares repurchased (in shares) | 0 | 0 | 0 | 908,000 | |
Average price of shares repurchased (in dollars per share) | $ 2.52 | ||||
Total purchase price | $ 2,300 | ||||
Stock repurchase program remaining authorized repurchase amount | $ 2,700 | ||||
Preferred stock dividends payable | $ 2,901 | $ 2,901 | |||
Series A Preferred Stock | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Preferred stock dividends payable | $ 2,900 |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock Repurchase Program - Ownership Interest in Consolidated Subsidiaries (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders’ Equity and Stock Repurchase Program | |||||||||||
Net income (loss) attributable to AXT, Inc. | $ (2,049) | $ (898) | $ 1,451 | $ (1,104) | $ (1,061) | $ 3,939 | $ 3,901 | $ 2,875 | $ (2,600) | $ 9,654 | $ 10,148 |
Increase (decrease) in paid-in capital for: | |||||||||||
Purchase of subsidiary shares from noncontrolling interest | (74) | 187 | |||||||||
Net transfers to noncontrolling interests | (74) | 187 | |||||||||
Net income (loss) attributable to AXT, Inc., net of transfers to noncontrolling interests | $ (2,674) | $ 9,841 |
Employee Benefit Plans and St_3
Employee Benefit Plans and Stock-Based Compensation (Details) - shares | 1 Months Ended | 12 Months Ended | ||||
May 31, 2019 | May 31, 2015 | May 31, 2013 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected term | 6 years 1 month 6 days | 5 years 9 months 18 days | 5 years 9 months 18 days | |||
1997 Stock Option Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for grant (in shares) | 1,928,994 | |||||
2007 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized for issuance (in shares) | 1,300,000 | |||||
Number of additional shares authorized for issuance (in shares) | 2,000,000 | |||||
2007 Equity Incentive Plan | Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 3 years | |||||
2007 Equity Incentive Plan | Restricted Stock Awards | Time based vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 3 years | |||||
2007 Equity Incentive Plan | Restricted Stock Awards | Performance Based Vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 12 months | |||||
2007 Equity Incentive Plan | Maximum | Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected term | 10 years | |||||
2015 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized for issuance (in shares) | 399,562 | |||||
Number of additional shares authorized for issuance (in shares) | 1,600,000 | 3,000,000 | ||||
Number of shares available for grant (in shares) | 1,000,000 | |||||
2015 Equity Incentive Plan | Consultant | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 1 year | |||||
2015 Equity Incentive Plan | Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 4 years | |||||
2015 Equity Incentive Plan | Restricted Stock Awards | Time based vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 3 years | |||||
2015 Equity Incentive Plan | Restricted Stock Awards | Performance Based Vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period, minimum | 12 months | |||||
2015 Equity Incentive Plan | Maximum | Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected term | 10 years |
Employee Benefit Plans and St_4
Employee Benefit Plans and Stock-Based Compensation - Options (Details) - Options - USD ($) $ / shares in Units, shares in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options Outstanding [Roll Forward] | ||||
Options outstanding, beginning of period (in shares) | 2,654 | 2,666 | 3,294 | |
Granted (in shares) | 430 | 246 | 184 | |
Exercised (in shares) | (113) | (238) | (762) | |
Canceled and expired (in shares) | (18) | (20) | (50) | |
Options outstanding, end of period (in shares) | 2,953 | 2,654 | 2,666 | 3,294 |
