Aixtron SE
XETRA:AIXA
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
12.76
38.66
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Aixtron SE
You don't have any saved screeners yet
Good afternoon, ladies and gentlemen and welcome to the Conference Call regarding Q1 2023 Results of AIXTRON SE. At this all participants have been placed on a listen-only mode. The floor will be opened for questions following the presentation.
Let me now turn the floor over to your host, Guido Pickert.
Thank you very much, operator. Welcome to our presentation of the first quarter of 2023 results. I'd like to welcome our CEO, Dr. Felix Grawert and our CFO, Dr. Christian Danninger. As the operator indicated, this call is being recorded by AIXTRON and is considered copyright material. As such, it cannot be recorded or rebroadcast without permission. Your participation in this call implies your content to this recording. Please take note of our Safe Harbor statements, which can be found on page two of our results presentation slide deck, as it applies throughout the conference call. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or transcript on our website at some point after the call.
I would now like to hand you over to our CEO for opening remarks. Felix?
Thank you, Guido. Let me also welcome you all to our results presentation. I will start with an overview of the highlights of the quarter and then hand over to Christian for more details on our financial figures. Finally, I will give you an update on the development of our business and our full-year guidance.
Let me now give you an overview of the key business developments in Q1 2023 on Slide 2. Demand for our equipment remained strong, with an order intake of €140 million, 7% year-on-year driven in particular by the strength of demand for wide bandgap power electronics based on GaN and SiC. The vast majority of orders in the quarter were driven by demand from this area.
We have a number of very large customers that are building high-volume manufacturing capacities and are placing orders to build-up the respective volume capacities step-by-step. From a regional point-of-view, the largest demand was recorded from customers with production sites in Europe. We see further adoption of the gallium nitride material system in medium voltage application, as well as residential solar applications. Our growth in the area of silicon carbide is mainly driven by the increasing adoption in electromobility, as well as by us winning additional new customers.
The positive development in silicon carbide is clearly supported by the great acceptance of our new G10-SiC dual wafer size production tool, which we expect to become our top selling product for 2023. Demand for tools to produce optoelectronics, as well as tools to produce LEDs, including micro LEDs continue to contribute to our overall strength in orders. As a result of all that, we can report a strong order backlog of €418 million, up 60% year-on-year.
Our Q1 2023 revenues have been affected by the delayed granting of export licenses. For a number of units, the licenses have not been issued by quarter-end. We are in close exchange with the government and have received clear signals that the licenses will be issued shortly. Hence, we expect that the tool deliveries can be executed in subsequent quarters.
Now, I will hand over to our CFO, Christian Danninger, he will take you through the Q1 2023 financial. Christian?
Thanks, Felix and hello to everyone. Let me start with the financial highlights of our income statement on Slide 3. As Felix mentioned, orders in the quarter continued to be strong and our backlog was up, driven by the mentioned strength in-demand. Revenues at €77 million were slightly lower compared to €89 million last year. To a large part, this was due to the mentioned delayed export licenses, which pushed shipments of finished tools out-of-the quarter.
Gross profit was at €31 million, EBIT was at €3.5 million and net profit also was at €3.5 million for the quarter. These amounts are below the prior year quarter, mainly due to the mentioned timing effects resulting in the shift of tool deliveries. Gross margin was at 40% compared to 41% the year before. OpEx in the quarter went up to €28 million, predominantly driven by higher R&D spending and higher personnel expenses compared to the previous year.
Now to our balance sheet on Slide 4. Inventories increased from €224 million at the end of 2022 to €295 million end of March, which is mainly due to the inventory buildup in preparation for the higher expected business volumes in the upcoming quarters and to a smaller degree to the previously mentioned delayed issuance of export licenses. Our strategy to prepare our complete supply chain well in advance for further growth has proved highly effective over the last two years. We are very consciously managing our inventories to enable us to offer acceptable delivery times to our customers. And our ability to ship is highly appreciated by our customers and has repeatedly enabled us to win against competitors.
