Company Performance - AXT reported a quarterly loss of $0.19 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.13, and compared to a loss of $0.03 per share a year ago, indicating an earnings surprise of -46.15% [1] - The company posted revenues of $19.36 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.50%, but down from $22.69 million in the same quarter last year [2] - AXT has surpassed consensus EPS estimates two times over the last four quarters and topped consensus revenue estimates three times during the same period [2] Stock Outlook - AXT shares have declined approximately 35.5% since the beginning of the year, while the S&P 500 has only declined by -5.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $24.15 million, and for the current fiscal year, it is -$0.26 on revenues of $102.01 million [7] - The estimate revisions trend for AXT is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Electronics - Semiconductors industry, to which AXT belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact AXT's stock performance [5]

AXT (AXTI) Q1 2025 Earnings Call May 01, 2025 04:30 PM ET Company Participants Leslie Green - Investor RelationsGary Fischer - CFO, VP & Corporate SecretaryMorris Young - Co-Founder, CEO & ChairmanRoss Cole - Equity Research AssociateTim Bettles - VP Business Development, Strategic Sales and MarketingMatthew Bryson - MD - Equity Research Conference Call Participants Richard Shannon - Senior Research AnalystDave Kang - Senior Analyst Operator Good afternoon, everyone, and welcome to AXT's First Quarter twent ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $19.4 million, down from $25.1 million in Q4 2024 and $20.2 million in Q1 2024 [5][6] - Non-GAAP gross margin was negative 6.1% in Q1 2025, compared to 17.9% in Q4 2024 and 27.3% in Q1 2024 [6][9] - Non-GAAP net loss for Q1 2025 was $8.2 million or $0.19 per share, compared to a loss of $4.3 million or $0.10 per share in Q4 2024 [9][10] Business Line Data and Key Metrics Changes - Revenue from indium phosphide was $3.8 million, gallium arsenide was $6.7 million, and germanium substrates were $600,000 in Q1 2025 [5] - Revenue from consolidated raw material joint ventures was $8.3 million, indicating healthy demand [5] Market Data and Key Metrics Changes - Revenue distribution: Asia Pacific region accounted for 83%, Europe 11%, and North America 6% in Q1 2025 [5] - The Chinese data center optical interconnect market is estimated to be one-third of the global market, with increasing sales of indium phosphide within China [16] Company Strategy and Development Direction - The company is focusing on optimizing growth opportunities in China, particularly in high-speed data center connectivity and sensors for autonomous driving [25] - Plans to improve gross margins through a more measured approach to production and addressing yield issues [21][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by geopolitical factors and trade restrictions but expressed optimism about future growth opportunities in the Chinese market [15][25] - Expected healthy double-digit growth for revenue from data center applications in China in Q2 2025 [17] Other Important Information - The company is preparing for an IPO of its subsidiary in China, Tongmei, on the STAR Market [11] - Cash and cash equivalents increased to $38.2 million as of March 31, 2025, from $33.8 million at the end of 2024 [10] Q&A Session Summary Question: Yield issues for semi-insulating gallium arsenide - Management acknowledged yield problems due to aggressive market penetration but believes solutions are in place for recovery [30][32] Question: Timeline for resolving yield issues - Management indicated that while the product is established, changes in customer specifications require careful recalibration, which may take time [36][38] Question: Indium phosphide permitting process - Management expressed confidence in obtaining permits by mid-June, allowing for backlog shipments [41][46] Question: Risk of losing customers due to shipping delays - Management believes they hold a significant market share and that customers are willing to wait for shipments [55][60] Question: Impact of tariffs on gross margin - Management noted that tariffs are a concern but not a significant factor affecting gross margins at this time [72][78]

