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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

o

Registration Statement Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934orý

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             tooro

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


Date
of event requiring this shell company
report

Commission
file number: 000-51196

AIXTRON Aktiengesellschaft(Exact Name of Registrant as Specified in Its Charter)

Federal Republic of Germany
(Jurisdiction of Incorporation or Organization)

Kackertstrasse 15-17
52072 Aachen
Federal Republic of Germany(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Ordinary shares, no par value (only in connection with the listing of
its American Depositary Shares on The NASDAQ Stock Market, LLC)
(Title of Class)

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

The number of outstanding shares of each of the issuer's classes of capital or common stock as of December 31, 2008: 90,894,616 ordinary shares, no par
value.

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o    No ý

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934. Yes o    No ý

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the
past 90 days. Yes ý    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o


Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

U.S. GAAP o

International Financial Reporting
Standards as issued by the
International Accounting Board ý

Other o


If
"Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o    Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý



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Table of Contents



Table of Contents



PART I


3Item 1:

Identity of Directors, Senior Management and Advisers


3Item 2:

Offer Statistics and Expected Timetable


3Item 3:

Key Information


3A.

Selected Financial Data


3Five Year Financial Summary


3Exchange Rate Information


3B.

Capitalization and Indebtedness


4C.

Reasons for the Offer and Use of Proceeds


4D.

Risk Factors


4Company-Related Risk


4Risks Relating to Holding AIXTRON's ADSs and Ordinary Shares


11Item 4:

Information on the Company


13A.

History and Development of the Company


13Introduction


13Important Events


13Capital Expenditures


13B.

Business Overview


14Business Model


14Employees


14Technology, Products and Services


15Research and Development


17Intellectual Property


18Manufacturing


18Marketing Channels


19Customers and Principal Markets


19Seasonality


19Competitive Positioning


19Key Performance Indicators


20Government Regulation


20C.

Organizational Structure


21D.

Property, Plant and Equipment


21Item 4A:

Unresolved Staff Comments


22Item 5:

Operating and Financial Review and Prospects


22Global Economy


22The Semiconductor Equipment Market


22AIXTRON-specific Factors


23Management Assessment of Company Situation


24A.

Operating Results


24Development of Revenues


24Development of Results


25Development of Orders


27B.

Liquidity and Capital Resources


28C.

Research and Development, Patents and Licenses, etc.


30D.

Trend Information


30E.

Off-Balance Sheet Arrangements


31Contingencies


31F.

Tabular Disclosure of Contractual Obligations


31Preparation of consolidated financial statements under IFRS


32Critical accounting policies and key sources of estimation and uncertainty


32Recently Issued Accounting Standards


33Item 6:

Directors, Senior Management and Employees


34A.

Directors and Senior Management


34B.

Compensation


36C.

Board Practices


39Audit Committee


39Compliance with NASDAQ Listing Standards on Corporate Governance


40


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Table of Contents

D.

Employees


40E.

Share Ownership


40Employee Bonds and Options


41Item 7:

Major Shareholders and Related Party Transactions


42A.

Major Shareholders


42B.

Related Party Transactions


43Item 8:

Financial Information


43A.

Consolidated Statements and Other Financial Information


43Export Revenues


43Legal Proceedings


43Policy on Dividend Distributions


43B.

Significant Changes


44Item 9:

The Offer and Listing


44A.

Offer and Listing Details


44Trading Markets


44Market Price Information


44B.

Plan of Distribution


46C.

Markets


46D.

Selling Shareholders


46E.

Dilution


46F.

Expenses of the Issue


46Item 10:

Additional Information


47A.

Share Capital


47B.

Memorandum and Articles of Association


47Corporate Governance


47Sarbanes-Oxley Act Requirements and NASDAQ Rules


48C.

Material Contracts


50Employment contracts of current members of the Executive Board.


50Intellectual Property Agreements


50D.

Exchange Controls


51E.

Taxation


51German Taxation


51U.S. Federal Taxation


54F.

Dividends and Paying Agents


57G.

Statement by Experts


57H.

Documents on Display


57I.

Subsidiary Information


57Item 11:

Quantitative and Qualitative Disclosure about Market Risk


57Exchange Rate Risk


57Foreign Currency Risk


58Interest Rate Risk


59Item 12:

Description of Securities other than Equity Securities


59PART II


60Item 13:

Defaults, Dividend Arrearages and Delinquencies


60Item 14:

Material Modifications to the Rights of Security Holders and Use of Proceeds


60Item 15:

Controls and Procedures


60Item 16A:

Audit Committee Financial Experts


61Item 16B:

Code of Ethics


61Item 16C:

Principal Accountant Fees and Services


61Audit Committee Pre-Approval Policies


61Item 16D:

Exemptions from Listing Standards for Audit Committees


62Item 16E:

Purchases of Equity Securities by the Issuer


62Item 16F:

Change in Registrant's Certifying Accountant


62Item 16G:

Corporate Governance


62PART III


63Item 17:

Financial Statements


63Item 18:

Financial Statements


63Item 19:

Exhibits


63


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Table of Contents

Signatures


64Report of Independent Registered Public Accounting Firm


65Consolidated Income Statement


F-1Consolidated Balance Sheet


F-2Consolidated Cash Flow Statement


F-3Consolidated Statement of Changes in Equity


F-4Statement of Recognised Income and Expense


F-5Notes to the Consolidated Financial Statements


F-61.     General principles


F-62.    Significant accounting policies


F-63.    Segment reporting


F-154.    Acquisition of subsidiaries


F-165.    Research and development


F-176.    Other operating income


F-187.    Other operating expenses


F-188.    Personnel expense


F-189.    Net finance income


F-1810.  Income tax expense/benefit


F-1911.  Current tax assets and liabilities


F-2012.  Property, plant and equipment


F-2113.  Intangible assets


F-2214.  Investment property


F-2315.  Other non-current assets


F-2316.  Deferred tax assets and liabilities


F-2417.  Long-term receivables from current tax


F-2518.  Inventories


F-2519.  Trade receivables and other current receivables


F-2620.  Other financial assets


F-2721.  Cash and cash equivalents


F-2722.  Shareholders' Equity


F-2723.  Earnings per share


F-2924.  Employee benefits


F-2925.  Share-based payment


F-3026.  Accruals and provisions


F-3327.  Trade payables and other current liabilities


F-3428.  Financial instruments


F-3429.  Operating leases


F-3930.  Capital commitments


F-3931.  Contingencies


F-3932.  Related parties


F-3933.  Consolidated entities


F-4134.  Events after the balance sheet date


F-4135.  Auditors' fees


F-4136.  Employees


F-4237.  Statement of compliance with the German Corporate Governance
Code


F-4238.  Supervisory Board and Executive Board


F-4239.  Critical accounting judgments and key sources of estimation and
uncertainty


F-43


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Table of Contents

Presentation of Information

In this Annual Report on Form 20-F (this "report"), unless the context otherwise requires, references to "AIXTRON,"
"the AIXTRON Group," or "the Company" are to AIXTRON Aktiengesellschaft and its consolidated subsidiaries. Throughout this report, whenever a reference is made to AIXTRON's website, such reference
does not incorporate information from the website by reference into this report.