Trade receivables were at €63 million at the end of March, down from €120 million at the end of 2022, mainly due to the collection of receivables from Q4 2022 shipments. The advanced payments received from customers at quarter-end were €160 million, representing about 39% of order backlog. This led to a total cash balance including other current financial assets of €328 million. Out of this, €237 million were invested into funds following a very conservative diversification strategy.
Just a quick word on our free cash flow on the next slide before I turn back to Felix. Free cash flow in the first quarter was €2 million, down from €22 million last year. Free cash flow was basically generated from current earnings of the period. The strong cash inflows from receivables and down payments were mostly compensated by the mentioned increase in inventories.
With that, let me hand you back over to Felix. Felix?
Thank you, Christian. Before giving you our view on the outlook for the remainder of the year 2023, I would like to share with you some highlights on our market development. As stated at the very beginning, the order momentum in particular in most of our addressed end-markets remains very healthy. In the area of power electronics based on the material systems of gallium nitride and silicon carbide, the momentum has accelerated further.
The order momentum for GaN EPI tools continues to grow due to the increasing use of this novel material in Power Electronics. Orders for GaN power accounted for more than one-third of order intake in Q1 2023. The reason for this is that customers are addressing more and more applications with GaN, most recently with fast-growing volumes in the medium voltage class and also in photovoltaic PV applications.
To create the required capacities, several major customers systematically build high-volume manufacturing facilities, relying on AIXTRON as their core supplier. AIXTRON was recently awarded the Supplier Excellence Award by one of these leading producers in the semiconductor industry, what was given in recognition of AIXTRON's close partnership in setting up the volume production and the new AIXTRON GaN deposition tool G10-GaN which the customer is already using.
This new system would be widely launched later in the year end in addition to improved performance will offer increasingly higher productivity with lower cost per wafer, as well as a completely new design with significantly reduced clean room footprint. The silicon carbide business also continues to experience strong growth, driven by the ongoing expansion of electromobility. Several of AIXTRON’s customers continue to build the high-volume production with AIXTRON equipment. The new G10-SiC system which was introduced in Q3 2022 is proving to be very successful, also in ongoing operations with our customers. It is already apparent today that this silicon carbide device manufacturing tool will clearly become the top-selling product in 2023.
In addition, AIXTRON continues to win new customers with this product. But also in the area of optoelectronic, demand for lasers whether for 3D sensing of optical data communication remained healthy. In micro LEDs, we see the research activities to develop next-generation displays based on micro LEDs continuing worldwide with strong momentum.
With that, let me now give you the update on our full-year guidance 2023 on Slide 6. As mentioned before, due to the lack of export licenses, a number of tools could not be shipped in the first quarter. We are in close exchange with the authorities. We have obtained the request from the government to add an additional layer of protection in our tools that makes sure that they can only be used for the targeted end usage. This additional mechanism has been implemented in Q1 2023 and based on this we expect to receive the outstanding licenses shortly.
Hence, we are planning to ship the respective backlog of tools in the course of the subsequent quarters. We continue to expect total orders for this year in a range between €600 million and €680 million and the revenues to be in a range between €580 million and €640 million. We continue to expect a gross margin of around 45% and an EBIT margin in the range of 25% to 27%.
With that, I’ll pass it back to Guido before we take question.
Thank you very much. Operator, please open the Q&A session.
[Operator Instructions] And the first question comes from Martin Marandon, ODDO BHF. Please go ahead.
Hi. Thanks for taking my question. My first question is the export licenses issue. Can you maybe give us more color on what is exactly the issue here and could it become more recurring that is first part of my question. And then the second part is, when do you expect export licenses to come? Should we expect it to come all at the same time or more as the year goes on? Thank you.
Excuse me. I didn't fully get your first part of the question, could you repeat that please?
Yes. So the first part is to know, what exactly is the issue? And did this issue with export licenses could become more recurring in the future?
