Thank you, Doris, and good afternoon, everyone. Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company and our ability to control costs and improve efficiency, increase orders in succeeding quarters, improve our competitive position as the market improves, as well as other market conditions and trends.

We wish to caution you that such statements deal with future events and are based on management's current expectations and are subject to risks and uncertainties that could cause actual events or results to differ materially.

These uncertainties and risks include, but are not limited to, overall conditions in the markets in which the company competes, global financial conditions and uncertainties, market acceptance and demand for the company's products and the impact of delays by our customers on the timing of sales and products.

In addition to the factors that may be discussed in this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission and available online by link from our website for additional information on risk factors that could cause actual results to differ materially from our current expectations. This conference call will be available on our website at axt.com through February 23, 2013.

Also before we begin, I want to note that shortly following the close of the market today, we issued a press release reporting financial results for the fourth quarter and fiscal 2011. This press release can be accessed from the Investor Relations section of AXT's website at axt.com.

I would now like to turn the call over to Raymond Low for a review of the fourth quarter and fiscal 2011 results. Raymond?

Thank you, Leslie. Revenue for the fourth quarter of 2011 was $21.2 million compared with $28.3 million in the third quarter 2011.

Total gallium arsenide substrate revenue was $11.1 million for the fourth quarter of 2011 compared with $18.7 million in the third quarter of 2011. Indium phosphide substrate revenue was $724,000 for the fourth quarter of 2011 compared with $1.5 million in the third quarter of 2011.

Germanium substrate revenue was $3 million for the fourth quarter of 2011 compared with $3 million in the third quarter of 2011. Raw material sales were $6.4 million for the fourth quarter of 2011 compared with $5.1 million in the third quarter of 2011.

In the fourth quarter of 2011, revenue from North America was 19.9%, Asia Pacific was 61.2%, and Europe was 18.9% of total revenue. One customer generated more than 10% of our revenue during the fourth quarter while the top 5 customers generated 35.2% of our fourth quarter revenue.

Gross margin in the fourth quarter was 36.9% compared with 43.2% of revenue in the third quarter of 2011. The drop in gross margin was the result of lower raw material pricing and lower capacity utilization.

We expect gross margin in the first quarter of 2012 to be flat to up from the fourth quarter of 2011 as a result of higher revenues and improved product mix.

Selling, general and administrative expenses were $3.9 million for the fourth quarter of 2011 compared with $3.6 million in the third quarter of 2011. Research and development cost was $657,000 for the fourth quarter of 2011 compared with $612,000 for the third quarter of 2011.

Total stock compensation expense was $258,000 for the fourth quarter of 2011, of which $24,000 was including cost of revenues, $222,000 in SG&A and $12,000 in R&D.

Income from operations for the fourth quarter of 2011 was $3.3 million compared with income from operations of $8.1 million in the third quarter of 2011. Net interest and other income for the fourth quarter 2011 was $443,000.

Net income in the fourth quarter of 2011 was $2.6 million or $0.08 per diluted share. This compares with net income of $6.5 million or $0.19 per diluted share in the third quarter of 2011.

Let's now look at our cash and the balance sheet. Cash and cash equivalents with maturity of less than 3 months, short-term investments and other investments in high-grade debt securities with maturities of less than 2 years were $40.6 million at December 31, 2011, compared with $39.2 million at September 30, 2011.

Accounts receivable, net of reserves, were $18 million at December 31, 2011, compared with $22 million at September 30, 2011. Days sales outstanding were at 78 days for the fourth quarter compared with 71 days for the third quarter of 2011.

Net inventory was $46 million at December 31, 2011, compared with $44.3 million at September 30, 2011. Of this, approximately 55% is raw materials, 40% is work in progress and 5% is finished goods.

When we guided for the fourth quarter, we had expected our inventory to decline from the prior quarter. However, the timing of the receipts of prior raw material purchases, coupled with weaker gallium arsenide substrate demand in the quarter, resulted in an increase in our inventory.

We now believe that we are at peak inventory, and that we will see a decline in our inventory over the coming quarters beginning with Q1.