The
Company's audited Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting
Standards Board (IASB).

AIXTRON
publishes its audited Consolidated Financial Statements in Euros. As used in this report, "EUR," "Euro" or "€" means the single unified currency that was
introduced in the Federal Republic of Germany and ten other participating member states of the European Union on January 1, 1999. "US-Dollar," "U.S$," or "USD" means the lawful
currency of the United States of America. "Pound Sterling," "British Pounds," "GB Pounds" or "GBP" means the lawful currency of the United Kingdom.

Except
where AIXTRON otherwise attributes market or industry data to another source, all such data included in this report are its own estimates. These estimates are based upon the
Company's experience in its industry and its familiarity with the relevant markets. While AIXTRON believes these estimates to be reliable, the Company has not verified them with independent sources.

Forward-Looking Statements

AIXTRON believes that various statements in this report may constitute forward-looking statements. You can identify these statements by
forward-looking words such as "may," "will," "could," "expect," "anticipate," "contemplate," "believe," "estimate," "intends," and "continue" or similar words. You should read statements that contain
these words carefully because they:



AIXTRON
believes it is important to communicate its expectations. There may be events in the future that AIXTRON is unable to predict accurately or over which the Company has no control.
The risk factors and cautionary language discussed in this document provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations
described by AIXTRON in its forward-looking statements, including among other things:



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You
are cautioned not to place undue reliance on these forward-looking statements.

All
subsequent written and oral forward-looking statements attributable to AIXTRON or to any person acting on its behalf are expressly qualified in their entirety by the foregoing
cautionary statements. AIXTRON does not undertake and expressly disclaim any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after
the date of this report or to reflect the occurrence of unanticipated events.

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Table of Contents

PART I

Item 1:    Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2:    Offer Statistics and Expected Timetable

Not applicable.

Item 3:    Key Information

A.    Selected Financial Data

Five Year Financial Summary

You should read the selected consolidated financial data set forth below in conjunction with "Item 5Operating and
Financial Review and Prospects" and AIXTRON's Consolidated Financial Statements included in this report. The historical results included below and elsewhere in this report are not necessarily
indicative of AIXTRON's future performance.

As of or For the Year Ended December 31,

2008
IFRS

2007
IFRS

2006
IFRS

2005
IFRS

2004
IFRS(thousand EUR, except share and per share data)Consolidated Income Statement Data:Revenues


274,404


214,815


171,685


139,402


140,004Operating result


32,489


20,643


5,699


-52,675


9,674Profit/Loss attributable to the equityholders of AIXTRON AG (after taxes)


22,994


17,250


5,857


-53,468


7,681Basic earnings per share


0.26


0.20


0.07


-0.65


0.12Diluted earnings per share


0.25


0.19


0.07


-0.65


0.12Dividends declared per common share


0.00


0.07


0.00


0.00


0.00Consolidated Balance Sheet Data:Total assets


314,827


296,827


263,482


237,317


176,335Total liabilities


101,938


98,473


79,540


53,718


39,368Minority interests


0


0


0


0


0Total shareholders' equity


212,889


198,354


183,942


183,599


136,967Subscribed capital


89,692


89,139


87,836


87,797


64,832Other Data:Adjusted weighted average number of shares outstandingbasic


89,478,415


88,163,952


87,824,321


82,111,081


64,831,512diluted


90,494,901


88,947,886


87,902,699


82,111,081


65,165,246


Exchange Rate Information

The following tables set forth, for the periods indicated, information concerning the exchange rates for Euros per
US-Dollar. AIXTRON has provided these rates solely for your convenience and you should not construe these translations as a representation that Euro amounts actually represent these
US-Dollar amounts or that the Euro amounts could have been, or could be, converted into US-Dollars at those rates or at any other rate. AIXTRON did not use these rates in the
preparation of its financial statements
included elsewhere in this report. Fluctuations in the exchange rate between the US-Dollar and the Euro will affect the US-Dollar equivalent of the Euro price of the Company's
ordinary shares traded on the Frankfurt Stock Exchange and are likely to affect the market price of the Company's American Depositary Shares ("ADSs") traded on the NASDAQ Global Select Market.

As
used in this report, the term "noon buying rate" refers to the rate of exchange for Euro, expressed in US-Dollar per Euro, as announced by the Federal Reserve Bank of New
York for customs purposes as the rate in The City of New York for cable transfers in foreign currencies.

The
table below shows the average noon buying rates in The City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New
York for

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Table of Contents

US-Dollar
per Euro for AIXTRON's fiscal years. The average is computed using the noon buying rate on the last business day of each month during the period indicated.

Year ended December 31,

Average Rate2008


1.46952007


1.37032006


1.26612005


1.24002004


1.24782003


1.1411


The following table shows the noon buying rates for Euros in US-Dollars for the last six months.

Month ended

High

LowFebruary 2009*


1.3064


1.2808January 2009


1.3946


1.2804December 2008


1.4358


1.2634November 2008


1.3039


1.2525October 2008


1.4058


1.2446September 2008


1.4737


1.3939August 2008


1.5569


1.466


---

On February 13, 2009, the noon buying rate was USD 1.2879 per € 1.00.

B.    Capitalization and Indebtedness

Not
applicable

C.    Reasons for the Offer and Use of Proceeds

Not
applicable

D.    Risk Factors

Any of the following risks could have a material adverse effect on AIXTRON's financial position, results of
operations, liquidity and the actual outcome of matters that the forward-looking statements contained in this annual report refer to. The risks described below are not the only ones the Company faces.
There may be additional risks AIXTRON is currently unaware of and risks that are common to most companies. There may also be risks that AIXTRON now believes are immaterial, but which may ultimately
have a material adverse effect on the Company's financial position, results of operations, liquidity and the actual outcome of matters that the forward-looking statements contained in this annual
report refer to. For additional information regarding forward-looking statements, see "Forward-looking statements" included in this annual report.

Company-Related Risk

The compound semiconductor and the semiconductor industries can be highly volatile and unpredictable, which may adversely affect AIXTRON's operating results and result in
significant volatility in the market price of its ordinary shares and American Depositary Shares.

The compound semiconductor and the semiconductor manufacturing equipment industry can be affected by the cyclical nature of the
semiconductor industry. Although semiconductors are used in many different products, the markets for those products are interrelated to various degrees. The industry has historically experienced
sudden changes in supply and demand for semiconductors. The timing, length and severity of these industry cycles are difficult to predict. During periods of declining demand for semiconductor
manufacturing equipment, AIXTRON needs to be able to quickly and effectively align its cost structure with prevailing market conditions, to manage its inventory levels to reduce the possibility of
future inventory write-downs resulting from obsolescence, and to motivate and retain key employees. Because a high proportion of AIXTRON's costs are fixed in the near term, the Company's ability to
reduce expenses quickly in response to revenue shortfalls is limited. During

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periods
of rapid growth, AIXTRON's business must be able to acquire and/or develop sufficient manufacturing capacity and inventory to meet customer demand, and to attract, hire, assimilate and retain
a sufficient number of qualified people. The Company's customers often accelerate or delay expenditures, as well as attempt to cancel or reschedule their orders, in reaction to variations in their
businesses or market conditions. As a result, AIXTRON must be able to react quickly to these changes in supply and demand. A failure to quickly align the Company's cost structure and manufacturing
capabilities with industry fluctuations could lead to significant losses or to fail to capitalize on increased demand. In either event, the results of operations may be adversely affected, which could
result in
significant volatility in the market price of the Company's ordinary shares and American Depositary Shares (ADSs).

