AXTI - Earnings call transcript Q3 2020

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Operator

Good afternoon, everyone, and welcome to AXT's Third Quarter 2020 Financial Conference Call. Leading the call today is Dr. Morris Young, Chief Executive Officer; and Mr. Gary Fischer, Chief Financial Officer. My name is Joanna, and I will be your coordinator today. participants a all mode. time, this are listen-only in At and a follow Later, conduct session instructions we will question-and-answer will time. at that [Operator this reminder, as may And recorded. conference be Instructions] call a call now over to would I turn to like Ms. the Leslie Green, Relations Investor AXT. for yours. floor the Ma'am, is

Leslie Green

Joanna, everyone. and afternoon, good you, Thank

to other course to yields in the projections schedule begin, chips like utilize industry among environmental timing response our our in demand a the and contagious and the the COVID-XX sales company, uncertainties, the and you risks regulations in tariffs performance markets trade our or uncertainties China; and We market capacity, to their statements trade products. questions, will companies mix, delays company’s our applications, provide global other partially are conditions management’s the of emerging the to make chain and our disease; restrictions; that financial the political we fabricated materially. conference other in of call as for supply health on in regarding, using expenses, you to manufacturing conditions that we performance and as products; to markets trends your are regarding the the timeliness overall chemical of product events cause Before by uncertainties substrates, this and remind conditions, growing differ and including not on financial financial safety including of to economic owned or of outbreaks and global forward-looking improve competes, based impact costs These conditions environmental include efficiencies, I serve, control to but the and market statements wish and could that well in during events company on succeeding to restrictions. deal to caution such acceptance potential manufacturing increase relocation, customers including would are future of our future tariffs and regulations and results devices quarters things, limited and or comments with made current our ability we of which orders subject risks growth China, expected the actual increased and and expectations or and

In addition cause is link of Commission. turn the for axt.com. results our to quarter from of available our our call additional to call, on Exchange actual we may market press the Fischer now this website with third discussed periodic results. filed and contain the risk the of October through the XXXX. would materially conference website over to will online a Gary on call information of Investor to I XX, shortly available our reports XXXX. to at begin, today, note that factors release I Also, following that results want from current This differ financial the information refer expectations. our we for close that portion could are issued reporting in This a to review you company’s the available like Gary? we before Relations third at factors by Securities be and on These axt.com website be quarter

Gary Fischer

Thank you, Leslie.

of of we the time AXT. of and been many of Zooming China of flying. pandemic, this considerable Morris in As are amount because you a spend have year, I aware, instead But behalf on

morning. about our are we offices, in However, currently the both X:XX Beijing it and in is

we COVID and the mandatory which thing getting the see happening went we want and quarantine, unique glad a we when do what's the and all the we're to So opportunities was are AXT. excited rest through we tests it, that required our because getting of for experience. was that to whole And about stressful. XX-day we shareholders But visas about arrived, know the the

it's a we're here. not and We're leaving still yet. good trip been So

the XX% now increase in second quarter from the million, in from our Of million $XX.X So third million and sales more of Total increase substrate to quarter of quarter third than QX quarter $XX.X turn $XX.X XXXX XXXX. an the of $XX.X let's with in million were QX million XXXX. in QX. of total of in than the results $XX.X million XX% of the second revenue, revenue compared XXXX and more was $XX.X for

