Guido Pickert – Director, IR Paul Hyland – President and CEO Wolfgang Breme – EVP and CFO

David Mulholland – UBS Uwe Schupp – Deutsche Bank Sandeep Deshpande – JP Morgan Aaron Chew – Maxim Group Simon Schäfer – Goldman Sachs Günther Hollfelder – Baader Bank Jürgen Wagner – MainFirst Bank Janardan Menon – Liberum Capital

Good afternoon, ladies and gentlemen, and welcome to AIXTRON’s 2012 Annual Results Conference Call. Today’s call is being recorded and I would like now to hand you over to Mr. Guido Pickert, Director of Investor Relations at AIXTRON for opening remarks and introductions.

Welcome everyone to our 2012 annual results conference call of AIXTRON. Thank you for attending today’s call. My name is Guido Pickert, Director of Investor Relations at AIXTRON. Today, we have Paul Hyland, President and CEO of AIXTRON, as well as Wolfgang Breme, the Executive Vice President and CFO of AIXTRON with us on the call. As the operator indicated, this call is now being recorded by AIXTRON. It’s being recorded by AIXTRON as considered copyright material. As such, it cannot be recorded or rebroadcast without express permission. Your participation in this call implies your consent to this recording. As with previous results conference calls, I trust that all participants have our results presentation slides, page two of which contain the usual Safe Harbor statement. I will, therefore, not read it out loud, but would like to point out that it applies throughout this conference call. You may also wish to take a look at our new online annual report which was published today as well as our latest IR presentation, which includes additional information on markets and technology. Both are available on our Web site. This new interactive annual report, which you can find there, features interactive services like quick analyzer or a download center through which you can individualize elements of the report which you are interested in and create your own PDF. So please will be invited to test that annual report. I would now like to hand you over to Paul Hyland, our CEO and President, for opening remarks. Please, Paul?

Thank you, Guido. Ladies and gentlemen, good afternoon to those of you calling in from Europe. Good morning to those 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 for the presentation of our 2012 results. Let me start with slide three by making some general comments about 2012 and how we see current developments in the market. 2012 proved to be an exceptionally challenging year for AIXTRON, largely due to the severe and extended macroeconomic headwinds that the whole world has been suffering from. Our original expectation was that 2012 would develop into a transitory year with lower orders and revenues in the first half of the year, but with the prospects of a significantly better second half. However, as we all know, we didn’t see a significant economic recovery in the second half of the year and, consequently, equipment orders and shipments weren’t realized, impacting on our ability to be profitable in 2012. What we can say is that during the fourth quarter of 2012, we did deliver the Q3 predicted operational year-end results of €220 revenue and EBIT loss of minus €125 million before the additional restructuring provisions and balance sheet adjustments that Wolfgang will expand on his presentation. On a more macro level, we remain positive about both the mid-term and long-term outlook of the business. Albeit muted, there are clear signs of stabilization, particularly in the Eurozone as well as other better-than-expected economic data coming out of Japan, China and the US. The ongoing level of demand seen in the second half of 2012 and into 2013 encourages us to reiterate our view that we have reached the bottom of the current cycle and that we might reasonably expect to see further market recovery at some point during 2013. Encouragingly, towards the end of last year, we saw increasing numbers of LED general lighting products coming to the market, particularly in the commercial and industrial sectors, but also the consumers’ appetite for LED lights has also been encouraged by the actual or imminent regulatory bans on incandescent light bulbs, helped by an increasingly competitive pricing environment for replacement LED and equivalents. A combination of regulatory encouragements, increasing product availability and a rapidly dropping prices can only help to initiate the momentum the LED industry is looking for. We can only see this trend continuing throughout 2013 and 2014 and would then expect significant increases in the demand for LEDs for general lighting, which will inevitably lead to LED manufacturers needing to install new MOCVD equipment both to satisfy demand and to meet cost reduction road maps. Our view remains that this third investment cycle for LED equipment is closer in some regions than others. On our recent trip to Asia this year, several major customers were telling me that their LED backlighting/LED lighting mix was close to 75% and 25%, and that their utilization rates were over 90%. But I also have to acknowledge that other regions are nowhere near that level of utilization and continue to have a substantial over-capacity to draw through. This regional contrast, in both utilization and capability, doesn’t help. And the precise timing and magnitude of the pickup remains unclear at this stage. What we do know is that it will not only be the biggest investment cycle in total to date, but that the investments would also be made over a far longer period in contrast to the two-and-a-half year backlighting cycle. Given the expected performance and cost of ownership challenges the industry faces going forward, we believe AIXTRON is very strongly positioned to take full advantage of this opportunity. Moving beyond LEDs now, we’re also gaining traction in some other exciting areas. As there is very little pure LED volume production business today, you will appreciate that we’re greatly encouraged by the increasing demand for systems for other compound semiconductor applications, the strongest of which is coming from the fast growing power electronics sector. We are also tangibly gaining momentum in the silicon semiconductor space, most notably for our most recently released QXP-8300 ALD system, which offers a compelling and cost-effective technology solution for memory device producers. The same can be said for our Carbon Nanotube and Graphene solutions where we continue to gain healthy customer interest. Finally, in organic semiconductors, we’re working toward completing the production qualification of a new OLED system delivered to an Asian customer last year and have made substantial R&D progress over the last three months. R&D work on future MOCVD generations continues to occupy a lot of our focus, but these other areas promise to broaden the scope of the markets we can address and offer substantial growth potential in the coming years. At this point, let me hand you over now to Wolfgang for a more detailed view of Q4 and our full year numbers. Wolfgang?

