May 14, 2003 – Fremont, CA – AXT Inc., a manufacturer of optoelectronic devices and compound semiconductor substrates, is set to temporarily halt production of optoelectronic devices at its US facilities for two weeks in May as a cost reduction measure after which time it will determine at what pace production will be resumed.

During the shutdown, the company expects to ship products to meet customer orders from current inventory.

This action is being taken because, while optoelectronic sales in April were in line with expectation, optoelectronic sales in May have decreased significantly. The decrease in business is largely due to customers reporting a slow down in demand for optoelectronic products as a result of the outbreak of SARS.

The reduction in orders resulting in the temporary plant closure is expected to affect the company’s revenue and earnings during 2Q. The impact will be partially offset by a reduction in costs as a result of the temporary shut down. AXT is closely monitoring the situation and will provide updated guidance as soon as it is able.

To date, performance at the substrate business is in line with expectations for the second quarter.