Guido Pickert - Director, IR Martin Goetzeler - President & CEO Bernd Schulte - Chief Operating Officer

Uwe Schupp - Deutsche Bank Adrian Pehl - Equinet Bank Sandeep Deshpande - JPMorgan Tammy Qiu - Berenberg Jurgen Wagner - MainFirst Bank Guenther Hollfelder - Baader Helvea Andrew Abrams - SCMR

Good day, ladies and gentlemen and welcome to our Aixtron’s 2014 Annual Results Conference Call. Please note that today's call is being recorded. Let me now hand you over to Mr. Guido Pickert, Director of Investor Relations at AIXTRON for opening remarks and introductions.

Thank you, operator. Let me start by welcoming you all to Aixtron’s 2014 annual results conference call. Thank you for attending this call. My name is Guido Pickert, Director of Investor Relations at AIXTRON SE. I would like to welcome our President and CEO, Martin Goetzeler, as well as our COO, Bernd Schulte 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 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 2 of which contains 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 have a look at our latest IR presentation, which includes additional information on AIXTRON’s markets and its technologies, and is available on our website. 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 would now like to hand you over to Martin Goetzeler, AIXTRON’s President and CEO, for opening remarks. Martin?

Thank you, Guido. And thank you all for joining the Aixtron’s 2014 conference call. Let me start by making some general comments about 2014, before going into the numbers. I’ll then hand over to my colleague on the Aixtron Board, Dr. Bernd Schulte, who will give a detailed overview of our R&D activities as well as more details on the launch of our new MOCVD the Aixtron R6 Showerhead. I’ll then wrap up with some comments on the company’s strategy as well as our near-term view on the market. One year ago, on this same conference call we shared our view that 2014 revenues would be nine results of 2013 and concurrently that Aixtron would not be profitable on an EBIT basis over the course of several year. Even though you might say our goals were not ambitious, 2014 was not an easy year but a year for setting critical strategic directions. Our anticipation was that the prospects on order pick up would improve as a year went on. This is exactly what happened and we were able to announce on our Q2 call on July 29, that we had reached a trough in the order cycle for LED manufacturing equipment. In Q3 we were also able to announce a 50 tool order from a large Chinese LED manufacturer for our new Aixtron 6 Showerhead MOCVD tools. By now we have received orders from six customers, different regions, for our new tool. In Q4 with €39.9 million, we have achieved the highest equipment order intake ever since Q3 2011. The aforementioned large order is not yet reflected in our Q1 -- Q4 equipment orders. Booking will commence in Q1 2015. Total equipment order intake for the year 2014 was at €153.4 million, which was €20.2 million or 15% higher than the 2013 total equipment order intake of €133.2 million. Revenues have increased by 6% from 2013 to €193.8 million, but earnings remain negative throughout the course of the year. EBIT for 2014 came in at minus €58.3 million with net income at minus €62.5 million. This result is better than the previous year, but is still not good enough and I just want to reiterate that all of us at Aixtron are fully focused on returning to profitable growth as soon as possible. That is one of the reasons why we’re continuing our reorganization and why we had to announce in January plans to reduce our workforce by further 60 people. With this, we're also responding to the increasing importance of process and application oriented solutions. This results in shifts and adjustments in the organization that in fact requires skills. The living organisms like Aixtron must reflect through this developments and test has to be flexible and able to change itself. On the positive side we have made substantial improvements in a number of areas including customer relationships, thanks to the ongoing five Point Program. We're also improving our supply chain management with our design to cost program, we’re working to improve the cost of procured modules and components. We're also very focused on cash management as our strong balance sheet allows us to sustain the important investments in Aixtron’s future. Let me now take you through our Q4 and full year 2014 numbers starting with Slide 4, which gives an overview of our revenues. In Q4 we generated €58 million revenues, which were 27% ahead of the previous quarter and 30% ahead of the same quarter last year. Revenues as I said earlier also increased year-on-year 6% to €193.8 million. The most important factor impacting the development of revenues and orders in Aixtron over the last 12 months has been the growing demand for MOCVD the position equipment for LED applications. Sales in this area rose by over 85% from 2013 to EUR100.3 million of these levels were still low by historical standards. In our other technology areas we saw weaker demand in 2014. The good news is that since late 2014 we obtained solid orders and rising interest, but only for the LED manufacturing equipment, but also specifically for our solutions for silicon semiconductor as well as power electronics manufacturers. 