Guido Pickert – Director of Investor Relations Paul Hyland – President and Chief Executive Officer Wolfgang Breme – Executive Vice President and Chief Financial Officer

David Mulholland – UBS Simon Schafer – Goldman Sachs Maxime Mallet – Natixis Janardan Menon – Liberum Capital Olga Levinzon – Barclays Capital Peter Knox – Societe Generale Andrew Huang – Sterne, Agee David O’Connor – Exane Sandeep Deshpande – JPMorgan Robert Fundel [ph] – ThinkEquity Timothy Arcuri – Citigroup

Good afternoon, ladies and gentlemen, and welcome to the Aixtron Full Year 2011 Results Conference Call. Today's call is being recorded. And I would like to hand you over to Mr. Guido Pickert, Director of Investor Relations at Aixtron for opening remarks and introduction.

Thank you. Good afternoon and good morning, everyone, and thank you for attending today’s call. With me today are, again, as always, Paul Hyland, President and Chief Executive Officer at Aixtron, and Wolfgang Breme, Executive Vice President and Chief Financial Officer. As the operator indicated, this call is being recorded by Aixtron and is considered copyright material. As such, it cannot be recorded or rebroadcast without expressed permission. You participation in this call implies your consent to this recording. As with previous result conference call, I trust that all participants have our results presentation slides, page 2 of which contains the user Safe Harbor statement. I will therefore not read it out, but would like to point out to you that it applies throughout the conference call. You may also wish to have a look at our latest IR presentation, of which includes additional information on markets and technologies as many of you know. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or a transcript on our website at some point after the call. I’m afraid that today we’re a little bit tight of time. So I would therefore quickly pass it directly onto Paul to start the call. Paul?

Okay. Thank you, Guido. Ladies and gentlemen, good afternoon, to those of you calling in from Europe. Good morning to those of you joining us from the US. And good evening to investors calling in from Asia. I’d like to welcome you on behalf of Aixtron’s executive board to the presentation of our 2011 full year results. Although the 2011 result that we present to you today fall short of 2010’s record numbers, I hope once you’ve heard what we have to present to you that you will agree that we can still be pleased with what we achieved in a very difficult 12 months for everybody. However you look at 2011, it was certainly an extraordinary year by any standard. Despite the backdrop of a very challenging macroeconomic environment, we were still delivering extremely high revenues in the first half for the year. The first six months revenues of €381 million would still have been the second highest annual revenue in our history. The strong first half revenue figure was mainly driven by demand from LED backlighting, early lighting applications, and, significantly, a continuation of a generous regional subsidy to manufacturers in China. However, progressively through the course of the year, Asian LED customers began to feel the effects of rapidly declining consumer confidence and a consequent lower demand for LED backlit TVs and monitors. A combination of new MOCVD capacity coming on line and declining LED demand contributed to the development of overcapacity and, in turn, led to significant LED price declines and consequent margin pressures for these customers. We also saw a continuation of the difficulties that many new LED customers were experiencing in putting in place the necessary infrastructure and expertise to support their business plans and, more specifically, in the second half increasing credit tightness. These specific factors, amongst others, led to the very abrupt slowdown in demand for our system in the third quarter, particularly in Asia, which led us to carry out a thorough review of our plans for the remainder of 2011 in September. At the same time as we reviewed our order intake outlook, we also risk-reviewed the equipment order backlog. As a result of these reviews, we took the decision both to reduce the previously published order backlog by €100 million to €273.5 million and to issue a revised guidance of revenues of €600 million to €650 million for 2011 with an EBIT margin of 25% to 30%. The yearend achievement of €611 million revenue is only just within the range, lower-end of our guidance range, makes the ongoing suppressed nature of the LED industry very clear. The very low order intake for Q4 brings the severity of this downturn even more sharply into focus. We have subsequently decided to take an even more cautious view of our ability to convert all of our inventory into revenue and consequently have decided to write down €40 million to recognize the risk of an extended downturn overlapping with planned new product releases. The effect of these adjustments is a reduction of the 2011 EBIT figure from €153 million or 25% of sales to €113 million or 18.5% of sales, and a reduction of a net result by €28 million to 79.5%, thereby reducing the return on sales by 5 percentage points to 13%. Wolfgang Breme, our CFO, will expand on this decision and [the facts] in his comments later on. Let me now start the formal presentation with an overview of the financial highlights and some comments on the general environment which influenced our 2011 result. Wolfgang will then take you through some more aspects of the financial and business performance. And, finally, I’ll end the presentation by coming back to some thoughts on the market and finish with a brief look at the outlook for 2012. So let’s turn to slide 3. I’m not going to go through all of the numbers on this slide, but let me touch on some of them. As I’ve already said, our 2011 revenues ended up within our revised range of around €611 million. It was certainly a year of two distinctly different halves. Of the €611 million, no less than €380 million or 62% of our total revenues were recorded in the first half. Although €611 million is 22% lower than our record 2010 revenues, we shouldn’t lose sight of the fact it’s still double the 2009 revenue figure. As I explained to you during our Q3 call last year, the principal reason for this dramatic deceleration in the second half for the year was specifically related to a change in order and delivery requirements from a relatively small number of large customers in Asia who deferred orders and deliveries for a combination of reasons, including a shortage of essential resources and funding availability, growing credit tightness, rapidly declining end market demand, and consequent overcapacity effects on their margins. Not surprisingly with a 22% reduction of our revenue, there’s also a significant effect on our margins. However, thanks to our speed of response and a little help from the US dollar, the gross margin of 38% fell by only 15 percentage points of which 7 percentage points were related to the inventory adjustment I talked about earlier. At final, EBIT figure of €113 million or 18% was that I described earlier, €40 million and 7 percentage points less because of that material adjustment. As with the revenue development in 2011, our equipment order intake significantly decreased in 2011 and was 31% down year-on-year at €513.4 million, of which 84% was recorded in the first six months. The total equipment order backlog of €141 million at December 31st, 2011 was 49% lower than at the same point of time in 2010. Before I pass you on to Wolfgang, I want to briefly comment on our ongoing R&D investments into R&D. Our ability to continually offer more productive systems to the market, supporting our customers’ design, designs that constantly reduce their production cost is vital for our future both in MOCVD and beyond. It is equally critical for our customers to be able to unlock the cost barrier to the solid-state lighting market. A common link between our cost of ownership reduction abilities and the barrier to the solid-state lighting market is our R&D road map and our ability to turn value-added know-how in IP into productive manufacturing technologies. And that is why you will find that we are accelerating our R&D investments even at this difficult time. I will hand you over to Wolfgang now who will take you through a few slides to discuss our financial performance in more detail. Wolfgang?

