Agreement Underscores AXT's Industry Leading Position in Large Diameter Gallium Arsenide Substrates

FREMONT, CA -- (Marketwire) -- 01/05/09 -- AXT, Inc. (NASDAQ: AXTI), a leading manufacturer of compound semiconductor substrates, announced today that it has been awarded a production order from IQE plc (AIM: IQE) for semi-insulating gallium arsenide (GaAs) substrates for IQE's 2009 worldwide substrate requirements. This agreement is valued at approximately $14.3 million. The substrates ordered by IQE in this agreement include both 4-inch and 6-inch diameter semi-insulating GaAs to support IQE's wide ranging materials needs.

IQE is a leading global supplier of advanced semiconductor wafers with products that cover a diverse range of applications, supported by an innovative outsourced foundry services portfolio that allows the Group to provide a 'one stop shop' for the wafer needs of the world's leading semiconductor manufacturers.

"AXT continues to be a great partner for IQE," said Drew Nelson, president and CEO of IQE. "Its strong customer service focus, ample manufacturing capacity and diverse product portfolio allow us to support diverse and unique requirements of our growing customer base."

"We are very pleased to have been awarded a new contract from our valued customer, IQE, for their 2009 substrate needs," said Phil Yin, chairman and CEO of AXT. "As the industry continues to move towards larger diameter substrates, we have made a firm commitment to supporting this transition through targeted capacity increases in our 6" manufacturing capability. We believe we are well positioned to support IQE's substrate needs in the coming year and we look forward to continued close collaboration between our two companies."

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, and fiber optic communications. 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, particularly in optoelectronics applications. AXT has manufacturing facilities in China and invests in five joint ventures producing raw materials.