77% of revenues in 2014 mainly €148.5 million came from equipment sales, with the remaining 23% or $45.3 million coming from the sales of spare parts and services. On a regional basis 83% of total revenues in 2014, were generated by sales to customers in Asia, five percentage points higher than the same period last year. Europe accounted for 13% of 2014 sales plus your remaining 4% coming from the Americas. Total equipment order backlog was €65.2 million at December 31, 2014 was 12% higher than the 2014 opening backlog of €58.1 million. The 2014 yearend order backlog was revalued at the 2015 budget deposit rate of US$1.25 per €o as January 1, 2015, leading to an opening equipment order backlog of €69 million for 2015. Turning to the next slide, in 2014 we generated a gross profit of €41.5 million following a negative gross profit of €7.4 million in the previous year. We generated a gross margin of 21% for the full year, which is low by historical standards and is a reflection of low volumes, product mix and cost related to the ramp of our fixed production. Going forward we expect demand pickup on our mix to improve and material cost to go down. All of this would result in an incrementally positive impact on gross margin. For the full year 2014 operating cost were just below the previously targeted €100 million at €99.8 million despite a significantly higher R&D spend and further restructure cost. SG&A expenses were 25% lower than the prior year at €35.3 million. At the same time, we increased R&D expenditures by 17% from €57.2 million in 2013 to €66.7 million in 2014 reflecting our commitment to innovation as well as pre-launched development cost related to the R6 next-generation MOCVD tool and progress made in the area of OLED technology. The operating result for 2014 was still a loss of €58.3 million was improved over the €95.6 million loss we generated in 2013. Total taxes for 2014 were €5.4 million and came about mainly from country-specific tax expenses slightly lower than the €5.8 million in 2013. The net results for 2014 came in at a loss of €62.5 million, which is better than the €101 million loss we recorded in 2013, but it’s still unbearable levels. We will continue to improve our financial performance as I’ll explain later, while commenting on our 2015 outlook. With advanced payments received from customers, we achieved positive free cash flow of almost €6 million in Q4. For the entire year, we had a cash outflow from operating activities of €33.8 million in 2014 and capital expenditures of €13.4 million a total free cash flow of minus €47 million mainly for the activities to execute our innovation roadmap. Let’s not move to the next slide, which shows our balance sheet. Aixtron continues to have a solid balance sheet with €268.1 million in cash and cash equivalents, no financial debt and equity ratio of 78%. The other item I would like to draw your attention to is the level of inventories in the balance sheet, which at the end of 2014 totaled €81.27 million this is over 23% above the previous year's €66.2 million and is reflection of some material build up in preparation of the launch of the AIXTRON R6 escrow as a reflection of our plan to raise service levels, which require spare parts to be made available regionally. Funding of this targeted inventory buildup is secured by the advance payments we receive from customers, which increased year-on-year by about 45% to €66.9 million including the advance payment for the previously mentioned large order. There were no other material changes to the balance sheet. And in summary Aistron remains in a strong position in its core markets, with leading technologies and its portfolio plus a strong balance sheet, which shows the progress we have made over the last 24 months, we now start to have a more robust and flexible business model. Let me hand over you to Bernd, who give you some details around our R&D activities as well as our new R6 next-generation tool. Bernd?