Thank you, Paul, and hello to everyone on the call. Let me start by repeating what Paul has already said and that is that these numbers we are presenting today are certainly not what we had planned for at the end of – at the start of 2012. We knew at the start of last year that it would be difficult, but the weak order pick-up in the second half of the year was really unexpected. That said, the business is now stabilizing and we are expecting 2013 to be a stronger year and we expect 2014 to be an even better one. Let me start with slide four and our income statement. Revenues for 2012 at €228 million were ahead of our Q3 guidance of circa €220 million, but this was down 63% year-on-year, reflecting the already mentioned down cycle in the LED equipment sales. Gross profit for 2012 came in at €430,000 in comparison to €231 million achieved in 2011. The major reasons for this development are, firstly, a clear reflection of low production volumes, which meant that fewer units had to bear the full brunt of the fixed cost effects related to extra manufacturing and service activities. Secondly, special effects such as inventory write-downs and additions to other provisions resulted in more than €40 million negative impact on the gross margin. It is important to mention that those special effects settle issues, which we are carrying with us since the beginning of the downturn in mid-2011. At the end of Q3, we guided for an EBIT loss of circa €125 million for the full year, but the extra result came in slightly below at €132 million. The difference was mainly due to one-off restructuring costs. The net result for 2012 was down year-on-year from a profit of €79.5 million to a loss of €145 million. Despite the loss, we ended up having to pay some corporation taxes mainly for our subsidiaries in last year. When we started 2012, we were still anticipating a stronger second half and we also anticipated a return to profitability during the course of the year. Based on this planning scenario, we capitalized deferred tax assets which we had to reverse at the year-end of the year. Mainly due to this derecognition process, our deferred tax assets declined from €28.3 million at the end of 2011 to €5.4 million at the end of 2012, and this had a special effect also on the tax percentages of the fourth quarter. The overall decrease in earnings was largely a reflection of the significant drop in gross margin as well as the one-off write-downs we made in Q3. Before I dig down into some key line items in the income statement, let me say that the 2012 numbers have been burdened with above-mentioned one-off restructuring costs. This cost improvement will have a positive impact on our breakeven level, stabilizing our OpEx level for this year going forward in the range of €110 million to €120 million, a reduction in cost of circa €10 million to €20 million on last year. Let me draw your attention to, in particular, two line items in the income statement. Firstly, general and administrative expenses which decreased year-on-year by 42% to €19.5 million, principally due to the reduced number of temporary staff, lower consultancy costs, and lower IT infrastructure costs, as well as less bonus-related expenses. The second item is research and development which increased by approximately 45% year-on-year to €72.8 million, which is a clear reflection of our view that R&D is a key part of the strategy to unlock the substantial future market opportunities we currently see. In the quarterly view, Q4 revenues came in at €77.5 million, which was 25% up on the previous quarter. Gross margin also improved substantially from a negative gross margin in Q3 to 23% of gross margin in Q4. This was still below historic levels and is the result of our focus on reducing inventories as well as the fixed cost in relation to production. The operating result for Q4 was also better than Q3, but it remained negative at €19.3 million. Let’s now move to the next slide, our balance sheet. Despite the previously mentioned results, AIXTRON still has a strong balance sheet with €209.5 million in cash and cash equivalents, no debt and an equity ratio of 83%. There are two figures in the balance sheet I would like to discuss in more detail, our cash position and inventory. Our total cash position at €209.5 million is broken down into €75 million or 29% on 2011 and is a reflection of the 2012 operating losses in the business as well as the dividend payment of €25 million we paid in Q2. Our cash position at year-end was broken down into €109.8 million of cash and cash equivalents, with an additional €99.7 million on deposit, with a maturity of more than 90 days, which was classified as other financial assets according to IFRS. It’s important to mention that we saw a slightly positive cash flow in Q4. Cash is, of course, one of the most important financial key figures we are focusing on in those times. Target remains not to burn cash in 2013 and the foundation, as you can see, was already laid in Q4 of 2012. The other figure I would like to draw your attention to is the level of inventories on the balance sheet, which at the end of 2012 totaled €126 million. This is 32% lower than the previous year and reflects the significant write-down, but also our ongoing future focus on improving our cash generation from these assets. It is also important to note that also we have not made – we have had to make the inventory write-down in Q3. We currently do not see any further need for inventory or other form of impairments. A closer look at the comparison of inventory levels between Q3 and Q4 show that we were able to reduce inventories by more than €30 million in Q4 by selling equipment from stock. This helped the cash flow significantly. Let me now turn to slide six, cash flow statement. As I have already talked about the cash flow before, I would only like to point out again that the reduction in cash was significantly influenced not only by €45 million negative cash flow from operating activities, but, again, also by the €25 million dividend payment in 2012, which is shown as cash flow from financing activities in the cash flow statement. Let me now move on to slide seven, the 24-month business development. The slide shows a good overview of revenues, equipment, orders and backlog over the last 24 months. The most significant sector impacting the development of revenues and orders over the last 12 months has been the current cyclical downturn in demand for MOCVD deposition equipment for LED application. That said, there has been growth in non-LED areas and, in particular, silicon semiconductor equipment over the last 12 months, which comprised 48% of total sales in 2012, up from 17% in the previous year. The good news is that both orders and revenue have been picking up over the last quarter. Order intake in Q4 at €35.4 million was the highest in five quarters and the second quarter in a row where there has been growth. And as we have already said, Q4 revenues – that €75 million – was the best quarterly performance in the year. Please also note that for comparison purposes, 2012 orders were valued according to internal policy at the 2012 budget exchange rate of $1.40 to the euro, whereas 2012 revenues are valued at extra booking rate, which average for the year was $1.29 per euro. Let’s now just take a quick look at our regional split on slide eight before I hand you back to Paul. On a regional basis, 78% of total revenues in 2012 were generated by sales to customers in Asia, around 13 percentage points lower than in 2011. During 2012, AIXTRON generated 78% of revenues, mainly €176.9 million, from equipment sales, with the remaining 22% of €51 million coming from the sales of spare parts and services. Let me now hand you back to Paul who will talk about the near-term outlook slide on slide nine.