Depreciation and amortization in the fourth quarter was $898,000, and capital expenditures were $3.8 million. As of December 31, 2011, the company, including our consolidated joint ventures, had 1,308 total employees of whom 1,014 worked in production.

And now let's turn our results to the year ended December 31, 2011. For the fiscal year 2011, revenue was $104.1 million, a 9% increase from $95.5 million in fiscal year 2010.

Gross margin for the fiscal year 2011 was 43% of revenue compared with 38.2% of revenue for fiscal year 2010. Net income for fiscal year 2011 was $20.3 million or $0.61 per diluted share compared with net income of $18.7 million or $0.57 per diluted share for fiscal year 2010.

This concludes our review of the results. I'll now turn the call over to Morris.

Morris?

Thank you, Raymond. Our fourth quarter results came in sequentially lower and within the guidance range we provided in October as a result of competitive dynamics and our customer base with semi-insulating gallium arsenide substrate, softer LED market conditions and flooding in Thailand that impacted our indium phosphide revenue.

However, despite these near-term challenges, for 2011 as a whole, we posted the strongest fiscal year results in more than 10 years. Revenue for the year was up 9% from the prior year, gross margin increased by nearly 400 basis points, and net income rose by approximately 9%.

In addition, we laid important groundwork to prepare our company for growth as we enter the next semiconductor cycle, as well as increasing demand relating to a number of key secular trends that we play into.

Across our business, we placed great emphasis on the diversification of our customer base with notable success in every product category. We strengthened our sales presence and product specification to enhance our participation in key geographic areas such as China, Japan and Taiwan.

Further, we took a critical measure step to ensure that we have the appropriate level of capacity at the right time to meet market demand as it increases over the next several years. Throughout 2011, we carefully managed our expense levels and further improved our manufacturing and operating efficiency to keep pace with the pricing requirement of our customers and the sizable fluctuation in raw material costs.

I'm very pleased with -- by the way, our team executed its mission in 2011 and believe that we're well positioned for continued growth in 2012.

In many ways, 2011 highlighted a key theme for AXT of diversification. Early in the year, the tragic event in Japan prompted many customers in our universe to rethink their supply strategies and consider additional substrate vendors to satisfy their requirement, which has opened up many doors for us and has given way to one of the most active qualification period in our history.

Further, our own customer confidence concentration, particularly in semi-insulating substrates, limited our ability to grow our revenue and resulted in a significant drop in revenue in the fourth quarter. As a result, we have placed tremendous focus on developing our relations -- relationships with new and returning customers across our product portfolio as well as growing revenue from customers that we are currently not a major supplier.

While we cannot specify particular customers, I am very pleased to report that we have successfully, re-completed multiple direct and indirect qualifications with mid- and top-tier accounts, which we believe will ramp throughout 2012. There remains a number of significant account that we are currently still in various stage of qualification, and these are primary focus of our business this year.

Looking at our product categories. In the demand environment for semi-insulating substrate and in Q1 -- and during Q1 was somewhat challenging.

But we already beginning to see a pickup in order activity as we move through the quarter, which is leading us to expect growth in our revenue from the prior -- from Q4.

Many of our customers in our space are expanding their capacity and the nature of our discussion indicates a growing confidence from them in market demand. We are experiencing, however, continued strong pricing pressure as customers in every region are planning their business conservatively given the near-term lack of macroeconomic clarity.

As we look ahead to the calendar year, analysts largely agree that the demand for wireless devices will continue to grow, and our increasing customer penetration and diversification is expected to drive growth in this area of our business throughout this year and beyond.

In semi-conducting gallium arsenide substrate, as we've discussed last quarter, the market for LED applications has been fairly weak for the past 2 quarters, following tremendous growth in late 2010, and early 2011. We've utilized this opportunity to tackle certain technical and cost considerations that are important in expanding our presence in key strategic regions such as Asia.

As a result of our work, we successfully qualified 2 new accounts in this region. We are already seeing revenue contribution from these customers in the first quarter.

Therefore, we expect sequential growth in semi-conducting substrates this quarter with positive growth indicators throughout the year. We're also monitoring with interest, the latest industry development regarding the use of LEDs in solid state lighting.