The economic slowdown and the related disruptions in the banking industry may adversely impact AIXTRON's financial position and results of operations.

Recently, the U.S. economy and several other major economies have slowed and the financial health of major banks has deteriorated.
Although AIXTRON had no bank borrowings during 2008, it has cash bank deposits. AIXTRON monitors the financial condition of its banking partners, but if one of AIXTRON's banking partners were to
default before AIXTRON detected the problem or took appropriate measures, this could adversely impact AIXTRON's financial position.

The
global economic slowdown and tight credit market might adversely affect AIXTRON's customers and suppliers. In addition to the potential for reduced demand, AIXTRON customers might
delay or cancel orders and suppliers might delay or cancel deliveries, which could adversely affect AIXTRON's ability to align its capacity with its sales. These conditions might make it challenging
for AIXTRON to plan and adapt, which could adversely impact AIXTRON's results of operations.

In order to compete, AIXTRON must attract, retain and motivate key employees, and its failure to do so could have an adverse effect on its results of operations.

In order to compete, AIXTRON must attract, retain and motivate executives and other key employees, including those in managerial,
technical, sales, marketing and support positions. Hiring and retaining qualified executives, scientists, engineers, technical staff and sales representatives are critical to the Company's business,
and competition for experienced employees in the semiconductor industry can be intense. To attract, retain and motivate qualified employees, AIXTRON relies heavily on paying cash compensation at
market-competitive rates and offering additional incentives and bonus payments. If such cash payments cease to be viewed as a valuable benefit by the Company's key employees, the Company's ability to
attract, retain and motivate its employees could be adversely impacted, which could negatively affect its results of operations and/or require AIXTRON to increase the amount it expends on cash and
other forms of compensation.

AIXTRON depends on a limited number of customers that operate in highly concentrated industries.

AIXTRON's customer base is, has been and may in the future be highly concentrated. Orders from a relatively limited number of customers
have accounted for, and likely will continue to account for, a substantial portion of the Company's revenues, which may lead customers to demand pricing and other terms less favorable to the Company.
If a principal customer discontinues its relationship with AIXTRON or suffers economic setbacks, AIXTRON's business, financial condition and operating results could be materially and adversely
affected. AIXTRON's ability to increase
revenues in the future will depend in part upon its ability to obtain orders from new customers. AIXTRON cannot be certain that it will be able to do so. In addition, because a relatively small number
of large manufacturers, many of whom are AIXTRON's customers, dominate the industries in which they operate, it may be especially difficult for the Company to replace these customers if it loses their
business. A large portion of orders in AIXTRON's order backlog are orders from its principal customers. Furthermore, AIXTRON does not have long-term contracts with many of its customers.
As a result, the Company's agreements with its customers do not provide any assurance of future revenues and AIXTRON is exposed to competitive price pressure on most new orders it attempts to obtain.
The Company's failure to obtain new orders from new or existing customers would have a negative impact on its results of operations.

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AIXTRON's business operates in a highly competitive industry characterized by increasingly rapid technological changes, and if the Company does not develop new products in a
timely manner, it may not be able to compete successfully in this market.

The introduction of new products and technologies occurs at a continuously increasing pace and grows increasingly complex over time. If
AIXTRON's business does not develop and introduce new products and technologies in a timely manner in response to changing market conditions or customer requirements, its financial condition and
results of operations could be materially and adversely affected. AIXTRON's competitive advantage and future success depend on its ability to:



AIXTRON's competitors may have greater resources than AIXTRON, or may otherwise be better suited to compete in the Company's markets, and AIXTRON's failure to compete
successfully with these companies would seriously harm its business.

Some of AIXTRON's competitors have greater financial, engineering, manufacturing and marketing resources than the Company does. In
addition, AIXTRON faces competition from smaller emerging equipment companies whose strategy is to provide a portion of the products and services that the Company's semiconductor equipment business
offers, using innovative technology to sell products into specialized markets. New product introductions or enhancements by AIXTRON's competitors could cause a decline in revenues or loss of market
acceptance of its existing products. Increased competitive pressure could also lead to intensified price competition resulting in lower margins. The Company's failure to compete successfully with
these other companies would seriously harm its business.

AIXTRON faces lengthy sales and qualification cycles for its products and, in many cases, must invest a substantial amount of time and funds with no assurance that these
efforts or expenditures will result in revenues.

Revenues from AIXTRON's systems primarily depend upon the decision of a prospective customer to invest in or upgrade its manufacturing
capabilities, which typically involves a significant capital commitment by the customer. Customers usually place orders with AIXTRON between three to nine months, or longer, after the Company's
initial contact with them regarding a particular system. AIXTRON often experiences delays in obtaining system orders while customers evaluate and receive internal approvals for the purchase of these
systems. These delays may include the time necessary to plan, design or complete a new or expanded semiconductor fabrication facility. Due to these factors, the Company expends substantial funds as
well as marketing and management efforts to sell its semiconductor production systems. These expenditures and efforts may not result in revenues.

In
order to expand its materials production capabilities, the Company has dedicated a number of its systems to the manufacture of wafers and devices. At any given time, some of AIXTRON's
products are being tested to determine whether they meet customer or industry specifications. During such a qualification period, AIXTRON invests significant resources and dedicates substantial
production capacity to the manufacture of these new products, prior to any commitment to purchase by the prospective customer and without generating significant revenues from the qualification
process. If AIXTRON was unable to meet these specifications or does not receive sufficient customer orders to profitably use the dedicated production capacity, its business, financial condition,
results of operations and cash flows could be materially and adversely affected.

AIXTRON's
future budgets for operating expenses, capital expenditures, operating leases and service contracts are based upon the Company's assumptions as to the anticipated market
acceptance of its products. If AIXTRON's products do not meet the expected customer demand, the Company's
business, financial condition, results of operations and cash flows could be materially and adversely affected.

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AIXTRON's quarterly operating results fluctuate significantly, which may cause the market price of its ordinary shares and its ADSs to increase or decrease significantly.

AIXTRON has historically experienced significant fluctuations in its quarterly operating results and the Company anticipates that such
fluctuations will continue. AIXTRON's results may vary significantly depending on a number of factors, including:



In
addition, the Company derives a substantial portion of its revenues in any fiscal period from the sale of a relatively small number of high-priced systems. As a result,
the timing of recognition of revenue for a single transaction could have a material effect on total revenues and operating results for a particular reporting period. A delay of only a week or two can
often shift the related realization of revenues into the next quarter, which could adversely affect the Company's ability
to meet expectations. In addition, customers at times attempt to cancel or reschedule orders, even when not permitted to do so under the contractual terms of the purchase order.