I didn't get it, sorry.
Could you repeat the question please?
Can you hear me better now?
Yes.
Yes. So my question is on the export licenses issue and I wanted to know what is exactly the issue here? Can we have maybe a bit more color? And do you know if it will become more recurring also in the future?
Okay. I get the first part of that one. So what exactly is the issue? What I mentioned already upfront is that we have asked by the authorities to add an additional level of protection, which ensures that our tools can only be used for the end applications that export licenses are requested for, that means, whenever you apply for an export license, you have to tell in the license application, what is the usage, what exactly are you using that for, yes. And we have been requested now to introduce in the tool, in our tools, a mechanism, yes, a program so to say that ensures that so to say, it's not only written on paper. But so to say the tool is only doing and what the permission is giving for. And we have implemented this mechanism within the first quarter of 2023, so this is done and given that this is now completed, we expect that the licenses which are outstanding will now be issued shortly.
And this topic of having request of an additional restriction or an additional specialty is nothing unusual. We have received that in many cases also in the past, so it is a normal procedure within the proceeding of export licenses. So this would be my answer to the first part of your question.
Now I come to the second part of your question which is whether we expect which I understood, whether we expect to receive the licenses all-in one big chunk in one place or whether this would be rather spread out? For this one, I would say we don't know what exactly, we don't expect it to be in one big chunk. I would expect rather that it comes step-by-step, probably a big part of that within one quarter atmost stretching over two quarters. That is my expectation.
Okay. That is very clear. Thank you. And just maybe a quick follow-up on Wolfspeed, it seems that [indiscernible] is slower than previously expected and some of the investment scheduled for H1 this year will be postponed to H2 this year and H1 next year. So did you notice any change in the order intake long-term and does it change your expectations for silicon carbide this year?
It does not exchange our expectation for silicon carbide, it neither changes the expectation for this year, nor does it exchange or change our expectation in the long-run, let me explain why. We have by now relatively broad-base of customers in silicon carbide. So, Wolfspeed is not the only customer that we have and that we serve. And given that there is an overall very strong momentum potential shift from one customer from one year to another don't affect the overall trend, so our guidance is clearly unaffected by this topic.
Okay. That is very clear. Thank you.
Thank you.
And the next question comes from Michael Kuhn, Deutsche Bank. Please go ahead with your question.
Good afternoon. Thanks for taking the question. Pretty much three one, one follow-up on the export licenses, because my impression is, there is two elements, let's say of complication here. Firstly, you being asked to add a new mechanism as you just explained. But also since last year, we've been hearing about personnel shortages in Berlin, in the buffer. So do we see an improvement there and do you see efforts by the government in terms of debottlenecking? And also in the context of export licenses, what amount of sales did you miss over the past six to nine months due to those delays? Second one on inventories, they were already high in December. Now, as of March, you reached close to €300 million that you mentioned your inventory management to fulfill, let's say relatively short delivery times for customers. What absolute amount of inventories do you think is realistic to model for year-end? And then the last question, on a Bloomberg article today, there was a report that Germany is in talks to limit the export of chip chemicals to China, have you heard anything about that topic and could that have any implications on your business as well? Thank you.
Thank you very much, Mr. Kuhn. So I took four questions, I noted down, very happy to take them, I take number one, two and four and my colleague, Christian Danninger take number three on the inventory, so let me get started. So your first question, let me repeat, I understood that there is two elements, the adding of an additional mechanism and an overall personnel shortage in the authorities and making or having the effect that over the granting of licenses takes longer. This is an absolutely correct statement that you have made, it's in fact these two effects.
Now, we believe that for both effects, we have an approach to deal with them, to address them, to remedy these ones. I mentioned already upfront that this mechanism has been developed, we could complete that within relatively short-time and install that, so that topic should be off the table, we can tick it off.
