AXT Completes First Tranche Private Equity Investment in China
December 09 2020 - 9:05AM
AXT, Inc. (NasdaqGS: AXTI), a leading manufacturer of compound
semiconductor substrates, today announced that the first tranche of
the private equity investment in its wafer manufacturing company in
China, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), has
been fully funded. The first tranche investment totals
approximately $22.5 million. Three funds within the Haitong Private
Equity Group make up the first tranche investors: Liaoning Haitong
New Energy Low-Carbon Industry Equity Investment Fund Co., Ltd.,
Liaoning Haitong New Kinetic Energy Equity Investment Fund
Partnership (Limited Partnership) and Haitong Innovation Securities
Investment Co., Ltd.
AXT previously announced on November 16, 2020 a
strategic plan to access China’s capital markets and progress to an
initial public offering by Tongmei on the Shanghai Stock Exchange’s
Sci-Tech innovAtion boaRd (the “STAR Market”). To qualify for a
STAR Market listing, Tongmei is required to have multiple
independent shareholders. The first major step in this process is
engaging reputable private equity firms in China to invest funds in
Tongmei. In exchange for approximately a 7.14 percent minority
interest in Tongmei, private equity firms will invest approximately
$50 million. The second tranche of approximately $26.5 million is
expected to fund in January 2021. The second tranche investment
documents have not yet been executed.
“We are pleased to have completed the first
tranche funding so quickly,” said Morris Young, CEO. “This is an
exciting time for our company as the applications and customer
opportunities for which we have been preparing over the last two
years are now taking shape. The materials we produce are proving to
be an essential part of many of the technologies that will define
advancements in telecommunications, networking, healthcare,
consumer products, and other verticals for many years to come. We
believe that our success to date in positioning ourselves for an
IPO of Tongmei on the STAR Market reflects the strong market demand
for our products and our future growth, as well as our
well-established presence in China. We appreciate The Haitong
Group’s enthusiasm for our business and its cooperation throughout
this process. We look forward to continuing to build a long and
positive relationship.”
The process of going public on the STAR Market
includes several periods of review and, therefore, is a lengthy
process. Tongmei does not expect to accomplish this goal until
mid-2022. Today, AXT has posted on its website a brief summary of
the plan and the process. The listing of Tongmei on China’s STAR
Market will not change the status of AXT, Inc. as a U.S. public
company. AXT is a U.S. company, headquartered in Fremont,
California. It will continue to be listed on the Nasdaq Global
Select Market under the symbol AXTI.
About AXT, Inc. AXT is a
material science company that develops and manufactures
high-performance compound and single element semiconductor
substrate wafers comprising indium phosphide (InP), gallium
arsenide (GaAs) and germanium (Ge). The company’s substrate wafers
are used when a typical silicon substrate wafer cannot meet the
performance requirements of a semiconductor or optoelectronic
device. End markets include 5G infrastructure, data center
connectivity (silicon photonics), passive optical networks, LED
lighting, lasers, sensors, power amplifiers for wireless devices
and satellite solar cells. AXT’s worldwide headquarters are in
Fremont, California where the company maintains its sales,
administration and customer service functions. AXT has
manufacturing facilities in China and, as part of its
supply chain strategy, has partial ownership in ten companies in
China producing raw materials. For more information, see AXT’s
website at http://www.axt.com.
Forward-Looking
Statements
The foregoing paragraphs contain forward-looking
statements within the meaning of the Federal securities laws,
including, for example, statements regarding Tongmei signing
investment documents to secure the second tranche of private equity
investment funds into Tongmei and subsequently receiving such
funds, completing other preliminary steps in connection with the
proposed listing of shares of Tongmei on the STAR Market, being
accepted to list shares of Tongmei on the STAR Market and the
timing and completion of such listing of shares of Tongmei on the
STAR Market. Additional examples of forward-looking statements
include statements regarding the market demand for our products,
our growth prospects and opportunities for continued business
expansion, including technology trends and new applications, our
market opportunity and ability to compete for business
opportunities, elevating our manufacturing, enhancing our business
processes and financial structure, our relocation and our
expectations with respect to our business prospects and financial
results. These forward-looking statements are based upon
assumptions that are subject to uncertainties and factors relating
to the company’s operations and business environment, which could
cause actual results to differ materially from those expressed or
implied in the forward-looking statements contained in the
foregoing discussion. These uncertainties and factors include, but
are not limited to: the lack of interest of private equity funds in
China to invest in Tongmei, the withdrawal, cancellations or
requests for redemptions by private equity funds in China of
investments in Tongmei, the timing of receipt of private equity
funds into Tongmei, the administrative challenges in satisfying the
requirements of various government agencies in China in connection
with the investments in Tongmei and the listing of shares of
Tongmei on the STAR Market, continued open access to companies to
list shares on the STAR Market, investor enthusiasm for new
listings of shares on the STAR Market and geopolitical tensions
between China and the United States. Additional uncertainties and
factors include, but are not limited to, the timing and receipt of
significant orders; the cancellation of orders and return of
product; emerging applications using chips or devices fabricated on
our substrates; end-user acceptance of products containing chips or
devices fabricated on our substrates; our ability to bring new
products to market; product announcements by our competitors; the
ability to control costs and improve efficiency; the ability to
utilize our manufacturing capacity; product yields and their impact
on gross margins; the relocation of manufacturing lines and ramping
of production; possible factory shutdowns as a result of air
pollution in China; COVID-19 or other outbreaks of a contagious
disease; tariffs and other trade war issues; the financial
performance of our partially owned supply chain companies; policies
and regulations in China; and other factors as set forth in the
company’s Annual Report on Form 10-K, quarterly reports on Form
10-Q and other filings made with the Securities and Exchange
Commission. Each of these factors is difficult to predict and many
are beyond the company’s control. The company does not undertake
any obligation to update any forward-looking statement, as a result
of new information, future events or otherwise.
Contacts:
Gary
Fischer Chief
Financial
Officer (510)
438-4700
Leslie
Green Green
Communications Consulting,
LLC (650)
312-9060
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