Private & Confidential

Aixtron SE
Phase 1
March 2023

Deposition systems for semiconductor production

Preliminary Investment Thesis
Growth story exposed to Semi trends. Highly attractive business model with room for self-help. Main risk to assess is cyclicity.
1 Business description
▪ Aixtron is a leading provider in the market niche for special deposition systems which are used in the production of compound semiconductors and displays used
for lases (3D sensors, LiDAR, Datacom), speciality LEDs (Displays, UV-LEDs…), SiC Power (Charging stations, EVs) and other applications (Wireless charging, 5G…).
▪ Aixtron manufactures the equipment, but also provides surrounding spare parts and services which account for c. 15% of its revenues.
▪ The company employs c.1k employees o/w c.35% work in the R&D division. Aixtron generates roughly 60% of sales in Asian markets (mainly China, Taiwan, Korea).

2 Beauties of the Investment Case

▪ Leading market positioning: With a total market share of +75%1 Aixtron is currently holding the 1st market position for MOCVD systems, which are needed for the
production of power semiconductors, LED or RF components.
▪ Attractive business model: Modular systems enable flexibility in terms of customer requests and production. As 90% of production is outsourced to suppliers, cyclical
fluctuations in orders can be offset.
▪ Steep learning curve & barriers to entry: Highly complex systems (20-22% of €200-250mn sales invested on R&D across the cycle), the processes running on them
and the very high quality requirements raise significant barriers and has led to an oligopoly for MOCVD systems which already emerged in a very early market phase
▪ Strong growth ahead: Exclusive semiconductor equipment for high growth niche markets. Expected 35-30% CAGR in the Power equipment and LED equipment
driven by 1) increasing penetration at a massive scale from SiC and GaN semiconductors 2) further increasing demand for lasers for optical data transmission of large
volumes (5G and 6G) such as for video streaming and Internet-of-Things (IoT) applications and 3) high growth potential in MicroLED (e.g. if chosen by Apple for c.
2024-26 release of MicroLED Apple Watch).
3 Value dislocation
▪ Attractive risk reward: Exit at 22x PE below its L5Yrs median of 25x, and its competitors average of 30x. Aixtron top-line growth is expected to undergo a significant
acceleration leading to a +22% EPS CAGR. The company is in a 1.0x net cash position with a +35% ROCE across the cycle. IRR of 17-20%. Worse case scenario limited
on the back of margin gains from changing mix and penetration of new family of products.
4 Active engagement
▪ Improving capital discipline: New management stepping in provides window to address historically conservative capital deployment strategy. Room to incentivise
shareholder returns (buy-backs and dividends) and to expand into new synergetic technologies via M&A (v. difficult to penetrate new market through greenfield)
▪ LTIP structure: potential room to enhance and further align via EPS growth (vs. current sales growth) and introduce value creation oriented KPIs (i.e. ROCE)
5 Risks to the case
▪ Understand business cyclicality: Strong order intake and LT contracts imply a multi-year growth cycle. However, we need to get comfort with the very diverse end-
market drivers and cyclicality.
▪ Price competition from China: Lower value add machines (MiniLED) seeing some competition pressure from Asian players (AMEC).
Private and Confidential 1) Market share in SiC is c.45%, 100% in GaN, 100% in MicroLED.

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Bullet-proof asset condition
High-tech offering with asset-light business model. Top market position across verticals.
Selected key themes
KPI YES/NO Comments / Facts
USP YES ▪ Aixtron’s expertise in MOCVD systems gives it a technological edge over peers and allows it to dominate in high-margin markets
▪ Modular systems enable flexibility in terms of customer requests and production. As 90% of production is outsourced to suppliers,
cyclical fluctuations in orders can be offset
Barriers to entry YES ▪ Highly complex systems, the production processes and very high quality requirements raise significant barriers to entry
▪ An oligopoly for MOCVD systems already emerged in a very early market phase
LUCO/ Cost flexibility YES ▪ Modular systems and 90% outsourcing allow for significant flexibility
Exposure megatrends YES ▪ Shift from silicon to compound semiconductors stands to benefit Aixtron as a major supplier of the deposition equipment necessary to
make these materials
▪ Growing end-markets in power electronics (esp. fast-charging), Mini LEDs/ Micro LEDs and return to growth in 3D sensing
Why is the product special?
% of equipment
End-market Product / technology USP Customers
revenue1
Power electronics ▪ Production of gallium nitrite (GaN) semiconductor ▪ Semiconductor
devices for more powerful power supplies in consumer manufacturers wafer
electronics, data centres and movile communications ▪ Expertise in planetary MOCVD manufacturers
42% systems gives it an edge over
infrastructure
▪ Silicon carbide devices used in, e.g. electric vehicle peers that mostly rely on
charging infrastructure and inverters for renewables showerhead technology
Optoelectronics ▪ Optoelectronics tools and systems mostly used by ▪ Products offer higher productivity ▪ Telecom/ Datacom
customers to manufacture lasers for optical data and profitability to customers ▪ VCSEL/ EEL producers
transmission and 3D sensing technology
28% ▪ High R&D spending has allowed it
▪ Other applications include facial recognition, robotic
environment sensing, autonomous vehicles and other to secure its technological and
applications requiring context recognition innovation leadership in the
LED ▪ Systems for deposition of complex semiconductors market and high quality ▪ Display manufacturers
used by customers to manufacture pixels in display perception from customers
applications. ▪ Features that control
▪ Deployed productively in large-area-displays and in the homogeneity and wafer
27% future Micro LEDs. Other specialty applications incl. temperature which result in
ROY LEDs used in auto lighting. UV LEDs for water higher yields
disinfection