Currently, the solid state lighting other than street lighting, can be achieved by using red LED to soften white light for warmer indoor light. This application for our substrate is experiencing tremendous pricing pressure as manufacturers of LED lightbulbs are working to bring down the overall cost of the lightbulb in order to drive more widespread adoption.

For example, LED lightbulbs that recently sold for around $40 are now selling for less than $15. As a result of this decrease, the volume of our LED lightbulbs sold is increasing.

And consequently, we're beginning to see a more meaningful contribution from this adoption application in our product mix.

Turning to germanium substrate. This area of our business continue to be healthy.

The worldwide satellite market remains the primary near-term driver for our germanium substrate revenues, but we may begin to see growth from the nascent germanium-based terrestrial solar cell market later this year. Investors ask us from time to time whether we have exposure to the weakness in the terrestrial silicon-based solar cell market that has been well publicized in the past year.

In fact, the 2 markets are very different, and we have no exposure to the silicon solar cell market.

The germanium-based solar cell market is targeted at large-scale solar power plants such as the installation going on currently in a number of locations worldwide including China, Southern California, Spain and Middle East. Germanium-based CPV is a deal for this application as it can generate tremendous power and certain environmental conditions in a very cost-effective manner.

Currently, germanium solar cell conversion efficiency is over 43%. We believe that as the reliability of this relatively new technology becomes increasingly proven, we will see acceleration in the adoption rate.

We are well positioned in this market and expect to participate in its growth as the technology achieve greater commercial viability.

Turning to raw material. The improving demand environment for gallium arsenide and germanium substrate is translating into healthy demand for raw material as well.

Our joint ventures have been working to build capacity to prepare our customer requirements and are well positioned to support increasing demand. Increased capacity from our joint venture, as well as other suppliers around the world, is contributing to some of the decline in raw material market price.

Spot prices for gallium are currently approximately $540 a kilogram, and germanium is approximately at $1,400 a kilogram. However, as the demand strengthens throughout the year and next, the industry will be in a better position to support customer requirement.

As we have mentioned -- as I've mentioned in the past, our unique business model allows us to enjoy healthy margin contribution from raw material when the price of these material is high as a result of what we can sell on the open market from our joint venture. When the market or raw material drops, our margin contribution from these product is reduced.

However, the negative effect to our margin is partially offset by the benefit of our lower raw material costs in our substrate business as soon as our higher-priced raw material in our inventory is worked out.

In the first quarter, we'll be working down higher-priced inventory, and we'll begin to realize more of a margin benefit from lower raw material pricing in our substrate business mid-year. As we look ahead to our margin performance in the coming quarters, it is important to note that Q4 is likely to be the bottom for our gross margins as we are expecting margins to be flat to up modestly in Q1.

We're very pleased that given the difficult business environment of the last couple of quarters, we were able to maintain a mid- to high 30% gross margin range and post a fiscal year improvement from 2010. We believe that this demonstrates the strength of our financial model and the health of our business.

Now, before I close, I want to say a few words about our announcement to establish a second manufacturing site in Tianjin, China. The arrangement provide AXT with land use rights for approximately 32 acres of industrial land to construct a manufacturing facility that will be completed in phases by 2017.

Our investment over the next 2 years will be approximately $12.5 million that we can comfortably cover with our healthy cash position and continued cash generation from operations. While our current facility in Beijing continues to provide us with ample capacity to grow our business for the next 18 to 24 months, we believe that a second manufacturing facility in Tianjin will provide us with additional capacity for many years to come, particularly in light of healthy secular trend in our business.

The positive financial consideration of this arrangement, coupled with what we believe to be our long-term capacity needs, provide compelling incentives to proceed with our expansion plans at this time. This arrangement allows us to begin planning for growth and redundancy in our business in a measured and incremental way that is suitable for both -- to the current economic conditions and the sizable opportunity ahead.

In closing, while the fourth quarter presented challenges to us, we are entering a new semiconductor cycle in 2012, with healthy demand for our product and ever-expanding customer base and positive secular trends that provide an ongoing catalyst for further growth. In addition, we continue to execute well at every level of our organization providing a positive experience to our customers while delivering a solid financial model and continued profit.