Thank you, Martin. Moving o Slide 7, let me start by talking about our core strengths. We are one of the globe leaders in deposition technology, thanks to consistent investment in R&D and I want to make the point that we’re focused on delivering cutting-edge production technology solutions to markets, which we’ve growth potential. We will continue to work in developing technology innovations and improving existing solutions. This is evidenced by the introduction of several new equipment platforms such as the G5 Planetary Reactor for Power Electronics volume production, the QXP-8300 Silicon Semiconductor ALD Mini-batch technology and most recently the XR6 Showerhead MOCVD technology for the efficient manufacturing of LEDs. Let me begin with a letter. At the end of 2014, we launched the XR6, which brings substantial benefits to customers including increased throughputs, ease of use and a much smaller footprint of wafer output. It’s specifically addresses lower cost of ownership requirements from customers in the LED area, who are facing a very competitive environment. We have significantly enhanced the technology and added some highly innovative features to this tool. With this product positioning we’re convinced that this two generation with allow us to achieve better pricing and stronger gross margins again. We are making good progress with the tool in the markets. Of the orders received from six customers in different regions, three have already accepted the tool. In addition as Martin mentioned, we’re already able to secure a large multiple tool order at the end of September last year. The order is being processed and it’s expected to have an impact of order intake and revenues mainly through 2015. The customer is in progress of developing its own LED recipe in our tools, which we expect to take some time due to the higher grade of innovation build into our systems as well as the lower experience level on our previous generation tool. Hence with accordance with our order intake policy, this order will be book closer to the actual point of shipments, expecting more bookings in the second half of this year. We’re confident that together with our customer we will be able to achieve the required productivity target. On Power Electronics we target both, gallium nitride and silicon carbide’s high-power device producers, focusing on low cost high volume manufacturing solutions. Our Planetary Reactor offers single wafer reactor uniformity performance, combined with bench reactor throughput and cost of ownership, enabling customers to successfully address this market opportunity. Our customers are in transitioning from their product qualification to pilot production or they are already ramping up small volume production of our six and eight inch configured Planetary Reactors with the targets to launch highly energy efficient power devices into the markets. As a recognized pioneer of dedicated power device manufacturing systems, Aixtron has developed a very strong global installed base which is more than 50 systems at different customers worldwide. In large area older deposition technologies we made good progress in 2014. First the OLED R&D cluster has been commissioned and is successfully running customer demos in order to demonstrate Aixtron’s technologies, capabilities in this space. Second, we've started installing the Gen8 demonstrator, which we expect to be fully operational at the end of the first half of this year. We are very excited with this progress as we believe it will enable us to show potential customers how our equipment can help them to improve their cost efficiency for large OLED display production. In the silicon semiconductor industry our ALD technology is one of the key efficient numbers of production. A year after a drop in 2014, we expect significant growth in the current fiscal year. Based on positive customer feedback, we consider the future technology to revise on Silicon that make simple sectors even more powerful to be a key area and we are working hard on this further development. In summary we will continue to build upon our leadership position in our entire portfolio of deposition technology. Addressing growth areas of LED, OLEDs, power electronics, innovative films for memory chips, III-V on silicon and comp based materials such as graphene and carbon nanotubes. Hence to become successful in these areas, we are sustaining critical R&D investment, but we are focusing even more on our key strand. We remain fully committed to our technology and market strategy delivering highly efficient and reliable production technology solutions for complex material deposition to gross market. Our XR-VI is an important milestone within our technology roadmap. With these remarks, let me hand back to impact to Martin.