Private and Confidential

(1) Annual report 2022
3
 Divisional end-market overview
Growth to come from adoption of compound semis in Power Conversion and great optionality from MicroLed.
▪ Owing to its leading technology and ongoing customer qualifications, Aixtron has been steadily growing its MOCVD equipment market share in recent
years. This stands at 58% across all end markets; however, in certain applications - such as GaN power, VCSELs and MicroLED – share close to 100%.
▪ Power conversion to be the most significant driver of Aixtron in the next years, led by applications such as fast-charging, EVs and renewable energy.
▪ MicroLed is a potentially great catalyst for growth, given its superior performance over LCDs/ OLED. However, only an optionality story at the moment.

Aixtron End-function
Customer Sales (% of End-market CAGR’ Growth
Application equipment Customers Overview / recent developments
end-product total)1 21-263 likelihood
(% of sales)1 for:

▪ EV inverters (Tesla Y) Aixtron looking to qualify to add other

€64m (17% of
Power SiC ▪ EV DC/DC converters 33% Likely Wolfspeed, OnSemi large customers such as Infineon and
eq. sales)
Conversion ▪ Solar cells STM
(c.35% of total ▪ Fast chargers / ICs All main players: incl. China strongly entering the compound
sales) €96m (26% of
GaN ▪ Data Center servers 30% Likely Navitas, Wolfspeed, semi space should provide more
eq. sales)
▪ Laptop adaptors (Mac) POWI business for Aixtron3
Many device manufacturers adopting it
▪ Outdoor screens €100m (27%
MiniLED 14% Certain Apple (AMS), LG. as it is very cost effective vs. legacy LED.
LED ▪ Macbooks, Ipads. of eq. sales)
Backlighting offering optionality.
(c.25% of total
sales) ▪ No commercial use yet
>€5m (1% of Apple (AMS), Samsung, Testing mode. No massive commercial
MicroLED ▪ Higher definition, lower 127% Uncertain
eq. sales) TSMC use yet. Large growth opportunity
consumption
Verizon
▪ Fibreoptic cables Continued adoption from the
Lasers 8% Certain AT&T
Optoelectronics ▪ Datacom equipment communications market
€106m (29% Vodafone
(c.20% of total
▪ 3D sensors / VCSELs of eq. sales) 3D sensors already penetrated in
sales)
3D Sensing ▪ LiDAR for autonomous 0% Uncertain Apple and Samsung smartphones.
vehicles LiDAR tech not seeing adoption atm.
Semi companies, OEMs
Total equipment - - €380m / 100% W. avg: 18% Likely -
and Tier1s
Aftersales (20% €83m / c.20%
- - - Likely Maintenance, service and spare sparts
of total sales) of total
Private and Confidential 1) As of 2022
2) Expected for 2022 according to consensus, excluding aftersales, which represent 18% of total
4 3) Based on total chips sold penetration. According to a research report from Jefferies 2022.
4) No equipment sales limitation for Aixtron, as all US restrictions have been imposed in logic chips and not in analog (the space targeted by Aixtron eq.)
Explaining GaN/SiC opportunity (1/2)
Cycle of replacing old silicon and will eventually take over in massive applications (DCs, energy, industrial and consumption)
▪ GaN and SiC have several advantages over traditional materials like silicon, as they allow devices to operate at higher temperatures, voltages, and
frequencies, making them ideal for high-power and high-frequency applications. They also have lower on-resistance and faster switching speeds,
resulting in higher efficiency and smaller sizes. These properties make GaN and SiC devices suitable for use in electric vehicles, renewable energy
systems, data centers, and other applications that require high performance and reliability. As a result, many companies are investing in the
development of GaN and SiC technology to meet the growing demand for such applications.
▪ GaN/SiC technology is revolutioning the power supply market. In the recent years, compound semiconductors have started to become the norm in
some appliances such as smartphone chargers. The reason being is GaN and SiC are materials that permit 10x higher switching velocity than Silicon.
▪ 10x more switching speed (better reliability, lower losses) with a circuit the same size of Silicon, or same speed but with 10x lower size. This makes
GaN indispensable for applications in which size and/or energy loss is important; such as chargers, data centers and other industrial applications.
▪ Regulation is a key driver for adoption. Both the EU and US have already come out with regulation schemes that mandate a new set of standards in
which new DC systems must be compliant with the energy efficiency targets.