We're excited about our growth potential to 2011 and are actively preparing our company to take advantage of many opportunities ahead. I would like to personally thank our employee for -- of AXT for their tremendous dedication to our mission and our customers, our partners and our investor for their continued support of our company.

I will now turn the call back over to Raymond to discuss our forward-looking guidance. Raymond?

Thank you, Morris. As a result of market conditions in the first quarter, we expect total revenues of between $21 million and $24 million.

We are expecting net income in the fourth quarter -- first quarter of between $0.07 and $0.11 per share based on approximately 33.2 million common shares outstanding.

This concludes our prepared comments. We are now happy to answer your questions.

A few -- maybe you broke this one down, but I -- did you give out the semi-conducting and semi-insulating mix for the quarter?

Semi-conducting is 55%, semi-insulating, 45%.

Okay. And could you talk a little bit about the customer wins that you talked about?

I believe they were more on the wireless side of the business. And could you give us some idea in terms of how big these customers are?

Have they already started to order? Or what's the potential from them?

Avinash, it's the other way around. We said that, we had some semi-conducting customer wins.

Because the qualification cycle for semi-conducting is shorter than semi-insulating, so we are already getting 2 customer wins in semi-conducting, which we are already getting some first quarter revenue contribution, and we expect them to continue. However, semi-insulating, we are still working on them.

Okay. So you've not had any wins in the semi-insulating yet, but you're working on them.

Well, we have some wins, but because they work slower, so we don't have no revenue contributions. So we don't want to talk about it.

I see. So then, in the semi-conducting side, your numbers have been down a lot.

Do you expect this to grow sequentially from here on?

I believe so, Avinash. I believe, as we said in our conference call, we have problems that we have a customer confrontation issue, as well as the industry was taking a dip, and that there was an inventory correction.

And as we see going forward, just about all those problems are either alleviated or partially alleviated.

Okay. And then, any comments on CapEx and tax rate for the year?

What should we model?

CapEx, we haven't put out the number for 2012 yet. But we're probably looking about $4.5 million for normal CapEx.

Okay. And tax rate, any idea?

Tax rate is usually between 13% to 15% of net income before tax.

I guess a question on the guidance specifically on revenues. You -- in your prepared comments, you talked about some of the segments in terms of direction.

I'm wondering if you can give us a little bit of color on which ones you expect to grow more or less than the others, specifically, I'm curious about raw materials, if that's expected to grow materially or more so than the other segments in the first quarter.

Well, it's -- Richard, it's difficult for us to break it down because these are projections, first of all. And we have sort of a hodgepodge effect.

So I mean, for us to give a range is already difficult, and you know our business can turn. But I would think, as we said, I think we're starting to see the demand environment start to turn already as we entered second half of Q1.

So I do expect most of our segment of the business is coming back. Which one is stronger and is going to contribute for more revenue for Q1 specifically?

It's hard really to nail it down.

Okay, fair enough. And maybe just digging in one of those areas, a little bit more on the wireless side.

I think you mentioned that you are expecting it to grow in the first quarter. Do you expect your 6-inch semi-insulating to grow specifically as well in the first quarter?

Yes. That's mainly coming from 6-inch.

Okay. I just want to make sure of that.

And second question also related to guidance here, you've talked about gross margins coming upwards here. If I try to bake in the numbers you gave for guidance, it was just that gross margins could get to the high 30s, if not, maybe close to 40%.

Is that a general feeling? Is that kind of in the range of what you're thinking?

I don't think you want to be that aggressive. Right Raymond?

Yes.

Give it a little bit of time.

Okay. Next question, Morris, you mentioned in your prepared comments about the germanium market, and specifically, in the CPV terrestrial.

What gives you confidence that you're going to see perhaps an improvement in that part of your business in the second half of the year? What can you see into your customers until -- what problems and issues are being solved, be it technological or financing or whatever that gives you that confidence?

Well, Richard, that is reading into tea leaf per se. As you know, CPV has always been the market of tomorrow, and we have not said, we'll definitely see it.

