Aixtron Aktiengesellschaft (AIXG)

TOP CONTRIBUTORS

Naveen Kasthuri

Phillip Lyon

Aixtron Aktiengesellschaft (AIXG) is a provider of deposition equipment equipment to the semiconductor and compound-semiconductor industry. The company's technology solutions are used by a diverse range of customers worldwide to build advanced components for electronic and opto-electronic applications based on compound, silicon, or organic semiconductor materials.^[1]

Business Growth

Aixtron's revenue growth shows an incredible 150% increase since 2009. Net income also increased tenfold.^[2] A combination of recessionary results in 2009, tailwinds in the foreign exchange market, and organic growth has pushed Aixtron from a 300 billion euro company in 2009 to nearly an 800 billion euro company in 2010.^[2]

Key Trends and Forces

Significant growth opportunity in the high-end lighting and notebook markets

AIXG's technology is well suited for the lighting market with the trend in motion away from the incandescent lightbulb to the LED lightbulb. Another area of LED application is the TV, PC and notebook display market. Notebooks is the most important of the three, since the incremental cost of using LEDs in notebooks is substantially lower than in TVs and high-end monitors. Most of the top notebook makers in the U.S. are optimistic about using LEDs in notebooks. Both HP and Dell already have LED-based models, and Apple has followed suit with its LED Cinema Display.

The market is characterized by commoditization

The semiconductor equipment market is nearing a level of commoditization that mirrors the semiconductor manufacturing market. For example, while the demand for LEDs is likely to increase, prices for LEDs, its manufacturing components, and sapphire are likely to weaken. LED prices have fallen in seven of the last eight quarters. Analyst reports indicate that prices for LEDs may plunge up to 90% over the next three years as competition in the industry intensifies and commoditization of the goods result.^[3] This will greatly reduce AIXG's high net margins in the future.

Competition

Aixtron's main competitors are:

• Cree (CREE)
• SemiLEDs Corporation (LEDS)
• Soitec (EPA:SOI)
• Veeco Instruments (VECO)
• RUBICON TECHNOLOGY, INC (RBCN)

Various private companies exist that also compete with Aixtron. The industry is intense with competition and companies try to improve their products and streamline their processes to cut costs and lower prices.

References

1. ↑ Reuters: Company Profile - AIXG
2. ↑ ^{2.0 2.1} Wikinvest SEC Files: AIXG 2010 20-F, Item 3: Selected Financial Data
3. ↑ Yahoo! Finance: LED Lighting Prices May Drop 90% As Competition Grows to Meet Demand 6/16/2011