in quarter. up the QX. in revenue approximately This Total to $X.X QX $XXX,XXX. The XXX% third higher over conducting. $X.X XX.X% margin charge for were Total the quarter Asia are in revenue, $XX,XXX a profitable and our that's of five QX, which for material in ventures customers well companies to XX% of material good An includes manufacturing, XXXX. third raw revenue diversification the quarter. Operating quarter noteworthy some interesting a R&D of of collectively QX. was from net a $X.X accounted up. from a speaks XX%, We some in of of partially from combination was means in third with margin $XX,XXX. compared revenue income aspect income charge charge foreign was in was $X.X is third XXXX slightly was operating step joint in previous of supply product under million grew up that of because that, performance in and of base. quarter was XX% exchange for Pacific had we customer from XX%. of XX% mix, million, had the million these of interest was XX.X% By prior XXXX in work AXT in loss the in loss from improvement the Revenue even increased is a QX million expenses XXXX the of third due XX.X%, $XXX,XXX, was one of compensation with joint The for was of generated $XXX,XXX XXXX though of XXXX third margin that and from QX an of no we raw Other Gross the increase $X.X revenue. $XX,XXX tax as revenue North gross ventures gain QX So down companies. America quarter-to-quarter, XXXX. of Over development of chain This net gross our revenue $XXX,XXX up improvements two reached QX QX the quarter of QX quarter. total turned strong XX%, Operating quarter is it as from compared in top Europe profit $XXX,XXX. profit by consolidated of the profit method. stock comparison of $X.X in actually in a expenses. in from QX quarter $XXX,XXX QX, the prior the for was in in In the $XXX,XXX is SG&A was a that of net owned equity the Income operating decreased the net and a the the million connected $XXX,XXX. by million to

into $XXX,XXX QX the importing in tariff as the on XX% included China. Our of approximately results United a wafers result from States tariffs charge

of $X.XX a of quarter and of profit net a profit XXXX. a in count net or net of million diluted $X.XX $X.XX XXXX, share share. was For profit XX.XXX a in share in a The XXXX per net the loss second QX $XXX,XXX of share QX loss or $XXX,XXX a we or of of had per profit $XXX,XXX diluted we By per QX had comparison shares.

By at look $XX.X increased of $X.X balance about September it $XXX,XXX. XXth. the Let's Cash, was were sheet equivalents cash XX operating and by briefly. at million, actually This $XX.X a million. comparison investments June as but is of million cash decrease

why. Let explain me

we recall and summer, million $X.X reissue again. they pay has the China. we a bank customer been but China. may in requires last You that back now loan the in it loan renewed bank then That That's out loan took that

issued and which in back in So we but other full QX. bank amount QX the back paid half the QX half the our is October, in

slipped of October $X.X million that and decrease for cash been would into been by cash we would the offset have positive the quarter. Our have amount

cash the feel of the business and These model. work-in-progress, in million. sales. in good The $X.X was XX As result inventory quarter $XXX,XXX inventory by $X.X a CapEx and of consisted we fairly increased September about in decrease our about XX% amortization Net and goods. approximately XX% at our constant was million. was and in ended at Depreciation continue a $XX.X Ending our quarter decreased portions to million stay balance. result, finished raw third materials, cash management and of in X%

Morris? to for turn Dr. concludes I know our financial a review. of our review I business. call but fast And the this Young Morris over spoke now I'll Okay.

Morris Young

report our We're range. Gary. third earnings revenue and you, Thank pleased results to quarter solid above with guidance

world gallium used over increased revenue. in of This our and we optical the XG the that interconnects interconnects PON. applications seems sales XXG expectations, the broadband base we also is in market of such quarter, be our currently The and particularly user. laser networks and phosphide XXG to where also network strategic phosphide driven many laser to in prior In China. used delivered again the for That or reflecting believe power total adoption telecommunications access exceeding arsenide stations. indium end in by related the growth XG in Our being indium meaningful as was surpassed is momentum emerging strong growth will be XG saw parts the passive robust application

adoption new data the to also on-premise requirements hyperscale and migration cloud of of from center ongoing phosphide workloads build-out the XG data demand the continues. Remote in bandwidth of cloud. acceleration for indium work the has With in increases accelerated centers services capabilities,

data providers Some increase XX% as cited much cloud usage. as in have

photonics connectivity from center data in level our player -- a with XXXX. indirect relationship adoption steady the Our as has we're We sales transition as from sales both relationship. from a steadily healthy the throughout of believe direct to in a benefiting X direct Tier revenue been silicon well having -- overall center, a data at growth

direct ongoing report We the validation we of this and of high-volume prestigious is up believe are excited exacting applications in As -- a a some the we that of in result most qualification serve our the QX. need effort, strategic that ramping ability of began to to world. our to meet our and companies sales we

for expect be the is may news space applications, steady through center sales While QX quarter softer we market our that data relatively to a be in connectivity this indicating QX.