Thank you, Wolfgang. I’ve already talked about the very limited visibility we have today, but let me give you my opinion on what we might see going forward. We see the strong possibility that 2013 will be back-end loaded, but that it will end up to be a stronger year than 2012, both in terms of revenues and earnings, and that 2014 has a potential for us to be even stronger than 2013. Albeit from a lower level of business, we initially expect stronger growth from non-LED end market applications, including production equipment needed for power electronic applications and silicon semiconductor equipment. The major short-term growth driver, though, will be an increase in demand for LED production systems which will be driven by rising demand from the LED general lighting market. There are some clearly positive early indicators, particularly in the LED lighting space where adoption by commercial and industrial users is gaining traction, and that progress combined with some form of price-driven momentum in the private consumer end of the market will lead us into the beginning of what will become the third major LED investment cycle. I think it’s important to stress that despite the overriding caution in the marketplace, market conditions are not only actually better than this time last year, but that the prospects for recovery are slowly, but surely improving. Even if the exact timing is uncertain, the high customer factory utilization rates being reported are an essential and welcome precursor before equipment orders can take place. High utilization rates is one less key obstacle to recovery and enquiry levels suggests that we could see stronger order activities returning in the course of this year. Nevertheless, we need to and will remain vigilant about our cost structures, while at the same time being careful not to restrict future market opportunities. We continue to have the necessary balance sheet strength and a robust business model that will allow us to significantly expand margins as equipment demand picks up over the course of the next 18 months. With the tremendous opportunities available to us, we, again, increased our investments in R&D during 2012 and remain confident that these investments will lead to a whole range of new products that AIXTRON will bring to the market for years to come. It’s worth reiterating that AIXTRON’s key strength has always been its power to innovate and deliver commercial technology solutions to its customers. Let me conclude with a few comments on the financial outlook. With the lack of market visibility and certainty that we’re currently suffering from, it will be imprudent to give a precise year-end guidance at this stage. It just remains too difficult to give you a detailed revenue and earnings guidance for the year ahead, particularly in this fragile macroeconomic environment. We will, of course, give you some more precise numbers as and when we are able to do so. All I can tell you is that our business plan target is to be cash flow positive in this year and our focused investments are prepared to capitalize on an even stronger 2014. The team here is confident in the strategy being pursued and the company is well positioned to deliver substantial shareholder value in the coming years and, therefore, to remain fit for the future. And with that, this concludes our 2012 full year presentation. I’d like to thank you for your attention. And with that, I’ll hand you back to Guido before we take some questions. Guido?

Thank you, Paul and Wolfgang. Before we take questions, could I ask everyone to limit your questions as always to a maximum of two each time. This will allow people to have a chance to have their questions answered. Thank you. Operator, we will now take questions please.

Thank you, gentlemen. We will now start with the Q&A session. (Operator Instructions) And the first question comes from David Mulholland from UBS. May we have your question, please? David Mulholland – UBS: Hi. Thanks for taking the question. Just firstly, Paul, and then I have a follow-up. I wonder if you could address some of the recent management changes including your own departure and that of Holger Jürgensen from the executive – from the Supervisory Board. Can you just give us some color on the reasons behind these just because there’s been a lot of questions on it recently?

