AXT, Inc. (NASDAQ:AXTI) Q4 2022 Earnings Call Transcript

Hamed Khorsand: Okay. And then, as far as the inventory is concerned, any risk that it becomes obsolete by the time the business turns around?

Morris Young: No. 50% of our inventory is raw material, and raw material will never go bad. I mean, we can even sell the raw material, can’t we? And the other 40% is work-in-process, which without cutting or polishing to any product specification. And gallium arsenide, indium phosphide has been here — gallium arsenide has been here for 25, 30 years, so it will never go away, okay? I mean, so anything which is already cut to customer specification, which is only 4% or 5%, and even then, I don’t think we have lost customer. The most severe punishment is that the customer take our product and don’t pay and they go bankrupt, that’s the only time where we lost. So, I don’t think there’s a whole lot of risk for inventory.

Gary Fischer: Yes, in this business model — and again it’s different from the semiconductor, because I come out of that background. But the fact that we are a material science company and we start with raw materials, there’s not a lot of management need to be micro managing and watching out for obsolescence and things like that. So…

Hamed Khorsand: Okay. Thank you.

Gary Fischer: Thanks, Hamed.

Operator: There are no further questions at this time. I now turn the call back over to Dr. Morris Young for closing remarks.

Morris Young: Thank you for participating in our conference call. As always, please feel free to contact me, Gary Fischer or Leslie Green directly, if you would like to set up a call. We look forward to speaking with you in the near future.

Operator: Thank you for attending today’s presentation. You may now disconnect.