data high to and pace capacity to connectivity continue reliable infrastructure more hyperscale devices and number faster as keep the users, to applications. will ever-expanding be essential ahead, of scalable transition Looking centers with

Some the chain supply entire AXT. We for XXXG will than is the transition including that believe this center move for XXXG data faster to believe providers the news XXXG. a happen from to great equipment

our indium our applications. particularly of have substrates technology what we XXXX, we're low a for specifications made demand suited density defect we number phosphide a them growing own To and advancements. be in will investing of As discussed, the support key other in well believe

have level substantial six-inch As higher-volume substrates pace the the our Gary -- the R&D and advancement customer we market efforts and further increased applications. that believe diameter substrates and processes in has automation mentioned, indium about advancement excited has ramp the diameter We're strong to many with consistency. industry the bring in underway quality our manufacturing set we our AXT of will phosphide towards substrates. investing our are are also this larger of for progress. improve larger Equally we in this as our to long capability strong market will encouraged we enable to interest other by important,

investments our applications benefit serve of ability data PON our in customers core center. will to of and All these XG,

monitoring, new LiDAR. also care product the We in are in health positively and application consumer such ourselves categories, positioning as

whom volume We arsenide. spans completed. from growing now improving driven some gallium had with once move of from revenue customers automotive quarter and applications. building sales to multiple This again, us Turning with LED that QX, our other solid largely another by is growth are

applications also demand saw continued applications, including wireless We devices. by a IoT driven from Wi-Fi variety of

is arsenide resurgence growth last the applications enduring quarter, demand, it gallium appear be the through arsenide we is of for predict of do increased to believe we that mentioned but the going strength Collectively, of couple gallium in next a poised activities. development difficult to years. As substantial

cameras, augmented automotive world-facing New and biosensors include applications reality, sensors, virtual more. and may

LEDs believe with consume arsenide them the The for the use to LED LED green, pixel. will is chips. micro each contrast and space already an and to LED scale value less volume On brilliant will major lighting is power beyond. interest allow in for LED and this phosphide modular to the XXXX customer television being of we the significant Tier handheld early-stage blue exciting They Similar in development applications to are colors. indium in of may used from horizon very This and one driving arsenide are expressing the as new and real gallium confused Micro next that that be one market not should gallium X several micro our to screens nature for driver larger LED like add red, wafers diameter substrates. which are also provide sharper and mini wearable activities. follow devices one future. players large produce high-end devices expected

to underway substrates highly also arsenide have again the suitable reporting for we and to technology to larger Once we of such our gallium effort bring the As forward look our X-inch significant progress is a R&D producing to you. diameter requirement VGF market.

has capability to proud of our of Dingxing which been QX, our had valuable more ramp have the transitioning and the Kazou another manufacturing capacity or manufacturing continued growth now these amount timely. locations. differentiators. our competitive -- our the expand With of to opportunities in important capability I'm portfolio, our significant very milestone become never In across facilities of we

volume gallium early one this our arsenide benefit more reporting new of With state-of-the-art confident to Dingxing QX. Customers gallium such that volume its ramping is will improvement year now continue others in coming of been facility milestone from end facility. this have XX% out arsenide customers that this as largest XXX% approximately our of has consistency quality its or are who taking new since significant by of our One revenue as our ramp an and from the we and the new we're of of the lines.

revenue. -- travel not AXT a our week-long to In site conducted Beijing addition are have companies China quarantines to and visit we're our issue. they were sites. another have we and our They raw international manufacturing Tier customer Kazou that new And materials, employees in X two site, Dingxing site, turning visit two an is prior Yu these and finally, so results joint venture joint healthy our also PBM in and particular gallium consistent its the which Mei, other from arsenide Sales volume. continue to our venture consolidating gallium growth. to sales were positioning products as our see increase companies with Jin approximately In quarter. manufactures arsenide high-temperature continued crucibles Bo improving

years are account also that results and pleased we're we ventures positively joint which materials In two verticals other been using will last method are technologies healthcare, now we to years the many many the of applications contributed for QX. networking, excited the mentioned, Gary so in equity telecommunications, as be for that shape. net we to define are advancement over consumer taking in to addition In preparing essential collectively part come. -- of which of many our for for produce now, see our we closing, customers' many The to that and opportunities product years proving have

our ongoing elevate incremental and expected investment are the to of standards resources to several rigorous and In qualification concerted addition, provide to time that connected XXXX. -- making business opportunities processes in a meet we're of manufacturing

arsenide Gary gallium customer now and quarter manufacturing the being behind for This market now us be to turn poised my a of back we've believe clearly acceptance, the ourselves success ahead. our comments. effort evident concludes and largely of prepared an cornerstone the We call exciting new guidance. new With are for now differentiation. our facility our growth in our I Gary? will positioned relocation year to fourth

Gary Fischer

Thank Morris. you,

way. drivers demand leading discussed, remains Morris healthy, growth number As environment a of with the the

can is QX even believe for line us, with achieve than typically in bit or QX. a quarter we results better down we a While seasonally that

between be in $XX.X our QX be profit to believe of We that we approximately range will of $XX.X million shares. expect count the such, to will million. in to Share revenue As million net see $X.XX $X.XX. XX

This Okay. please? and I to questions. answer will be Joanna, you to comments. prepared do concludes Q&A our want glad your the handle Morris

Operator

have [Operator Craig-Hallum. a so Richard much. line coming you the We from from Shannon Sure. Thank Instructions] of question

open. line is Your

Richard Shannon

a most you can up to I we're substrate indium guessing and raw phosphide questions materials, of other for guidance Morris, and question, types in up you I'm guys. us kind by us answer. sequentially? Maybe, but help could revenues thanks expecting we're Can a your slightly here. quarter on Gary guess my Hi, give move the dynamics. perhaps expecting probably things here probably Thanks up, sense so But I'll will for flat ask taking the fourth China. be the and of early maybe how if wondering getting to with

Morris Young

Yes.

indium will up. phosphide think, I be

be germanium slightly raw be wireless is to down And slightly. and be going material will I going going down up. think, is semiconducting be and to LEDs to probably is flat

up. So to indium be phosphide is going

Richard Shannon

OpEx Okay. here assume you’re talking the gross And then, from talked I processes give here Are the $X.X from about the sustain on and questions quick maybe recently. for bit a as bottom quarter being to $X.XX guidance could bit margin investment we R&D a we last help would while? That's third margins $X.XX helpful. new can that here. these a a up see the to probably to of Any think, up quarter. gross on And in down up I about expecting line, here? trend get you flat you couple manufacturing you here, for us continued million

Gary Fischer

Yes.

comments. couple a So

we most gross on margin, we mid-XXs. to step made all, get can we of of up. good this We've back First a year that been think saying the

to yields pleased QX carried mix that. like of just to QX. the wise we're the keep away. sort probably and from Don't things flat it's with and get think it I But

for a higher it's will line couple a we more with into coming what definitely OpEx quarters. bit be So expected.

and not And now. going a million So range that somewhere forward, bit I right $X.X unwind then it $X.X try think. in we'll million, but

all of because R&D. this is So

thing happening. good a that's it's So

good. that's So

more questions? any Richard, So,

Richard Shannon

of few, Yes, the you relationship I'll and that sorts inventory obscure out here indirect A talking there. you're step quite -- your the direct Morris, any you about for you're others. about a of line also a look into environment with looking fourth the transition what that's from kind the question that of and an customer steady demand ask might takes coming of couple looks a a from now? talk puts but versus to customer right quarter for for and demand being real more just Can talking this kind about raw datacom

Morris Young

Yes. we're we the being redirect as a direct, order as sort concerned, company, of demand they the is very perspective, steady. be have But seeing think could supply put they is book still inventory. steady. inventory so their see or build From as sort are a we the don't they to from of summation sort we that much as because we of if steady. of our together, I line could indirect the far company inventory QX depleting But is visibility, that their large But

No. know don't we So really that.