Options vested and unvested options expected to vest, net of forfeitures, end of period (in shares) | 2,914 | |||
Options exercisable, end of period (in shares) | 2,169 | |||
Weighted-average Exercise Price [Roll Forward] | ||||
Options outstanding, beginning of period (in dollars per share) | $ 4.09 | $ 3.81 | $ 3.38 | |
Granted (in dollars per share) | 3.06 | 5.77 | 8.99 | |
Exercised (in dollars per share) | 2.37 | 2.64 | 3.25 | |
Canceled and expired (in dollars per share) | 4.47 | 4.40 | 3.47 | |
Options outstanding, end of period (in dollars per share) | 4 | 4.09 | 3.81 | $ 3.38 |
Options vested and unvested options expected to vest, net of forfeitures (in dollars per share) | 4 | |||
Options exercisable, end of period (in dollars per share) | 3.81 | |||
Weighted-average grant date fair value of stock options granted (in dollars per share) | $ 1.48 | $ 2.74 | $ 3.67 | |
Weighted average Remaining Contractual Life [Abstract] | ||||
Options outstanding | 5 years 11 months 12 days | 6 years 3 months 11 days | 6 years 10 months 13 days | 7 years 2 months 23 days |
Options vested and unvested options expected to vest, net of forfeitures, end of period | 5 years 10 months 24 days | |||
Option exercisable, end of period | 4 years 9 months 29 days | |||
Aggregate Intrinsic Value [Abstract] | ||||
Options outstanding, beginning of period | $ 2,720,000 | $ 13,149,000 | $ 5,301,000 | |
Exercised | 266,000 | 666,000 | 4,030,000 | |
Options outstanding, end of period | 3,040,000 | $ 2,720,000 | $ 13,149,000 | $ 5,301,000 |
Options vested and expected to vest, end of period | 3,001,000 | |||
Options exercisable, end of period | $ 2,484,000 |
Employee Benefit Plans and St_5
Employee Benefit Plans and Stock-Based Compensation - Options Exercise Prices (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Options outstanding, shares (in shares) | shares | 2,953 |
Weighted-average Exercise Price (in dollars per share) | $ 4 |
Weighted-average Remaining Contractual Life | 5 years 11 months 12 days |
Options Vested and Exercisable, Shares (in shares) | shares | 2,169 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 3.81 |
$2.14 - $2.14 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 2.14 |
Range of exercise price, maximum (in dollars per share) | $ 2.14 |
Options outstanding, shares (in shares) | shares | 11 |
Weighted-average Exercise Price (in dollars per share) | $ 2.14 |
Weighted-average Remaining Contractual Life | 4 years 3 months 29 days |
Options Vested and Exercisable, Shares (in shares) | shares | 11 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 2.14 |
$2.18 - $2.18 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 2.18 |
Range of exercise price, maximum (in dollars per share) | $ 2.18 |
Options outstanding, shares (in shares) | shares | 540 |
Weighted-average Exercise Price (in dollars per share) | $ 2.18 |
Weighted-average Remaining Contractual Life | 5 years 10 months 2 days |
Options Vested and Exercisable, Shares (in shares) | shares | 540 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 2.18 |
$2.29 - $2.36 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 2.29 |
Range of exercise price, maximum (in dollars per share) | $ 2.36 |
Options outstanding, shares (in shares) | shares | 358 |
Weighted-average Exercise Price (in dollars per share) | $ 2.32 |
Weighted-average Remaining Contractual Life | 4 years 1 month 24 days |
Options Vested and Exercisable, Shares (in shares) | shares | 358 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 2.32 |
$2.47 - $2.91 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 2.47 |
Range of exercise price, maximum (in dollars per share) | $ 2.91 |
Options outstanding, shares (in shares) | shares | 342 |
Weighted-average Exercise Price (in dollars per share) | $ 2.71 |
Weighted-average Remaining Contractual Life | 3 years 11 months 19 days |