Financial Performance - Revenue for Q1 2025 was $19.4 million, down 22.8% from $25.1 million in Q4 2024 and down 14.8% from $22.7 million in Q1 2024[4] - GAAP gross margin for Q1 2025 was (6.4)%, a significant decline from 17.6% in Q4 2024 and 26.9% in Q1 2024[4] - Non-GAAP gross margin for Q1 2025 was (6.1)%, compared to 17.9% in Q4 2024 and 27.3% in Q1 2024[5] - GAAP net loss for Q1 2025 was $8.8 million, or $0.20 per share, compared to a net loss of $5.1 million, or $0.12 per share, in Q4 2024[7] - Non-GAAP net loss for Q1 2025 was $8.2 million, or $0.19 per share, compared to a net loss of $4.3 million, or $0.10 per share, in Q4 2024[7] - GAAP net loss for Q1 2025 was $8.798 million, compared to a net loss of $2.083 million in Q1 2024, representing a significant increase in losses[16] - Non-GAAP net loss for Q1 2025 was $8.152 million, compared to a net loss of $1.274 million in Q1 2024, indicating a worsening financial performance year-over-year[16] - GAAP loss from operations for Q1 2025 was $10.275 million, up from a loss of $3.347 million in Q1 2024, reflecting increased operational challenges[16] - Non-GAAP loss from operations for Q1 2025 was $9.629 million, compared to a loss of $2.538 million in Q1 2024, highlighting a decline in operational efficiency[16] - GAAP gross profit for Q1 2025 was $(1.241) million, a decrease from a gross profit of $6.094 million in Q1 2024, indicating a significant drop in profitability[16] - Non-GAAP gross profit for Q1 2025 was $(1.178) million, down from $6.199 million in Q1 2024, further emphasizing the decline in revenue generation[16] - GAAP net loss per diluted share for Q1 2025 was $(0.20), compared to $(0.05) in Q1 2024, reflecting a deterioration in per-share performance[16] - Non-GAAP net loss per diluted share for Q1 2025 was $(0.19), compared to $(0.03) in Q1 2024, indicating a negative trend in earnings per share[16] - Total shares used to compute diluted net income per share increased to 43,554 thousand in Q1 2025 from 42,987 thousand in Q1 2024[16] - Stock-based compensation expense for Q1 2025 was $646 thousand, compared to $809 thousand in Q1 2024, showing a reduction in compensation costs[16] Operational Challenges - The decline in gross margin was primarily due to a 58% reduction in indium phosphide sales, yield reduction on gallium arsenide wafers, and under-absorbed factory overhead[5] - AXT is taking a more measured approach to market share expansion to improve execution and production levels[3] Strategic Focus - The company is focusing on growth opportunities in China, particularly in high-speed data center connectivity and LIDAR for autonomous driving[2] - The STAR Market IPO application for Tongmei is under review, with hopes to complete the process in the coming months[6] Asset Management - AXT's total assets as of March 31, 2025, were $333.5 million, a decrease from $339.3 million as of December 31, 2024[15]

Financial Performance - Total revenue increased by $23.6 million, or 31.1%, in 2024 to $99.4 million from $75.8 million in 2023, driven by higher demand for InP and GaAs wafer substrates [288]. - Gross profit increased by $10.5 million in 2024, resulting in a gross margin of 24.0% compared to 17.6% in 2023 [297]. - Revenue from customers in China increased by 41.1% in 2024, primarily due to higher demand for GaAs, InP, and Ge wafer substrates [293]. - Revenue from customers in Taiwan surged by 63.0% in 2024, primarily due to increased demand for GaAs and InP wafer substrates [293]. - Revenue from North America increased by 14.9% in 2024, primarily due to higher demand for InP wafer substrates [293]. Expenses and Costs - Research and development expenses rose by $2.5 million, or 20.4%, to $14.5 million in 2024, mainly due to higher development costs for GaAs and InP wafer substrates [301]. - Selling, general and administrative expenses increased by $1.3 million, or 5.7%, to $24.1 million in 2024, attributed to higher legal and professional service expenses [299]. - Interest expense, net decreased by $187,000, or 12.2%, to $1.34 million in 2024 compared to $1.53 million in 2023, while it increased by $456,000, or 42.6%, from $1.07 million in 2022 [303]. Assets and Liabilities - The company recorded accounts receivable net balance of $25.6 million as of December 31, 2024, compared to $19.3 million in 2023, reflecting an increase of approximately 32.1% [266]. - The allowance for credit losses decreased by $432,000 during 2024, while it increased by $272,000 in 2023, indicating a shift in credit risk assessment [266]. - As of December 31, 2024, the company had an inventory reserve of $24.1 million for excess and obsolete inventory, up from $21.9 million in 2023, representing a 10.1% increase [268]. - The accrued product warranties decreased to $451,000 in 2024 from $703,000 in 2023, a reduction of approximately 35.8% due to fewer quality claims [267]. - The company has no impairment of long-lived assets as of December 31, 2024, and 2023, indicating stable asset valuations [276]. Tax and Deferred Assets - The company’s deferred tax assets have been reduced to zero by a valuation allowance, reflecting uncertainties in realizing these assets [281]. - The company recorded a valuation allowance against net deferred tax assets of $20.7 million and $17.5 million for the years 2024 and 2023, respectively [309]. - Provision for income taxes increased by $974,000, or 608.8%, to $1.1 million in 2024 from $0.2 million in 2023, while it decreased by $2.0 million, or 92.7%, from $2.2 million in 2022 [308]. Cash Flow and Financing - Net cash used in operating activities was $12.1 million in 2024, primarily due to a net loss