As
stated above, AIXTRON has experienced long and unpredictable sales cycles. The timing of an order often depends on the capital expenditure budget cycle of customers. In addition, the
time it takes the Company to build a product to customer specifications, which the Company refers to as the build cycle, typically ranges from four to nine months, followed in certain cases by a
period of customer acceptance during which the customer evaluates the performance of AIXTRON's system and may potentially reject its system. As a result of the build cycle and evaluation periods, the
period between a customer's initial purchase decision and revenue recognition on an order often varies widely, and variations in length of this period can cause further fluctuations in operating
results.

The
factors described above, together with the cyclical nature of the semiconductor industry, could cause the market price of AIXTRON's ordinary shares and its ADSs to fluctuate
significantly.

AIXTRON's business is exposed to the risks of operating an international business.

AIXTRON's business has operations located in many countries throughout the world to support the Company's sales and services to the
global semiconductor industry. Managing international operations located in many countries throughout the world presents complex management challenges. These challenges may make it more difficult for
AIXTRON to implement business strategies and enforce centralized business processes and controls across its enterprise.

AIXTRON is highly dependent on international revenues, particularly revenues from Asian countries.

Revenues outside of Europe accounted for 93.3% of the Company's total revenues for the year ended December 31, 2008, versus
91.25% for the year ended December 31, 2007, and 87.05% of total revenues for the year ended December 31, 2006. Revenues from AIXTRON's Asian-based customers accounted for 86.8% for the
year ended December 31, 2008, versus 81.06% for the year ended December 31, 2007, and 78.76% of total revenues for the year ended December 31, 2006. AIXTRON anticipates that
international revenues, including revenues from Asia, will continue to account for a significant portion of its revenues. As a result, a significant portion of the Company's revenues will be subject
to risks, including:



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Wherever
currency devaluations occur abroad, AIXTRON's products become more expensive for its customers in that country. In addition, difficult economic conditions may limit capital
spending by the Company's customers. These circumstances may also affect the ability of AIXTRON's customers to meet their payment obligations, resulting in cancellations or deferrals of existing
orders and the limitation of additional orders.

Exchange rate fluctuations, in particular between the Euro, the US-Dollar and the pound sterling, could adversely affect AIXTRON's ability to price its products
competitively and its operating results.

The Company's operations are conducted by entities in many countries and a substantial portion of its sales and productions costs are
denominated in currencies other than the Euro. As a result, fluctuations between the value of the Euro and other major currencies, in particular the US-Dollar and the pound sterling, may
affect the Company's operating results. While AIXTRON has taken steps to reduce part of these currency exposures, including by entering into forward exchange contracts or options to hedge the exchange
rate risk arising on the export of equipment, AIXTRON is not able to completely eliminate the risk that fluctuations in foreign currencies will adversely affect its operating results.

Further
details can be found in "Item 11, Quantitative and Qualitative Disclosure about Market Risk."

Because AIXTRON's operating income is subject to taxation in differing jurisdiction, the Company is exposed to a number of different tax risks.

Because AIXTRON operates in a number of countries throughout the world, including the U.S., its operating income is subject to taxation
in differing jurisdictions and at differing tax rates. AIXTRON seeks to organize its affairs in a tax efficient and balanced manner, taking into account the applicable regulations of the jurisdictions
in which it operates. As a result of the Company's multi-jurisdictional operations, it is exposed to a number of different tax risks, including tax risks related to: income tax, value added tax,
payroll tax, social security tax, customs and excise duties, sales and use tax, U.S. state tax, withholding tax requirements, tax treaty interpretation, tax credits, permanent establishments, transfer
pricing on internal deliveries of goods and services (including benefit tests and requirements to prove the arm's length character of internal transactions), loss carry forwards, multi-jurisdictional
double taxation, acquisitions, dispositions, reorganizations, and internal restructurings.

The
tax authorities in the jurisdictions in which AIXTRON operates may audit the Company's tax returns and may disagree with the positions taken in those returns. An adverse outcome
resulting from any settlement or future examination of AIXTRON's tax returns may subject the Company to additional tax liabilities and may adversely affect its effective tax rate which could have a
material adverse effect on its financial position, results of operations and liquidity. In addition, any examination by the tax authorities could cause AIXTRON to incur significant legal expenses and
divert the Company's management's attention from the operation of its business.

AIXTRON is exposed to risks associated with acquisitions.

AIXTRON has in the past and may in the future undertake acquisitions of or significant investments in, other businesses with
complementary products, services or technologies. Acquisitions, or other significant investments, involve many risks, including:



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AIXTRON
may not be successful in addressing the risks that its past or future acquisitions may present and the Company may fail to realize the perceived benefits of such acquisitions.

AIXTRON is dependent on a limited number of suppliers and the Company's operating results could be harmed if it loses access to sources of materials or services.

The systems that AIXTRON produces are complex and require the Company to manufacture or obtain through third party sources many
critical components. Many of these components are only available from a limited number of suppliers or, in some cases, a single supplier. Because of the cost of AIXTRON's systems, the Company
generally aims to keep its inventories at minimum levels. Because AIXTRON often does not account for a significant part of its suppliers' business, the Company may not have access to sufficient
capacity from these suppliers in periods of high demand. In addition, AIXTRON risks having important suppliers terminate product lines, change business focus or even go out of business. If AIXTRON was
required to change any of its suppliers, it would be required to re-qualify each new supplier. In the near term, the Company's supplier qualification processes could prevent or delay
component shipments, which could in turn prevent the Company from delivering products to its customers in a timely manner. AIXTRON estimates that it could take approximately six to eighteen months to
replace suppliers of certain critical components used in its systems. In addition, in connection with third-party manufacturing activities, it is possible that AIXTRON may encounter unforeseen
technical complexities that it may be unable to resolve, or that the resolution of such complexities may lead to delays in the implementation of these third-party manufacturing activities.

Although
AIXTRON has not experienced any material delays related to its suppliers in the last three years, any such delays would have a negative impact on its customer acceptance, and
ultimately, to its ability to generate revenues. In addition, AIXTRON generally does not have long-term supply agreements with many of its suppliers. Consequently, the Company could
experience significant price increases and may not be able to obtain replacement components in a timely manner or at all. Such price increases would increase the cost of goods which could adversely
affect the Company's gross margins and operating results.

AIXTRON may increase production in anticipation of customer orders that may not materialize, which would negatively affect the Company's operating results.

AIXTRON schedules production of its systems based upon order backlog and customer commitments. Based on the complexity of the systems
that AIXTRON produces, the Company must expend considerable efforts in hiring, training and retaining qualified manufacturing personnel. AIXTRON has in the past experienced delays in customer delivery
schedules, as well as outright cancellations of orders. As a consequence, the Company may incur significant near term expenses for manufacturing capabilities that it may not be able to fully utilize,
which would negatively affect its gross margins and its profitability. Moreover, industry analysts evaluate AIXTRON's backlog in determining the Company's prospects. If AIXTRON experiences significant
reductions in its backlog as a result of cancellations or the Company's failure to obtain new orders, it could experience negative ratings from analysts which could adversely impact the trading value
of the Company's stock.

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The semiconductor industry and AIXTRON's operations are characterized by a high percentage of costs that are fixed or otherwise difficult to reduce in the
short-term, and by product demand that is highly variable and is subject to significant downturns that may adversely affect the Company's business, results of operations and financial
condition.