Thank you, Paul, and hello to everybody on the call. Let me start by repeating that the numbers we are presenting today are certainly not what we had expected when we started into the year, but that they represent not only the reduction in sales in the third quarter and the dramatic reduction order intake in the second half of the year. This reduction order intake combined with the current and certain outlook has led us to the inventory allowance decision Paul has already described. Let me pick out some key numbers. Paul has already talked about the revenue in some detail, but let me point out the gross margin number in particular. With the effect of the inventory write-down included, this has reduced to 38%, down by 15 percentage points, which is relatively better than the 22% decline in revenue due to our [flick] effect of a business model. Despite the very sub-nature of the deferred customer orders and deliveries experienced in Q3, we have exercised some of the flexibility we have built in, including releasing 250 contract employees from the business without jeopardizing our ability to respond to an uptick demand and demand in the future. The second figure on the income statement I want to have a closer look at are the selling expenses which reduced by 34%. Again, this is largely volume related. On one hand, less warranty provisions and also less sales commissions. On the other hand, total selling expenses including discretionary expenses fell in relative terms and enabled us once again to record a falling percentage of selling cost to revenues from 6% in 2010 to 5% in 2011. And the third figure on the income statement I would like to talk about is our R&D spend. At €50 million, we again spent more on research and development during 2011 than we did during 2010. This year-on-year trend is set to continue in 2012 and as Paul already mentioned, we regard its ability to invest as a key strength of the Aixtron platform. Let me show you that this spend remains under the tightest commercial control and is entirely in keeping with our desire to maintain Aixtron as a recognized technology and market leader. Finally, a quick look at our net result and especially what we will do with it. Aixtron generated a group net result of €79.5 million in 2011, which represents a return on sales of 13%. Despite this decline, our balance remains strong and we will propose to the general meeting to maintain our dividend policy, with a payment of about a third of the net profit. If approved as proposed, the dividend of around €0.25 per share will take €25 million out of our cash reserves midyear, which has been provided for when planning our cash flows for 2012. Let’s now move to the next slide, our balance sheet. There are three figures I would like to discuss in more detail – property plan and equipment, our cash position, and advanced customer payment. First, PP&E, this value has continued to increase because of the continuing investment program in our new R&D center in Herzogenrath. Phase two of our R&D center has been completed in 2011 and includes a new application lab as well as a production facility for prototypes. This additional facility will house further 150 personnel. Second, I would like to look at our cash position and the advanced payments of customers. Our cash and cash equivalence including cash deposit figure of almost €295 million represents a decrease of around 23% compared with the previous year. This decrease is due to lower customer prepayments along with the capital expenditure I mentioned earlier, and the effect of the 2010 dividend payment. Our determination to maintain safe cash balances is what will allow us to pay a dividend for 2011 in line with our company policy and to support our R&D program that is so vital to take us through the next cycle. In line with decreasing order intake in the second half of the year, our advanced payments from customers decreased by almost half in comparison with 2010 to €65 million. Needles to say Aixtron remains well-funded and fully able to finance all its operational and investment requirements. We continue to have no restrictions on our use of cash resources as well as full access to the capital markets. The cash flow statement on the following slide does not contain anything that should surprise you. But let’s just take a brief look at it. Without substantially reduced net result, we have seen a net outflow of some €6 million in the operating business. The difference between net profit and operating cash flow is largely explained by the increase of networking capital, largely caused by the customer deferrals and delays that we have previously described. The variance in investing cash outflow is mainly due to change in cash deposits with a maturity of more than 90 days and purely driven by internal treasury decision. Our cash outflow from financing activities of about €57.2 million in 2011 includes a dividend payment of more than €60.7 million in May. The impact was reduced to a small extent by inflows from exercises of stock options. Slide 8 is the familiar chart of eight quarters of equipment order intake and backlog valued in 2011 at our budgeted exchange rate of $135 per euro and total revenues. The pattern shown, however, is not so familiar. In total, order intake was down 31% year-on-year. You can see from the top chart that despite posting record numbers in Q1 and Q2, order intakes significantly declined in Q3 and Q4. I would add to this the same comment as Paul has already made. We should not expect the first quarter of 2012 to bring any relief in this regard. In accordance with the decision, we have already explained. You can also see here the reduction of our order backlog, which left us at the yearend with a total backlog down 49% year-on-year at €141 million. For those of you wishing to model this into 2012, I should point out that you will see this figure revalue throughout 2012 budget trade of $140 to the euro when we present our Q1 numbers. Based on this budget rate, our 2012 opening backlog has been revalued at €136.8 million. Let’s now move on to the next slide. It looks in the first place like there’s not much news on the revenue composition front. 91% of revenues came from systems, the remaining 9% from spares and services, which is back to the more usual ratio you’ve seen previously in 2008 and ’09. While the large majority of our systems, namely 83% are used to manufacture LEDs still primarily for backlighting purposes, but increasingly also for general lighting applications. But it continues to be difficult to be precise as to how many of our systems are intended for us in manufacturing LEDs for general lighting applications. We believe that more than half of the deliveries made during the year 2012 are intended for this purpose in one form or the other. Regionally, 90% of revenues were generated by sales to Asia with the remaining 10% split between Europe and United States. The importance shift to previous years is the shift inside Asia. China account for more than 50% of our business in 2011. Ladies and gentlemen, thank you for your attention for now. Let me now hand you back to Paul for his strategic observations regarding 2012 and beyond. I will of course be available for questions later on. Paul?