I can’t give you any color on the questions of the departure of two Supervisory Board members. That’s a question you would have to put to the Chairman. I don’t have anything that I can add on that. But I can give you a comment on my departure. And I really don’t want this to be a distracting topic. But, perhaps, I’ll make just one clarifying comment and then say no more on this issue. I’ve had one or two calls about one particular – the press release lines that said I will be close “leaving the company by mutual agreement as of the 28th for personal reasons.” First of all, I’m not leaving AIXTRON for personal reasons. I’m afraid there’s no story there. Rather I made a personal decision back in 2009 when I was discussing with the Chairman my current 2010 to 2015 contract. We discussed then that I would not go beyond 2015. I joined the company in 2000, so 13 years ago. And I’ve been very privileged to have been CEO for 11 of those 13 years. It’s a long time by any standards. And as I had no intention of going beyond 2015, the question of succession had to be addressed. As for the timing, while however inevitable, such announcements always come as a surprise. But I think, in this instance, there is a clear logic. It never makes sense to appoint a new CEO at the last minute, and to do so, runs the risk of unsettling the organization unnecessarily. It’s always better to be early rather than late. And given how long it can take to extract your chosen replacement, particularly here in Europe, and the time it takes to conduct a thorough search, the fact that the Chairman has already started that process shouldn’t be a surprise to anybody. However – and Martin Goetzeler, the Chairman, has not only found someone who is available immediately, he has also found a highly experienced international manager with direct experience of the LED photonics industry and that in itself is a huge gain for a company like ours. I also agree with the Chairman that having found the right man, given the industry is still six months to nine months away from the next major investment cycle, that it makes good sense to make that change at this time, so Martin has the time to get into the detail of the business now rather than in a year’s time whether there may be less time to think than there is now. Of course, I’ll be very sad personally to leave AIXTRON. I thoroughly enjoyed my time here. I’ve enjoyed working with, what I think is, undoubtedly one of most talented teams I’ve come across in my career. And I’ve got a lot of satisfaction from playing a small part in what has been an extraordinary transition from a university startup to what is an internationally recognized market leader in this market. And I firmly believe there’s much, much more to come from this team. But the time has come for a change. Change at the top of an organization is a healthy process, as it can challenge, sharpen and focus, I think, even the best of teams to drive the business on to the next level. And I’m sure that Martin Goetzeler has all of the qualities to do just that. So although my formal legal tenure as CEO finishes today, I willingly agree to be available to Martin and the team here to ensure a smooth transition. But based on the many discussions I’ve already had with Martin, I don’t expect he will need a lot of help. He is clearly a very focused individual. And I wish him and the team here every success in the future. And I hope that you will all give him the same support that you’ve given me over the over the years. I think the other question I’ve been asked, what I will do next. Well, I think I’m going to – first priority is reintroduce myself to my family and maybe even the rowing machine. And then, after a fortnight, I’m sure my wife will tire of me and I shall then think about what I’m going to do next, but whatever that is we’ll see. I’m afraid I can’t offer you any other comment. And I think that’s probably enough or we get into a distracting discussion. David Mulholland – UBS: No. That’s very helpful. Thanks, Paul. And enjoy the rowing machine. Just one follow-up for Wolfgang. I just wondered if you could help us understand what you expect in terms of gross margins in 2013, especially if you’ll still be shipping out of some of the already finished inventories, that would just be very helpful.

Hi, David. As Paul said, we’ve not given any specific guidance so far. And also in light of the management changes, we have, of course, to see what the next quarters are going to bring us. But, in general terms, priority for this year’s cash, what we’ve seen in Q4, what’s worked out quite nicely is that we may be able to be, let’s say, aggressive to sell-off the inventory despite the fact that the gross margins are lower. But the focus is not so gross margin, it’s more the cash flow return on sales. That’s my major focus. Secondly, for the general model moving forward, we have not changed, as all our peers, of course, in the industry, to target gross margins of 40% and beyond. But, again, this will apply once we get back into more quieter waters. And if we, again, have the possibility to sell off our inventory, we will do so regardless of the gross margin if it brings some positive cash flow. David Mulholland – UBS: Thank you very much.

Okay. Thank you, David.

The next question comes from Uwe Schupp, Deutsche Bank. May we have your question, please? Uwe Schupp – Deutsche Bank: Yeah. Thanks, Paul, for the personal clarifications. Just business-wise, could you just again elaborate a bit on the cost savings measures that you have already done by now? And with regard, especially with regard to this article that’s occurred in – I believe it was a local newspaper a few weeks ago that indeed there could be harsher measures ahead, I think it would be great if you could shed a bit more light on that. And then, on your comment regarding business picking up a bit on the power electronic side, again, what’s the tangible evidence here and which technologies could be a major driver here in terms of, in particular, gallium nitride on silicon and how do yourself positioned here? Thanks.