Options Vested and Exercisable, Shares (in shares) | shares | 341 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 2.71 |
$3.06 - $3.06 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 3.06 |
Range of exercise price, maximum (in dollars per share) | $ 3.06 |
Options outstanding, shares (in shares) | shares | 430 |
Weighted-average Exercise Price (in dollars per share) | $ 3.06 |
Weighted-average Remaining Contractual Life | 9 years 10 months 6 days |
$4.79 - $4.79 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | $ 4.79 |
Range of exercise price, maximum (in dollars per share) | $ 4.79 |
Options outstanding, shares (in shares) | shares | 129 |
Weighted-average Exercise Price (in dollars per share) | $ 4.79 |
Weighted-average Remaining Contractual Life | 1 year 9 months 26 days |
Options Vested and Exercisable, Shares (in shares) | shares | 129 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 4.79 |
$5.21 - $5.21 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 5.21 |
Range of exercise price, maximum (in dollars per share) | $ 5.21 |
Options outstanding, shares (in shares) | shares | 471 |
Weighted-average Exercise Price (in dollars per share) | $ 5.21 |
Weighted-average Remaining Contractual Life | 6 years 9 months 26 days |
Options Vested and Exercisable, Shares (in shares) | shares | 370 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 5.21 |
$5.61 - $5.77 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 5.61 |
Range of exercise price, maximum (in dollars per share) | $ 5.77 |
Options outstanding, shares (in shares) | shares | 325 |
Weighted-average Exercise Price (in dollars per share) | $ 5.73 |
Weighted-average Remaining Contractual Life | 7 years 2 months 16 days |
Options Vested and Exercisable, Shares (in shares) | shares | 146 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 5.68 |
$5.83 - $7.95 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 5.83 |
Range of exercise price, maximum (in dollars per share) | $ 7.95 |
Options outstanding, shares (in shares) | shares | 223 |
Weighted-average Exercise Price (in dollars per share) | $ 6.41 |
Weighted-average Remaining Contractual Life | 2 years 4 months 2 days |
Options Vested and Exercisable, Shares (in shares) | shares | 207 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 6.29 |
$9.50 - $9.50 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of exercise price, minimum (in dollars per share) | 9.50 |
Range of exercise price, maximum (in dollars per share) | $ 9.50 |
Options outstanding, shares (in shares) | shares | 124 |
Weighted-average Exercise Price (in dollars per share) | $ 9.50 |
Weighted-average Remaining Contractual Life | 7 years 9 months 26 days |
Options Vested and Exercisable, Shares (in shares) | shares | 67 |
Options Vested and Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 9.50 |
Employee Benefit Plans and St_6
Employee Benefit Plans and Stock-Based Compensation - RSU (Details) - USD ($) $ / shares in Units, shares in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted Average Grant Date Fair Value [Roll Forward] | |||
Common stock reserved for future issuance | 4,940 | ||
Restricted Stock Awards | |||
Shares [Roll Forward] | |||
Non-vested, beginning of period (in shares) | 633 | 480 | 325 |
Granted (in shares) | 554 | 344 | 312 |
Vested (in shares) | (228) | (181) | (157) |
Forfeited (in shares) | (20) | (10) | |
Non-vested, end of period (in shares) | 939 | 633 | 480 |
Weighted Average Grant Date Fair Value [Roll Forward] | |||
Non-vested, beginning of period (in dollars per share) | $ 6.85 | $ 7.13 | $ 3.27 |
Granted (in dollars per share) | 3.60 | 6.02 | 9.15 |
Vested (in dollars per share) | 6.46 | 6.04 | 3.13 |
Forfeited (in dollars per share) | 7.16 | 6.65 | |