Okay. Thank you, Wolfgang. Before I give you my comments on our outlook for 2012, I want to pick out a few points in slide 9 and try and give you an insight into how we see the current market environment developing. It’s important to say upfront we remain confident in Aixtron’s business positioning and our strategic prospects. We have remained consistently focused on what we consider to be our core competence, namely creating key-enabling technology from manufacturing complex material structure. We will not be distracted by the extraordinary market conditions we face today and will continue to further enhance what we consider to the increasingly relevant US piece, not only for the MOCVD market, but also for many other imminent and emerging market applications. Our consistent technology development track record in the past and our increasing investments for the future underpin that confidence. However, one very significant business condition remains. That is that our operational visibility continues to be very limited. There’s very little we can do directly about that lack of visibility. It simply reflects the difficult market environments that we have to cope with until the market recovers. There is certainly nothing in what we can see today that suggests any sort of major recovery in the first half of 2012. It is not inconceivable that activity levels will begin to pick up in the second half. We will nevertheless continue to develop contingency plans that reflect to 2013 recovery scenario, by which time there can be little doubt that LED lighting will have kicked off. Whether or not we see a gentle climb out of 2012 into 2013, or conversely, if we see a more 2009-like surge in 2013, there is no doubt in my mind, by 2013, LED lighting will have arrived. Let me try and give you my views of the industry drivers that could lead to a pickup in demand for LED manufacturing equipment. Since 2009, we’ve enjoyed extraordinary demands driven by the very rapid consumer acceptance of LED, LCD TV and monitors. The use of LEDs for this application has been a great success. However, in my opinion such will the strategically accelerated investments made in this area, the vast majority of the LED capital equipment needed to serve this specific backlighting market, has already been installed. Conversely, with a market adoption of less than 5%, the LED industry has not yet generated sufficient demand to support the next LED equipment investment cycle. The very large regional and local government strategic investments made to build up the LED infrastructure in the Asian markets, most prominently in China, did for a while suggest these non-market driven investments could have acted as a ‘bridge’ across the valley between the investment cycles for LED backlighting and separately for LED general lighting. What happened in the third quarter of last year was a clear signal that that bridge is too fragile to support more strategic investments before the emerging LED lighting industry triggers meaningful real market driven demand for LED mass production equipment. We continue to see very encouraging signals in the form of increasingly proactive governmental engagement and clear market preparation and positioning activities from significant industry players specifically targeting the LED general lighting opportunity. The medium to long-term prospects for the LED industry remain excellent, particularly in view of the general worldwide acceptance of the environmental and increasing cost benefits that come with using LED technology for general lighting applications. Let me assure you that when the doors to that opportunity really open wide, we will be ready with highly competitive products and services. As I have set out before, we believe that the quality and depth of our Research and Development work is a key asset and the foundation for our future success. Phase II of our new R&D center is now complete, providing us with a much needed infrastructure we need to support our ongoing investments in R&D. We’ve transferred our latest generation technology into the research and development laboratories and we are now transferred our specials and prototype production also into this building. We will of course also use these facilities to further enhance the productivity and performance of our existing products, delivering lower cost of ownership for our customers. In the current climate our customers are having to cope with substantial LED price erosion and increasing margin pressures. And our contribution to the partnership we have with customers is to provide the support they need from us and to ensure that they have access to the ongoing development of increasingly productive equipment from AIXTRON. Our substantial multi-year investment program is not exclusively limited to the development of next generation LED manufacturing tools. We are also focusing on the development of new technologies for other end markets we believe we can address with the expertise we have within AIXTRON. In this context, it is important to recognize that we are not, as a company limited to just LED market opportunities, albeit the LED market is very substantial. We continue to work on new technologies used in the manufacturing process of complex material films for other semiconductor applications. These beyond LED technologies include, emerging LED application, MOCVD applications such as power electronics, large area deposition equipment to produce organic semiconductors like OLEDs or silicon semiconductor system technologies for next generation applications where we expect to see an increased convergence between compound and silicon semiconductors. ln the longer term, we continue to make good progress providing equipment for the research community addressing carbon nanostructure applications, including graphene and carbon nanotubes. The commercialization of these nanostructure applications could be more than 5 years out, but the work we’re doing today, will allow us to maintain our market positioning when these new applications gain commercial traction. Complementing and enhancing our R&D work, we’re also actively engaged in a number of publicly and industry funded research projects to jointly work on the development and eventual commercialization on a number of these and other emerging technologies. So let me consolidate those thoughts on the market environment and tell you what that could mean in terms of our outlook for 2012. Going back to the remarks I made at the beginning of the presentation, you won’t be surprised that I believe without investments driven by the LED lighting industry, we face a very challenging first six months in 2012, with perhaps a more positive outlook for the second six months. What is clear is that hoping for a recovery is neither sensible nor professional. We will continue to take a proactive, disciplined and focused approach to managing the business we have. With so much market uncertainty and so little order visibility, at this stage in the year, it’s far more difficult than in previous years to be precise in our 2012 prediction. However, although we cannot give you a detailed revenue and EBIT guidance for 2012 at this point in time, I can tell you that we anticipate remaining EBIT profitable in 2012. We will of course give you a detailed revenue and EBIT forecast for 2012 as and when our visibility improves. In summary; the flexible business model, our solid balance sheet and strong financial position that we work so hard to create, has enabled us to deliver a good 2011 result in a very difficult market environment. It also provides the foundation for our commitment to not only invest into today’s opportunities, but also to invest into the markets of tomorrow. In partnership with our customers, suppliers and employees, we are confident that we can cope profitably with the challenges we are facing today and emerge stronger from this period than we went into it. And with that, let’s concludes our 2011 full year presentation. I would like to thank you for your attention and turn the call back to the operator to start the Q&A session.

