BACK    / /    FORWARD   
Letter to the shareholders

Dear Shareholders,

2012 proved to be an exceptionally difficult year for AIXTRON largely due to the severe and extended macroeconomic headwinds the entire global economy has been suffering from.

We do however remain positive about both the mid-term and long-term outlook, and albeit muted, there are clear signs of stabilization particularly in the Euro zone as well as better than expected economic data out of Japan, China and the US.

The small increase in demand we saw in the second half of 2012 encourages us to believe that we have reached the bottom of the current cycle and we are continuing to see an improvement in our business environment, although at a very modest pace.

But let me zoom up to the bigger picture and take a longer-term view; despite the challenging nature of 2012, we are increasingly confident of our future profitability and we continue to invest significantly in several exciting new areas of opportunity, which I will outline later.

We believe that these new growth area opportunities, combined with an inevitable inflection point in the long awaited demand for LED for GENERAL LIGHTING purposes, will enable us to generate substantial and sustainable shareholder value in the coming years.

Looking ahead, we see 2013 as being better than 2012 and a significantly better year in 2014, both in terms of revenues and earnings with the major driver being a pickup in demand, led by solid growth in the LED general lighting market. We also expect in 2013 a positive contribution from other end-market applications we have been working hard to develop in recent years, including production equipment needed for power electronics and SILICON or organic SEMICONDUCTOR applications.

Amongst the positive indicators for our business is the increasingly evident adoption of LED backlit televisions.

LED growth and momentum in general lighting also took a distinct step forward in 2012, largely because of government regulatory bans of incandescent lighting becoming effective, specific LED subsidies being rolled out globally and LED lighting products being adopted by consumers and municipal authorities alike.

The significantly increased competition between LED manufacturers in recent years is also beginning to show its consequent effect, including lower LED lamp pricing in all global markets, which in turn is stimulating demand, creating the momentum we are looking for.

The precise timing and magnitude of the demand development remains unclear at this stage, but our view remains that our customers are coming closer to the point where they will have to give more serious consideration to investing in new cost efficient and highly productive manufacturing systems as global LED demand expands in line with increasing adoption of LED lighting applications.

We believe that we are not only at the start of the LED lighting investment cycle but also that AIXTRON is very well positioned for what will be the biggest growth market for LEDS so far with our best-in-class technology, service offerings and strong customer relationships.

Looking beyond our LED application business; AIXTRON's key strength has always been its power to innovate and deliver commercial technology solutions to its customers. With the great opportunities in front of us, we again increased our investments in R&D during 2012 and are confident that these investments will lead to a whole range of new products that AIXTRON will bring to the market for years to come.

We are investing today in what we believe is essential to keep us 'Fit for the Future'.

We are maintaining our core R&D focus on three different semiconductor technology markets; production equipment for compound (i.e. LEDs, power electronics), silicon (i.e. memory) and organic materials (i.e. OLED).

Within those technologies, the five main end-market application opportunities we are concentrating on currently, are LED applications (compound), memory applications (silicon),  power electronic applications (compound), OLED applications (organic) and carbon nanostructure applications (silicon).

I've already talked about LEDs, so let me expand what we are doing in each of these other four end-market opportunities.

In the more established silicon semiconductor industry, we believe there are significant opportunities for us to increase our equipment sales into the more advanced generations of silicon based DEVICES, in particular, within the memory DEVICE market.

In 2012 we delivered our first full production system order, for the new AIXTRON QXP-8300 ALD DEPOSITION tool, to a leading Korean DRAM manufacturer who has qualified our technology for their mass production of next generation DRAM memory devices.

We expect more growth opportunities to emerge from this line of our business as this specific customer progressively upgrades more of their production lines and we are optimistic that other customers will also qualify our technology. We believe that this silicon application alone represents a total market opportunity for AIXTRON of more than USD 800m over the next five years.

Looking now to power electronics device applications (power ICs, power semiconductor devices and modules); our customers' end-markets have been predicted by IMS Research to develop into a USD 70bn per year market by 2021, up from USD 33bn in 2010. In that we are already seeing some early commercial traction in power electronics, we believe that this market has great potential for AIXTRON going forward.

With this projected robust growth in end-user markets, we believe that the Company has a very real opportunity to significantly increase our sales into this market addressing a total equipment market opportunity larger than USD 800m over the next ten years.