The semiconductor industry and AIXTRON's operations are characterized by high costs, such as those related to facility construction and
equipment, research and development, and employment and training of a highly skilled workforce, that are either fixed or difficult to reduce in the short-term. At the same time, demand for
the Company's products is highly variable and downturns have been experienced, often in connection with maturing product cycles and downturns in general economic market conditions. These downturns
have been characterized by reduced product demand, manufacturing overcapacity, high inventory levels and decreased average selling prices. The combination of these factors may cause AIXTRON's revenue,
gross margin, cash flow and profitability to vary significantly both in the short-term and over the long-term.

AIXTRON's businesses use potentially harmful chemicals and other hazardous materials. AIXTRON is subject to environmental risks and regulations which could harm the
Company's results of operations and financial condition.

The Company's research and development activities, as well as the manufacturing and demonstration of AIXTRON's products, involve the
use of potentially harmful chemical and other hazardous or potentially hazardous materials and radioactive compounds. AIXTRON cannot completely eliminate the risk of contamination or injury from the
use, storage, handling or disposal of these materials. In the event of contamination or injury, AIXTRON could be held liable for damages that result, and any liability could exceed the Company's
resources. AIXTRON is subject to the laws and regulations of numerous jurisdictions governing the use, storage, handling and disposal of these materials and specified waste products. The Company's
cost of compliance with these laws and regulations include local, state and federal fees and costs related to the installation and maintenance of safeguards to mitigate the risk of potential release
of hazardous materials (including equipment safeguards, such as scrubbers). The amounts expended in compliance with these laws and regulations to date have not had a material effect on the Company's
capital expenditures, earnings and competitive position. However, if stricter laws were passed or applicable environmental laws were more strictly enforced, AIXTRON may incur significant additional
capital expenditure to address compliance with such environmental laws and regulations.

Failure
or inability to comply with existing or future environmental regulations could result in significant remediation liabilities, the imposition of fines and/or the suspension or
termination of production, each of which could materially and adversely affect the Company's business, financial condition, results of operations and cash flows.

AIXTRON is exposed to the risk that third parties may violate the Company's proprietary rights or accuse the Company of infringing upon their proprietary rights.

AIXTRON's success in the markets in which it operates may depend on its ability to operate without infringing the intellectual property
rights of others and to prevent others from infringing the Company's intellectual property rights.

There
has been substantial litigation regarding patents and other intellectual property rights in the semiconductor industry. AIXTRON may become a party to patent litigation or
proceedings to determine its patent rights with respect to third parties, including, potentially, its customers. Interference proceedings may be necessary to establish which party was the first to
discover certain intellectual property. AIXTRON may also become involved in patent litigation against third parties to enforce the Company's patent rights, to invalidate patents held by third parties,
or to defend against similar claims by others. The cost to AIXTRON of any patent litigation or similar proceeding could be substantial, and it may require significant management time. Any patent
infringement litigation may also adversely affect the Company's ADS or ordinary share prices. If infringement litigation against the Company was resolved unfavorably, AIXTRON may be enjoined from
providing some of its products or services, or the Company may be required to obtain a license from a third party. AIXTRON may not be able to obtain the requisite license on commercially acceptable
terms at all, which could require the Company to cease selling systems that contain infringing technology until it can identify and implement subsystems that do not infringe on third party technology.
AIXTRON may not be successful

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in
developing non-infringing solutions and may be prevented from selling its systems, which could result in a significant reduction in the Company's revenues and a reduction in the value
of its ordinary shares and ADSs.

The Company's competitive position may depend on its ability to protect its intellectual property rights and trade secrets. If AIXTRON was unable to protect such rights and
secrets, other companies may be able to compete more effectively against it, and the Company's business could suffer.

AIXTRON's success is dependent upon the protection of the Company's proprietary rights. In the high-tech industry,
intellectual property is an important asset that is always at risk of infringement. AIXTRON incurs costs to file for patents and defend its intellectual property and AIXTRON relies upon the laws of
Germany and of foreign countries in which it develops, manufactures or sells its products to protect its proprietary rights. However, there can be no assurance that these proprietary rights will
provide competitive advantages, or that other parties will not challenge, invalidate or circumvent these rights. Moreover, the laws of some foreign countries may not be as protective of intellectual
property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Infringement upon the Company's proprietary rights by a third party
could result in lost market and revenue opportunities for AIXTRON.

AIXTRON
relies on trade secret protection for its confidential and proprietary information and procedures. AIXTRON currently protects this information and these procedures as trade
secrets through recognized practices, including confidentiality agreements with employees, consultants, collaborators and customers. These confidentiality agreements may be breached, however, and
AIXTRON may not have adequate remedies for any breach. In addition, these trade secrets may otherwise become known to, or be independently discovered by, competitors. If AIXTRON's trade secrets were
to become known to, or be independently discovered by, competitors, the Company's competitive position and its business may be negatively impacted.

Risks Relating to Holding AIXTRON's ADSs and Ordinary Shares

You may be unable to enforce a judgment against AIXTRON or members of its Executive Board or Supervisory Board.

AIXTRON is a stock corporation organized under the laws of the Federal Republic of Germany. None of the members of its Supervisory or
Executive Boards is currently a citizen or resident of the United States. Substantially all of the assets of these individuals and most of the assets of the Company are located outside the United
States. As a result, it may not be possible for you to enforce against AIXTRON judgments obtained in the United States. You may also encounter difficulties in connection with the enforcement in
Germany of liabilities based solely upon United States laws in original actions or in actions for the enforcement of judgments of United States courts.

You may have less access to information about AIXTRON and less opportunity to exercise your rights as a shareholder if you hold AIXTRON's ordinary shares through its ADSs.

The rights and terms of AIXTRON's ADSs are designed to replicate, to the extent reasonably practicable, the rights applicable to the
Company's ordinary shares, for which there is no active trading market in the United States. However, because of aspects of German law, the Company's Articles of Association and the contractual terms
of the deposit agreement under which AIXTRON's ADSs are issued, your rights as a holder of ADSs will differ in various ways from a shareholder's rights, and you may be affected in other ways,
including:



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As a holder of AIXTRON's ADSs you may have fewer or less well-defined shareholders' rights compared to a holder of common stock of a U.S. company.

AIXTRON's corporate affairs are governed by its Articles of Association (Satzung) and German law. German law is generally less specific
than U.S. law in terms of governance of corporate operations. Under German law, as a holder of AIXTRON's ADSs you may have fewer or less well-defined rights than you would as a shareholder
of a U.S. company. For example, a shareholder of a U.S. corporation may institute lawsuits on behalf of the corporation and class actions. In Germany the company must assert claims for damages against
members of the Executive Board or the Supervisory Board upon a respective shareholders' resolution requiring a simple majority of the votes cast. Moreover, in Germany, shareholders whose shares
represent 1% or a proportional amount of € 100,000 of the stated share capital of the stock corporation may apply in court for authorization to assert claims for damages
of the Company against members of the Executive Board and/or the Supervisory Board in their own name. However, the Company may at any time assert its claims for damages on its own behalf; in such case
any pending authorization or court proceeding initiated by a shareholder of the Company related to the same claims for damages will then be inadmissible. As a result, a shareholder of a German stock
corporation may not be able to protect his or her interest in the shares as well as a shareholder of a U.S. corporation could.