Non-vested, end of period (in dollars per share) | $ 5.02 | $ 6.85 | $ 7.13 |
Total fair value of restricted stock awards vested | $ 1,500,000 | $ 1,100,000 | $ 490,000 |
Unrecognized compensation expense related to restricted stock awards | $ 4,200,000 | ||
Weighted average remaining contractual terms | 1 year 7 months 6 days | ||
Common stock reserved for future issuance | 939 | ||
Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock options exercised (in shares) | 113 | 238 | 762 |
Intrinsic value of options exercised | $ 266,000 | $ 666,000 | $ 4,030,000 |
Weighted Average Grant Date Fair Value [Roll Forward] | |||
Common stock reserved for future issuance | 2,953 | ||
2015 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation costs related to unvested stock options not yet recognized | $ 1,400,000 | ||
Value of estimated forfeitures | $ 110,000 | ||
Weighted-average period of amortization | 2 years 10 months 24 days | ||
Weighted Average Grant Date Fair Value [Roll Forward] | |||
Common stock reserved for future issuance | 1,048 |
Employee Benefit Plans and St_7
Employee Benefit Plans and Stock-Based Compensation - Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 2,346 | $ 1,925 | $ 1,405 |
Net effect on net income (loss) | $ 2,346 | $ 1,925 | $ 1,405 |
Shares used in computing basic net income (loss) per share | 39,487,000 | 39,049,000 | 37,444,000 |
Shares used in computing diluted net income (loss) per share | 39,487,000 | 40,265,000 | 38,966,000 |
Effect on basic net income per share | $ (0.06) | $ (0.05) | $ (0.04) |
Effect on diluted net income per share | $ (0.06) | $ (0.05) | $ (0.04) |
Cost of Revenue [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 125 | $ 92 | $ 39 |
Selling, General and Administrative [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | 1,778 | 1,520 | 1,146 |
Research and Development [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total stock-based compensation | $ 443 | $ 313 | $ 220 |
Options | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock options grants in period | 430,000 | 246,000 | 184,000 |
Weighted-average grant date fair value of stock options granted (in dollars per share) | $ 1.48 | $ 2.74 | $ 3.67 |
Employee Benefit Plans and St_8
Employee Benefit Plans and Stock-Based Compensation - Assumptions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average assumptions [Abstract] | |||
Expected term | 6 years 1 month 6 days | 5 years 9 months 18 days | 5 years 9 months 18 days |
Volatility (in hundredths) | 49.50% | 46.60% | 46.50% |
Risk-free interest rate (in hundredths) | 1.67% | 3.09% | 2.10% |
Retirement Savings Plan [Abstract] | |||
Period after which all full time employees are eligible to participate in the savings plan | 90 days | ||
Contributions to the retirement savings plans | $ 176,000 | $ 180,000 | $ 149,000 |
Maximum | |||
Retirement Savings Plan [Abstract] | |||
Maximum percentage of employer matching contribution if employees contribute at least 6% of base pay (in hundredths) | 4.00% | ||
Minimum | |||
Retirement Savings Plan [Abstract] | |||
Minimum percentage of employee contribution to get 4% of employer's contribution (in hundredths) | 6.00% |
Guarantees (Details)
Guarantees (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Product Warranty [Abstract] | ||
Period of warranty | 12 months | |
Change in warranty accrual [Roll Forward] | ||
Beginning accrued product warranty | $ 236,000 | $ 133,000 |
Accruals for warranties issued | 522,000 | 289,000 |
Adjustments related to pre-existing warranties including expirations and changes in estimates | 227,000 | 87,000 |
Cost of warranty repair | (598,000) | (273,000) |
Ending accrued product warranty | $ 387,000 | $ 236,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Loss Carryforwards [Line Items] | |||
Non-U.S. income included in income (loss) before tax | $ 2,800,000 | $ 6,500,000 | $ 6,400,000 |
Current: | |||
State | 27,000 | 5,000 | 2,000 |
Foreign | 535,000 | 933,000 | 790,000 |
Total current | 562,000 | 938,000 | 792,000 |
Total provision for income taxes | $ 562,000 | $ 938,000 | $ 792,000 |
Reconciliation of effective income tax rates and U.S. statutory federal income tax rate [Abstract] | |||
Statutory federal income tax rate (as a percent) | 21.00% | 21.00% | 35.00% |
State income taxes, net of federal tax benefits (as a percent) | (2.10%) | ||
Valuation allowance (as a percent) | (173.00%) | (2.60%) | (139.50%) |
Rate change (as a percent) | 100.80% | ||
Stock-based compensation (as a percent) | (21.80%) | 0.30% | (10.40%) |
Foreign tax rate differential (as a percent) | 137.70% | (11.40%) | (10.30%) |
Foreign income tax incentive (as a percent) | 32.20% | (2.90%) | (7.00%) |
Foreign tax incentives (as a percent) | 2.60% | 55.60% | |
Section 78 gross up | 11.70% | ||
Foreign tax credit (as a percent) | (30.60%) | ||
Tax effect in equity method loss or gain from unconsolidated affiliates (as a percent) | (47.80%) | 3.20% | 2.90% |
Foreign-derived intangible income (as percent) | (2.40%) | ||
Others (as a percent) | (1.00%) | 0.10% | (0.90%) |
Effective tax rate (as a percent) | (54.80%) | 7.90% | 7.30% |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 14,979,000 | $ 15,735,000 | |
Accruals, reserves and other | 3,011,000 | 2,100,000 | |
Credit carryforwards | 1,685,000 | 1,685,000 | |
Operating lease liability | 209,000 | ||
Gross deferred tax assets | 19,884,000 | 19,520,000 | |
Valuation allowance | (19,691,000) | (19,520,000) | |
Total deferred tax assets | 193,000 | ||
Deferred tax liabilities: | |||
Operating lease right-of-use assets | (193,000) | ||
Increase (decrease) in valuation allowance | $ 200,000 | (2,600,000) | $ (46,300,000) |
Realized benefits of tax rate reduction (as a percent) | 10.00% | ||
Reconciliation of beginning and ending amount of the gross unrecognized tax benefits [Roll Forward] | |||
Gross unrecognized tax benefits beginning balance | $ 14,557,000 | 14,557,000 | 14,557,000 |
Gross unrecognized tax benefits ending balance | 14,557,000 | 14,557,000 | 14,557,000 |
Unrecognized tax benefit would favorably impact the effective tax rate in future periods if recognized | 14,600,000 | ||
Domestic Tax Authority | |||
Deferred tax liabilities: | |||
Operating loss carryforwards | 58,300,000 | ||
Tax credit carryforwards | $ 1,700,000 | ||
Foreign Tax Authority | |||
Deferred tax liabilities: | |||
EIT income tax rate (as a percent) | 25.00% | ||
Preferential tax rate (as a percent) | 15.00% | ||
Benefit from foreign tax rate | $ 211,000 | $ 764,000 | $ 599,000 |
Net Income (Loss) per Share (De
Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||||||||||
Net income (loss) attributable to AXT, Inc. | $ (2,049) | $ (898) | $ 1,451 | $ (1,104) | $ (1,061) | $ 3,939 | $ 3,901 | $ 2,875 | $ (2,600) | $ 9,654 | $ 10,148 |
Less: Preferred stock dividends | (177) | (177) | (177) | ||||||||
Net income (loss) available to common stockholders | $ (2,777) | $ 9,477 | $ 9,971 | ||||||||
Denominator: | |||||||||||
Denominator for basic net income (loss) per share - weighted-average common shares | 39,487 | 39,049 | 37,444 | ||||||||
Effect of dilutive securities: | |||||||||||
Denominator for dilutive net income (loss) per common shares | 39,487 | 40,265 | 38,966 | ||||||||
Basic net income per share: | |||||||||||
Net income (loss) attributable to AXT, Inc. | $ (0.07) | $ 0.24 | $ 0.27 | ||||||||
Net income (loss) to common stockholders | $ (0.05) | $ (0.02) | $ 0.04 | $ (0.03) | $ (0.03) | $ 0.10 | $ 0.10 | $ 0.07 | (0.07) | 0.24 | 0.27 |
Diluted net income per share: | |||||||||||