Moving on; Certainly one of the most talked about emerging new technology areas is organic semiconductor devices, with the most imminent application opportunity being organic LEDs, better known as OLEDs. This is a fascinating technology application, which is still at a relatively early stage of commercialization.

Within this space; We launched the new PRODOS-200 Polymer Vapor Phase Deposition (PVPD®) R&D platform last August which drew a lot of positive customer interest. We also announced the first delivery of a Gen 3.5 PRODOS production system to a major Asian customer during 2012.

Encouragingly, there are already some successful niche OLED applications commercially available today, such as small Displays for mobile phones or tablets. Higher volume OLED applications in development include large displays such as TVs or monitors where the inherent qualities of these organic materials allow for much more energy efficient and self-illuminating, brilliant displays compared to current LCD displays.

Another longer-term OLED application under development is OLED lighting. OLED lighting enables the light source produced to be in a broad 'sheet' format rather than a precise 'point of light' form. We believe that this technology has the potential to become incrementally complementary to LED technology.

The broader potential organic semiconductor application market for displays, lighting, electronics and even solar cells is seen as a substantial mid-to long-term opportunity.

Finally; The development of carbon nanomaterial structures is clearly still at a very early stage of development where the applications have yet to become commercially meaningful. Our BM series of PECVD R&D tools, which we are increasingly selling to the commercial and academic research communities, enable our customers to manufacture highly complex  carbon nanomaterials such as CARBON NANOTUBES, carbon nanowires or graphene.

Given the very real potential of these highly complex materials and material structures to become a key enabling technology for the semiconductor industry in due course, we believe this area has long-term potential for AIXTRON.

AIXTRON's core strengths and ability to take advantage of these exciting market opportunities lies in our proven expertise in complex material deposition equipment and market leading experience accumulated over 30 years of constant investment in R&D. We remain more than ever committed to leverage our core strengths and see this same market-driven R&D focus as an essential future growth driver for AIXTRON.

AIXTRON's objective is to remain a global leader in providing manufacturing solutions for LEDs and next generation semiconductor technologies. We are strongly committed to supporting our customers and working closely with them on common roadmaps which will result in us delivering new products to market, further reducing their cost of ownership and improving their performance in the coming years, thereby increasing the market potential for our equipment.

Let me summarize; Although we cannot yet put a precise date on when LED manufacturers' investment confidence will return, we see enough end-market product positioning and aggressive pricing promotion to persuade us that orders will continue to recover and that AIXTRON will have a stronger 2013 and an even stronger 2014. We recognize that challenges remain, but ones that I am confident, that we have the team required to meet them 'head on'. And you can also be assured that we will not take our eye off the longer-term opportunities that we are well positioned to take advantage of and will drive the longer-term value of AIXTRON.

Let me take this opportunity to express the Executive Board's gratitude for the very active support and encouragement that we have received from the AIXTRON Supervisory Board over the past twelve months.

I would also like to voice my appreciation to the remarkable commitment of our workforce and to thank you, our shareholders, for your continued support and patience in these challenging times.
And finally, as I come to the end of my time at AIXTRON, I would like to sincerely thank both the AIXTRON team and shareholders for the support and encouragement throughout the last eleven years. It has been a privilege and honor to have been part of the AIXTRON team and I leave the Company convinced that with the foundations in place and the quality of the AIXTRON team, all stakeholders can look to the future with confidence.

Introduction The Executive Board

THE EXECUTIVE BOARD
OF AIXTRON SE

Image Image Image
WOLFGANG BREME
CHIEF FINANCIAL OFFICER
PAUL HYLAND
CHIEF EXECUTIVE OFFICER
DR. BERND SCHULTE
CHIEF OPERATING OFFICER
     
  Wolfgang Breme Paul Hyland Dr. Bernd Schulte
       
  Chief Financial Officer
Born in 1960, married,
2 children
Chief Executive Officer
Born in 1953, married,
4 children
Chief Operating Officer
Born in 1962, married,
3 children
       
  Education: Business Graduate.
2002–2005 Executive Board
Member & CFO of technotrans AG.
Before 2002: board member and other leading positions at various international technology companies.
Education: Businessman.
2000–2002: Managing Director Thomas Swan.
Previously: Managing Director of various international technology companies.
Education: Physics Graduate
and Ph.D.
Since 1993: different management
positions at AIXTRON.
   BACK    / /       TOP    / /    FORWARD   
AIXTRON SE © 2018   |   Contact   |   Imprint