Let me make one more remark before we hand the call over to the operator for the Q&A. Since we have quite a long list of people wanting to ask questions, we ask you to limit your questions to a maximum of two each time. And additionally, as I said at the very beginning, I’m afraid that we will have to limit Q&A to about 30 minutes. This will hopefully allow everyone to ask their questions, and therefore, I will all pass you back to the operator. Operator?

Thank you gentlemen. Let me now open the conference call for the Q&A session. (Operator instructions). The first question comes from David Mulholland from UBS. May we have your question please? David Mulholland – UBS: Hi, just one question, more conceptually as we look forward from here. If we think back over the past cycle and how the cycle was able to gain some shares that has declined [ph] their product, launches for when, before the market starts to turns again. When you look forward in your planning, the launch of your next generation tool, are we currently at a stage which are to come to market when the market turns around just to try and have that advantage again? Or is it still the least development and you know, were still some work to do on the products. Paul Hyland David, Paul Hyland here. I mean we have always as a matter of course, always had at least two generations and maybe one concept work in progress. The timing on the products, and the product launches, is very much dependent on what the environment is. We clearly do have fairly advanced product development going on, but as to precisely when we would choose to launch that, it depends on a number of factors, including any fine tuning of the design, but also dependent on the state of the market, and what the market is asking for. Just now, of course, it’s a very, very flat market, and we are at this – this valley between backlighting and lighting. So we don’t have necessarily pre-determined fixed date, but as soon as we see the market turning, we will have new product generations available when the time is right. David Mulholland – UBS: That’s great. And just one quick follow-up, obviously, it’s the commentary on the inventory, if there’s still any risk to the event that we see further right bonds, obviously we only – how much would you expect as part of your inventory in 2012?

Hi, David. No, we do not see any further risk in our inventory looking forward. We believe we have taken our current shipment plans into account such that value-wise, most of the inventory, mini-work in progress which we have on our balance sheet after this reduction will go out within the year. David Mulholland – UBS: Thanks very much.

The next question comes from Simon Schafer Goldman Sachs, please, it’s your turn now. Simon Schafer – Goldman Sachs: Yes, thanks so much. Actually, Wolfgang, the qualifications just on your FX, did I get that right? You said FX at 140 rather than 135, so there’s another slight re-evaluation on the backlog and therefore, the orders? Just a clarification.

Yes, that’s absolutely correct. So we have set the exchange rate at 140, so there’s a very slight reduction, it goes down to 137 from the 141, so just a minor, it’s just. Simon Schafer – Goldman Sachs: Understood. Great.

And we should add that it’s pretty well – standard process each year, it’s not a new process. Simon Schafer – Goldman Sachs: Yes. And then Paul, just a question for you, obviously, lots of conversations surrounding the subsidy structure now, having shifted to your customers, maybe share some of your perspective as it relates to the timing, and how that may benefit from an eventual equipment point of view, that would be very helpful. Thank you.

Yes. Well we have seen probably the majority, I think of the new subsidy investment, that doesn’t mean there is a number of customers out there, still receiving systems, or will continue to, that will gain benefit from subsidies, but certainly it’s true, and I think it’s pretty essential for the whole Chinese industry that they do move these subsidies downstream. If we just recount the history of this, they started what I’ve always called sort of the top-down subsidies to try to encourage an LED lighting industry or remember the street lighting projects with the first. Then what we call the bottom-up ones, in other words, the substantial investments to help people buy equipment, certainly we appear to be coming towards the end of that. I would expect now to start to see them move downstream. There is very strong rumors that there are new, there are some proposed, new centrally government proposed subsidies, which of course will be proposed by the government, they’re executed by the regions. One of them I think goes to the street lighting projects. That looks as though that will continue to be rolled out, and maybe more projects. There are also some as yet undefined subsidies being talked about for Chinese companies to assist them in reducing cost and increasing performance of LEDs, and there are also talks of perhaps some – and these will be, we think funded by local government and in regions, and cities, and that is subsidies for consumers. But these at the moment are still rumors, the do fall in line with rumors we’ve heard before, and we may just have to be a little bit more patient to see actually what the detail is. I think it should come out at some point in the near future, but we haven’t got the detail behind that. I personally think that is exactly what they need, having made these huge infrastructure investments. Until the Chinese industry reaches a point it can be globally competitive, it needs an internal market in order to fuel this massive increasing capacity investment. So this thing, is like the next logical step. Perhaps a bit of more regulatory encouragement from the Chinese would also help to drive that growth, but we haven’t seen that just yet. Simon Schafer – Goldman Sachs: That’s great. Thanks, Paul.