of $11.8 million and a net change in operating assets and liabilities of $11.7 million [315]. - Total cash, restricted cash, and cash equivalents decreased by $16.3 million in 2024, ending the year at $33.8 million [313]. - Net cash used in investing activities was $4.4 million in 2024, primarily for property, plant, and equipment [318]. - The company has no current intentions to distribute earnings to investors under its corporate structure, maintaining cash management policies for funding between subsidiaries [330]. - The company reported net cash provided by financing activities of $38.0 million for 2022, with $53.1 million from short-term loans in China and $2.2 million from capital increases in subsidiary shares [323]. Investments and Equity - The company sold approximately 7.28% of Tongmei to private equity investors for about $49 million as part of its IPO process on the STAR Market [331]. - The IPO application for Tongmei was accepted for review by the Shanghai Stock Exchange on January 10, 2022, and approved on July 12, 2022 [332]. - Dividends received from PRC subsidiaries were approximately $2.4 million, $4.3 million, and $2.9 million for the years ended December 31, 2024, 2023, and 2022, respectively [329]. - Minority investments under the fair value method totaled $0.6 million as of December 31, 2024, unchanged from 2023, while investments under the equity method increased from $12.5 million in 2023 to $14.1 million in 2024 [354]. Regulatory and Economic Environment - The company faced significant economic challenges due to escalating trade tensions, with U.S. tariffs on imports from China increasing to 70% [286]. - The company anticipates potential delays in export permit processing for indium phosphide substrates due to new regulations, impacting future operations [286]. - Approximately 92% of the company's revenue in 2024 came from customers located outside of North America [292]. Miscellaneous - The company has no off-balance sheet financing arrangements or special purpose entities established [341]. - The company has committed to a total investment of approximately $90 million in Dingxing, China, including cash for land and buildings, equipment, and local employment [344]. - The company has instituted a foreign currency hedging program to mitigate foreign exchange exposure related to Japanese yen, which may also be applied to the Chinese renminbi in the future [351]. - A registration statement was filed with the SEC to offer up to $60 million in various securities for working capital and potential acquisitions [335].

Group 1 - AXT, Inc. reported a 23% year-over-year increase in revenues for Q4 2024, driven by high demand for indium phosphide wafers [1] - The growth in AI computing and data centers is significantly contributing to the increased demand for the company's products [1]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $25.1 million, up from $23.6 million in Q3 2024 and $20.4 million in Q4 2023, reflecting a strong year-over-year growth [6][16] - Non-GAAP gross margin in Q4 was 17.9%, down from 24.3% in Q3 2024 and 23.2% in Q4 2023, primarily due to lower benefits from recycling and under-absorption of manufacturing overhead [9][10] - Non-GAAP net loss for Q4 was $4.3 million or $0.10 per share, compared to a loss of $2.1 million or $0.05 per share in Q3 2024 and a loss of $2.8 million or $0.07 per share in Q4 2023 [12][17] Business Line Data and Key Metrics Changes - Revenue breakdown for Q4 2024: Indium phosphide at $9.1 million, gallium arsenide at $5.4 million, germanium substrates at $1.6 million, and revenue from joint ventures at $9.0 million [7][8] - The company reported a non-GAAP operating loss of $5.4 million in Q4 2024, compared to a loss of $2.6 million in Q3 2024 and a loss of $2.7 million in Q4 2023 [11] Market Data and Key Metrics Changes - Revenue from Asia Pacific accounted for 79%, Europe for 11%, and North America for 10% in Q4 2024 [8] - The top five customers contributed approximately 36% of total revenue, with one customer exceeding the 10% threshold [8] Company Strategy and Development Direction - The company plans to list its subsidiary Tongmei on the STAR Market in Shanghai, viewing it as a good IPO candidate [18] - AXT is focusing on expanding its portfolio of raw material companies to create a valuable supply chain and explore new markets [22][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to new trade restrictions on indium phosphide exports but expressed confidence in navigating the permit process [23][24] - The company anticipates a revenue impact of approximately $4 million to $5 million in Q1 2025 due to these restrictions but expects to recover once permits are secured [25][41] Other Important Information - The company reported a total revenue of $99.4 million for fiscal year 2024, a 31% increase from $75.8 million in fiscal year 2023 [16][17] - Cash, cash equivalents, and investments decreased by $5.0 million to $33.8 million as of December 31, 2024 [13] Q&A Session Summary Question: Concerns about gross margins and operating expenses - Management expects gross margins to remain low in Q1 due to reduced indium phosphide sales but anticipates recovery to mid-20s in subsequent quarters [49] - R&D investments in indium phosphide are ongoing, with expected benefits from improved yields and performance [50][51] Question: Opportunities in datacenters and photodetectors - Growth is expected in both photodetector and laser segments, particularly with the transition to silicon photonics and EML applications [56][58] Question: Impact of export controls on revenue - Management believes that the permitting process for indium phosphide will be manageable, similar to gallium arsenide, and expects to secure permits for non-military applications [70] Question: Revenue recovery in Q2 - If permits are obtained, management is optimistic about recovering lost sales in Q2 and potentially achieving strong revenue levels [77] Question: Market share in the wireless sector - The HBT market is estimated at $80 million to $100 million annually, with a target to grow market share from 10% to approximately 13% to 14% this year [80][81] Question: Growth outlook for indium phosphide - Expected growth for indium phosphide in 2025 is around 20%, driven by demand in AI and silicon photonics [91][92]

Revenue Performance - Revenue for the fourth quarter of 2024 was $25.1 million, a 31% increase year-on-year from $20.4 million in Q4 2023[3] - Fiscal year 2024 revenue reached $99.4 million, up from $75.8 million in fiscal year 2023, representing a 31% increase[7] Gross Margin - GAAP gross margin for fiscal year 2024 improved to 24.0% of revenue, compared to 17.6% in fiscal year 2023[7] - Non-GAAP gross margin for fiscal year 2024 was 24.3%, up from 18.1% in fiscal year 2023[7] Net Loss - GAAP net loss for fiscal year 2024 was $11.6 million, or $0.27 per share, an improvement from a net loss of $17.9 million, or $0.42 per share in fiscal year 2023[7] - Non-GAAP net loss for fiscal year 2024 was $8.5 million, or $0.20 per share, compared to a net income of $14.3 million, or $0.34 per share in fiscal year 2023[7] - AXT, Inc. reported a GAAP net loss of $5,088,000 for Q4 2024, compared to a net loss of $3,621,000 in Q4 2023, representing an increase in loss of approximately 40.5% year-over-year[16] - Non-GAAP net loss for the year ended December 31, 2024, was $8,527,000, compared to $14,341,000 in 2023, showing an improvement of about 40.3%[16] Operational Performance - AXT, Inc. reported a GAAP loss from operations of $6,165,000 for Q4 2024, compared to a loss of $3,560,000 in Q4 2023, indicating a year-over-year increase of 73.1%[16] - The company’s operating expenses for the year ended December 31, 2024, were $38,639,000, an increase from $34,887,000 in 2023, representing an increase of about 10.1%[16] Assets and Liabilities - Total current assets decreased to $158,272,000 as of December 31, 2024, down from $170,656,000 in 2023, reflecting a decline of approximately 7.3%[15] - Cash and cash equivalents decreased to $22,833,000 in 2024 from $37,752,000 in 2023, a decline of about 39.5%[15] - Total liabilities decreased to $84,406,000 in 2024 from $89,555,000 in 2023, a reduction of approximately 5.5%[15] - The company’s accumulated deficit increased to $43,664,000 in 2024 from $32,040,000 in 2023, reflecting a rise of approximately 36.4%[15] - AXT, Inc. reported total stockholders' equity of $216,331,000 as of December 31, 2024, down from $227,483,000 in 2023, a decrease of approximately 4.9%[15] Market and Technical Advancements - AXT has successfully penetrated the cell phone market, which is estimated to be close to a $100 million addressable market[2] - The company is advancing technical specifications of its materials to address next-generation connectivity challenges, particularly in cloud and data center infrastructure[2] - AXT's subsidiary, Tongmei, is in the process of an IPO on the STAR Market, which is subject to review and approval by regulatory authorities[6] - The company aims to develop larger diameter substrates to enable next-generation technology innovations across various end-markets[12]

Revenue and Sales Performance - AXT's substrate product group generated 63% of consolidated revenue in 2023, while the raw materials product group accounted for 37%[157]. - AXT's consolidated revenue percentages for substrate and raw materials were 79% and 21% in 2022, and 75% and 25% in 2021, respectively[157]. - Revenue increased by $6.3 million, or 36.2%, to $23.6 million for the three months ended September 30, 2024, compared to $17.4 million for the same period in 2023[212]. - Revenue increased by $18.9 million, or 34.1%, to $74.3 million for the nine months ended September 30, 2024, compared to $55.4 million for the same period in 2023[213]. - Substrate revenue for the nine months ended September 30, 2024, increased by $16.8 million, or 48.0%, to $51.7 million from $34.9 million in the same period