Value of current and potential SAM per end-product type ($ bn) GaN starting to make economic sense for a diverse set of applications

Features from using GaN vs. Si Penetration at scale just starting

Equipment
▪ Reduce power loss by 80% 50% % of total power device
market revenues
▪ Minimize need for cooling 40%
components
30%
▪ Smaller / Lighter systems
20%
▪ 60% smaller magnetics 10% 11%
10% 6% 8%
▪ Higher hours of reliability 5%
2% 3% 3%
0% 0% 0% 1% 1% 2%
0%
2020 2021 2022 2023 2024 2025 2026

GaN SiC

Private and Confidential Source: Company information. Texas Instruments reports.

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Explaining GaN/SiC opportunity (2/2)
The range of GaN/SiC applications just started to penetrate most markets. Cost effectiveness pushing penetration
▪ The penetration of GaN includes the mid-range segment of Power, up to 100kW, which includes an enormous and very diverse set of use cases,
including OLED TVs, home appliances, Led Lightning, Motor Drivers and Data Centers.
▪ SiC operates at higher ranges of Power, thought for electric intensive applications such as Renewable Energy, EV parts and infra and other industrial

Applications for GaN/SiC

▪ Data Centers
▪ Notebook / Phone chargers
▪ Communication
infrastructure
▪ Solar energy storage systems
▪ Battery tester systems
▪ HVAC appliances
▪ Automotive Power systems
▪ Renewable energy
▪ EVs infrastructure

Private and Confidential Source: Company information. Navitas, Power Integrations.

6
Preliminary financials
Multi-year cycle growth driven by new technologies adoption in semis. Solid track-record. Prudent net cash position.
Aixtron (EURm)
CAGR
Summary Financial & CF data 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 '15-22 '18-22 '23-26 Market
P&L ($m)
Revenues 228 183 194 198 196 230 269 260 269 429 463 594 647 722 829 13% 15% 12%
growth
Normalised revenues 269 429 493 564 647 722 829 14% 16% 14% expected at
Gross profit 0 (7) 40 50 56 74 118 109 108 181 195 267 297 332 384 22% 14% 13%
Adj. EBIT (124) (109) (59) (30) (26) (19) 42 27 22 89 97 154 181 206 244 n.m. 23% 17%
c.18%
Op. income (132) (96) (58) (27) (21) 5 42 39 35 99 105 164 192 218 257 n.m. 26% 16%
Net Income* (145) (101) (63) (29) (24) 6 46 33 35 96 101 151 177 200 237 n.m. 22% 16%
EPS (1.4) (1.0) (0.6) (0.3) (0.2) 0.1 0.4 0.3 0.3 0.9 0.9 1.35 1.57 1.78 2.11 n.m. 22% 16%
Cash Earnings (recurrent)** (129) (73) (46) (19) (11) 24 56 43 44 105 109 163 192 219 260 n.m. 18% 17%
Cash Earnings (non-recurrent) (140) (115) (64) (34) (29) (18) 46 21 22 86 92 141 166 188 224 n.m. 19% 17%
FCF adj. (62) (2) (47) (59) (43) 84 4 35 14 49 7 64 112 130 150 n.m. 15% 32%
* Includes net profit + (amortization + write-downs - extr. items)
€30m sales delayed in Q4 2022 passed on to 2023 Median
Financial Ratios 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 '15-22 '18-22 '23-26
Sales growth (20%) 6% 2% (1%) 17% 17% (3%) 4% 59% 8% 28% 9% 12% 15% 8% 8% 13%
Normlised sales growth 4% 59% 15% 14% 15% 12% 15% 15% 15% 15%
Gross Margin 0% (4%) 20% 25% 29% 32% 44% 42% 40% 42% 42% 45% 46% 46% 46% 42% 42% 46%
EBIT Margin (54%) (60%) (30%) (15%) (13%) (8%) 16% 11% 8% 21% 21% 26% 28% 29% 30% 11% 16% 28%
Net Income (Adj) Margin (64%) (55%) (32%) (15%) (12%) 3% 17% 13% 13% 22% 22% 27% 27% 28% 29% 13% 17% 28%
EPS adj. growth n.m. n.m. n.m. n.m. n.m. n.m. 605% (28%) 6% 174% 5% 51% 17% 13% 18% 6% 6% 18%
Net Debt/ EBITDA 0.9x 2.1x 2.8x 5.8x 9.3x 191.9x (4.5x) (7.2x) (5.9x) (1.5x) (1.0x) (0.7x) (0.9x) (1.1x) (1.2x) (1.5x) (4.5x) (1.0x)
ROCE (EBIT adj./ CE) n.m. n.m. n.m. n.m. n.m. n.m. 25% 15% 11% 34% 30% 37% 38% 37% 38% 25% 25% 38%
ROCE (ex-GW Intang.) n.m. n.m. n.m. n.m. n.m. n.m. 42% 26% 18% 47% 38% 45% 45% 43% 43% 38% 38% 44%
ROA n.m. n.m. n.m. n.m. n.m. 1% 9% 6% 6% 13% 11% 15% 16% 16% 16% 7% 9% 16%