You’re welcome.

The next question comes from Maxime Mallet from Natixis, may we have your question please? Maxime Mallet – Natixis: Yes. Good morning gentlemen. Just a question from the SS1 would be, if we rule out your provision on existing boundaries, we add growth margin on Q4 which would be around 37%, seems a little bit lower than Q3. And could you explain why this would decrease the growth margin even without the provision. And – could you remind what’s your cash breakeven? Thank you.

Maybe if I just give you the opening, to your first question, and then Wolfgang can give you the technical detail. Worth remembering passing Q3, not only do we see a substantial slowdown in all that’s being placed, and delayed shipments, but of course we also saw people delaying the speed that we expect took, and signed off systems. So what it means, if you look at our revenue for Q4, it’s predominantly shipments, but not a huge amount of final acceptancies. And I’ve heard some very new reasons why things have gone, signed off in the last month, but clearly, the mix in terms of shipments, and final acceptance is being very different. And the margin on final acceptance is much higher because it’s predominantly profit with very little cost. So I think that’s the operational reason, but I’ll hand you over to Wolfgang.

Technically, the gross margin reduction was mainly driven by the fact that we had a different product mix or revenue mix in the fourth quarter. We shift to the very big orders from China in this quarter, but we did forget to file acceptancies yet, they are scheduled for Q1, up to the end of Q2, into Q3 because of the significance of the bigger orders. As you know, we recognize revenue as 90% on shipment carry all the cost of goods sold, and then we – the less risk, off the revenue to recognize up to final acceptance of 10% which carries, more or less low [ph] cost that is very profitable. So we have a very high backlog of final acceptancies especially in China. So the major reasons for the reduced gross margin. The cash breakeven I access for last year, around 225, for this year, this may increase up to, say EUR 250 million, cash breakeven so meaning a kind of EBITDA breakeven. Maxime Mallet – Natixis: Okay, thanks a lot.

The next question comes from Janardan Menon from Liberum Capital, please, it’s your turn now. Janardan Menon – Liberum Capital: Yes, hi there. Just going back to your R&D efforts, I was wondering given, a record success with the (inaudible) tool, what your latest thoughts would be on the revenues of the market for such a tool, and your own plans if you can say anything about it in terms of bringing such tools to market, as well as you know, what you can tell us about increasing productivity on the tools to be more competitive and regain some market share. Second question, also which is back to the question about if and when the lighting market does take off, what your latest thoughts are in terms of what the kind of annual fee the tool volume that that will bring assuming we go to a penetration of 30% or something like that. What is your current degree of confidence that that kind of a penetration will result in a significant jump in you order book as well as the shipments in the industry itself?

Okay, well yes, you’re quite right, you said, we wouldn’t talk too much about the detail behind our R&D program, but currently, that part of our R&D which is focused on preparing for future generations to support the lighting industry is all about being able to enable customers to not only produce better yields and performance of products, but certainly cost of ownership. You can see that in many of the conferences that we go to, whereas the dialogue was mostly lumens per watt right now talking so that dollars per lumen. In terms of competitive, we believe we already have a very competitive product, unfortunately, the market is very flat at the moment, but if you were to look at the price two, which now a (inaudible) product which in a period of 18 months has had two upgrades, which depending on the weight and size is given the capacity increase of anything between 40% and 50% plus. So even on a standalone basis, we think it’s highly competitive, as you’d expect. But future products, of course, we’re going to see increased pressure on past performance, we’re going to see an increasing amount of bigger weight reduction, all of which bring different technical challenges. And we also have to better supply very user friendly equipment for more operate – maybe even more silicone-like business environment. As for the size of the market, I think I’m probably repeating what we’ve said before on this, but I think if I draw a comparison, I think John Peter with Bico [ph] has suggested that by 2015, the LED general lighting business would make something like 5,000 systems. To be fair to John, I think he’s talking there about the current standards because I don’t think it’s that many. And I suspect it’s probably close to the 3,500 to 4,000 , but those 3,500 to 4,000 will be more productive and fine picketed products. Quite clearly, we’re going to need to be able to supply them very much of the cost-reducing technology for the industry as it takes off. Today, it’s less than 5%. Now the number systems, if those – if either of those figures are right, of course if it goes very quickly, the industry will consume more systems because it doesn’t have the ability to generate efficiencies on the line. But it’s clearly a fairly substantial market, and I think begins to get some traction in 2013. Janardan Menon – Liberum Capital: Okay, thank you very much.

You’re welcome.

The next question comes from Olga Levinzon from Barclays Capital. May we have your question please? Olga Levinzon – Barclays Capital: Hi, thank you for taking the question. I wanted to follow-up on your efforts in the non-LED space. We’ve seen a pretty decent uptick in your display, and others have been switched – you know, I believe there’s a (inaudible) China. How are you thinking about that growth into 2012 and beyond in terms of equipment demand?