Thank you, Bernd and let's turn to Slide 8. The equipment business for semiconductor has always been cyclical. The good news is we believe that we have passed the bottom in the equipment market for LEDs, which can be clearly seen in the producer interest particularly in our new tool supported by the underlying, growing and end customer demand for LEDs. We believe that our customers consider investing in new cost efficient and highly productive systems as global LED demand continues to increase. Furthermore we expect that they will start replacing older generation less efficient systems. Having said this, it is important to note that the market demand for production capacity ultimately driven by end market demand. The previously mentioned large Chinese order is therefore part of the total capacity requirements to address anticipated LED demand. It is not to be added on top on the demand we have seen in the market. It rather supports the overall growth for LED manufacturing capacity. And the end market opportunity is significant. For instance the market research institute IHS in November 2014 study predicted that the market for LEDs for general lighting would grow from 820 million shipped units in 2014 to 3.5 billion shipped units in 2020. The increase in adoption of LEDs in the general lighting market will require new LED production capacity. That all said, timing and the extent of this buildup remains difficult to predict. In addition to the LED market, we're also focused on a number of substantial opportunities in other areas too. In fact diversification is a key to long-term sustainable profitability. The most immediate opportunity is in the silicon semiconductor industry, where we believe we have a substantial competitive advantage and growth opportunity with our so called ALD automatic layer deposition technology for memory. In fact, we're seeing increasing demand for our LED solutions. Another area of focus is the OLED technology. OLEDs have a large variety of potential applications for these TVs advertising or lighting. The market volume for OLED devices including TVs are expected by display search in OLED shipment and forecast report to other from about US$10 billion in 2014 to about US$20 billion in 2021. With our OVPD technology we now expect the first major orders in mid 2016. In the area of the power electronics, we see increasing momentum towards the growing penetration of new silicon carbide and gallium nitrate based devices, which can be produced using our equipment. As Bernd mentioned, manufacturers are investing in new equipment for pilot increasingly for volume manufacturing. According to yield development the total power device market is expected to growth from US$10.6 billion to US$70.9 billion between 2013 and 2020. For the initial penetration phase of silicon carbide and gallium nitrate based devices, the market research institute IHS states that market for the new power devices is estimated to generate a volume of $663 million by 2017. In terms of financial guidance, we see 2015, being a better year than 2014 in terms of revenues, orders and earnings. We expect revenues to be somewhere in between €220 million and €250 million in 2015 driven by growth in all of our technology areas. This represents a revenue growth to the midpoint of this guidance of about 20%. We also anticipate a sequential improvement in earnings in both half year periods of 2015 considering ongoing ramp up costs for the new VI tool as well as cost for some crucial R&D project. This means that H1-15 earnings will be stronger than in H2 '14 and H2 '15 earnings will be stronger than in H1 '15, with DVT VIII breakeven being achieved in the second half of 2015. These are important milestones on our rate to return to sustainable profitability. Let me highlight Aixtron's three major priorities this year. First and foremost, we need to execute on successfully positioning our new VI in the market. Secondly, we have to execute on our cost cutting initiatives and efficiency improvement programs and thirdly, we need to execute on our technology roadmap namely developing and investing in the exciting new technologies, which are the future of our company. Ladies and gentlemen let me conclude by saying we have some substantial opportunities in front of us and I am convinced that we will deliver value in the coming years. The entire team is fully committed to achieve the target. And with that I’ll pass it back to Guido before we take some questions.

Thank you, Martin. Before we take questions, could I ask everyone to limit your questions to maximum of two of each time. This will allow everyone a chance to have their question answered. Thank you. Operator, we'll now take questions.

Yes, thank you gentleman. [Operator Instructions] And the first question comes from Uwe Schupp from Deutsche Bank. May we have your question please.

Yes, thanks good afternoon, gentleman. thanks for taking the questions. Two, please. First, it's the first time that you and also your competitor launched a new tool. And despite that, we haven't, yet at least, not seen a significant CapEx spree bar one amongst your customer base. Well, do you expect this to be kind of a temporary issue only and things get better as utilization rates improve? Or is there, I don't know, something fundamentally different this cycle than in the past one, or in the past ones that you -- and what you are seeing in the market? Secondly, you keep highlighting the new technologies, and obviously very important in terms of future revenue potentially beyond 2016. And you also indicated that ALD particular will be the first major revenue opportunity according to what you see in the market. What's the indicator or roadmap that you look when it comes to your customer base that could trigger the first major revenue stream for ALD? Thanks.

Thanks Uwe for your questions. I would, I was not here when the tools were launched in the past, but I would like to answer this way, I think today our customers in this area are much more focused also towards basically the end market demand and that’s where they derive basically the needs from and also the phase of orders. So when we look also at the last cycle a significant portion -- when the last cycle started this was the TV cycle you remember, the additional demand was actually coming from the real demand also for the TV cycles. So as a significant portion of this was related to this and then was an initiative in China as you remember, which came on top, but in general, we would say the demand is really driven by the end customer demand and that's what we have to see and what we always said about the lighting cycle. The lighting cycle is happening as we speak, but it will have a little bit differentiate shape than the other cycles and that's what we I think communicated now over the last at least two years. So as I said, it’s a robust cycle, but it's a not a booming fast cycle as we explained. On the other technologies you talked about ALD it's clearly a short term opportunity, but we are addressing here primarily the memory market and we are now feeling more confident that we will be qualified not just at one customer, but we will make progress at two more. This is one reason. The other reason is that one customer we have is executing the growth plan where we are benefiting from and we are also the supplier of choice. As I just mentioned the other end, we really will pushed hard today also to explain the other technologies and we were talking about MOCVD for power. We are always thinking about MOCVD for logic. We clearly see also opportunities in these areas. Power is clearly more short term because we see some of the customers move now away from R&D into a pilot production. The company even went into higher, I would say volume production, but a significant volumes as well and therefore this is something, which we see more in the short and medium term as a logic part working in later. All of these technologies have also synergies as in our technology roadman and therefore we will create also value if its start at a lower stage.