Solid track record Current year scenario Going forward

▪ Sales: +13% CAGR’ 2015-2022 ▪ 2023 top-line growth spike comes from some ▪ 2026 base case implies a c.14% CAGR from 2022,
delayed orders from 4Q22 vs. total market value expected to grow 18%
▪ EPS: +22% CAGR’ 2018-2022
▪ 2023 and 2024e figures already guided through ▪ Growth highly visible from customers.
▪ Company´s technology started to pay off in 2017 Semiconductor customers (OnSemi, Wolfspeed) to
order intake
onwards, through improving positioning and triple capacity this year and double next, both to
market share gains ▪ In 2022, backlog increased by 64% to €352 million
exceed $1bn SiC run-rate in 2023e
driven by high demand across all end-markets.
▪ Increasing margins driven by operating leverage ▪ Wolfspeed to spend cumulative c.$7bn on CapEx
amid the environment in increasing value add in ▪ Company claims to be inmerse in a multi-year cycle
by 2027
semiconductor equipment of penetration of compound semiconductors.
▪ Margin expansion (guidance at 27% for 2023e) on
▪ Historically conservative net cash position (2-3x) ▪ Two high optionality stories not included in the back of shifting mix away from lower value eq.
ND/EBITDA estimates: Signing of Infineon for SiC and (MiniLED) and higher pricing from new family of
iPhone/Apple for MicroLED (details in p.9) machines
Private and Confidential Source: Company, Bloomberg.

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Risk reward
c. 17% IRR under prudent exit assumptions (22x P/E vs. 30x industry avg.). Main risk is end market downturn/ cyclicality
Market & BS data 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Nº of shares 101 103 112 112 112 112 112 112 112 112 112 112 112 112 112
Share price 8.9 10.5 9.4 4.1 3.1 11.6 8.4 8.5 14.3 17.9 25.0 25.0 25.0 25.0 25.0
Market Cap 901 1,083 1,050 461 346 1,293 940 954 1,596 2,003 2,809 2,809 2,809 2,809 2,809
Net debt (cash) (100) (167) (116) (116) (120) (226) (236) (270) (187) (150) (105) (124) (181) (249) (325)
Enterprise Value 801 916 934 345 226 1,067 705 685 1,410 1,854 2,704 2,685 2,628 2,560 2,484

