In the second quarter of 2012, revenue from North America was 17%, Asia Pacific was 64% and Europe was 19% of total revenue. One customer generated more than 10% of our revenue during the second quarter, while the top 5 customers generated 39.3% of our second quarter revenue.Gross margin in the second quarter was 29.8% compared with 34.9% of revenue for the first quarter of 2012. The drop in gross margin was largely the result of the new People's Republic of China value-added tax, or VAT, levied on foreign enterprises that import materials, which do not form part of the final product. AXT recently received notice of the retroactive VAT, which applies to the period of July 1, 2011, to June 30, 2012, and amounted to $1.27 million expense in the quarter ended June 30, 2012, which resulted in a 505 basis points impact to gross margins. Excluding the effect of this VAT tax, gross margins in the second quarter would have been 34.9%. Going forward, we expect that this new VAT will negatively impact gross margins by approximately 150 basis points per quarter.
AXT Management Discusses Q2 2012 Results - Earnings Call Transcript
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