Thank you very much.

Thank you.

The next question comes from Adrian Pehl from Equinet Bank. May we have your question please.

Yes hi gentlemen, good afternoon. Actually, a couple of questions. First of all, I was wondering whether you could share with us your R&D budget and your OpEx target for 2015. Secondly, maybe you could elaborate a little bit on your OLED demonstrator. What's the current status here? And thirdly, I was wondering whether you could share with us the timing of the order intake pattern and consequently the delivery in 2015 of the San'an order. So should we assume that it's spreading rather into the second half year? Is it Q3, is it Q4? And how will it look like in the first half? And last but not least, on your guidance, actually. In fact, when I assume that there is not much of San'an booked in Q4, and taking your existing backlog of €65 million plus the San'an order, whatever it is in euro terms, probably €85 million or something, and add upon this your service business of €40 million, €45 million, it looks to me in fact that you only need €40 million of fresh orders in Q1 to fulfill your guidance at midpoint. So maybe you could comment on is my math correct to some extent, or am I missing something. And how do you treat potentially upcoming orders from the LED space? And maybe you could comment on the respective visibility that you have here as a follow-up order to San'an from other customers. Thanks.

Thanks for the question. First on the OpEx, as we communicated in one of ours last calls, we're targeting for next year to get to the run rate of $80 million. For us it's something we want to achieve later in the year. And as I mentioned in my speech, we will have still some higher R&D spending in the first half, so that is clearly something where it will not be easy for us to achieve this run rate in either way, so we're planning to achieve that during the course of the second half. But it's still there and I also would like to comment -- its nearly also impacted since our U.S. business also plays an increasing role. It's clearly also impacted somehow by currencies. So we have always to bear that in mind. The question on the San’an order, I think Bernd quite intensively and extensively elaborated on this situation at San’an. I think as we said we have a tool, which has introduced was a higher rate of innovation compared to the prior generation and was in low expense level on our previous generation tools at the customers side. It takes a little bit longer to adopt and to fine tune the process and recipe. And we decided therefore to basically take a hood in the product by the process of development is ongoing and the order will be -- we will book it during the course of the year, but we will start to record initial orders in Q1. Nevertheless we are right now planning that the more significant part of the order intake and also of shipments will be in the second half. And if we fulfill the whole order in next year this could be the couple of tools also go in the first quarter. So it might not be fully -- and then we have also service fees and also in other cases and therefore I think your calculation is may be a little bit too low also for creating other businesses. On the OLED side Brend will answer.

As I mentioned in my talk, the OLED demonstrator is currently in commissioning and in test phase and we plan to start process in end of Q2 of this year and just want to remind ourselves what is the purpose of it is basically to show to customers the potential and the scaling potential of our technology. Though we have the R&D cluster, which is much more flexible where we can basically run demos for specific customer requirement and the generic demonstrator will not grow full OLED, but we will show the customers that we can transfer the process capabilities from Gen 1 side 200 mm to Gen 8 side which is 2.5 by 2.3 meters deposition area and this is the key step what the market is expecting and this will be done in the second half of this year.

Okay. Maybe just one quick follow-up, actually, on the LED auto side. So I assume that you potentially have a couple of tools out there in the market for qualification with other customers. I was just wondering whether you could share with us some thoughts on should we expect further generation six orders coming in the near term. Will it take longer, or what's the status here? Because I simply believe that obviously as San'an is now getting new technology out there, others will have to follow to stay competitive. So what's your view on this?

I think what we said in our speech that we have basically from six customers we have orders and thus we also accepted the tools what we mentioned and further orders related to this as we said is still difficult for us to predict as I mentioned in my speech.

So and then would this come on top of the guidance, or have you factored in already probability for achieving a couple of orders here?

As you see in our guidance we have basically according to our defiant and clearly was in this corridor you have a certain basically split also on let's say like a certain, how do you say corridor of tools, which could be delivered, but it's clearly a part of our guidance overall.