Richard Shannon

looks good for and next Android Wanted get Maybe facility making either questions Okay. as what in terms That's more like Obviously, into of you're kind haven't of there. of the couple possibly fair. asked What we some about of quarters, some to couple a but a thinking into it for moving new your sense -- XD customers get even for we don't wanted ecosystem? to me. XD think sensing? year sensing entirely about Apple or you're the the progress we

Morris Young

excited we're about think new I facility. the Yes,

that customer I think the their device than rate is facility old us yield the higher telling have from we than actually one all one. more new the reports

going our our for to And one. which data specifics old facility actually and improvement also, We better the we're yield further than collecting new made and are improvement. manufacturing still more do have see, is

use to of as information, And this sensing of the that the next definitely. so point new doors going the data with will knock yes, we very on VCSEL year, XD opportunities, into strong definitely set

Richard Shannon

Fair here. Last the question, Okay. enough. line out I'll jump of

emerge process hints And talked about to any for your You this talked customers process? -- you material might may you again, manufacturing control manufacturing here. Can next obviously, quarter about talking that describe about or this specifically are customers about the some last to quarter, for and new statistical from and these allude us application that year. for working asking this on quality us that what you're emerge new improve

Morris Young

in purchasing guys, one process, both of a they this we're terms us our out going tell indium what both they what Actually, phosphide, direct their as product. quality wanted of mean, up the our need really set improve we I who with to technical and on Yes. that to well dealing it's as exactly visibility that, large support so do from indium us interestingly. have really customer lines arsenide, with phosphide of gallium our we

yield. buying development And either see and exactly extra so can that we to out that, what equipment see to they metrology what our of research or direct -- can their

budget. help lot. us will And purchasing that and shortly that our also and machines will several be increased that research we online So a we're development expect

So know the product what they about are -- customer excited front for the developing will think, they sort we're customer they the of And it, new ahead I are ramp. we that I doing schedule all all But the we in end. excited. the be with Tier customers. think, we're X solving and ahead are they when their of we're we're paying that, problem developing And existing exactly

phosphide, arsenide, gallium both its is answer the yes. as indium well as So

Richard Shannon

jump guys. I'll perspective. of Thank the out Appreciate you line. the

Morris Young

Richard. you, Thank

Operator

Thank you.

from comes Gus question from Northland. Richard the next Your of line

open/ Your line is

Gus Richard

for the Thanks Yes. question. taking

flat plus Just sounds favorable up. the to just phosphide going and in to takes gross in of fourth it fourth a bit puts I margin of would you're you up gross terms on commentary volume. margin the flat like it should mix in more quarter? indium on a quarter based Can expect of little be color have your on give to

Gary Fischer

Yes.

well, because of that's on modest -- us the you're are. want that I we track. think how just right I keep you kind to know so you're expectations,

So.

Morris Young

in let little jump so try me Richard a bit. to But here

help seeing us actually about I'm our excited our think which own I results also better from factory, yield. new

the you of are last on wafer it each And grow. But probably growth crystal mean cycle sort hour. longer longer because I doing because range is when a same the half thing. growth it to in processing tweak the takes we I think things longer takes end crystal only

to point get little concerned, probably want bit as growth crystal takes that But the as it can you you longer. quicker. far So is a

So And you into can the gain more I know, course a future. as mix growth are to there of think well. product does further going on we improvement think crystal big difference us Yes. I make

probably to would are they that big argue or two those steady or inefficiencies three start I labor as sites. force, So the -- from of our when we are two Also we suggest differentiators. also we manufacturing had a lot are

to Now sites we the there as are I the on we you force some well. labor more efficiency gain concentrating Would new moving steady and can think agree? more

Gary Fischer

That's Yes. Yes agree. I good color.

So.

Gus Richard

XXXX high to into margins XXs, XXs guess close for of XX. peaked think in years high couple ago thought Is next of moving So year? reasonable a your the to mid- a I

Gary Fischer

There I some will Gus detail haven't -- next done we've really been takes. that and hard numbers year. be in for puts so busy any haven't we

too more happy knowledgeable. I give your get I when I'm business not side people the would So to think feel of to more But in color aggressive. I encourage

it's and I wait but Yes. let's So -- think see.

So.

Gus Richard

just Okay. be on like up more driven fourth or It that final to more in Is the going quarter. sounds sequentially photonics? indium silicon PON by by And then one it's phosphide.

Morris Young

demand were very out from than PON. seeing strong of more PON. We definitely the It's

Gus Richard

I’ll it. Thanks. back Got jump in line. Okay.

Morris Young

Gus. Thanks,

Operator

you. Thank

comes Your from the next Financial. from Hamed line question of Khorsand BWS

is open. line Your

Hamed Khorsand

understand. to wanted just Hi. I

a And are larger next talking along year? lead spend that CapEx more Is far how higher going substrates. the you about on to You diameter those were to projects?

Morris Young

question. good a That's

-- are CapEx, built more building. think the in more and water, And concentrated enough. DI most we towards than think behind I have us I it's room argue I clean of our would those facilities

is incremental concerned a the as not And And so the I the is think has also equipment as think large. as equipment far I benefit.

We once only a development. buy finish the business, the we equipment will there's when

Gary Fischer

Yes.

related. we next tuning done but So and again numbers and year will CapEx in equipment trend more and believe be switch. less we going haven't facilities hard will to it yet, down It's up related to be specific,

in our about of are stuff XXXX. excited list. So of make we to are Right. is the customers. team There's we're it's CapEx of things that be the than excited higher these measurement at request not And some going that some take some on larger some the investing things to the surface metrology steps but whole

Morris Young

And we're lot a also doing automation. of

I I mean on maybe better quality a little the that end will we us think that have end. delivering in consistent bit But quality equipment. will side, and spending the front buying help on money back more us. help more automated the

Hamed Khorsand

Okay. And for going to other going after through going is normal a then you the of directly middle instead that customers customer direct to larger going Are on to go you? event be people?

Morris Young

is that No not it. it. driving its that It's wanted we're our initiative, customer They specific.

Gary Fischer

this the thing key that, The thinking to do to is we're enables their capability. Yes. they understand is customer what specific of have own API

from the buy So They're going us. buy if API a customer probably direct doesn't houses. to want to do API to going then they're from not

Hamed Khorsand

you. it That’s Thank for me. Okay.

Gary Fischer

to hear you from Good Hamed.

though. on Just your luck good stuff,

Operator

Ailon We [ph] from have question from Instructions] [Operator Nanocap Bushan another Growth Fund.

open. line Your is

Unidentified Analyst

Star guys. listing a you have quarter. question in Good a again. China? I growing made you're see to revenues making Exchange the or exploring on Excellent any progress have continued Hi possible progress regards with

Gary Fischer

that time a but I've about learn now have community of. looked mentioned Well aware think, it's to amount [ph] don't that it say it. in to yet your glad we're topic more. spent we topic. and we people as Ailon of I much at a more or have I a it I'm us Several and looking considerable It's very very can interesting into share

interest. fund other it. know something but you've the -- people mentioned yes, it's pointed and I out the in So management that Star have Several market of available is

So.

Unidentified Analyst

specifications would be would of second future? these them a that of only other that terms that gallium Sumitomo to uses supply you they require? who then -- other like Okay. company the is possible large assuming possible a arsenide kind you them And reach in there second or probably could indium there Apple source source the high-purity the some Are is phosphide than another to I'm be could available with of in

Morris Young

see, think let I I question. me that -- how answer

of of and they terms their think their competitor in one to phosphide. ramp importantly, We market I number lead ability world over in production. if our are a we terms demand think share were we most up we believe have to meet quality think indium in I capacity,

I indium ahead X-inch think we now we are capability very I proud develop of are think phosphide And about pack. we the capability.

the they our where us. always think as we competitors. we can come want to to very do keenly competition far them aware Yes But we're I with we customer of our use whether is. to the to multiple attract try choice best compete to As want suppliers? to