We haven’t put any numbers out there on areas like power electronics. It’s clearly a very much growing area. I believe I’m right. Guido, you probably also put some slides in, haven’t you in the…

In the IR presentation.

In the IR presentation which gives you a little sort of interesting connection on the history for OLED technology. This is an area where we’ve also been engaged, probably since back to about 2003. We’ve certainly seen a pick up. You will already know that we’ve shipped many years ago systems stable light right display, plastic logical over system. But there is a genuine pick-up. We are seeing now more people, perhaps taking the lead from people like Samsung, looking at both R&D and preproduction systems. We are certainly spending more there. If you went into our R&D lab, which you won’t (inaudible) – but you would see more organic semi-conductor activities than we’ve seen before in the past. So, that’s an area, which we do think is very interesting. I did see these fantastic OLED TVs at CES this year, albeit very expensive but I still think that will probably take maybe at least a couple of years to flush through to the mainstream. But certainly you can expect that OLED TV’s monitors will be a part of the consumer market I would think certainly within a couple of years. Needless to say, there were plenty of other organic semiconductor opportunities beyond just purely consumer electronics. To tell you there’s the lighting potential, there’s maybe an organic solar cell potential. But I would also add, our semiconductor business looks – I think much more encouraging this year than last. We have to turn that into real orders. So, we don’t talk it up until we see that. And carbon nanotubes, graphing applications continued to keep our Black Magic products still looking very encouraging. Albeit, it’s a three to five year commercial cycle probably. Olga Levinzon – Barclays Capital: Got you. And just a quick follow-up question. In terms of your backlog in orders, how much of that was actually coming from China?

I would say, in the second half, the orders of China reached two-thirds of the business revenues or more than 50% of the sales, so, this is pretty much reflected in our backlog as well. I mean, China was the big story of, let’ say, of the past 18 months. Olga Levinzon – Barclays Capital: Thank you.

The next question comes from Peter Knox of Societe Generale. May we have your question, please? Peter Knox – Societe Generale: Yes. Thanks for taking the question. You alluded to continue investments in R&D. And you’ve made a number of references in terms of marketing particularly into China in the past six months or so. Can you give us some indications about what levels of OpEx cost we should be looking at moving forward? Are we looking at a continuation of Q4 rates or potentially a service step-up?

Wolf can give you the details, but certainly on R&D, we were up around the €50 million in 2011. We almost certainly be up around the €60 million in 2012 and it may climb beyond that. Peter Knox – Societe Generale: Okay.

Hi Peter. The break-even for 250 million to 275 million, it’s at a 40% gross margin and assumes OpEx around 110 million depending on R&D, maybe slightly higher. So, if you take the 275 million, you have a 110 million gross margin. For a zero EBIT, we have 110 million OpEx, which includes an increase in R&D and decrease in other areas. Meaning, the ceiling index [ph] goes down significantly.

I think you also touched on a subject on China. It’s true that we are investing more in China, not just in terms of commercial infrastructure but also a new research and training center which opens fairly soon in conjunction with SiNANO in Suzhou and that will be opening fairly soon and maybe more to follow. Peter Knox – Societe Generale: Thank you.

The next question comes from Andrew Huang from Sterne, Agee. May we have your question, please? Andrew Huang – Sterne, Agee: Good morning.

Hi. Good morning, Andrew. Andrew Huang – Sterne, Agee: So, I think you mentioned in your prepaid remarks that you’re awaiting investments in General Lighting to drive a recovery. So, other than capacity utilization, are there any other things that you’ll be monitoring?

Yes, we certainly are. And in fact, there were several slides in our IR presentation would show you some of the things we are tracking. Clearly, the ability of the ranking manufacturers to deliver commercially acceptable pricing. We’ve listed a list of them down there. Well a couple that springs to mind – certainly, Korea continues to be, I think, very strategically focused on this space. I know of a 40-watt equivalent has been sold in Korea. I think it is about $8.50. I think we’re now below $16 per 60-watt. Now, of course, it’s not just about Korea. Korea does have a very positive government encouragement. No subsidies, but a 60-20 program certainly is very focused on achieving a certain level by 2020. Elsewhere, we are seeing more people looking at lighting application, and certainly China, which we have to – we can’t ignore such a huge market and has probably the most joined-up thinking in terms of encouraging the developments of a lighting industry. But for me, watching the pricing and the speed at which it’s developing, I think is very interesting. The charts you find in our presentation also contain what the price development is for incandescent and for CFLs. So, it does show you it’s driving down the price of the incumbent technology at the same time. I think they are all good positive signals that we can’t be so far away. Now, whether or not it develops slowly out to 2012 and into 2013 or another – if you’re like Samsung Light, it’s a big jump into 2013. We don’t know. I don’t think anyone else does but we have to be prepared for both eventualities. Andrew Huang – Sterne, Agee: Okay. And then, when we look back at the back lighting investment cycle, I think it’s fair to say that it was somewhat concentrated among Fiber 6 chip makers. So, when you look at general lighting, do you think it’s going to be the same players or will the landscape be a little bit different?