Okay. Thank you.

The next question comes from Sandeep Deshpande from JPMorgan. Please, your line is open now.

Yes, hi. My first question would be on the competitive environment and pricing. How do you see that developing through this year? You had talked about 30% gross margin. There's a changed currency environment. Does that change the gross margin target that you can achieve this year in the new currency environment? And then finally, when you look at your regional positions, when you came in, you have tried to change your position in China. Is that --? Are there shifts that you wanted done now, or is there more to do?

First of all I think I would like to reiterate our guidance and our guidance is related to EBITDA where we said we want to have each sequential improvement in first and second half of next year and also be profitable in the second half. Regarding the split and I made a comment on OpEx already, regarding the cost margin I also mentioned that we will have to see how the ramp up cost of VI project continue. We will have also to see how the effective product mix will be and how quickly we can and also implement our design to cost activities, all this will have an influence on our cost margin. Nevertheless, we stick to our comments that we will have the sequential improvement and we will have an EBITDA positive in the second half of the year. By the way the guidance, if you look at our annual record, we also made a statement that the guidance is related to a certain budget REIT and that as I mentioned at €125. So that's included. There could be some opportunities in case we have a better exchange rates, but for us it's right now too difficult to predict the exact development that can change quickly as you saw at the beginning of January. Regarding your question on the regional if you reach our regional position improvements, which we are striving for, I would like to mention that clearly this large order for us is a major step in improving our position in this region. Nevertheless I think at the end decisive for us will be to also convince other customers and to get also our fair share of those.

Thank you.

The next question comes from Tammy Qiu from Berenberg. Please, your line is open now.

Hi, thank you for taking my question, first one is on ALD opportunity. Would it be possible for you to quantify the opportunity for me? And also, just a little bit of comment on the competition landscape for this year. This area is fairly crowded. You have [land] [ph], you have IPS and you have Hitachi all playing this area. How would you think you can have a competitive advantage versus this semi equipment players? And also, DRAM cycle has been quite strong in first half this year and second half of last year. How come we don't see a significant uptick in your ALD demand?

Let's start with the competitive topic, which Brent will address for a second and then I’ll answer on the ALD.

Yes for the competition landscape you are trusting the right names. What you have to keep in mind is since there are different technology approaches in the market, one is the batch reactors where you have many places, you have the senior wafers, where you obviously have only one wafers and where we repositioning product is just between is a mini-bet solution where only a few other companies having similar approach may be from Korea and we have a special approach where we can -- where you have to design the system, which have isolated each individual wafer, but we're running several wafer who are in one chamber. So basically what we do is we -- similar like I mentioned to the planned reactor we're achieving the quality and performance like the Silicon single wafer system, but with multiple wafers throughput and that is basically the USB we're positioning to the market. We can certainly not exactly quantify the opportunity for 2015, but as I mentioned before we expect a significant improvement over 2014.

And I would say the -- if you look on a quarterly basis you see also the recovery we have already indicated.

Okay. Thank you. And the second one is on LED side. So basically, what happens in (inaudible) recovery while we already seen greater adoption in general lighting. In 2015, if general lighting adoption remain the same kind of pace as 2014, or in 2016 the pace will be the same, when are we likely to see MOCVD recovery, or the demand will be smooth like every year instead of we see a significant growth year on year in 2015 or 2016.

I am not sure if I mentioned a couple of times how we see the development, we see lighting cycle and as we mentioned it will not be basically one infliction point, but based on the different applications, different regional requirement and so on, it will be multiple infliction points. But the gross net rate will be significant, but not as I mentioned at the moment past. Nevertheless, we are convinced that the capacity, which is today will not be sufficient in order to fulfill the LED demand for the growth in the lighting business and that will create the additional demand. Secondly, I also mentioned that we are seeing or we believe that coming with now there is new more powerful tool older generations will also become difficult to compete and therefore also customers will start to replace certain installations and therefore we see some good opportunities. Nevertheless, and that's what I mentioned in my speech it's not too easy for us to pay the say the extent and timing.

Okay, thank you.

Our next question comes from Jurgen Wagner from MainFirst Bank. May we have your question please.