Net income (loss) attributable to AXT, Inc. | (0.07) | 0.24 | 0.26 | ||||||||
Net income (loss) to common stockholders | $ (0.05) | $ (0.02) | $ 0.04 | $ (0.03) | $ (0.03) | $ 0.10 | $ 0.10 | $ 0.07 | $ (0.07) | $ 0.24 | $ 0.26 |
Options | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 1,106 | 1,339 | |||||||||
Weighted-average shares: | |||||||||||
Securities excluded from diluted net income (loss) per share as the impact is anti-dilutive (in shares) | 2,953 | 266 | 86 | ||||||||
Restricted Stock Awards | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 110 | 183 | |||||||||
Weighted-average shares: | |||||||||||
Securities excluded from diluted net income (loss) per share as the impact is anti-dilutive (in shares) | 939 | 227 | 63 |
Segment Information and Forei_3
Segment Information and Foreign Operations - Product Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue by product type | |||
Revenue | $ 83,256 | $ 102,397 | $ 98,673 |
Substrates | |||
Revenue by product type | |||
Revenue | 67,849 | 81,008 | 78,619 |
Raw materials and others | |||
Revenue by product type | |||
Revenue | $ 15,407 | $ 21,389 | $ 20,054 |
Segment Information and Forei_4
Segment Information and Foreign Operations - Segment and Geographical Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | 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 | $ 83,256 | $ 102,397 | $ 98,673 |
Long-lived assets by geographic region, net of depreciation: | |||
Long-lived assets | 100,341 | 82,280 | |
China | |||
Long-lived assets by geographic region, net of depreciation: | |||
Long-lived assets | 99,272 | 81,835 | |
North America (primarily the United States) | |||
Long-lived assets by geographic region, net of depreciation: | |||
Long-lived assets | 1,069 | 445 | |
Reportable Geographical Components | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | 83,256 | 102,397 | 98,673 |
Reportable Geographical Components | China | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | 26,796 | 31,492 | 24,962 |
Reportable Geographical Components | Europe (primarily Germany) | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | 18,178 | 22,013 | 23,956 |
Reportable Geographical Components | Taiwan | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | 16,204 | 20,078 | 18,279 |
Reportable Geographical Components | North America (primarily the United States) | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | 8,228 | 10,021 | 8,352 |
Reportable Geographical Components | Asia Pacific (excluding China, Taiwan, and Japan) | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | 7,592 | 8,488 | 9,866 |
Reportable Geographical Components | Japan | |||
Net revenues reported for products shipped to customers in corresponding geographic region [Abstract] | |||
Revenue | $ 6,258 | $ 10,305 | $ 13,258 |
Other (expense) income (Details
Other (expense) income (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other (expense) income | |||
Foreign exchange gain (loss) | $ 321,000 | $ 165,000 | $ (602,000) |
Gain on available-for-sale securities | 77,000 | ||
Gain from local China government subsidy | 808,000 | ||
Other income (expense) | (182,000) | 187,000 | (28,000) |
Other (expense) income, Total | $ 947,000 | $ 352,000 | $ (553,000) |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Jan. 28, 2020 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 |
Leases | ||||
Term of royalty agreement | 8 years | |||
Aggregate amount payable towards royalty | $ 7,000,000 | |||
Royalty expense | 565,000 | $ 526,000 | ||
Credit of royalty expense | $ 10,000 | $ 49,000 | ||
Dingxing | ||||
Leases | ||||
Total investment agreement value | $ 90,000,000 | |||
Kazuo | ||||
Leases | ||||
Total investment agreement value | 15,000,000 | |||
Kazuo | Beijing BoYu Semiconductor Vessel Craftwork Technology Co | ||||
