What Aixtron (AIXA) Said on Its Q3 Earnings Call

Key Points

• Orders surged: Aixtron’s third-quarter orders reached €275 million, more than double the prior-year level, while revenue rose 54% year over year to €184 million. The company maintained its 2026 outlook for €560 million in revenue and a 17%–20% EBIT margin.
• Profitability and cash flow strengthened: Gross margin increased to 48% and EBIT rose to €57 million, helped by higher revenue and favorable mix. Free cash flow reached €128 million in the quarter, supported by a sharp increase in customer advance payments.
• Optoelectronics is driving growth: AI and data-center demand for optical interconnect equipment is fueling Aixtron’s backlog, which management says provides visibility into 2027. GaN power-electronics demand is beginning to recover, while silicon-carbide and MicroLED markets remain comparatively weak.

Aixtron ETR: AIXA reported third-quarter revenue growth and a sharp increase in orders as demand for optical communications equipment used in artificial intelligence and data-center infrastructure continued to strengthen.

CEO Felix Grawert said new orders reached €275 million in the third quarter, more than double the prior-year level and 40% above the second quarter. Orders were driven primarily by optoelectronics, with power-electronics demand also beginning to improve. Third-quarter revenue totaled €184 million, within the company’s quarterly guidance range of €180 million plus or minus €20 million.

The company maintained its full-year 2026 outlook, targeting revenue of €560 million, plus or minus €30 million, a gross margin of about 42%, and an EBIT margin between 17% and 20%.

Revenue ramp lifts profitability and cash flow

Chief Financial Officer Christian Danninger said third-quarter revenue rose from €59 million in the first quarter and €115 million in the second quarter, reflecting the ongoing production ramp. Revenue was 54% higher than a year earlier. For the first nine months, revenue was €358 million, down 3% from the prior-year period.

Optoelectronics represented 61% of equipment revenue in the first nine months, while GaN and silicon-carbide power electronics accounted for 19%. LED and MicroLED equipment made up 18%. After-sales revenue increased 10% year over year to €88 million and represented 25% of group revenue.

Third-quarter gross profit rose 88% year over year to €87 million, with gross margin increasing to 48% from 39%. Danninger attributed the margin improvement to higher revenue and a favorable product and regional mix, but said the third-quarter margin should not be viewed as representative of the fourth quarter.

EBIT increased to €57 million from €15 million a year earlier, producing an EBIT margin of 31%, compared with 13% in the prior-year quarter. For the first nine months, EBIT was €49 million and the EBIT margin was 14%.

Operating cash flow was €138 million in the third quarter and €311 million for the first nine months. Free cash flow reached €128 million in the quarter and €290 million for the nine-month period, supported primarily by higher customer advance payments.

• Customer advance payments rose to €309 million at the end of September from €44 million at year-end 2025.
• Inventory increased to €323 million from €284 million, reflecting higher work in progress for expected shipments.
• Liquidity rose to €945 million as of Sept. 30, while net financial assets totaled €591 million.
• Full-year capital expenditures are expected to be about €40 million, including roughly one-third of the planned €40 million Malaysia expansion investment.

Optoelectronics remains the central growth driver

Grawert said optoelectronics accounted for about 68% of equipment order intake during the third quarter, and indium-phosphide-based optical applications represent the majority of Aixtron’s backlog. He said that backlog provides revenue visibility “well into 2027.”

The company sees AI and data-center construction driving demand for lasers used in high-speed optical interconnects. Grawert cited an increase in LightCounting’s forecast for annual demand for 800-gigabit-and-above transceivers, as well as LPO and CPO ports, to 279 million units by 2030 from about 198 million units in an earlier estimate.

He also said demand is broadening geographically beyond early orders from the U.S. and Europe, with activity now increasing in Japan, Taiwan, Singapore and China. Meanwhile, customers are continuing to use 75-millimeter and 100-millimeter wafer production platforms longer than expected because of limited supply of 150-millimeter substrates.

During the question-and-answer session, Grawert said the expected share of 150-millimeter systems in 2027 had declined to around 25% from about 30%, while demand for smaller 75-millimeter platforms had increased because customers were seeking available substrates.

Power electronics recovery begins, led by GaN

Grawert said customer utilization rates in gallium nitride, or GaN, have returned to normal, and some customers have begun planning expansions and equipment purchases. He expects that trend to continue through 2027.

According to Grawert, the newest GaN demand is increasingly linked to power conversion in AI data centers, particularly for lower- and medium-voltage applications within 800-volt high-voltage direct-current architectures. He said the company expects 200-millimeter and 300-millimeter GaN manufacturing to coexist, with customers generally retaining the wafer size used in their existing fabrication facilities.

Silicon-carbide demand remained soft during the year, although utilization rates have improved and the company has received initial new tool orders. Grawert said electric vehicles remain the main driver for silicon carbide, while industrial, grid and AI data-center applications are expanding the technology’s potential uses. He characterized the expected silicon-carbide recovery as more gradual than the recovery in GaN.

MicroLED demand remains soft and has not yet reached broad volume deployment, Grawert said. However, Aixtron is seeing greater industry activity in augmented reality and potential optical-interconnect applications for AI data centers.

Capacity expansion and 2027 outlook

Aixtron said construction at its new Malaysian site remains on schedule. Groundwork and piling have been completed, and the company expects the building to be usable from fall 2027. The initial phase will equip about one-third of the potential clean-room space, leaving room for future expansion.

Grawert said the company does not face a fixed manufacturing-capacity ceiling, but its production expansion depends on the pace of hiring and supply-chain ramping. He said lead times are currently around 12 months, although capacity reservations and varying customer contract structures can affect shipment timing.

The company expects to maintain or increase the current strong order-intake level over coming quarters, supported by optoelectronics and growing power-electronics momentum. Management did not provide formal 2027 financial guidance and said it plans to do so when it reports full-year 2026 results on March 4, 2027.

About Aixtron (ETR:AIXA)

AIXTRON SE, together with its subsidiaries, provides deposition equipment to the semiconductor industry in Asia, Europe, and the Americas. It develops, produces, and installs equipment for the deposition of semiconductor materials; and offers deposition processes, consulting, training, customer support, and other related services, as well as peripheral devices and services for the operation of its systems. The company's product portfolio includes MOCVD, CVD and PECVD, and OVPD and PVPD systems.

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