Hi. Good afternoon, thank for taking my question. You mentioned that 83% of sales is generated in Asia. What magnitude is coming from countries outside China? And then looking beyond 2015 where you see -- you mentioned strong ALD improvements, a bit longer term, where would you see… Or in your prepared remarks, you also said that your business model is now more robust and balanced. But let's say in three years' time, where would you see your revenue split between ALD, OLED and MOCVD, compared to what we can expect for 2015? Thank you.

Thanks for your question. I think what we can say is that basically a little bit more than half of our business last year was in China. And I think that based on that, you can calculate -- you can calculate also what's the rest of Asia. I think they're already in a couple of meetings calls I mentioned. Our goal really is to increase and that I said actually last year, so it would be in 2019 because I said in five years we want at least to achieve 50% of our revenue with all the new technologies. So outside MOCVD LED 50% that is in five years. If it comes earlier, its fine, but that was our goal which we set out.

Okay Thank you.

The next question comes from Guenther Hollfelder from Baader. May we have your question please.

Thank you. Two questions, the first one on the latest trend concerning 6 inch. We heard from lots of suppliers that the price premium per area now went away, and so I was wondering what you expect here. Is it driving your service and spare parts this year with some carrier -- were the carriers replacing? Or is it also resulting in demand for new tools? And the second question would be you said that three customers accepted the new R6 tool. So does it mean that this would result in sales then in the first quarter? Thanks.

May be first on the six inch tool Bernd will comment.

Yes, I guess you mean six inch for LED, certainly the cost of six inch substrate has come down, but still if you calculate the cost area, six inch is still significantly more expensive than two and four inch, but nevertheless in preparing the future, you're right, the toughness of preparing their developments for six inch LED manufacturing, we do not expect a significant increase in its their business because in our graphite is a consumable in any case. So that much we have to buy for substrate size, they have to buy -- they have to buy graphite, which is the carrier material for the wafer, but what we're seeing certainly its more request from customer and discussions on upgrading system from smaller substrate size to larger substrate sizes in order to -- because we have for certain reactor platforms improved head ups for larger wafers. This is what we see, but I think it's too early to say that it is a common production, it's more like preparing the future.

Okay.

Some of our customers as you know already moved significant part of their production. But it's actually this is what the others have told you and you have a last course. Your second question, yes we will see a couple of revenues in Q1.

Okay Thank you.

The next question comes from Andrew Abrams from SCMR. May we have your question please?

All right. Thanks for taking my call. The pricing issue, I wonder if you could talk a little bit about that, both from the standpoint of older tools and from the R6. Is there a lot of competitive pressure still on pricing? And do you have to negotiate terms or something along those lines in order to close deals? Or are you feeling less pressure than you did maybe third or fourth quarter of last year?

No, we definitely do not see the pressure of combining our six orders with orders from older generation tools. no we don’t experience this so we basically discussing with customers on opportunities for R6, but this is moment very much related to discussions on the technical performance level and -- but also depends on the market's requirement and the investments the customers want to take.

And our statements from the last call is valid to the pricing for these tools is higher than the previous generation and competition also always comes clearly with the size of the market and that we have to see how this develops. But in general statement that the pricing is higher than previous generation is still this is true.

And in terms of your roadmap for bringing costs down on the R6, are you expecting margins on the R6 product alone to be at corporate level or above corporate level in the first quarter? Or are they going to take more toward the higher volume San'an orders in the second half?

A lot of our design-to-cost activities will kick in at a later stage, because most product, which were basically delivered and shipped until the beginning of this year were based on the initial cost structure, but doing because of it we will see the benefit.

Okay. And lastly, I probably misheard what you said about OLED in terms of when you expect to start to see sales. I thought I heard you say mid 2016. Is that correct?

That’s when we expect larger orders to kick in yeah. The delivery time for these tools is longer than for LED so might actually impact then on the sales level of 2017.

Got it. Thank you.

Thank you.

Thank you very much. And at this point, we’ll have to wrap up the next round for you 2014 earnings call. Thanks all of you for joining us and thank you for your questions. If you have any additional questions, please don’t hesitate to contact as you know either our IR team in the U.S. we’ll address you or out here in Germany. Thanks for interest and good bye. Talk to you next time.