But if you ask me what do I see, for one, we see a lot of activities from our customers. We've got customers asking for quote for very large quantity we know is for CPV.

We're asked -- we heard our customers want us to nail down certain capacity of raw material. But none of them has turned into purchase order yet.

And we also see a lot of activities. Recently, there's a lot of VC activities as well as company merger or announced production agreement recently.

And so they all seems to indicate that the CPV market is getting to be more mature. Although the timing of that happening is still -- we cannot be sure of.

Okay, that's fair enough. Good to hear that.

And my last quick question, probably for Raymond. What was the percentage of sales coming from your top customer in the fourth quarter?

The top 5? 35%.

The top customer, single customer.

Top customer, we only just give that it's greater than 10%.

Kind of in line with the question on the guidance, just curious on the gross margin side, you said maybe flat to potentially up a little bit. How much of that was contributed from a lower raw material mix versus just high utilization on your factory?

We don't normally break down guidance going forward for raw materials, revenue or the substrate revenue. So it's always a combination.

I see, but is it fair to say that those are the 2 contributor for a flat to up gross margin outlook?

Well, the gross margin this time was a combination of lower gallium pricing and then also lower capacity utilization. So looking forward $21 million to $24 million, it would probably be similar.

I see, okay, great. That was helpful.

And then a touch on semi-conducting gallium arsenide business, you talked about 2 new qualification that already started to drive earnings growth here. Are those related to this LED lightbulb application that you mentioned, Morris?

Or is it related to other market?

Well, we can never be sure. As we've said before, when we sell substrate, we don't know exactly where they are using those substrate for particular application.

Whether it's for storefront moving signage or full-color display or whatnot. And in fact, when we mentioned about LED and solid state lighting, we say it could be one of these areas and particularly with the -- such a tremendous price pressure, and we start to see also volumes start to ramp.

I mean those are good indications that they could be using for some of the solid state lighting. But whether they are directly related, we can't tell.

I see, okay fair enough. But do you believe that your costs from producing more of these lightbulbs to the red LED [indiscernible]?

Well again, Edwin, I mean, I really cannot pin it down. I mean, at least, one of our customers, we recently got a qualification win, I took up -- we took apart one of the lightbulb they offered, we see red LED in there.

Great, that's a good indication. And then just on the semi-insulating side, a question on your customer inventory.

Do you start to -- do believe your customer inventory start to improve and that gives you the confidence that maybe the business start to produce [indiscernible]?

Yes, especially on the semi-insulating side. We start to -- inventories very much depleted especially in the last weeks.

Great. One last question I have is on raw material.

So on the raw materials side, you mentioned that there are some expansion in capacity on your side as to your competitive side, which has caused for a large -- basically caused some price decline on the last 2 quarters. I was wondering how you kind of think about the capacity there.

Do you a need to continue to expand this year? Or do you think that -- maybe there's no expansion to be expected this year?

Well, that's a good question. As far as raw material cost is concerned, with the raw material price decline, it's a double-edged sword.

I don't -- as far as AXT is concerned. When the price decline, our margin contribution from those raw material sales is less.

On the other hand, we can much easier handle our substrate business. As you know, that's a major component of our cost of goods sold for gallium arsenide for instance.

So as for germanium, I wish I can develop more germanium capacity, but that's a bit more difficult. As you know, the raw material is really very much of a natural resources business.

And so I think if we have the opportunity, I think it's in our plan to expand even more because natural resources is a commodity that you will never regenerate, you cannot create. So it may hurt you in the short term, but in the long term, it's a great business to be in.

And that will protect our business model in terms of providing an affordable substrate price to our customers.

First, Raymond, can I get those stock compensation numbers again?

Sure. It was $256,000 for the whole year -- sorry, for the whole quarter, broken down into $24,000 for cost of revenues, $222,000, SG&A and $12,000, R&D.

Got it. All right.

And then, Morris, regarding indium phosphatase, you are impacted because of the flooding in Thailand. So can we expect some kind of a rebound in Q1 or maybe even Q2?

No, no, it's coming back in Q1. It's coming back to the old form.

Yes, I just checked.

But can that reach pre-flood level, so you think about 1.5 in Q3, so can we expect that kind of rebound or more of gradual recovery?