AIXTRON may in the future be considered a passive foreign investment company.

The United States Internal Revenue Code contains special rules relating to passive foreign investment companies ("PFICs"). A United
States holder who owns stock in a PFIC is generally subject to adverse tax consequences under these rules. These rules do not apply to non-United States holders. A company is treated as a
PFIC if at least 75% of the company's gross income for a taxable year consists of "passive income," defined generally as income from passive investments, as opposed to operating income. A company is
also treated as a PFIC if the average percentage of the value of its assets, including cash balances, that produce or are held for the
production of passive income is at least 50%. While AIXTRON believes it is currently not a PFIC, because a company's status as a PFIC is a complex, factual determination made on an annual basis, there
can be no assurance that the Company will not become a PFIC in the future. Further details about the PFIC rules and their consequences to United States holders can be found under "Item 10
Additional InformationTaxation."

If
AIXTRON was classified as a PFIC, unless a U.S. holder made a timely specific election, a special tax regime would apply to any "excess distribution," which would be such holder's
share of distributions in any year that are greater than 125% of the average annual distributions received by such holder in the three preceding years or such holder's holding period, if shorter; and
any gain realized on the sale or other disposition of the ADSs. Under this regime, any excess distribution and realized gain would be treated as ordinary income and would be subject to tax as if the
excess distribution or gain had been realized ratably over such holder's holding period for the ADSs. A U.S. holder will generally be required to pay taxes on the amount allocated to a year at the
highest marginal tax rate and pay interest on the prior year's taxes. Such U.S. holder may be able to ameliorate the tax consequences somewhat by making a mark-to-market
election or "QEF election", which is an election to have AIXTRON treated as a qualified electing fund for U.S. federal income tax purposes. You should consult your tax advisor of the consequences of
AIXTRON's classification as a PFIC.

Because AIXTRON is not obligated to continue to have its ADSs listed on the NASDAQ Global Select Market, your ability to trade the ADSs may be eliminated in the future, and
the market prices of the Company's ADSs and ordinary shares may be negatively affected and it may become more difficult to sell the ordinary shares.

Because AIXTRON is not obligated to continue to have the ADSs listed on the NASDAQ Global Select Market, AIXTRON could delist its ADSs,
which could adversely affect the market price for the ADSs and ordinary shares. In addition, if the ADSs are no longer listed on the NASDAQ Global Select Market, there can be no assurance that a
market will develop for the ADSs and it will be more difficult for a United States holder to sell the underlying ordinary shares outside the United States.

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Identification of deficiencies or weaknesses in AIXTRON's internal control over financial reporting may have an adverse impact on the Company's financial condition and
results of operations and the trading price of its securities.

The Company's management is required to prepare a report relating to its evaluation of the Company's internal control over financial
reporting, as required pursuant to Section 404 of the U.S. Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). AIXTRON intends to take prompt measures to eliminate any identified
deficiencies or weaknesses in the Company's internal control structure. Such measures may involve significant effort and expense. Depending on the nature
and extent of any identified deficiency or weakness, AIXTRON could be required to restate previously issued financial statements. Any of such actions may have an adverse impact on the Company's
financial condition and results of operations and the trading price of its securities.

Item 4:    Information on the Company

A.    History and Development of the Company

Introduction

AIXTRON Aktiengesellschaft was incorporated as a German limited liability corporation in 1983 and converted to a stock corporation
under the laws of the Federal Republic of Germany in 1997. AIXTRON is headquartered in Aachen, Germany and has wholly-owned subsidiaries in Germany, the United Kingdom, Japan, South Korea, Sweden,
Taiwan and the United States. AIXTRON's principal executive office is located at Kackertstrasse 15-17, D-52072 Aachen, Germany, and the Company's telephone number there is
+49-241-8909-0.

Important Events

AIXTRON AG converts to registered shares

AIXTRON converted its entire 90,894,616 stock of bearer shares into registered shares, as of September 22, 2008. This will
facilitate a more direct communication with AIXTRON shareholders. The Company believes that a more transparent shareholder structure and the potential cost savings are to the long-term
benefit of AIXTRON shareholders.

Acquisition of Nanoinstruments, Ltd.

On October 4, 2007 AIXTRON Ltd, Cambridge United Kingdom, acquired 100% of the issued share capital of
Nanoinstruments Ltd., a private limited company based in Cambridge, United Kingdom. The consideration was initial payments of € 860 thousand and further
payments of up to € 2,578 thousand depending on the level of future sales up to December 31, 2011. Nanoinstruments Ltd. manufactures PECVD equipment
for the production of carbon nanotubes and nanowires.

Acquisition of Genus

On March 15, 2005, AIXTRON acquired Genus, a supplier of chemical vapor deposition ("CVD") and atomic layer deposition ("ALD")
technologies, which are required in the production of advanced semiconductors and hard disk drives. Genus changed its name to AIXTRON, Inc. in May 2006, although it continues to trade under the
name "Genus."

For
information regarding amendments to AIXTRON's Articles of Association, refer to Item 10.B. "Additional InformationMemorandum and Articles and Association" in this
report.

Capital Expenditures

The AIXTRON Group's capital expenditures of fiscal year 2008 amounted to € 12.9 million, compared
to € 8.1 million in 2007 (2006: € 2.4 million), of which € 11.6 million were related to
purchases of technical equipment (including testing and laboratory equipment) and € 1.3 million were related to intangible assets. Additionally, a reduction of bank
deposits totaling € 1.8 million with a maturity of at least three months is recorded in fiscal year 2008 as cash inflow from investing activities (2007 and 2006:
cash outflows of € 2.1 million and € 2.8 million, respectively). All of the expenditures were funded out of operating cash flow
and available cash resources.

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B.    Business Overview

Business Model

AIXTRON is a leading provider of deposition equipment to the semiconductor industry. The Company's technology solutions are used by a
diverse range of customers worldwide to build advanced components for electronic and opto-electronic applications based on compound, silicon, or organic semiconductor materials. Such
components are used in displays, signaling, lighting, fiber optic communication systems, wireless and mobile telephony applications, optical and electronic storage devices, computing, as well as a
range of other leading-edge technologies.

AIXTRON's
business activities include developing, producing and installing equipment for coating semiconductor materials, process engineering, consulting and training, including ongoing
customer support.

Demand
for AIXTRON's products is driven by the sustained miniaturization, increased processing speed, improved efficiency, and reduced cost of ownership demands for current and emerging
microelectronic and optoelectronic components. The ability of AIXTRON's products to precisely deposit thin material films and the ability to control critical surface dimensions in these components,
enables manufacturers to improve performance, yield and quality in the fabrication of advanced microelectronic and optoelectronic devices.

AIXTRON
supplies to customers both full production-scale chemical vapor deposition systems and small scale systems for research and development use and small-scale production use.

Environmental
protection and the responsible use of resources are an essential part of AIXTRON's business strategy. The Company's engineers work diligently to continuously improve
AIXTRON's systems, both in terms of resource conservation and environmentally-friendly design and function.