in 2023[214]. - Revenue in China increased by $13.6 million, or 47.3%, for the nine months ended September 30, 2024, primarily due to higher demand for GaAs, InP, and Ge wafer substrates[218]. - Revenue in Taiwan increased by $3.8 million, or 59.2%, for the nine months ended September 30, 2024, driven by higher demand for GaAs and InP wafer substrates[219]. - Revenue in North America increased by $1.8 million, or 260.8%, for the three months ended September 30, 2024, primarily due to higher demand for InP wafer substrates[217]. - Revenue in Europe increased by $2.1 million, or 23.8%, for the nine months ended September 30, 2024, primarily due to higher demand for GaAs and InP wafer substrates[220]. Product and Market Strategy - The demand for InP substrates is expected to increase due to growth in AI applications and high-speed data transfer needs in data centers[156]. - AXT's supply chain strategy includes partial ownership of raw material companies in China, providing pricing advantages and reliable supply[162]. - The company is focused on expanding its market presence and increasing sales through new product development and applications[150]. - AXT's substrates are used in various applications, including 5G infrastructure, fiber optics, and consumer electronics[156]. Manufacturing and Operations - AXT's manufacturing operations are primarily located in China, benefiting from lower costs compared to the US, Europe, or Japan[162]. - The relocation of gallium arsenide production lines was completed, with 100% of ingot production transferred to new facilities, enhancing capacity and technological sophistication[164]. - The company has invested in additional buildings and advanced equipment to support future capacity needs[164]. Financial Performance and Expenses - Gross profit for the nine months ended September 30, 2024, increased by $10.7 million, or 123.5%, to $19.4 million from $8.7 million for the same period in 2023[222]. - Gross margin as a percentage of revenue increased to 26.2% for the nine months ended September 30, 2024, compared to 15.7% for the same period in 2023[222]. - Selling, general and administrative expenses increased by $217,000, or 1.2%, to $17.7 million for the nine months ended September 30, 2024, compared to $17.4 million for the same period in 2023[225]. - Research and development expenses increased by $1.1 million, or 12.4%, to $10.4 million for the nine months ended September 30, 2024, primarily due to higher development expenses for crystal ingot processing[227]. Cash Flow and Liquidity - Cash and short-term investments decreased by $11.3 million in the nine months ended September 30, 2024, primarily due to net cash used in operating activities of $13.4 million[237]. - As of September 30, 2024, the principal source of liquidity was $38.8 million, consisting of cash of $24.9 million and restricted cash of $13.9 million[237]. - Net cash used in operating activities was $13.4 million for the nine months ended September 30, 2024, primarily due to a net loss before income attributable to noncontrolling interests of $6.1 million[239]. - The company has adequate cash and investments to meet operating needs and capital expenditures over the next 12 months[259]. Investments and Financing - The company has a total investment target of approximately $90 million in value, assets, and capital for its new manufacturing facility in Dingxing, China[262]. - The company expects to use net proceeds from a $60 million Shelf Registration Statement for working capital, capital expenditures, and potential acquisitions[258]. - The company secured a new line of credit amounting to $9.7 million, structured as a five-year bank loan with an interest rate of 6.5% per annum[255]. - The company recorded a foreign exchange gain of $0.2 million in 2023, down from $1.6 million in 2022, and a net foreign exchange loss of $0.4 million in 2021[266]. Regulatory and Geopolitical Risks - The company anticipates potential challenges related to geopolitical tensions and regulatory changes affecting its operations in China[150]. - Effective August 1, 2023, the PRC government requires export licenses for gallium and germanium-related materials, impacting shipment timelines[176]. - The company is subject to unique legal and operational risks associated with its corporate structure, which could materially affect operations and stock value[179]. Corporate Structure and Governance - AXT's PRC subsidiary, Tongmei, received a total investment of approximately $49 million from private equity firms, granting them a 7.28% redeemable noncontrolling interest[168]. - The company has no current intentions to distribute earnings to investors under its corporate structure[251]. - Approximately 7.28% of Tongmei was sold to private equity investors for approximately $49 million as part of the IPO process[252]. - Tongmei's IPO application was accepted for review by the Shanghai Stock Exchange on January 10, 2022, and approved on July 12, 2022[253].