Hi, Uwe. Let me maybe start with the cost savings from my side before Paul elaborates on the business side and power electronics. We are currently – and we have started this weeks ago, months ago already – reviewing our complete cost structure, which does not only mean we are looking at our head count, we are also looking at our general cost structures. Just to give you a flavor, our head count is around €80 million in the – which you can’t in the first place in our P&L, so the head count is only a smaller lever to reduce the cost. What was in the newspapers, of course, here in our major location of course, a topic if we lay off people. So there were, of course, see how many people are affected, but I want to come back, for instance, giving you another number. We already, for the last 15 months, have reduced our temporary staff from approximately 450 in the peak down to zero which, of course, here in the region already had a major impact on our business partners around factory. What we’re doing here is we are looking at comparisons to past years, we’re looking at peer groups and we are targeting, through the P&L, a cost reduction, as I mentioned before, of €10 million to €20 million at this stage. Of course, given the management changes, we have to see what the strategy is going forward. My business model, as I stand here today, is unchanged, which says €300 million breakeven scenario which implies, of course, that we can take down our cost structures by €10 million to €20 million, but this isn’t only head count related, it’s also especially related to infrastructure costs and also project costs in all areas of the P&L.

Thanks. Okay. On the Power Electronics, if we look at the spread of our business, LED is still a major portion of it. But if we also look at, for example, telecom, datacom and silicon type applications, what the fourth sector, which we would call other in the past, it’s categorized as other because simply it’s too small or it’s too diverse, is in excess of about 30% of our revenue if we look at it. And in there is a number of different categories which could include solar, it could have wireless applications and power electronics. And power electronics is probably one of the – one of those areas which particularly is taking shape. Now, we have a particular strength there, I think, where that Planetary Reactor, certainly for the big 6 inch and 8 inch wafers, which tend to be more than known for power electronics. And the ability for single wafer systems that we’re able to offer their high uniformity, et cetera, it’s a very strong position for us. Gallium nitride on silicon also is becoming an area of real interest for a number of – shall we say, a number of silicon experienced LED manufacturers. And although we’re not yet seeing what I’d say is substantial orders for gallium on silicon, there’s a lot of activity going on there and it could, I think, in the next couple years become an increasingly important part of the spread of business that we have. But there is certainly an increase in activity both for power electronics and also for LED applications. But we haven’t got any numbers that we can give you here today. Uwe Schupp – Deutsche Bank: Thanks, Paul, and all the best.

Thank you.

The next question comes from Sandeep Deshpande from JP Morgan. Please, it’s your turn now. Sandeep Deshpande – JP Morgan: Yeah, hi. Thanks for letting me on. Paul, maybe you can give us some flavor of what the customers are saying at this point in time. You said that there are some customers which are highly utilized, but they’re still not placing orders at this point. So what reasons customers are taking to place orders even though they remain very, very highly utilized because we do see there’s some sudden improvement in stores of LED-based light bulbs and LED-based lighting happening at this point? At the same point, we do not see the customers, normally, when this happens, getting excited in terms of adding capacity to supply these markets. And then secondly, maybe you can make a comment on the Chinese market and how the consumption of the tools which are shipped there in the past few years is going. Are the tools being more utilized or they still remain underutilized? And thanks and all the best for you as well for the future, Paul.

All right, thank you. Well, let me try and make – first of all, pick up on the utilization issue because I’ll try to give you a mixture of maybe fact and opinion. Certainly, I have noticed, in the last six months or so, rising utilization, particularly in markets like Korea and Taiwan. It doesn’t go for all the players. Well, I can think of several major players in those markets who are now reporting capacity utilizations up to 90-plus-percent. Now, that’s very unusual. In the past, when we’ve seen that level, usually it’s about 75%, 80% and the dialog on next purchase (inaudible). I think there’s a couple of possible explanations. The timing, as it comes towards the end of the big classical buying cycle, and for consumer electronics, that typically stretches from Thanksgiving all the way through to Chinese New Year. We’re getting towards the end of that market. So if, for example, your end line business has been driven by display or tablet type business, then you are getting towards the end of the likely big buy season. So it would be understandable if those customers were then looking for some degree of confidence as to what business would draw through additional capacity after. And, of course, lighting is the most obvious. And you’re quite right. We are seeing substantial number of new products coming in all the major markets. However, it’s not yet enough to able to persuade people to start to invest. I think some of the customers out there, quite frankly, are struggling for cash. We are – if you look at our Investor Relations pack we’ve put together, we always track what’s happening on prices. And I think the last quarter, again, we’ve seen 10% reduction quarter-on-quarter. This is – we’re now well into the second year of aggressive price reduction. So you can see some customers clearly struggling for cash. I think there are some customers who see the opportunity of potentially imminent consolidation presenting them with opportunities where they might be able to buy capacity. And certainly, we’ve seen some interesting already acquisition activities cross-border, whereas what was characterized over the last two or three years was having these investments into China to gain advantage of the subsidies. Now, we’re beginning to see some of the larger Chinese make acquisitions or investments out of China. So there’s a number of reasons. But as yet, that hasn’t yet manifested itself into – and it does vary considerably from region to region. I’ve mentioned that Korea and Taiwan. Certainly, they are two markets where you can see, clearly, with the big names, utilizations are quite high. Now, the low prices may also be influencing some of those players because, of course, they are able to buy in if they choose from suppliers elsewhere in the region that were able to offer cheap and cheaper prices. In China, there really is a very mixed picture because now you’re getting some fairly substantially sized customers who also are talking about very high utilization rates, but, in reality, the number of customers who fall into that description are relatively few – the bigger customers; it’s less than ten. And there is a huge number of customers who are on very low utilization. And you may even find some out there 20% – in between 20% and 50%. And they may well be the – perhaps the first victims of any wave of consolidation that takes place. So there are some very mixed signals out there, I agree. But it is true, we are seeing continually dropping prices of LED lights. We are seeing increasing utilization. We are seeing drop in prices. We are seeing the quite strong possibility of a consolidation cycle starting, all of which, whatever you might think about the short-term implications of that, all of which for me are very positive mid to long-term signals for the industry. Sandeep Deshpande – JP Morgan: Thank you and all the best.