No. I think it will be fairly dramatically different in a sense that the conventional lighting companies clearly have invested substantially in this area. The traditional things that we all know – the Philips, the OSRAMs, the GEs, et cetera. But you do have a new group now who are very focused on developing their position in lighting and that is the semiconductor guys – the Samsungs and LGs, who have very impressive portfolios and very aggressive positioning in terms of price. Add to that, now we must consider that within, certainly, the next two years, with its huge government support coming from China that you will see some meaningful Chinese players. I’m sure I read recently, the Chinese already produced something like 70% of all the world’s light bulbs, under license or OEMs to other people. It’s a very important part of their industry and one that they are clearly very focused on. So, I think we’re going to see not only a different group of people competing in this space but I think we are likely also to see some – maybe some considerable consolidation as the early investors start (inaudible) by the bigger players. I believe, the Chinese, their view is that they expect eventually to end up with maybe five or six fairly substantial global players, not just hundreds of local playing companies. It will be a very interesting time, I’m sure. Andrew Huang – Sterne, Agee: Thank you very much.

You’re welcome.

The next question comes from David O’Connor from Exane. May we have your question, please? David O’Connor – Exane: Good afternoon, gentlemen and thanks for taking my question. Just one or two things, if we may. Paul, do you think we need to see consolidation in the China LED markets versus before we see that Chinese players come back and order more tools? That’s the first one. And also, between the (inaudible) and the 4000 [ph] system you mentioned, can you give us a kind of timeframe? Do you have any idea on the timeframe for that? Are we talking between now and 2015 or is this going to happen a lot quicker? Thanks.

That one is fairly simple. I think the original conversation I heard from John on 5000 by 2015, minus 3 1/2, the 4000 is the same sort of period. David O’Connor – Exane: Okay.

What is true is that should there be the source of investment profile we saw for backlighting in 2009, it be more systems simply because the faster the investment, the less time there is to sort of get incremental efficiencies creeping in. I’m sure if it’s not by 2015, it’s 2017. It would be less than if it was 2013, if you follow my drift. Consolidation in China. I think there will be natural consolidation because clearly there’s – already you’re seeing maybe two or three tiers of very capable local players. Perhaps, some transplanted expertise into China that are also succeeding and some are struggling. Some of the companies that came to this space came in, perhaps, with not as much experience and expertise as others, and perhaps not the same sort of balance sheet. So, I would think quite naturally, you would see consolidation taking place over time as we’ve seen elsewhere. But I’m not sure I’d necessarily connect it directly with LED lighting investment from China. I think that will be pretty relentless progress but when the next investment cycle starts, I don’t think is dependent on consolidation. It’s going to be dependent on the ability to bail, to produce devices. David O’Connor – Exane: Okay, got it. Thank you.

You’re welcome.

The next question comes from Sandeep Deshpande from JPMorgan. May we have your question, please? Sandeep Deshpande – JPMorgan: Yes. Thanks for letting me on. Just a quick question on the China market itself, Paul. I mean, despite shipping a lot of tools into the China market – I mean, the data seems to suggest that utilization still remains very poor there or it’s not installed. I mean, you also talked about tools not being installed. Is there any risk that some of those tools come back into the markets where the utilization is clearly growing very strongly at this point – Taiwan or Korea? That’s my first question. And secondly, on pricing. You yourself have talked about in the past call that there will be more pricing pressure with your competitor. So, do you see that occurring at this point or do you think that that is now mostly in the margins?

Well, on the pricing pressure thing, I think I would probably give the same answers John Peeler would and that is, it’s not so much necessarily being driven by pure competition between the two companies. Of course, we both compete. I mean, we’re both very casual [ph] technology companies. I think pricing pressure comes more from that the business is coming from regions perhaps that are more price sensitive and very, very customers who have the ability to leverage their purchasing power. But as the industry naturally progresses to a more semiconductor-like environment, which indeed it is, helped by lots of semiconductor players coming in, then I think we will see progressively tougher prices. I mean, what you can see clearly with our product development is what we hope to offset some of that pricing pressure is by being able to offer more competitive or greater capacity technology. So, if we can offer a machine which offers the greatest capacity or perhaps a little bit more money, then we are able to sort of dilute that. I mean, that’s part of the way in which the industry is flowing. As for the flow-back question, I was asked this once before. I’m sure we were following someone else’s round on a road show because I got asked on every place – every place we stopped to visit about systems that we have boxed up ready to be resold. I said then I only recall one customer who came to us to say, “I want to take delivery of the system even though my cab’s not finish for reasons (inaudible) done.” But can’t I think of any others. I think that was probably subsidy related because most systems we ship – you can imagine, we’re very eager to be able to get psych of that final acceptance money, which is mostly profit, not cost. So, in virtually every case, we have a very close view as to whether or not those systems are going to be installed. If they’re not installed, we can’t claim our money. So, we don’t see it so often. However, I will say there are some customers who have taken multiple systems and might find creative reasons why they can’t sign for those systems which are turned in being used for business. So, that’s an issue that we have to come to terms with, with perhaps some of these new markets. I think you’re hinting at the increased capacity utilization that is going on currently in Taiwan and Korea, which I think is being partly driven by these low-cost direct-lit, backlit TVs. Certainly, we are seeing utilization is climbing into the 70% and in one case, I can think of 80%. But I stick by my argument, that won’t necessarily drive any new business for us because most of the capacity is already being installed. Will light systems flow from China physically to Taiwan? I wouldn’t think so. I think it’s probably more likely that people who have investments in China might utilize Chinese capacity with lower cost to be able to pick up any additional demands. I may be wrong, Sandeep but I certainly haven’t heard any dialogue of physical movement of systems coming from China to elsewhere. And indeed, the motivation to do by the Chinese players is diluted by the fact they’re sitting on huge subsidies. I think probably many of those subsidizing cities or provinces might be a bit reluctant to see anything going on a boat to Taiwan if they’re given subsidies for them. Sandeep Deshpande – JPMorgan: Thanks for that Paul.