Trading multiples 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Median
Trading multiples '15-22 '18-22 '23-26
EV/Sales 3.5x 5.0x 4.8x 1.7x 1.2x 4.6x 2.6x 2.6x 5.2x 4.3x 5.8x 4.5x 4.1x 3.5x 3.0x 3.5x 4.3x 3.8x
EV/EBITDA n.m. n.m. n.m. n.m. n.m. n.m. 13.5x 18.3x 44.4x 18.7x 25.5x 16.2x 13.4x 11.4x 9.3x 18.7x 18.7x 12.4x
EV/EBITA n.m. n.m. n.m. n.m. n.m. n.m. 16.6x 25.0x 63.4x 20.8x 27.8x 17.4x 14.5x 12.4x 10.2x 25.0x 25.0x 13.5x
EV/FCF n.m. n.m. n.m. n.m. n.m. 12.7x 163.8x 19.6x 100.9x 37.9x 361.7x 41.7x 23.5x 19.7x 16.6x 69.4x 100.9x 21.6x
PER Adjusted n.m. n.m. n.m. n.m. n.m. 164.3x 15.4x 20.8x 40.4x 19.4x 26.9x 17.8x 14.9x 12.8x 10.5x 23.9x 20.8x 13.8x
EV/C. Employed 2.2x 3.1x 3.1x 1.2x 0.9x 7.5x 3.7x 3.5x 4.6x 4.2x 4.8x 4.2x 3.7x 3.3x 2.9x 3.9x 4.2x 3.5x
Price/BV 1.9x 2.3x 2.5x 1.2x 0.9x 3.5x 2.2x 2.1x 3.2x 3.4x 4.2x 3.7x 3.2x 2.7x 2.4x 2.7x 3.2x 2.9x
PBT/ Market cap (14%) (9%) (5%) (6%) (6%) 0% 5% 4% 2% 5% 4% 6% 7% 8% 9% 3.0% 4.2% 7.3%
Real FCF yield* 3% - - - - - - (0%) 0% 1% 1% 2% 2% 2% 3% - 0.0% 2.2%
Norm. FCF yield** (16%) (9%) (6%) (6%) (7%) 0% 5% 3% 2% 5% 4% 5% 6% 7% 8% 2.8% 3.5% 6.7%
Adj. FCF yield^ (over EV) (18%) (12%) (7%) (10%) (13%) (1%) 6% 3% 2% 5% 3% 5% 6% 7% 9% 2.6% 3.5% 6.9%
DVD Yield (%) 3% - - - - - - - - 1% 1% 2% 2% 2% 3% 0% 0% 2%

Views on valuation and returns Comps Valuation

Comparables 2021E 2022E 2023E
▪ Lion share of the case relies on assessing whether Average EV/EBIT 28.1x 17.4x 16.5x Valuation
the company multi-year growth trend is sustainable. Veeco Instruments Inc 25.1x 16.0x 11.6x Exit & return assumptions
ASM International NV 37.5x 24.0x 22.3x
Particularly given past market cyclicality of top-line if Tokyo Electron Ltd 21.7x 12.2x 15.7x
Exit P/E 20.0x
we look on a L10Y basis. Discount (%) (1%) 0% (12%) Exit FCF yield on EV 5.0%
Average P/E 36.2x 21.2x 21.2x
Implied IRR 18%
▪ Similar outlook can be applied to margins and Veeco Instruments Inc 38.1x 19.5x 16.0x Implied upside 91%
whether the surge in 2021 (24% EBIT margin) can be ASM International NV 34.3x 27.0x 25.3x
sustained beyond the medium term, or if it will Tokyo Electron Ltd n.m. 17.2x 22.3x ▪ 17% IRR under a prudent exit assumption of 20x P/E
Discount (%) (47%) 27% (16%) vs. 30x industry average historically and 25x for
revert to historic average of c. 15% during normal
periods, or even negative if overhang materialises Aixtron´s history.
due to cyclicality ▪ Aixtron has historically traded above peers on EBIT
levels, while it now shows some discount on 2023e. ▪ Worst case assuming no
▪ If prudent case materialises 25x P/E is in-line with
▪ P/E multiples historically high for the industry (at growth, some margin
market valuation and from a growth perspective we expansion and exit at 18x
+30x), now showing attractive levels going forward
would be paying a c.0.9x PEG imply money preservation.
(below 20x)

Private and Confidential Source: Company, Bloomberg.

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 Growth case could prove prudent given massive optionalities
Historically, little downside deviation from mgm. Guidance. Current base case is that of consensus. Optionalities could prove real.