Unidentified Analyst

on analysts months on on plan what's And the really and of to the single press other or awareness appreciate a have we Okay. with that. the that anything really during passed anything new through three Is you there I release the to these company communicating uniqueness Investor company Relations increase and business? seen Street do think I your of The lastly haven't periods. than going any time front,

Gary Fischer

IR things have working Yes Yes. again suggested to of that And of that we people of be been community from more And it a there we've got to be came is. kind We several number when a China. have -- on. we'd actually honest proactive. couple sidetracked

visas we arose have China but to they of set suspended. So they're had. the China, because come always to to visas go -- to new all a opportunity We

go Morris We and quarantine been we've a We've for to visas. had and our here COVID long we going be then we extended of to the couple time to So are testing pretty I and had process both months. -- a through a here. to do get had

do But we communicate up. it's coming some think a just a lot to and promote. you'll been and be we have So do lot of going that have a anyway, And that to we on. seeing path

So.

Morris Young

Yes.

is last that announce probably many a yet, phosphide, how announce diameter times we if right? you style X-inch a traditional indium a Our long we time. can hear larger But And will you. for do

think mean... I and to need on do ourselves working are a it. better we we little promote bit I

Unidentified Analyst

I Okay. it. Thank you. appreciate

Gary Fischer

you to more. and the But challenge we and we we're hear do going accept

will. we Yes. -- it's So

Unidentified Analyst

Okay.

Gary Fischer

hear Good in luck from you. your to Good business.

Operator

Thank you.

a Shannon Craig-Hallum. We from from have follow-up Richard question

line is Your open.

Richard Shannon

guys. Hey,

here? fourth you're quarter? it on thinking And Gary, can CapEx give for a in then sense Just us that sense do one we XXXX before expect of to term, low CapEx. don't us year you down said give be the averaging longer you're level what of if kind you higher on XXXX. kind mid follow-up again? then you get of in millions question look quick of about Can single-digit a CapEx. thinking for to to you're When you a And what you per

Gary Fischer

Yes.

think than will down It QX. -- won't greater current a I bit. QX trend be QX probably

it to keep So When back year. we -- I will think haven't and down. probably it, do studied but trending single-digits, not next I get

double-digits. say low would I year year be could will the think after, be single-digit that then still But it Richard. I next

more into take market need we're and to the fruit to earlier. that bear thinking about. account Morris have also we then we're going However, they stuff trends that level for customers us indicated If of the

customer buying we're example, a for that Specifically asked buy. machine a us to

so that. may some And we of get

XXXX, So I I -- but -- I maybe analysis think below we a double-digits say I've get done can yet. have grounds-up but can't that

So.

Morris Young

Yes.

here. in chime to try me Let

normal in I our terms mean quarter think think million right. range? $X million you're the CapEx we in I have couple I to a is $X years

Gary Fischer

year. A

Morris Young

of with means And increase then machines ahead on stepped must more that A our up will I facility coming. more already CapEx that new year, capacity. our But built year. the factory. new is time, a the say, would of our customer that course mean actually keeps with right, that the so we if going And CapEx

its good rather think I than bad news. news

Gary Fischer

Yes.

But an -- what advantage. state-of-the-art in me can vision the customers vision. we're fact who I large for own have their think let we're up. it's appealing that's this -- that our just again, explaining is going significantly only to add Ailon underline was [ph] the company fact saying be invested especially but quickly us the that and capacity demand facilities very going The a now to interesting we gives clearly

So rate, our be if it run than will we'll higher and that converges reasons all will for all CapEx but celebrate. probably be then historical good

yes.. So,

Richard Shannon

Okay. Appreciate me. the perspective for guys. you. That's Thank all

Gary Fischer

All right. Good luck to you. Joanna?

Operator

to like conference turn am Morris Dr. Yes, back to I sir. the questions no at further showing would time. CEO. Young, I this

Morris Young

XXth participating November Conference part call Select We our Annual for Craig-Hallum conference you on Alpha this Thank taking were in XX. in quarter.

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Operator

today's for this conference all concludes Thank you and call. gentlemen, you Ladies speakers. Thank joining.

You may now disconnect.

AXT (AXTI) 29 Oct 202020 Q3 Earnings call transcript