No. I think it's going be a rebound.

Rebound, like a 1.5 rebound?

Well, as I said...

Something like that, right?

Yes.

Okay, fair enough. And then regarding your new customers -- semiconductor customers, were they Chinese?

Or can you tell us who they were?

They are Asian customers.

Asian customers. Okay, all right.

What about your top -- 10% customer, was it semi-insulating or conducting?

Semi-insulating.

Semi-insulating. Okay, that's what I thought, okay.

And then, last question is regarding your terrestrial -- germanium terrestrial. How many customers are in the pipeline that you're expecting them to ramp in the second half?

Are we talking maybe 1 or 2 or more than 2?

Let me see. Well, right now, we've got 1, 2, 3, 4 -- 4 or 5 of them were really decent customers, but one of them is really dominating.

And we're seeing a lot of signals from them. Potentially, they can ramp our CPV.

But if this market to -- were to mature, I think the participant can be a lot. I mean, we're not counting, for instance, these Chinese customers.

I mean, you saw the recent completion of the big capacity increase in China. We are not counting out those yet.

Right. Sure, sure.

And then the -- actually, the last question is on the semi-insulating side. You talked about several customer qualification activities.

Any near-term, and maybe some kind of like a first half announcement, can we expect on the wireless side?

Well, Dave, I don't think we ever have a habit of announcing customer wins usually because especially -- even for semi-conducting, I'm happy to report that we had 2 new customer qualification. But usually, we don't announce those.

And also, you will start to see activity of order coming in. As they reach 10%, we'll let everybody know.

But I don't think we ever have a habit of announcing new customer qualification.

I just had a couple of questions. Most of my questions have been answered.

Can you just talk a little bit more -- I know you touched on the market for solar, but just in terms of what the opportunity there is over the next couple of years and how you see it playing out?

Well, the solar business I think if you look at the satellite business, which is the bread and butter, which is very steady, I believe our opportunity mainly is getting into more markets. And we've been saying that we have qualified in most of the major satellite market including Europe, Asia, Russia, and the area that we're lacking is United States, which we very equally try to get into that market.

And that market is being steady, and they are contributing to about 80% of our revenue for the germanium solar cell business. I think what is explosive -- potentially, can get very explosive is the CPV market.

But when they're going to start to take off and how big the size of the market is, I think it's a very, very difficult prediction to give because we've been wrong over and over again. We thought 2011 could be the year to take off and then now it's 2012.

And then -- and every time there is a financial crisis, it could be a hindrance to it's taking off. But from what I understand, the good thing about this CPV using germanium or gallium arsenide, the benefit -- really the strength is that the technology is very, very good.

It can convert sunlight into electricity at very high efficiency rate. And in certain environment where there's a abundance of sunlight, and they call it DNI being very high, then you can be very economically generating a lot of electricity at very low cost.

So when will that technology being adopted, accepted by the industry and that's the time for it to take off, and I believe there's a lot of opportunity for it.

Any guess as to when that might happen?

Well, I put it late 2012 or 2013.

Okay, great. And in terms of the inventory, maybe we can just talk a little bit about that.

Is that mainly -- I know the majority of that was raw materials. Is that just being opportunistic as the costs come down because inventory was already at a relatively high level in -- at the end of Q3?

I'm just curious as to why you continue to build on that.

I think it was just a slight -- it was just timing, Tom. It's just the timing of the receipt of the prior raw material purchases.

Just a couple of quick follow-ups on your joint ventures.

Richard, you're fading. You're not very clear.

Can you speak louder?

A question -- couple of questions on your joint ventures, specifically the gallium ones, what -- how much did your overall capacity grow in 2011? And how much do you expect it to increase by the end of 2012?

Yes. I mean, we have a lot of increasing capacity.

The plan that we have on GIs [ph] is almost more than double.

During 2012?

Yes.

Thank you for participating in our conference call. This quarter, we'll be participating in the ROTH Conference in Dana Point and look forward to seeing many of you there.

As always, feel free to contact me, Raymond or Leslie directly, or if you like to meet with us, we look forward to speaking with you in the near future.