Leases | ||||
Total investment agreement value | $ 8,000,000 | |||
Subsequent Event | Sumitomo Electric Industries | Formal cross license and covenant agreement | ||||
Leases | ||||
Payment period to Sumitomo | 10 years |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)ft² | Jan. 01, 2019USD ($) | |
Leases | ||
Area of leased property (in square feet) | ft² | 19,467 | |
Operating lease, option to extend | true | |
Operating lease, extension term | 3 years | |
Variable lease payments | $ 0 | |
Residual value guarantee | 0 | |
Operating lease right-of-use assets | 2,938 | |
Operating lease liability | $ 3,014 | |
Lease, Practical Expedients, Package [true false] | true | |
ASU 2016-02 | ||
Leases | ||
Operating lease right-of-use assets | $ 1,086 | |
Operating lease liability | 1,100 | |
Adjustment. | ASU 2016-02 | ||
Leases | ||
Operating lease right-of-use assets | $ 1,100 | $ 1,086 |
Operating lease liability | $ 1,100 |
Commitments and Contingencies_3
Commitments and Contingencies - Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Future minimum lease payments | |
2020 | $ 452 |
2021 | 549 |
2022 | 565 |
2023 | 556 |
2024 | 267 |
Thereafter | 1,223 |
Total minimum lease payments | 3,612 |
Less: Interest | (598) |
Present value of lease obligations | $ 3,014 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Long-term portion of lease obligations |
Less: Current portion | $ (319) |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities, Current |
Long-term portion of lease obligations | $ 2,695 |
Commitments and Contingencies_4
Commitments and Contingencies - Leases - Weighted-Average Remaining Lease Term and Discount Rate (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases | |
Weighted-average remaining lease term (years) | 7 years 11 months 9 days |
Weighted-average discount rate | 4.61% |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | $ 267 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 2,072 |
Commitments and Contingencies_5
Commitments and Contingencies - Leases - Components of Lease Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease expense | |
Operating lease | $ 358 |
Short-term lease expense | 60 |
Total | $ 418 |
Unaudited Quarterly Consolida_3
Unaudited Quarterly Consolidated Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Unaudited Quarterly Consolidated Financial Data | |||||||||||
Revenue | $ 18,410 | $ 19,841 | $ 24,797 | $ 20,208 | $ 22,232 | $ 28,626 | $ 27,120 | $ 24,419 | $ 83,256 | $ 102,397 | $ 98,673 |
Gross profit | 3,865 | 5,759 | 8,506 | 6,695 | 5,850 | 10,614 | 11,010 | 9,573 | 24,825 | 37,047 | 34,475 |
Net income (loss) attributable to AXT, Inc. | $ (2,049) | $ (898) | $ 1,451 | $ (1,104) | $ (1,061) | $ 3,939 | $ 3,901 | $ 2,875 | $ (2,600) | $ 9,654 | $ 10,148 |
Net income (loss) attributable to AXT, Inc. per share, basic (in dollar per share) | $ (0.05) | $ (0.02) | $ 0.04 | $ (0.03) | $ (0.03) | $ 0.10 | $ 0.10 | $ 0.07 | $ (0.07) | $ 0.24 | $ 0.27 |
Net income (loss) attributable to AXT, Inc. per share, diluted (in dollar per share) | $ (0.05) | $ (0.02) | $ 0.04 | $ (0.03) | $ (0.03) | $ 0.10 | $ 0.10 | $ 0.07 | $ (0.07) | $ 0.24 | $ 0.26 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Feb. 05, 2020 | Jan. 28, 2020 | Nov. 06, 2018 |
LIBOR | |||
Subsequent Events | |||
Spread | 2.00% | ||
Wells Fargo Bank | |||
Subsequent Events | |||
Maximum borrowing capacity | $ 10 | ||
Subsequent Event | Wells Fargo Bank | |||
Subsequent Events | |||
Maximum borrowing capacity | $ 7 | ||
Subsequent Event | Wells Fargo Bank | LIBOR | |||
Subsequent Events | |||
Spread | 2.50% | ||
Subsequent Event | Sumitomo Electric Industries | Formal cross license and covenant agreement | |||
Subsequent Events | |||
Aggregate fixed cost | $ 2 | ||
Installment Payable Period | 10 years |