And the topic about shortages of personnel and overall longer time period for granting the licenses, that topic unfortunately remains. And we remedy that topic by making sure that as soon as a customer order comes in, we work very closely with the customer in getting together all the supporting documents, you can imagine such an application has a lot of documentation required about, I mentioned the application, about the customer and so on. And we have been very clear and very transparent to our customers about this whole procedure and given now that everybody has the topic apparently on the radar, you as investors, we as a company, but also our customers and those documentation is now essentially, immediately submitted to the authorities as soon as an order is placed.
While in the past, where the critical path was essentially the lead time for manufacturing our tool in the history that took much longer than getting the license and now that the license takes so long, we make sure that they are submitted. So based on that, we expect that this topic that we are currently now discussing and that for the first quarter had a very big effect on us that this topic will go away and we will then come again to a steady state, a predictable steady state and this can be forgotten in a couple of quarters. So I think we have a very clear road map how to address and get this topic out of the way. So that I think was the first part of your question.
Then I further took a question from you, what amount of sales have been affected in the last six to nine months, let me clarify. So we clearly did not lose any revenue and we did not lose any customer who went away, so there is no lost revenue for AIXTRON. However, revenue has been shifted from one quarter to another. And if you remember, we shifted I think it was around €20 million to €30 million from the Q4 of last year out into 2023 and this quarter we have now not been able to realize 70, €70 million of revenues which has shifted, which we could have realized if the license would have been there. And now this revenue has been shifted to the subsequent quarter within 2023, really not a lost revenue, it's just a shifted revenue to be very clear about that. So that is my answer to your second question.
And now before I hand over to Christian, I also take first the fourth question, which you had. I took the question broader we all have today about some discussions on chips, chemicals restrictions from Germany going to China. I think everybody knows what I mean by that. We see that our case is and that would be a similar discussion I would put it like the ASML case, which just recently, maybe one month, two months ago went through the media. We clearly see that our case is very different for the following reason, both in the ASML case and also as I understand it, I'm not a specialist in that. As I understand the chip chemicals case, it is a case as part of the trade war where some Western government or Japan are trying to withhold something and present something to go into China. Our case is different in as much as that. In China, we had a very strong local equipment industry.
So the respective trade agreements [indiscernible] and so on, they talk about local availability which is fully given for MOCVD equipment in China. We all know there is a bunch of quite a large number of local equipment makers for Epitaxy equipment for our competitors, who are also able to reach the most advanced performance specs, so they have all the capabilities. And also, we know that in China, there is already today the largest installed base of EPI tools, again completely different from like the ASML case, where there's no EUV or deep UV system in China. And therefore, there is absolutely no point in restricting MOCVD shipments into China. So I hope that addressed your last point and gives you the understanding why our case is different.
And with that, I hand over to Christian about the inventories topic.
Thanks, Felix. Here a few words on the inventory. If we look a little bit back into the history, 2021 and 2022, and you know from our reporting and the quarterly calls, we come out of an area of material shortages, supply chain restrictions where – which requires a lot of operational efforts to serve our customers on time and satisfy our customers. We are finally reaching a state now where we get into the range of inventory levels that are actually required for the actual business performance, but also for the further growth that we are seeing.
Just to give you a few numbers, if you take a look at our inventory level at the moment and the development from last year from Q1 2022 to Q1 2023, our inventory pretty much doubled. And at the same time, our down payment also doubled. So a big portion of that is already financed by our customers. So there's no – in it all very well backed up by the order backlog that we have that also has pretty much developed in the same direction.
Going forward, your question was, of course, what to expect at the end of the year, I cannot really give you that number because that would basically guiding into the next year, which we cannot do at this point. Because it basically depends on the order backlog at the end of the year, that's the primary driver.
But I mean if you take a look at the relationships, our inventories as a percentage of backlog is like 50% to 60%, seems to be a reasonable range, down payments also like 50% to 60% of inventories. And then you need to take your assumption on the development going forward and what the backlog is at the end of the year. We can only say we are preparing for further growth, so I would not expect inventories to significantly go down except, of course, the special situation that we have with the export licenses that issue, that special effect should be resolved by the end-of-the year.
That’s very helpful. Thank you.
The next question comes from Olivia Honychurch, Jefferies. Please go ahead with your question.
Hi. Thanks for taking the question. On gallium nitride, given that that was so strong in the quarter on the order side, are you expecting that to remain the largest driver of orders for the current year and beyond going forwards? I know you've previously spoken about a split within power of 60 to 40 in favor of silicon carbide this year, but just wondering if the outlook there has changed in light of that strength that you've seen in GaN in Q1? And then my second question is on the 2023 guidance. You're sounding very positive on the hope and expectation that these license issues resolve within the full-year. If that happens and we consider the strength that you are seeing in power and GaN and Sic specifically, would you say that there's future upgrade that 2023 guidance later down the line through the remainder of this year as you have done in previous years? Thank you.
Felix is on mute.
No, I think I was on mute. So thank you very much for these two questions. The first one I talk about the split between GaN and silicon carbide and in fact, we see the momentum in silicon carbide unfolding exactly as we had expected and as we have reported. And we see the momentum in gallium nitride increasing further or faster than we had expected before. So in fact gallium nitride really gets a faster and bigger momentum than thought before and based on that, the 60/40 I think this no longer applies, I'm just thinking what the correct numbers would be. Silicon carbide is still ahead of the gallium nitride, I think that's a very clear one, but gallium nitride is getting an acceleration here. So I think that's well noted.
So the second part of your question, what it means to our guidance. In fact, we expect that this export license topic as indicated before will result within the next quarter or next two, three quarters, for sure, but definitely by year-end. And so with that, if that is resolved and given an accelerating momentum as we observed in gallium nitride, it could well be that there might be a further upgrade throughout the year. But let's discuss that when we are really there, but as you have clearly noted and identified a positive trend, that's absolutely correct.
That's really helpful. Thank you.
Thank you.
And the next question comes from Gustav Froberg, Berenberg. Please go ahead with your question.
Hi. Thank you very much for taking my questions as well. I just have one really on new customer wins. Could you maybe just give us a little bit more color around new customer wins sort of in what and market of what applications are you seeing those new customer wins? And how far along in their own manufacturing process are these new customers that you're winning?
Yes. That's a very good question. We see the new customer wins and of course we are no new customer wins today. It says driving revenue of tomorrow. And we see that along multi dimensions. Let me go step-by-step. First of all, in silicon carbide, we see the momentum for the overall market continuing as mentioned. And also what we indicated before, we see our G10-SiC to a very, very successful in the market. And we have recalled previously that we are in a close connection with some of the leading players which is continuing.
We further had reported that there is very large number of new entrants not only from the power electronics industry, but also players with either coming from the silicon industry, but also Tier 1 manufacturers both automotive Tier 1 manufacturer – but also electronic Tier 1 manufacturers who is now newly entering the field of silicon carbide power because everybody can see the gigantic market size, the gigantic opportunity size as essentially the whole automotive world goes electric. And we all know silicon carbide is the material of choice for this one.
And from many of these new entrants into the field, beyond the established power IDM, we continue to win and we continue to win even new and additional ones also throughout the first quarter of 2023 customers around the world, let me put it this way, around the world is the right thing, across all geographies, both in Europe, both in the U.S., but also in Taiwan and in China. And that is the basis for a further acceleration of this momentum on the silicon carbide side. So it's a continuing of a trend, which we have been spoken, but in fact there is a number of additional ticks, quite significant ticks that we can make and that we have made in the first quarter that silicon carbide.
Now I move over to gallium nitride and as I indicated in gallium nitride, we see an additional momentum coming from the low voltage, from the photovoltaic. And in gallium nitride we see that some existing customers who have already our platform qualified and maybe who have now three, four, five or maybe seven, eight systems, they now sort of say go on expanding and really building large facilities meaning literally customers are planning a complete fab and you know the sizes of fabs and really with the objection, objective pardon, sorry, with the objectives of dedicating that fab for gallium nitride power chips. And they're sharing with us a long-term plan, long-term growth plans how so to say such fabs will be equipped and this is not only one customer. This is a very decent number of customers. So that's the expansion plans of existing customers.
And at the same time you were asking about new customer wins and also in gallium nitride, we continue to see new entrants or customers who maybe had, I would say play style R&D style effort now starting to go very serious and really entering this field. And we also have been able to convert some players who have not been our customers yet, but in the field of gallium nitride to become customers. So it's a positive trend across the market.
Okay. Great. Thank you.
And the next question comes from David O'Connor, BNP Paribas. Please go ahead with your question.
Great. Thanks for taking my question. Maybe first on the silicon carbide side, just a follow-up to the prior question. Among the top five power device manufacturers, Felix, any further wins at these customers? I know you talked about new entrants and some other wins in Asia, but specifically the top five, the big five power device manufacturers, that's the first part of my questions. And also related just to clarify your answer to a previous question, you mentioned that your big U.S. customer in silicon carbide did push out some orders, but this was offset by strength as other customers, just to clarify that firstly? Thank you.
Okay. So let me take the two questions. So the first one I took is whether we have achieved more wins in the top five? I would say, please give me two more quarters and I can give you an update on that one. The second question, I took, whether we compensated some push outs of a large North American customer who is known to be our customer. Now, as always, you know, we never speak about dedicated customers. We always keep the information coming from our customers as confidential, so I would like to keep that also in this call here. So I would not want to comment and directly answer your question, please understand that.
However, I can tell you that across the whole industry both in the silicon carbide segment and in the gallium nitride segment, as well as in the micro LED segment, we have seen over the last 12, 15 months customers building fabs across all our end applications and due to supply chain and material shortages some customers be it North American, be it European customers, be it Asian customers had to shift here and there their plans by a quarter or a couple of quarters even and we had to react in a flexible manner to that.
And the fact that some factory constructions of customers take longer, I think is a very normal thing in this overall massively growing market for compound semiconductors that we see because please take into account, it's a very different thing whether you have an existing shell and existing fab and you just need to put some additional electricity, water and gas line and moved in some tools or whether you really have to build a complete new shell from the grounds up with everything that comes together, so we have seen that across the board. But as you can see, we have very well managed that, allocated slots in such case from one customer to another, I would say that part of our daily business. So nothing really to have it – vary on.
Okay. Understood. Maybe a follow-up just on the orders, what was power in total in Q1? And then lastly, can you just give us an update on micro LED? Thank you.
Yes. Power in total in Q1 was around just look at my numbers here, it was around three quarters of the total order intake garnered I think power electronics for the orders. And coming to the second part of your question, Micro LED. We continue to be engaged, very strongly engaged with customers in Micro LED. Overall plans of our customers remain unchanged, meaning the big volume ramp, meaning the ambition to make micro LEDs the next big display application, but as reported previously in order to secure the mass transfer step, so the Epi step and also the processing of the LED is working fine. There is no major obstacles, however, the mass transfer step remains a hurdle in combination of technical and commercial challenges. It can be done on a technical level, but not at commercial scale and those things which are commercially viable are not technically feasible.
And therefore, our customers, probably need I don't know two, four, six quarters more to resolve those topics before then the big volume ramp kicks in. Nevertheless, we see many customers now as always taking so to say smart compromises, meaning not aiming for the highest volume applications in one shot, but rather taking a step-by-step approach, meaning to really go for some high-end applications which are able to carry a premium and do the ramp-up more gradually, I think throughout the year you may have some – we may have some news for you on that front.
Very helpful. Thank you.
The next question comes from Adam Angelov, Bank of America. Please go ahead with your question.
Yes. Hi. Thanks for letting me on. I'll just go one at a time. So firstly, I wondered if you could quantify for us the roughly the percentage of your revenue that you need export licenses for on an ongoing basis?
The percentage of revenues that we need an export license for, let me check. So, as you remember, we need an export license for all countries outside of both United States and Japan. For these three geographies we don't need an export license. In return we need an export license for all of China, all of Korea, all of Taiwan, all of Malaysia and all rest of world, so just to remind everybody. And just now looking here what that makes up in numbers, I think numbers that means we need an export license roughly for 40% to 50% of our revenue split currently is for the year 2023.
Yes. Got it. And so it's for all tools to those geographies, it's not restricted to certain ones?
Exactly.
Okay. That's great. Thanks. So, secondly, I was wondering on your power electronics orders, obviously been very strong. So, curious to know do you view the order strength is sustainable, let's say, into 2024 or is it a case of clearly the or potentially some orders ahead of large fab buildout and so the orders are coming in now and maybe would slow down later?
I think that's a very good question. No, we do see that as a sustainable and continuous and steady trend because the customer base in these market is following a dynamic where they built their fabs step-by-step, meaning adding the tools roughly on a quarterly basis as the customers expect the revenues to come and their revenue ramp to come and that revenue ramp given that we speak about the mega trend here, I call it the electrification of everything, both for the very efficient gallium nitride power electronics, yes, which simply allows us to cut down the energy wasted and converted into heat. And in silicon carbide where the benefit is that you get more mileage out of your battery, it's a continuous and steady trend. And we don't have any customers amongst these, which are either driven subsidy driven, making – filling a complete fab. And then the fab is standing empty. We have had that if you remember in the blue LED boom about a decade ago, where Chinese subsidies triggered that, but this is a very steady very, very, very stable trend according to customer behavior.
Okay. Got it. So they're basically ordering as they build out the fab rather than ordering all at once ahead of the fab build out. Yes, is that the right way to read it?
Exactly, that's exactly how it goes.
Okay. I agree. And then last one from me just on competition in silicon carbide and to a lesser extent gallium nitride. I think in silicon carbide it's interesting that you and most of your peers are all speaking very positively about new customer wins and also the 200 millimeter transition. So just curious, firstly, how do you read that really, is it a case where I guess maybe we're seeing some just multi sourcing from customers or, can basically everyone be gaining share. And then on gallium nitride, I guess you've clearly had a very dominant share for a while there. So, are you seeing any increased competition or I – sounds like that's still the case, but just wondering if you're seeing any increased competition there? Thanks.
So let me take the second question first. So gallium nitride, we don't see a change on the competitive landscape, not at all. So I think this can be very short. On the silicon carbide, I think there are multiple players on the silicon carbide market and I think the dynamic is rapidly changing. I think the incumbents of the industry is not the ones getting the wins, but I think it's rather that the attackers to which we are counting. Remember, we barely had any significant silicon carbide revenue two years ago, the attackers is taking all the new socket. I think that's the dynamic that we see. And based on that, that gives us this confidence because we are winning a very large share of these new tools.
Okay. That makes sense. Thanks.
The next question comes from Gianmarco Bonacina, Equita. Please go ahead with your question.
Yes. Good afternoon. Three for me, please. The first one is about accounting on the backlog basically to clarify if the orders you got signed from your clients, but still doesn't have the export license. These are all in your backlog or not, so basically if you recognize them when you get the order signed or when you have the basically export license? Second question is about the lead time. So, forget about the export licenses, what's your normal lead time at the moment from let's say ordering to shipment. And then related to this, looking at your chart on the revenue guidance, on page seven. So considering your €370 million of backlog plus the Q1 revenue plus the after-sales. So to reach your guidance, you need less than one quarter of new orders. So, I am just wondering why is that because basically with the orders you will get in Q2, you will probably even over achieve this guidance, if you can clarify this point? Thank you.