Current base case in line with consensus Strong optionalities not included in estimates:
▪ At this level of analysis we position the company in line with consensus. 1 Sign up of Infineon for SiC
▪ Further research needed in per end-market to provide valuable growth insights ▪ Concentrated market: Aixtron serves 2 of the top-4
providers of SiC to auto OEMs. Positioning suggests
Metric 2017A 2018A 2019A 2020A 2021A 2022A 2023A 2024A 2025A 2026A
Infineon could sign in 2023e.
Revenue 230 269 260 269 429 463 594 647 722 829
Consensus 230 269 260 269 429 463 594 649 724 827 ▪ Overall c.45% m.s. for Aixtron could jump to 60%+
Fund vs. Cons. - - - - - - (0%) (0%) (0%) 0% SiC manuf. Market Share1 Customer
Gross margin 32% 44% 42% 40% 42% 42% 45% 46% 46% 46%
Consensus 32% 44% 42% 40% 42% 42% 45% 45% 45% 45%
ST Micro 26% X
Fund vs. Cons. - - - - - - 0% 1% 1% 1% On Semi 26% ✓
EBIT (19) 42 27 22 89 97 154 181 206 244
WolfSpeed 18% ✓
Consensus (19) 42 27 22 89 97 155 176 203 233
Fund vs. Cons. - - - - - - (1%) 3% 2% 5% Infineon 22% Potential
Other 8% Some ✓

No variation between historical guidance and actuals 2 Apple MicroLED contract extending to Iphone
▪ Since available guidance data, solid track-record of execution with little downside variation between guidance and ▪ Aixtron has recently signed a contract with Apple to
actual results, all in top-line, gross margin and EBIT exclusively provide MicroLED equipment to ASM
Measure 2017A 2018A 2019A 2020A 2021A 2022A 2023E 2024E (Apple´s contract manufacturer) for the iWatch from
Revenue Guidance 195 245 275 280 340 475 610 640 2024e: order intake of 23e 2024 onwards.
Actual 230 269 260 269 429 463 594 647 Fund estimates ▪ Total contract will be around €120m
Actual vs. Guidance 18.1% 9.7% (5.6%) (3.8%) 26.2% (2.5%)
▪ In reality, this is a test to produce MicroLED at scale.
Gross Margin Guidance n.m. 40.0% 40.0% 40.0% 40.0% 41.0% 45.0% 45.0% If execution (yields) are attractive, Apple is
Actual 32.1% 43.8% 41.9% 40.2% 42.0% 42.2% considering rolling out MicroLED into iPhones in
Actual vs. Guidance 3.8% 1.9% 0.2% 2.0% 1.2% 2026e onwards.
▪ Potential rollout of MicroLED into iPhone would
translate in hundreds of millions for Aixtron.
EBIT Adjusted Guidance n.m. 18 29 35 43 105
Actual 5 42 39 35 99 105
Actual vs. Guidance n.m. 125.9% 35.1% (0.5%) 132.9% 0.2%

Private and Confidential Source: Company, Bloomberg.

