AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, announced that it has agreed with the Administrative Commission of Tianjin Economy and Technology Development Zone to establish a second manufacturing facility in Tianjin, China.

The arrangement provides AXT with land use rights for approximately 32 acres of industrial land located in Yixian Scientific and Industrial Park to construct a compound semiconductor substrate manufacturing facility that would be completed in phases by 2017.

AXT has committed to a $12.5 million investment in the construction of the facility over the next two years in exchange for land use rights, enterprise and individual income tax rebates, employee hiring and development subsidies, and other benefits. The facility would provide AXT with substantial substrate manufacturing capacity expansion, complimenting the company's current 190,000 square foot facility in Beijing.

"We are very pleased for the opportunity to begin planning our future expansion in such a vibrant and dynamic area of China and in cooperation with the Administrative Commission of Tianjin Economy and Technology Development Zone," said Morris Young, chief executive officer. "While our current facility in Beijing continues to provide us with ample capacity to grow our business for the next 18 to 24 months, we believe that a second manufacturing facility in Tianjin will provide us with additional capacity for many years to come, particularly in light of positive trends in the demand for wireless devices, the proliferation of LEDs and the adoption of photovoltaic technology. The positive financial considerations of this arrangement, coupled with what we believe to be our longer-term capacity needs, provide compelling incentives to proceed with our expansion plans at this time. This arrangement allows us to begin planning for growth and redundancy in our business in a measured and incremental way that is suitable both to the current economic conditions and the sizeable opportunity ahead."

About AXT, Inc.
AXT designs, develops, manufactures and distributes high-performance compound and single element semiconductor substrates comprising gallium arsenide (GaAs), indium phosphide (InP) and germanium (Ge) through its manufacturing facilities in Beijing, China. In addition, AXT maintains its sales, administration and customer service functions at its headquarters in Fremont, California. The company's substrate products are used primarily in lighting display applications, wireless communications, fiber optic communications and solar cell. Its vertical gradient freeze (VGF) technique for manufacturing semiconductor substrates provides significant benefits over other methods and enabled AXT to become a leading manufacturer of such substrates. AXT has manufacturing facilities in China and invests in joint ventures in China producing raw materials. For more information, see AXT's website at http://www.axt.com.