Thank you.

The next question comes from Adrian Pehl, equinet Bank. May we have your question please?

Operator?

Yes. We have Mr. Aaron Chew now from Maxim Group. Please, it’s your turn now. Aaron Chew – Maxim Group: Hi. Good afternoon, guys. Thanks so much for the question. I wonder if you could just drill a little bit deeper into the non-LED piece, given it’s becoming, clearly, a more central driver of your outlook. The spending in LED side is still pretty sluggish. The disclosures in the presentation are really helpful on 2012. But just to help us maybe better understand the shift sort of in the second half versus the first half of last year, anyway you could breakout the non-LED versus LED portion revenues in either the fourth quarter or the second half? And also, what LED versus non-LED, the composition of the order rates for fourth quarter as well?

Aaron, let me – I think, Wolfgang, we’ll have to see if we can help you with the second part of the question. But in terms of first half, second half, maybe I’ll just sort of add a little bit on what I thought was interesting if we just did a straight first half/second half comparison on a general level. But we, I think, had about 14%, just short of 15% more order intake in the second half versus the first. Although, I think, in revenue terms, it was nearly 40%. But I think we should temper that a little bit because you can see the knock-on effect in terms of order backlog, the key one to watch is, obviously, order intake. Now, the issue of where that business is coming from, I think one of the advantages of having this broad experience in different end markets is that we’ve been able – I don’t know precisely what the percentage is, but certainly there’s a number of non, shall we say, standard LED production style equipment, more customized equipment. And that, of course, also has not helped our margins because they tend to be more one-offs for some of the specialist electronic applications. They’re very highly tuned to the customer and more likely to be in the 6 inch and 8 inch realm.

A quick remark maybe on the numbers. It’s, of course, not always easy carve out precisely what is LED and what is not LED. But I think, as we also mentioned in our speech, approximately 50% of our business last year was driven by LEDs in total. So that’s both equipment and service. And the other 50% driven by silicon – gallium nitride on silicon for power applications and others. But I think it’s important to mention that this is everything, but a reference here, to model our revenue. So we expect, of course, in the future that the LED piece of our business will be the growth driver this year and for the years to come. Aaron Chew – Maxim Group: If I may just clarify, though, but in terms of orders, the current order run rate in the fourth quarter, is it level with that annual break-down or some sort?

As I’ve said, at low levels, they’re not representing the, let’s say, referencing here. Aaron Chew – Maxim Group: I see. I see. I see. I apologize, okay. And then, if I can have just one quick follow-up, wondering – I know it’s probably fairly difficult for you guys to, obviously, speak to specific contracts and announce them. And that’s totally understandable. But maybe, just so we can have a better understanding of the spending environment, the customer behavior, with regard to the most recent contract announced from your old customer, FOREPI, anyway you can kind of highlight sort of the nature – how the nature of that contract may have changed this year – or I should say, this time versus prior orders last year? Are they sort of flat? Are they notably down? Any way you can kind of guide us to how the spending on that contract is actually changing year-over-year will be helpful.

I think if we just make one little comment, it isn’t necessarily directly related to the order intake because FOREPI is one of those companies for which Sanan has recently made investments there. So you are getting these alliances which in themselves may in the future potentially influence where the money is being spent. You are seeing a consolidation of companies cross-border and that may influence future spending. But I don’t think there is anything significant about that particular order. We are – for example, if I just try and come back to the issue of China, a lot of the order intake that we saw in 2010 and 2011, a lot of that was driven by subsidy. There is very little of that now other than subsidies which perhaps have already been agreed in regions with, shall we say, some of the more powerful players in China. There is no general subsidy-driven business. You’ve got pockets of remaining subsidy commitment, but not a huge amount. I’d say, generally speaking, there is not those very few customers buying just pure volume extensions at this stage. Aaron Chew – Maxim Group: Okay, very helpful. Thanks so much, Paul, and I wish you well in the years ahead.

Thank you. Thank you.

The next question comes from Simon Schäfer from Goldman Sachs. May we have your question please? Simon Schäfer – Goldman Sachs: Yes, thanks so much. Just wanted to go back to the cost a bit, thanks for clarifying on the €10 million to €20 million restructuring potential if you choose to implement it, depending on revenue. But just when you think about it strategically, how long would you be willing to accept some pretty wide operational losses? I guess there’s always this tradeoff between innovation at the trough of the cycle and a bad period and the financials, but some sort of more color as to how you think about that timing that would be helpful. I guess I’m just trying to understand when you would make that call.

