XML 29 R14.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Investments in Privately Held Companies | 12 Months Ended
--- | ---
Dec. 31, 2016
Investments in Privately Held Companies |
Investments in Privately Held Companies | Note 6. Investments in Privately-held Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business. We have six direct investments. Our consolidated subsidiaries have also made investments in private companies. We have four indirect investments. These companies form part of our overall supply chain. Our direct investments are summarized below (in thousands):
|  | Investment Balance as of |  |  |  |  |
|  | December 31, |  | December 31, |  | Accounting |  | Ownership |
Company |  | 2016 |  | 2015 |  | Method |  | Percentage |
Beijing JiYa Semiconductor Material Co., Ltd. |  | $ | 3,331 |  | $ | 3,331 |  | Consolidated |  | 46 | %
Nanjing Jin Mei Gallium Co., Ltd. |  |  | 592 |  |  | 592 |  | Consolidated |  | 83 | %
Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. |  |  | 1,346 |  |  | 1,346 |  | Consolidated |  | 70 | %
|  | $ | 5,269 |  | $ | 5,269 |  |  |  |  |
Donghai County Dongfang High Purity Electronic Materials Co., Ltd. |  | $ | 1,498 |  | $ | 1,524 |  | Equity |  | 46 | %
Xilingol Tongli Germanium Co. Ltd. |  |  | 4,000 |  |  | 5,343 |  | Equity |  | 25 | %
Emeishan Jia Mei High Purity Metals Co., Ltd. |  |  | 1,101 |  |  | 1,081 |  | Equity |  | 25 | %
|  | $ | 6,599 |  | $ | 7,948 |  |  |  |  |
Our ownership of Beijing JiYa Semiconductor Material Co., Ltd. (“JiYa”) is 46%. We continue to consolidate JiYa as we are the founding and largest shareholder, we appoint the general manager and controller and have the ability to exercise control in substance over the long-term strategic decisions made. Our Chief Executive Officer is chairman of the JiYa board and we have appointed one other representative, Davis Zhang, to serve on the board. Mr. Zhang was an executive officer of AXT for 27 years. Further, our Chief Financial Officer, Gary Fischer, is on the board of supervisors of JiYa. Our ownership of Nanjing Jin Mei Gallium Co., Ltd. (“Jin Mei”) is 83%. We continue to consolidate Jin Mei as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the Jin Mei board and we have appointed two other representatives to serve on the board. Our ownership of Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd (“BoYu”) is 70%. We continue to consolidate BoYu as we have a controlling financial interest and have majority control of the board. Our Chief Executive Officer is chairman of the BoYu board and we have appointed two other representatives to serve on the board. Although we have representation on the boards of directors of each of these companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short- term strategy and operations, ordinary course of business capital expenditures, and decisions concerning sales of finished product, are made by local management with regular guidance and input from us. During 2016, 2015, and 2014, the three consolidated joint ventures generated $0.1 million, $0.8 million and $3.0 million of income, respectively, of which a loss of $0.7 million, a loss of $0.3 million and a gain of $0.7 million, respectively were allocated to noncontrolling interests, resulting in $0.8 million, $1.2 million and $2.3 million of income, respectively, to our net income. For AXT’s three minority investment entities that are not consolidated, the investment balances are included in “other assets” in our consolidated balance sheets and totaled $6.6 million and $7.9 million as of December 31, 2016 and 2015, respectively. We own 46% of the ownership interests in one of these companies and 25% in each of the other two companies. These three companies are not considered variable interest entities because:
| · |  | all three companies have sustainable businesses of their own;
| · |  | our voting power is proportionate to our ownership interests;
| · |  | we only recognize our respective share of the losses and/or residual returns generated by the companies if they occur; and
| · |  | we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to any of these companies.
These three equity investment entities generated for AXT an equity loss of $1.2 million and $43,000 for the year ended December 31, 2016 and 2015, respectively, and an equity earnings of $569,000 for the years ended December 31, 2014, which was recorded as “equity in earnings (loss) of unconsolidated joint ventures” in the consolidated statements of operations. Net loss recorded from all of the consolidated joint ventures and these three equity investment entities was $0.4 million for the year ended December 31, 2016. Net income recorded from all of the consolidated joint ventures and these three equity investment entities was $1.1 million and $2.9 million for the years ended December 31, 2015, and 2014, respectively. We also maintain four minority investments indirectly in privately-held companies through our consolidated joint ventures. JiYa holds three investments and Jin Mei holds one investment. These minority investments are accounted for under the equity method in the books of our consolidated joint ventures. As of December 31, 2016 and 2015, our consolidated joint ventures included these minority investments in “other assets” in the consolidated balance sheets with a carrying value of $4.7 million and $5.8 million, respectively. AXT’s three direct minority investment entities and the three minority investments of JiYa and the one minority investment of Jin Mei are not consolidated and are accounted for under the equity method and had the following summarized income information (in thousands) for the years ended December 31, 2016, 2015, and 2014, respectively:
|  |  |  |  |  |  |  |  |  |  | Our share for the |
|  |  | Year Ended |  | Year Ended |
|  |  | December 31, |  | December 31, |
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |
Net revenue |  | $ | 24,851 |  | $ | 36,259 |  | $ | 47,824 |  | $ | 6,441 |  | $ | 9,112 |  | $ | 11,887 |
Gross (loss) profit |  |  | (2,344) |  |  | 8,327 |  |  | 21,436 |  |  | (542) |  |  | 1,954 |  |  | 5,340 |
Operating (loss) income |  |  | (7,388) |  |  | 2,494 |  |  | 9,046 |  |  | (1,828) |  |  | 494 |  |  | 2,059 |
Net (loss) income |  |  | (7,947) |  |  | 2,371 |  |  | 6,765 |  |  | (1,995) |  |  | 462 |  |  | 1,528 |
These seven minority investment entities that are not consolidated, but rather are accounted for under the equity method and had the following summarized balance sheet information (in thousands) for the years ended December 31, 2016 and 2015, respectively:
|  | As of December 31, |
|  | 2016 |  | 2015 |
Current assets |  | $ | 32,210 |  | $ | 32,097 |
Noncurrent assets |  |  | 31,770 |  |  | 35,917 |
Current liabilities |  |  | 24,449 |  |  | 18,185 |
Noncurrent liabilities |  |  | 406 |  |  | 571 |
Our portion of the entity earnings from these seven minority investment entities that are not consolidated and are accounted for under the equity method were a loss of $2.0 million, a gain of $462,000 and a gain of $1.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. Dividends received from these minority investment entities were $0, $305,000 and $327,000 for the years ended December 31, 2016, 2015, and 2014, respectively. Undistributed retained earnings relating to our investments in all these minority investment entities were $4.7 million and $6.6 million as of December 31, 2016 and 2015, respectively.

X
- References No definition available. + Details
Name: | us-gaap_EquityMethodInvestmentsAndJointVenturesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66011266&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=64825282&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=64825282&loc=d3e32787-111569 + Details
Name: | us-gaap_EquityMethodInvestmentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration