AXT Board Approves Optoelectronics Exit

FREMONT, Calif., July 23 -- The board of directors of AXT Inc., a manufacturer of compound semiconductor substrates and optoelectronic devices, today approved management's plan to exit the company's unprofitable optoelectronics business.

The company said it expects to cease manufacturing operations at its optoelectronics division by August 31 and to dispose of the manufacturing equipment through private asset sales, a public auction or both by Dec. 31.

On June 24, AXT announced it would discontinue optoelectronics production and gave approximately 165 employees in that division 60-day layoff notices. The company said it will keep a minimum work force to produce and ship current customer orders and to continue to sell products from its inventory. AXT halted production of optoelectronic devices at its US facilities in May, attributing a decrease in optoelectronic sales to the severe acute respiratory syndrome (SARS) outbreak.

Morris Young, president and CEO, said, "Our decision to discontinue the optoelectronics business was difficult, but it was the right one. Now we can focus all of our efforts on growing and improving the performance of our core substrate business.

"We have improved the performance of the substrate business since the downturn began during the third quarter of 2001. Our costs are down substantially, product quality has improved and the substrate business generated more than $8.6 million in cash during the past 24 months," he said.

AXT also announced today it is denying a claim made by Cree Lighting and Boston University that it infringes a patent relating to semiconductor devices manufactured using a gallium nitride-based buffer technology, and that it is filing counterclaims against the plaintiffs.

For more information, visit: www.axt.com