Okay. You’re welcome.

The next question comes from Robert Fundel of ThinkEquity. May we have your question, please? Robert Fundel – ThinkEquity: Thank you for taking my questions. First, in relation to a past question. You talked about being able to reduce cost via flexible work arrangements in 2012. When you look at the possibility of a recovery in 2013, how much SG&A will you need to add back? We become more efficient after this downturn or should we look for similar levels of SG&A at similar revenue level?

Well, I think one of the reasons we are to able to wind the cost down, perhaps it’s not instant because of course, with such an abrupt stop, we still have to finish the equipment otherwise, we can’t leave it in a stable enough state such that we can build it for customers. But nevertheless, the cost came down very quickly. I think we released about 200 contractors from the manufacturing in Q4. We’ve gone during also Q4, another 50 during the course of Q1. So, we’ll see the full benefit of that 250 reduction in Q2 for the first time. But the way we’ve always worked is that we subcontract probably 90% with third parties. When it’s delivered to our manufacturing area, we test it and we have contractors who then can assemble them. It’s quite a modular product we’ve designed. And what we’ve reduced down to –we’ve always retained a core set of employees. This is the skill set. In fact, you will notice, some of our manufacturing headcount increased and that was partially because of the 200 odd people we released, there were some essential key people that’s been with us for maybe three or four years. And we decided, rather than lose them we’d convert them into abundance. So, we have a core that is capable of doing at least 200 systems if we did nothing else. But we’ve shown in the past, we are capable of ramping that up to well beyond – I think we’ve certainly produced 150 systems and of course the 600 systems a year. So, we’re reasonably confident in the ability to pick it up again. It’s not such a big challenge. There’s no capital, it’s simply about bringing possibly even the same people back in to pick up where we were before. Robert Fundel – ThinkEquity: Great. Thanks. And then, for many years and sort of couple cycles, your service revenues have remained in that $25 million per year range and then, over the past year, it’s been in the $50 million per year range. How do expect service revenue to trend in the coming years given the large number of tools you just put out in the field?

It has gone up, but I’d say, most of that service instead spares revenue rather than service. The industry is still in the stage where they’re quite reluctant – I mean, we can offer some fantastic service packages but most customers are reluctant to let us come and service and therefore see what process they’re running. And I understand that. I think when the industry develops a more standardize process, then that opportunity will arise. And certainly, we’ve got infrastructure in all of our main markets to increase service. But it’s very much us and when the customer is comfortable to let us come and do that for them. I think it will become – as I’ve said earlier, the semiconductor industry becomes sort of the more normal model, then service and service contracts become a more established part of the business profile. But we haven’t seen that develop yet. Maybe over the next couple of years. Robert Fundel – ThinkEquity: Great. Thank you so much.

You’re welcome.

The next question comes from Timothy Arcuri from Citigroup. Please, it’s your turn now. Timothy Arcuri – Citigroup: Hi. Paul, I wanted to get your perspective on the forthcoming side of plan in your China. We’ve heard that it’s only going to cover about 10 million bulbs, so it really is not a big number. And I’m wondering what your perspective is, what’s your intelligence says on that – number one. And then number two, I wanted to ask about pricing. Veeco talked last quarter about there being a little more competitive pricing out there. And I can only assume that they were talking about you. But I wanted to get your perspective on pricing environment. Thanks.

Well, the pricing environment – I think I touched on this earlier. I think it’s not so much about Veeco, and ourselves sort of competing. We are clearly competing and you would expect we’ve let business around, there will be a little bit more competitive price. But I don’t think it’s really coming from that. I would say we both have a common interest and that is that in my experience, pricing don’t go down and don’t go up, we’re both far better off trying to deliver greater value for a little bit more cost. And that’s how it should be. The five-year plan – well, of course, it’s taking a very long time to get the details out. You have to be patient. Then you see things take a hell of a long time before you get the full details. I think you may be referring, not to necessarily the five-year plan but these recent rumored subsidies that are talking about being rolled out. We heard about them first, I think back just before the end of last year. And we don’t know what they are. The word I heard is that the central government has made clear they want to introduce now some core subsidies. But they haven’t yet being defined as to what they are. China, we know is very much sort of centrally guided but locally executed. So, I think the some of the regions are equally keying for what the guidelines are from government. We’ve heard these three. One will be directly into LED manufacturers. Subsidies that will enable to improve quality and reduce price. But we don’t know the detail or what the set-form the subsidy state. We also know about perhaps another extension to street light brands, which probably is very beneficial for the likes of Korea and Philips because the Chinese still struggle with some of the hired [ph] power products, but there are some. And the final is we heard there may be some consumer subsidies. But you’re quite right to say, we don’t know the details yet. We’re just picking up probably on the same room as you are. But it makes sense to me. Given they’ve made this massive injection of capital equipment and given it will probably take the Chinese a couple of years to be globally competitive, if they don’t have an internal market to absorb this capacity, all of that investment would have been wasted. So, it does make sense that they should do this at this time, but we don’t know the details. Perhaps, a bit of regulatory encouragement by the Chinese central government would also be a huge help if they were to insist on LED technology for future building or something, but we haven’t seen that yet. Timothy Arcuri – Citigroup: Thanks a lot.

Okay. You’re welcome.

Well, I have to jump in again. Thank you for your interest. We will close the call today. We will contact anyone who did get to ask a question so we won’t leave any questions unanswered. Thank you again and bye-bye.