Letter to Shareholders

The fiscal year 2021 was exceptionally successful for AIXTRON with order intake growing to EUR 497 million (+65%), revenues to EUR 429 million (+59%), and operating income to EUR 99 million (+184%) - the latter roughly tripling. Our growth is driven by a broad base of application segments, and is built on the global megatrends of sustainability, electrification and digitalization. 2021 also shows that our compound semiconductor equipment business is on track to move towards the large volume markets of the semiconductor industry. Compound semiconductors are a key technology for numerous technology areas, as they are superior to classic semiconductors based on silicon in many areas - this is driving our growth!

The major trends in microelectronics driving growth for compound semiconductors are power electronics and optoelectronics.

Power electronics is required where current and voltage are converted, e. g. in the charging and discharging of batteries and electric vehicles. These processes should happen with virtually no losses so that electrical energy can be used as efficiently as possible. Here, compound semiconductors are far superior to the silicon semiconductors used to date. Here, in the area of sustainability, AIXTRON’s innovative solutions play a key role. They facilitate superior energy efficiency, lay the foundations for electromobility, and thus make a decisive contribution to climate protection. In particular, the market for gallium nitride (GaN) power semiconductors has seen rapid growth in the year 2021, following their commercial breakthrough. With AIXTRON technology, our customers are increasingly tapping into further segments of the market, not only in the field of compact smartphone chargers, but also increasingly in the highly efficient power supply of data centers and IT infrastructure, as well as solar energy. In this context, our customer base is steadily broadening, providing the basis for further growth. We also made great progress in the market for silicon carbide (SiC) power semiconductors in 2021. We are gaining additional market share with well-known new customers, and we are growing with our major existing customers as they build further manufacturing capacity. And we are receiving very positive feedback from our target customers on our technology and product strategy.

In optoelectronics, the focus is on optical applications ranging from lasers for fast data transmission or for the environment scanner in autonomous driving to innovative next-generation displays. Our solutions are a key element in the ongoing digitization of our world. Rapidly growing data volumes and the desire for ever faster data availability are the driving forces behind ever more powerful optical and mobile transmission networks. In addition, more and more vehicles are being equipped with laser-based sensor technology (LiDAR) to increase safety and facilitate autonomous driving. We are also seeing further growth in the field of red LEDs, where our customers continue to expand capacity to meet the growing demand for LED displays and LED lighting as well as in indoor farming ("agriculture"). In addition, AIXTRON is excellently positioned for the next generation of displays, which will consist of micro LEDs. We are working with numerous customers to develop this new technology, with the aim of soon becoming a market leader in the upcoming commercialization.

It is essential that compound semiconductors play a key role in all of these trends, and AIXTRON is actively spearheading this development as a technology and market leader. As a result, we are benefiting directly from the rapidly increasing demand that is driving our growth - both today and in the future.

In our core business of systems technologies for compound semiconductors, we continue to invest significantly in research and development to completely renew our equipment portfolio. Prototypes of next-generation equipment are already being tested by individual customers and are achieving very good results which often also results in follow-up orders. Through significant differentiation, we will maintain our strong market position in the future - and expand it even further in some segments.

In addition to the MOCVD product line, AIXTRON has been working with H&IRUJA Co. Ltd., South Korea, on the commercialization of OVPD (Organic Vapor Phase Deposition) technology for OLED displays through its joint venture APEVA. Our OLED subsidiary APEVA was initially restructured in the second quarter of 2021 and focused on the Chinese market. However, as customers in this market are also opting for Micro LED as the technological basis for the development of the next generation of displays even faster than originally expected, the shareholders of APEVA have decided not to make further investments in APEVA.

Particularly noteworthy for fiscal year 2021 is the robustness of our supply chain. This has enabled us to grow revenues by 59% despite the tense conditions in global supply chains. We were able to meet customer demand and at EUR 181 million in the fourth quarter, we recorded the highest quarterly shipments in 10 years. This shows that our manufacturing and supply chain are well equipped for further growth in the coming years.

To be prepared for further growth in the future, we are working intensively on the structural enhancement of AIXTRON. The new generation of AIXTRON's Executive Board was completed with the entry of our Chief Financial Officer, Dr. Christian Danninger, on May 1, 2021, and the retirement of Dr. Bernd Schulte on April 01, 2021. In the new constellation with three Executive Board members, each dedicated to a major area of responsibility, we are now well positioned to successfully implement our growth strategy in the coming years. We are also working in a targeted manner on streamlining and digitizing our business processes. We are also adapting our corporate structures to facilitate further rapid growth and meet the increasing demands of our customers in terms of product quality and innovation. At the same time, we are already working intensively on the technologies of tomorrow and beyond in order to secure a pole position in newly emerging markets.

To make this a sustainable path into the future, we have expanded our activities in the area of sustainability & ESG (environment, social, governance). For example, we are already voluntarily reporting on the taxonomy compliance of our business activities in accordance with the new EU Taxonomy Regulation for the first time for fiscal year 2021. We achieved very good results in this process, which clearly underlines the sustainability of our business activities. In addition, positive ESG ratings from various rating agencies show that AIXTRON has a strong focus on this issue and plays an essential role on the way to climate neutrality.

Having had a great year in 2021, in which we grew strongly despite numerous challenges, the outlook for the current fiscal year is again very good, so we also remain optimistic about the future.

The key to our company's success is our employees. Their creativity and problem-solving skills, their commitment and the extraordinary dedication of our teams are the foundation of AIXTRON. This also reflects our strong, AIXTRON-specific corporate culture, which we will continue to develop carefully and with a great sense of responsibility. Our special thanks go to all our colleagues for this commitment!

Our suppliers and business partners were also crucial to our success in 2021. Despite strained global supply chains, they helped AIXTRON achieve a record year and put in a great deal of effort to make it happen. Our thanks also go to them. 

A big thank you also goes to our Supervisory Board for their trusting cooperation in all matters of strategy and corporate development. 

Also, we would like to thank you, our shareholders, for your confidence in us to lead AIXTRON sustainably and profitably into a future of continued strong growth.