For
more information regarding potential factors that could adversely affect the described Company's business activities, model and strategy going forward, refer to Item 3.D. "Key
InformationRisk Factors" in this report.

Employees

AIXTRON's employees are recruited on the basis of professional and personal qualifications. Each employee's opportunities for
participation and promotion are based on personal success as well as individual qualifications and abilities.

The
Company's training center offers a number of training classes, ranging from new hire induction classes to continuous education, with topics ranging from quality assurance to
environmental and workplace safety management, leadership, and labor law issues. Additionally, AIXTRON supports internships and students in the writing of their diploma and doctoral theses on topics
of relevance to AIXTRON.

Due
to increasing business activity, the total number of employees increased in the last three years from 566 employees at the end of 2006 by 8% to 609 and then by another 2% to 619
people at the end of 2008.

2008*

2007

2006

2008-2007Employees by Function

Dec 31,

%

Dec 31,

%

Dec 31,

%

abs.

%Sales and Service


187


30
%

186


31
%

181


32
%

1


1
%Research and Development


218


35
%

210


34
%

183


32
%

8


4
%Manufacturing


131


21
%

139


23
%

128


23
%

(8
)

(6
)%Administration


83


13
%

74


12
%

74


13
%

9


12
%Total


619


100
%

609


100
%

566


100
%

10


2
%


---

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As of December 31, 2008, the majority of AIXTRON's worldwide employees were based in Europe and the largest group was employed in R&D and
Engineering positions.

2008*

2007

2006

2008-2007Employees by Region

Dec 31,

%

Dec 31,

%

Dec 31,

%

abs.

%Asia


84


14
%

79


13
%

73


13
%

5


6
%Europe


428


69
%

401


66
%

364


64
%

27


7
%USA


107


17
%

129


21
%

129


23
%

(22
)

(17
)%Total


619


100
%

609


100
%

566


100
%

10


2
%


---

Technology, Products and Services

AIXTRON is a leading provider of deposition equipment to the semiconductor industry. The Company's technology solutions are used by a
diverse range of customers worldwide to build advanced components for electronic and opto-electronic applications based on compound, silicon, or organic semiconductor materials. Such
components are used in displays, signaling, lighting, fiber optic communication systems, wireless and mobile telephony applications, optical and electronic storage devices, computing, as well as a
range of other leading-edge technologies.

AIXTRON's
product range includes customized production and research scale compound semiconductor systems capable of depositing material films on up to
95 × two-inch diameter wafers per single production run, or smaller multiples of 4 to 6 inch diameter wafers, employing Metal-Organic Chemical Vapor Deposition
("MOCVD") or organic thin film deposition on up to Gen. 3.5 substrates, including Polymer Vapor Phase Deposition ("PVPD") or Organic Vapor Phase Deposition ("OVPD®") for Organic Light
Emitting Diodes ("OLED") applications or Plasma Enhanced Chemical Vapor Phase Deposition ("PECVD") for depositing complex Carbon Nanostructures (Carbon Nanotubes or Nanowires).

AIXTRON
also manufactures full production and research scale deposition systems for silicon semiconductor market applications capable of depositing material films on wafers of up to 300
mm diameter, employing technologies such as: Chemical Vapor Deposition ("CVD"), Atomic Vapor Deposition ("AVD®") and Atomic Layer Deposition ("ALD").

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The following table summarizes the systems technologies AIXTRON offers to its customers:

Material

Compound
Semiconductors

Organic Semiconductors

Silicon SemiconductorsSystems Technology

MOCVD

OVPD®

CVDCVD

PVPD

ALDPECVD



AVD®Hydride Vapor Phase Epitaxie ("HVPE")Systems

Planetary Reactor®: 200 series, G3, G4

Gen1 R&D Tool

Lynx CVDClose Coupled Showerhead®: CCS, CRIUS®

Gen2 Production Tool

Tricent® ALDNano CVD Reactors; 'Black Magic Series'

Gen 3.5 Production Tool

Tricent® AVD®Hot-Wall Reactors: VPseriesPotential Applications/Devices

Light Emitting Diodes ("LEDs") for lighting, signaling, and outdoor giant screens

OLEDs for displays

Metal and Oxide films for CMOS gate stacksOptoelectronics (photo diodes, lasers, modulators for Telecom/Datacom)

OLEDs for solid state lighting

Metal and Oxide films for capacitor structures in DRAMs and FeRAMSLaser devices for consumer electronics (CDs, DVDs)

Organic transparent thin film solar cells

TFHThin Film Heads for data storage hard disk drivesHigh-Frequency devices (such as Hetero Bipolar Transistors and High Electron Mobility Transistors) for wireless datacom applications

Electronic semiconductor structures for flexible displays and Radio Frequency Identification DevicesSilicon Carbide ("SiC") based High Power DevicesSolar cellsCarbon Nanotubes: Structures for electronic, display & heat sink applications


AIXTRON offers a comprehensive range of peripheral equipment and services, including products capable of monitoring the concentration of gases in
the air and for cleaning the exhaust gas from metal organic chemical vapor deposition processes. AIXTRON's Global Service Organization ("GSO") provides a full range of customer services, from the
initial support of the customized development of an AIXTRON system through to the final installation and ongoing training and operational support of

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a
system. The Company also assists its customers in designing the production layouts of tubing and switching devices for the gas supply to thin film deposition systems.

Research and Development

As a high-technology company, AIXTRON maintains a strong Research and Development ("R&D") infrastructure, with significant
resources devoted to R&D projects. AIXTRON's R&D activities are critical for the Company's long-term strategy to maintain its position as one of the world's leading provider of deposition
equipment for the manufacturing of complex device structures for the semiconductor industry. In 2008, AIXTRON spent € 28.3 million on Research and Development,
compared to € 26.5 million in 2007 (2006: € 23.9 million). For more information regarding R&D expenses, refer to Item 5.A
"Operating ResultsDevelopment of ResultsResearch and Development Costs" in this report.

AIXTRON
maintains and upgrades its own R&D laboratories in Aachen and Herzogenrath in Germany and in Sunnyvale, California. These in-house laboratories are equipped with
AIXTRON systems for researching new equipment and processes for the production of semiconductor materials. The development process is supported by simulation techniques, which are important tools to
reduce material and energy-intensive manufacturing and testing processes as well as reducing natural resource consumption to a minimum.

AIXTRON's
R&D organization works closely with its own global sales and service organization to develop systems, tailored to customers' individual needs. Moreover, AIXTRON regularly
collaborates with many well-known universities and research centers worldwide and participates in numerous publicly-funded development projects.

The
following are examples of such projects:

APOLLON

The EU-funded photovoltaic project "APOLLON" aims at the improvement of concentrator solar cells (i.e. increased
efficiency, reliability, reduced cost and environmental impact), to prepare the industry for cost-effective mass production. The project consortium consists of partners from the energy
industry, end users, small- and medium-sized companies and research centers. AIXTRON is expected to improve its equipment and processes such that concentrating III-V based cell efficiency
can be made more commercially competitive.