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $23.6 million, down from $27.9 million in Q2 2024 and up from $17.4 million in Q3 2023 [4] - Non-GAAP gross margin in Q3 was 24.3%, compared to 27.6% in Q2 2024 and 11.3% in Q3 2023 [5] - Non-GAAP net loss for Q3 was $2.1 million or $0.05 per share, compared to a loss of $800,000 or $0.02 per share in Q2 2024 and a loss of $4.9 million or $0.12 per share in Q3 2023 [7] Business Line Data and Key Metrics Changes - Indium phosphide revenue was $6.8 million, driven by demand in data center applications and AI [4] - Gallium arsenide revenue was $6.6 million, reflecting a pullback after strong growth in Q2 [4] - Revenue from germanium substrates was $1.6 million, down from the prior quarter due to a strategic decision to avoid low-margin opportunities [4] Market Data and Key Metrics Changes - Revenue from Asia Pacific was 77%, Europe 12%, and North America 11% [5] - The top five customers accounted for approximately 29.4% of total revenue, with no single customer exceeding 10% [5] Company Strategy and Development Direction - The company is focusing on expanding its indium phosphide business, particularly in data center applications and high-speed optical connectivity [12] - Plans to list its subsidiary, Tongmei, on the STAR Market in Shanghai are ongoing, with optimism about the IPO due to recent economic stimulus in China [10][11] - The company aims to improve its cost structure and competitiveness in the gallium arsenide market by leveraging advancements from its 8-inch development to its 6-inch wafer production [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities in the indium phosphide sector, particularly related to data centers and AI [18] - The company anticipates a slight revenue increase in Q4 2024, driven by indium phosphide and raw material revenues, despite a decrease in germanium revenues [19] - Management noted that the market for low orbit satellites presents future opportunities, and they are strategically selective in their participation in the germanium substrate market [16] Other Important Information - Cash, cash equivalents, and investments decreased by $4.5 million to $38.8 million as of September 30, 2024 [7] - The company is fully licensed for gallium arsenide recycling, contributing positively to revenue and gross margin [15] Q&A Session Summary Question: Dynamics of the germanium business and pricing environment - Management noted that germanium raw material prices more than doubled, leading to a strategic decision to decline low-margin business opportunities [22] Question: Growth drivers for indium phosphide - Management highlighted strong demand for high-speed photo detectors in data centers and silicon photonics as key growth drivers [25][26] Question: Visibility and engagement in the silicon photonics market - Management confirmed active participation with key customers and a design win for a new product targeting silicon photonics and EML applications [28] Question: Opportunities in the HPT market - Management indicated a market size of $80 million to $100 million for HPT applications, with expectations of increasing market share due to competitive advantages [30][31] Question: Impact of China's stimulus on product lines - Management expects the stimulus to positively impact demand across various applications, including industrial lasers and LEDs [35] Question: Progress on the STAR listing - Management expressed cautious optimism about the IPO process, noting improvements in the Shanghai Stock Exchange environment due to economic stimulus [41][42]