(1) Jefferies as of Feb-23
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 Review of key aspects
Key beneficiary of compound semiconductor adoption. R&D is a key component. Global footprint.
THEME KPI YES/NO Comment
High Value added YES Leading provider of MOCVD tools used in the manufacture of compound semiconductors and MicroLED.
Product Is the product Aixtron state-of-the-art equipment specialized in Metal Organic Vapour Deposition, a complex technique necessary to manufacture compound
YES
unique? semiconductors.
Leader in an oligopolistic market. Highly complex equipment designer and manufacturer. 10+ years of patents and dedicated R&D and relationships with
Barriers to entry YES
world-class semiconductor companies (Infineon, STMicro, BESI, TSMC, world-known OEMs).
Aixtron deposition systems consists on highly complex equipment essential to produce high-performance semiconductors. Aixrton has created the
Franchise/ LUCO FRANCH
highest energy efficient MOCVD systems allowing customers to scale and upgrade their systems to adapt market needs.
Flexible business c.18% of revenue coming from spare parts and services. R&D is 20% of sales, while SG&A is c.10%. Good flexibility for a semiconductor equipment
MID
model manufacturer.
Sales force above Sales and aftersales presence in all key semiconductor regions (Japan, South Korea, China, US…). 58% market share in MOCVD proves out a very strong
MID
Business average? sales network.
Model Favorable labor
Moats Global footprint with 842 employees. Aixtron has a presence in more than 30 countries and over 50 manufacturing sites world-wide (main ones in
relations/ Right YES
Germany, China, Japan, US, Singapore, India). Currently building its new R&D campus in Herzogenrath, Germany, to develop next-gen systems.
footprint?
Payback on R&D/
YES Owing to its leading technology and ongoing customer qualifications, Aixtron has been steadily growing its share of the MOCVD market in recent years.
Marketing
Highly technical profiles. CEO is a semiconductor and high-tech industry veteran (PhD in physics and worked in customer Infineon). Strong technical
Management depth YES
background in the COO who has extensive experience in high-tech product development. The CFO has previous experience as CFO and COO.
Strong ESG angle since Aixtron’s technology contributes to a significant reduction in the energy consumption of its customers' products and their
CSR commitment YES
customers.
Value creation L5Y YES Sales growth of 17% CAGR’18 - 21 and Net Profit +28% CAGR, with operating margins expanding from 15.4% to 23.1% from 2018 to 2021.
Track
Record Accounting/ Cash Weak cash conversion in the last 3 years coming from unprecedent demand triggering working capital consumption. Expected to improve in the next
Limited
conversion years. Further research to be done.
Aixtron is a key beneficiary of the semiconductor industry's shift away from silicon and towards wide-band gap compound materials like SiC and GaN. The
Predictable sector YES
momentum in EV market, demand for high-speed fiber optic communications and high voltage energy systems all point out to a fastly growing market.
Growth
Attractive growth
YES Leading positioning, market trends, and a strong focus on R&D expense (avg. c.20% of sales) support Aixtron for a very attractive next decade.
next 10 years
Room for capital
Yes Leverage is key. Management has room to increase the debt level to reduce the cost of capital.
optimization?
Risk/ Sound financial No debt. Cash position is 17% of the Balance Sheet. Net cash to EBITDA at 1.4x in 2021. Dividend payout resumed from FY20 and continued in FY21.
Yes
Reward position Dividend payout in the L3Y of c.35%.
Attractive risk/
YES c.20% IRR with reasonable numbers (mgmt. case based on underlying market growth and high optionality from new products). Exit multiple of 25x
reward
Engagement Plan & Path YES Dividend payout recently resumed in 2020. Improving incentives and compensation structure and pushing for buybacks.
Private and Confidential

10
Key Investment Risks
Exposed to semis cyclicality. Secular demand, global presence and end-market diversification are the main de-risk factors
Key Risk Risk factors Assessment Mitigating factor
▪ Recessionary environment can trigger lower CapEx ▪ Diversified end markets provide demand resiliency. Tangential
Macro
▪ Inventory build-up depth from 2021 to be seen MID megatrends such as increasing use of advanced semiconductors in 5G
environment
▪ Exposure to commodity prices networks, SiC, EVs and re-shoring should diminish cyclicality.
▪ Very strong position across its end markets and solid track-record of
▪ Aixtron competes against several advanced competitors, innovation and market share gains.
Competition also coming from higher cost-effective regions (Japan MID
and Korea) ▪ There are not many quality competitors for MOCVD systems except for
Veeco in the US, and each of the competitors focuses in specific niches.

High ▪ 3Q22 revenue split: 66% Asia, 16% Europe, 17% ▪ The benefits of diversification should mitigate the foreign exchange risk.
international Americas. It implies being exposed to additional factors MID ▪ Large mix of Asia does not come from Asian companies but Western
sales such as weaker macro, tariffs, and FX. companies manufacturing their semis in China or other (i.e. Apple)

▪ Owing to its leading technology and ongoing customer qualifications,

Innovation ▪ Company depends on its ability to develop new
Aixtron has been steadily growing its MOCVD equipment market share in
products that comply with sophisticated customer LOW
pace recent years. This stands at 58% across all end markets and 100% share
requirements
in GaN.

▪ Aixtron's revenues do not swing from year to year as growth has been
▪ Potential variability in its revenue growth, driven by the driven more broadly across its product suite.
Revenue
boom and bust cycles felt throughout its LED and LOW
volatility
Optoelectronics segments. ▪ Diversification and strong end-market demand should smooth swing in
specific market headwinds.

▪ Covid 19 disruptions have proven Aixtron’s business model to be very

Supply chain ▪ Complexity to manage the volume, cost, and timing of
resilient, as the company showed unprecedented revenue growth in
delivery of orders makes Aixtron vulnerable to LOW
disruptions 2021, leveraging from its controlled supply chain, as opposed to other
disruptions in the supply chain.
competitors.