Hi, Simon. As I said before, the major focus for this year which I would call a transition year is on cash flow. I think there is no way that we are in a position to lose another €80 million, €90 million cash this year, so that’s the major focus. Of course, we expect, as I said, a better year in this year, this will help. But we are, clearly, not expecting to lose some more cash during – if we go forward. But I think most of us expect that next year, whenever this is going to happen. And you’re absolutely right, we have to invest during this downturn continuously in R&D to be ready for the next upturn. But, again, not against a backdrop in cash as we’ve seen it last year, so the major focus will be to hold the cash position as we have it today and turn the business around in this respect to, let’s say, a neutral cash flow. But this may go along with the negative EBIT, but, again, the focus this year is clearly on cash. Simon Schäfer – Goldman Sachs: Got it. Thank you.

My general comment on that. Clearly, this is always a difficult subject, particularly in sort of extended downturns such as we’re experiencing. And we shouldn’t forget the fact this extended downturn is, to some degree, largely a reflection of the relatively artificial subsidy-driven investments. So we are suffering the hangovers lasting longer. But it’s always a difficult subject when we’re talking about these difficult periods because, of course, R&D is very much based on the revenues that we’re aiming for in the next five years to ten years. So there are some very difficult decisions to be made. That having been said, we, clearly, have an obligation to the business and the long-term health and to our shareholders to ensure that we have also the most efficient use of the resources we’ve got. So we will have to look closely at every aspect of the business. And I think Wolfgang has already touched on that. I don’t think there’s any part of the business for which we won’t look very closely how we can, at least, make the most efficient use of our cash because, as I said, cash generation is a key issue for us going forward. Simon Schäfer – Goldman Sachs: Got it. And actually, I did want to just follow-up on the R&D point. What sort of cadence are you in then in terms of product launch roadmap? I think it’s fair to say, in the last couple of years, there was a short period in which the cadence between yourself and Veeco was just a little bit different. So you were sort of leapfrogging each other a little bit on the innovation cycle. But what is the real focus on the MOCVD side in terms of innovation this year? And, therefore, should we expect R&D to be sort of broadly unchanged sort of independently of where the revenue ends up? Thank you.

I think you should expect it would be broadly unchanged. And if we look at where the likelihood of where the business is going to expand in the next couple of years, it will be – it will definitely be Asia. And whether or not it’s going to be what we would call Showerhead – an emphasis on Showerhead region such as China or whether or not it will be markets like Korea and Taiwan where the Planetary product is far more prevalent is guess of the market. So we are looking at both markets and we are looking at both technologies. But we shouldn’t also forget that we have a certain – we have a roadmap in terms of our organic business. And for OLED, I think what we have seen in the last – well, since the beginning of the year is, I think, increasing evidence that the mainstream arrival of OLED probably is closer to 2015 rather than 2014 because it strikes me that the way in which the market is promoting very ultra-high definition products is likely to fill a gap between what we currently have and OLED. And I think that’s certainly is in our favor. We think that that development has probably helped us significantly, so that we will be in a strong position when OLEDs become a meaningful volume market of sort of generic level in 2015, 2016 and onwards. So we have to try and balance all of those issues. And there’s always difficult decisions to be made, but we have at least choices in areas where we think there are very strong potential going forward. Simon Schäfer – Goldman Sachs: Great. Great, Paul. Thanks so much. Speak to you soon.

You are welcome. Thank you.

The next question comes from Günther Hollfelder from Baader Bank. Please it’s your turn now. Günther Hollfelder – Baader Bank: Hi, Paul. Many thanks for managing the company through all the cycles you’ve seen here. And all the best, of course.

Thank you very much. Günther Hollfelder – Baader Bank: Concerning – I had a question on the inventory side, the €126 million, what you reported. Concerning the gross margin and also the free cash flow, do you see here any potential still coming from inventory you’ve already written down? Or is this basically lost?

Hi, Günther. Of course, it’s possible to sell because – as we do in accounting, we don’t write things down to zero. We just take an assumption and then we go by percentages. It’s what we believe what we can sell in the future and whatnot. Yes, there definitely is a potential, but, of course, we assumed in this exercise, together with our auditors, the expectations for next – or we enlarged the expectation for 2013 and then we took the decision. If the market would pick up, of course, we could – and we sell equipment of the written-off types. If we can sell them, of course, then – even if they are written-down. So we have not thrown the inventory away. It is still here. And if times come where we could sell the inventory, we are ready to do so. But we believe that the current valuation reflects the expectation for the year 2013. Günther Hollfelder – Baader Bank: Okay. And as a follow-up, concerning the need for additional capacity, do you think, compared to the last cycle, there is any change in the speed of yield improvement or movements per area, what makes a difference this time? Or should large LED chip makers, which are above 90%, you would expect investments for new capacity coming from them later this year?

