November 27, 2006 – AXT Inc., a manufacturer of compound semiconductor substrates, said that founder and CTO Morris Young would retire from his position by year’s end, although he will continue as a director.

After founding the company in 1986, Young held the CEO position for 15 years (1989-2004), and was chairman from 1998-2004, and has been CTO since 2005. He pioneered the vertical gradient freeze (VGF) technology used for producing lower defect compound semiconductors that generate lower defect materials, enabling the production of higher performance technology devices such as mobile phones, lasers, and LEDs. VGF has since become a key enabling technology for the gallium arsenide industry.

“Morris Young is a visionary technologist, a pioneer of the gallium arsenide industry and the person most responsible for the early growth and success of AXT,” stated AXT chairman Jesse Chen. “His experience and wisdom have been tremendous assets to the company. We are pleased that Dr. Young will continue to consult with AXT on matters as needed and intends to remain a member of the Board of Directors.”

AXT also provided an update on anticipated changes to its business in China relating to a new rule regarding value-added taxes (VAT) and custom duties. Release No. 82, which took effect in the PRC last week, modifies an earlier release (No. 139) regarding imposition of customs duties on, and a reduction or elimination of VAT refunds, for exports of gallium or arsenic, including certain shipments to AXT’s wholly owned subsidiary in China. However, the company says only a portion of its gallium transactions in China would be affected, and none of its local firms exports arsenic, so the company’s overall consolidated financial results will not be materially affected.