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 Management / Milestones / Alignment
New management in place since 2021. Management wants to improve the product mix to increase margins. Strong liquidity, and free float.
Key Management Share price evolution (€)
Dr. Felix Jan Grawert (CEO & Chairman – Executive Board): Appointed Chairman of the Country Germany
Executive Board (CEO) in April 2021. Joined Aixtron in Aug-17. PhD in Electrical Share Price (Euro) 27
Engineering and Computer Science from MIT. Career in Infineon and Mckinsey. Shares Outstanding (m) 113
B. Salary: €430k / Holding: c.0.23% stake Market capitalization (€bn) 3.1
10-Day Average Volume (m) 0.5
35.0
Dr. Christian Danninger (CFO and Member – Executive Board): He has served as the
30.0
Company’s CFO since May 2021. He has degrees in Law and Economics and has
25.0
experience as CFO and COO.
20.0
B. Salary: €220k / Holding: c.0.04% stake 15.0

10.0

Dr. Jochen Linck, (COO and Member – Executive Board): He has been COO since 5.0

October 2020. He has Ph.D. in Mechanical Engineering from MIT. Extensive 0.0

experience in high-tech product development

B. Salary: €330k / Holding: c.0.07% stake
Recent management succession plan
Shareholder Stake (%) Avg. cost ($) Investor type
▪ Former CEO Martin Goetzeler left in 2017 for personal reasons and Kim Schindelhauer
became interim CEO and CFO. Norges Bank 5.1% 22.6 Institutional

▪ Dr. Bernd Schulte retired at the expiry of his contract on Mar-21. Dr. Felix Grawert took Invesco 5.0% 13.9 Institutional
over as Chairman of the Executive Board, and CEO on Apr-21. Citigroup 5.0% 8.6 Institutional
▪ On May-20, Aixtron appointed Dr. Jochen Linck as new member of the Executive board
Baillie Gifford 4.9% 10.4 Institutional
in the role of COO and CTO. It was decided Executive Board is to be expanded to include
a CFO, bringing the total number of members to three. Argonaut Capital 3.5% 6.5 Institutional
▪ In 2021, Aixtron appointed Dr. Christian Danninger as a new member of the Executive T.Rowe Price 3.0% 14.7 Institutional
Board as CFO.
Artisan Partners 2.9% 9.8 Activist

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Aixtron positioning vs. Fund portfolio
Aixtron Fund the range of Fund attributes fundamentally. On the high end of market cap, but potential window could appear
▪ Aixtron would be the 10th largest holding by sales in the Fund portfolio. In terms of EBITDA it would be the 4st largest.
▪ On a market size perspective, current size of €2.9bn its on the high end of the portfolio.
▪ In terms of PE, Aixtron now trading at 18x ex-cash. Exit PE of 20x on the high-end, being the third largest, in the group of Kardex and Lectra.
▪ Aixtron would be on the €2.5bn market cap range if it declined 15%. We propose to continue the analysis and take it to Phase II in order to be prepared if the market offers an
attractive window opportunity.
Fund portfolio in 2023 (€m) Sales EBITDA EBIT FCF Market cap. P/E 2023E ex-cash Exit PE
Washtec 482 52 38 34 538 15.2x 15.0x
CIE 3,766 623 434 180 3,153 10.3x 11.5x
Vitec 505 83 60 36 410 13.6x 16.9x
Kardex 615 77 69 37 1,516 21.7x 21.0x
Safestyle 158 5 3 0 32 17.3x 7.0x
Leifheit 240 3 (5) (21) 162 n.m. 15.0x
Bodycote 842 187 115 54 1,416 16.7x 16.4x
Tyman 734 111 86 48 542 n.m. 14.1x
Eurocell 434 38 26 9 160 9.3x 11.3x
Senior 1,050 89 41 13 781 28.2x 16.4x
Guala 894 160 116 9 n.m. 12.9x n.m.
Alimak 509 89 72 68 706 1.1x 1.4x
TIFS 3,284 297 207 84 530 n.m. 10.0x
Lectra 525 95 73 64 1,253 21.6x 24.5x
Barco 1,024 114 94 116 2,462 19.3x 18.0x
Avon 261 36 17 16 328 20.7x 19.2x
Moneysupermarket 433 117 89 79 1,594 18.2x 19.2x
Faes 468 115 96 34 1,026 10.5x 15.0x
Eurowag 261 107 67 11 744 17.1x 19.2x
Rovi 681 131 108 113 2,188 19.2x 17.0x
Average Fund portfolio 858 126 90 49 1,028 16.0x 15.2

Aixtron 594 166 154 64 2,921 17.8x 20.0x

Aixtron ranking # 11 4 3 7 2 8 3
Potential Aixtron at €2.5bn mkt cap. (14.4%) 15.1x

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