Well, I think it’s possible. We might see a divergence of where the demand comes from. Certainly, begin to see sort of almost a two-tier approach. As I mentioned earlier, there is definitely a number of very capable new arrivals to the business. Looking at the potential for gallium nitride on silicon LEDs, partially, I suspect because they are able to and many others aren’t able to. So we could get a demand coming from one group that would be different from the others. So it’s difficult to say. But the basic economics still exists. And it is a question of producing areas of outperformance and yield. And, certainly, some of those new arrivals have shown themselves of being able to develop and improve performance very quickly. But I can’t say, it’s dramatically changed. It’s a question really of the adoption rate. Günther Hollfelder – Baader Bank: Okay. Many thanks.

Thank you.

The next question comes from Jürgen Wagner, MainFirst Bank. Please, it’s your turn now. Jürgen Wagner – MainFirst Bank: Yeah, good afternoon. Thank you for taking my question. I have a follow-up on your R&D strategy. How much of your 2012 R&D spend was still allocated to LED? And as you mentioned, you have to prepare for the post LED era, how much – or how will that change going forward and then I would have a follow-up on OLED?

I won’t give you a precise number, but I think you can safely assume, over the coming years, that the portion for OLED or, shall I say, large area organic development is likely to increase disproportionately because this is a substantially different technology, likely to involve far bigger ticket price. And fortunately, we’ve made the capital investments. We have the facility to be able to do that, but the ratio between the two will clearly change. Jürgen Wagner – MainFirst Bank: So is it still 50-50 or so right now?

No, we haven’t given any numbers breaking it down. Jürgen Wagner – MainFirst Bank: Okay.

And I should also say, it’s worth commenting that, for the MOCVD technology, which, of course, we’re inferring with LED, is equally relevant for other non-LED applications. So it’s probably safer to think about MOCVD compound development separate from organic. Jürgen Wagner – MainFirst Bank: Okay. And on OLED, you mentioned that it could become a larger market in 2015. Given the complexity of the tools you mentioned and, I guess, the much longer lead times, when would that turn into a business opportunity or a significant business opportunity for you then already next year?

Well, it’s too early to talk precise numbers. But, for example, we have shipped our first production system, Gen 3.5 system, last year and we are in the middle of the production qualification of that. The R&D work, which is geared towards being able to deliver both R&D system and production systems, is in full flow. And I would say, without wanting to talk about the detail of it, the progress we’ve made in the last three months has been substantial. So we believe we have some very meaningful USPs in the technology we’re offering, which is the technology which isn’t offered by any of the competition. And we’ve been able to demonstrate it internally and we are moving on the path now to demonstrating it to external parties who are interested in seeing it. So we’re very pleased with the progress. It’s a long road, but I have to say, in the last three months, we’re feeling much more comfortable that we had clearly some product that will have some real long-term revenue potential for us. Jürgen Wagner – MainFirst Bank: And who would you regard as the closest from the competition to your technology?

Well, I think the existing sort of players in the high vacuum are well established. But we are talking here about being able – a variation on a theme. We are still using the advantage. We’re leveraging the knowledge we have on, for example, Showerhead technology, MOCVD technology, and the control of that process, but then being linked to different chemistry. So I don’t think there’s anyone who offers anything like what we’re currently putting forward as a technology offering. Jürgen Wagner – MainFirst Bank: All right. Good, thank you.

Thank you.

I am afraid we have only time for one more question. So we will get back to everyone left in the queue. Please understand. Thanks.

So the last question comes from Janardan Menon from Liberum Capital. Please, it’s your turn now. Janardan Menon – Liberum Capital: Hi. Thanks for taking the questions. I’m just trying to figure out how your sales could progress in the first half of the year from a backlog point of view. What percentage of that backlog of roughly €79 million is likely to be shippable in the first half of the year? And if much of that is in the first half, can we assume that you won’t see a reasonable drop over the next couple of quarters’ from your relatively high Q4 number? And secondly, on pricing, in the weak market, presumably pricing pressure has been at a higher level than normal. As the market comes back eventually, how much of that you think you can get back? Or is once pricing has been given away, is it difficult to get that back even in a stronger market?

Let me start with the outlook. We have not given any outlook, but, of course, you can assume that we will ship most of the backlog in the next six months. Our lead times are between four and six months. That’s the industry average. Of course, we are able to ship or turn products very quickly, given our inventory situation, so there’s definitely an upside in the first half. So we have to adjust to the order backlog. But, again, we are not giving guidance at this point. Coming back to the pricing, the background of your question is correct. But, of course, everybody understands that if we have the current inventory situations, there may be some special offers out there. Of course, we are trying hard to avoid any collateral damages to our future products. On the other side, in the future, there will be new products with new features and significantly better cost of ownership in the market, which will again then justify going back to better pricing and margin situation than at this point. Janardan Menon – Liberum Capital: Got it. Thank you very much.

Okay. Thank you, everyone. At this point, we’ll have to wrap up our fiscal year 2012 earnings call. Thanks for joining us and your questions. If you have any additional questions, then please don’t hesitate to contact either the IR team here, the IR team in the US and for us here in Germany. Thanks for your interest. And also, Paul, to you, farewell and bye-bye. Thank you.