Thank you very much. Yes, three questions I took. So the first one, I took about accounting about and booking of order. So, as you know, we have very strict internal procedures for recording and booking equipment orders. And the rule for that one have been detailed out also in our annual report. And according to our policies, for each order we undergo an individual risk assessment for several risk factors. And one of these is especially also the topic of granting of export licenses. And whenever we see a risk here in place, we don't record the order until an export license is granted. And yes, in effect, for part of those orders this is in place. So I hope this addresses your first question.
To your second question, the lead time for our tools is today between eight and 12 months and that already leads now to your third question about the revenue guidance. Yes, in effect, we need less than one quarter of new orders in order to achieve our revenue guidance. However, if you bring that in relation to the lead time of shipment, you understand that in order that we get in the 1 July, I go now to the beginning of the third quarter is kind of falling out of the year 2023 simply due to the lead time topic. I hope that clarifies the second and third question that you had.
Yes. Thank you. Just a follow-up. So basically considering the orders in Q2 will likely be shipped at the end of the year and you have the €70 million, you mentioned before of basically machines which you built or you didn't have the license part of the €70 million is not in the backlog, so the €370 million probably you should get the export license is bigger, it means that your real, let's say, phase power for this year probably is bigger than this pie chart if you get the licenses and if you get, let's say decent order in the Q2, is that fair?
I think I didn't get the question.
Okay, sorry the question. Just a follow-up, so if I understand correctly, the €370 million of backlog is not including all of this €70 million of machines which you produce, but you couldn't ship because you don't have the license. So your real backlog, if you get all the export licenses is actually today already bigger than €370 million. And then – so it means that if you will have some order intake similar to the Q1 and the Q2. So your revenue potential for 2023 probably is bigger than what you're showing in this Page 7 of the presentation, is that fair?
Well, it is of course, depends on individual sectors like the lead times for the tools and how we get the parts for these tools for which the orders are coming in. And don't forget also about the point in time when the customer wants to have the tool. Two, three questions ago we were asked about some North American silicon carbide customers pushing orders out because the factories is not ready. So overall, it depends on multiple sectors, so it's not as easy as just adding the numbers, I would like to put that upfront. However, if several of these positive factors which you have just outlined in your question come together, customer wants it fast because they have a demand and the factory is ready. Second, all these export licenses are coming on time, last third, all the components and the materials are there and so on. Then in that positive case, if it all comes together, yes, then it could very well be that overall the numbers look better even at the end of the year. But it's too early to say that today because, you know, as I highlighted, it's external factors out of the control of AIXTRON, so and what's out of our control, we can take it.
Okay. And just to conclude, sorry, out of this €70 million of revenue, which will be postponed because of the export licenses, can we assume that I don't know half of these are not recognized in the backlog or is the minority, the majority of this figure?
Probably, probably something in the upper half, I would say.
Okay. Thank you.
The next question comes from Malte Schaumann, Warburg Research. Please go ahead with your question. Schaumann, your line is open. You may ask your question now.
Yes, two quick ones. First is on the export licenses again. Is it the case that once these customers place follow-up orders then later in the year that's then processing time – approval times will be shorter than what they're currently seeing independent from the fact the additional security layer which you have implemented.
Definitely. That is what we expect, simply also due to the fact that for repeat orders, repeat customer orders, typically the approval goes faster than for new customer orders, simply because the customer is known, a due diligence have been conducted and the customer and then it's just an easier repeat. Yes, that assumption is...
Yes. Good. Okay. And then on the customers, could you provide a number how many customers have actively ordered or currently ordering carbide and GaN tools for each of the technologies?
I wouldn't have the numbers, it's many, many, many, I don't know.
Okay. That's, yes.
30/40 GaN, 20/30, I don't know, but pretty, pretty, pretty substantial number.
Yes. Okay. Good, thanks.
There are no further questions from the audience.
All right, thank you very much. With this we end today's call. Thank you to all. We would appreciate by the way your support for our upcoming Annual General Meeting where the lines are open. This meeting takes place on May 17, so any support would be appreciated. Thank you very much and bye-bye.