DECISIF

Within the pan-European research program MEDEA+-approved, German government-funded research project, titled "DECISIF", new
transistor concepts are expected to be developed, delivering innovative switching elements for high-performance, next-generation micro-processors. The joint research project
has been initiated as collaboration between a global micro-processor manufacturer (AMD), a producer of silicon-wafers (Siltronic), AIXTRON, and two renowned German research institutes. AIXTRON's
AVD/CVD cluster-tool is a key element in the targeted device improvement, and the project will support AIXTRON's activity in the optimization of new oxide material applications for silicon
circuits.

MAXCAPS

AIXTRON is also part of the pan-European MEDEA+ consortium, which aims to develop new materials for next generation
capacitors and memories in the "MAXCAPS" project. The main goal of such project in the capacitors field is to increase the capacitance per surface area with very low leakage currents and excellent
high frequency linearity and therefore enable integration of currently discrete components into a single chip. In the memory field DRAM structures and new Phase Change RAM ("PCRAM") materials will be
evaluated. Through such project, AIXTRON is expected to improve its AVD equipment with respect to process stability, yield, low cost of ownership and reliability. The accomplishments under such
project will directly strengthen AIXTRON's position as a leading manufacturer of AVD/CVD equipment.

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OLED 2015

The OLED 2015 program, funded by the German government, supports the development of OLEDs for lighting applications. As part of the
OLED 2015 initiative, AIXTRON participated in the Organic Phosphorescent lights for Applications in the Lighting market 2008 project (OPAL 2008) project with the Company's OVPD® technology
platform. The goal of OPAL 2008 is to develop an OLED production technology capable of manufacturing a high performance white OLED device at a target cost of a few euro cents per cm2.

ULTRAGAN

Since August 2005, AIXTRON had participated in the EU-funded "ULTRAGAN" project which successfully ended in October 2008.
Such project aimed to explore new heterostructures using InAlN/(In)GaN alloys for Ultra-high Power Microwave Transistors, replacing conventional AlGaN/GaN heterostructures. Next generation
wireless network base stations, satellite communication systems and compact digital radar are just a few examples where those devices can improve the efficiency of amplifiers. Within the framework of
ULTRAGAN, AIXTRON worked on the process development for the advanced heterostructures as well as on the optimization of the MOCVD equipment for this new material combination, aimed at offering
optimized equipment and process know-how when the first InAlN/GaN-based products are launched in the high power electronics market sector.

Intellectual Property

AIXTRON's success depends in part on its proprietary technology. AIXTRON secures its technology by patenting inventions and
know-how, provided it is strategically expedient for the Company to do so. As of December 31, 2008, 128 patent-protected inventions were in use, of which 8 were registered in the
reporting period. Patent protection for these inventions applies in the sales markets relevant for AIXTRON and at its main competitors' production locations, specifically in Europe, Japan, South
Korea, Taiwan and the United States. These patents are maintained and renewed annually and will expire between 2009 and 2028.

AIXTRON
also has exclusive and non-exclusive licenses to patents owned by others covering certain AIXTRON's products, as well as SAP Software licenses.

AIXTRON
is the licensee of certain patents owned by Centre National de la Recherche Scientifique and Universal Display Corporation which are critical to the Company's operations in the
fields of AVD and OVPD. Under the terms of those licenses, AIXTRON sells epitaxial reactors that manage the layering of complex materials, produced by thin film deposition processes that enable the
high precision liquid injection, evaporation and gas phase deposition of metal organic materials required to produce photoelectric and electronic devices. Similar principles are employed in the design
of Organic Vapor Phase Deposition equipment for use in the manufacture of organic light emitting devices. Management finds it impractical to quantify the portion of revenues attributable to products
that incorporate the technology governed by these agreements because all product sales can be aggregated into one group based upon the common technology.

Manufacturing

AIXTRON is principally involved in the final assembly stage of the production process followed by the final equipment configuration,
tuning and testing processes. The Company purchases all of the components and assemblies required to manufacture the equipment from third-party suppliers. AIXTRON's contractors and suppliers are
selected and qualified to be able to source, supply and/or partially assemble individual equipment parts and assemblies. There are typically several suppliers for each AIXTRON equipment
component/assembly. AIXTRON anticipates continued reliance upon third party suppliers and focus its internal manufacturing efforts on the final assembly and test procedures to ensure the highest
quality standards.

Since
1994, AIXTRON has, each year, been awarded unlimited ISO-9001 certification. In December 2003, the process-oriented management system was successfully certified and
subsequently audited in accordance with worldwide quality standard DIN EN ISO 9001:2000. For compliance with customer requirements and specifications, the Company works together with a series
of independent certification companies, such as "TÜV" in Germany or "UL" or "ETL" in the USA.

18

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Marketing Channels

The Company markets and sells its products worldwide, principally through its direct sales organization and appointed dealers and sales
and service representatives. The relationships with these appointed sales and service representatives are generally terminable at the Company's will. These arrangements typically require that AIXTRON
reimburse the representatives for their business expenses as well as pay specified service rates or sales commissions, which vary by geographic region.

Customers and Principal Markets

Our semiconductor market customers are principally, but not exclusively, focused on device manufacturing of LEDs, wireless,
optoelectronics, and data storage components. Some of these are vertically integrated device manufacturers who serve the entire value chain down to the end consumer (Samsung, as an example). Others
(Epistar, as an example) are independent
component suppliers who deliver the chips and components produced on AIXTRON equipment to the next link in the value chain, namely; the electronic device manufacturers (Nokia, as an example). Our
customers also include research centers and universities. Most of the world's leading electronic device manufacturers produce in Asia. Consequently, the majority of our sales continue to be delivered
into this region.

For
more information regarding a breakdown of revenues by technology and region for each of the last three fiscal years, refer to Item 5.A. "Operating and Financial Review and
ProspectsOperating ResultsDevelopment of Revenues" in this report.

Seasonality

AIXTRON's business is currently not materially affected by seasonality.

Competitive Positioning

AIXTRON's main competitor in MOCVD applications is the process equipment division of Veeco Instruments, Inc. (USA). AIXTRON also
competes with a number of Asian manufacturers, including Taiyo Nippon Sanso (Japan).

Based
on market research by VLSI Research, Inc. ("VLSI") it is estimated that the share of the MOCVD equipment market (estimated 2007 total market value: USD 289m) held by
AIXTRON in 2007 was around 70%. The Company's strongest competitor in terms of sales, Veeco Instruments, Inc., had an estimated market share of approximately 18% for the same period. The
Company anticipates a similar 2008 market share position in the global MOCVD market, when next reported for 2008.

For
Organic Semiconductor applications, AIXTRON competes with established manufacturers such as Ulvac, Inc. (Japan), Tokki Corporation (Japan), Sumitomo (Japan), Applied
Materials, Inc. (USA), Doosan DND Co., Ltd. (South Korea), Sunic System (South Korea) and a number of smaller other companies. While these competitors use established vacuum
thermal evaporation ("VTE") technology and polymer technology to produce organic light emitting diodes (OLEDs), AIXTRON offers to OLED manufacturers its own highly innovative organic vapor phase
deposition (OVPD®) and large area deposition technologies. In AIXTRON's opinion, due to the superior process technology and the potential for reducing manufacturing costs,
OVPD® technology has the potential to compete successfully with VTE and polymer technologies. AIXTRON is potentially well positioned as a key system supplier for next generation of OLEDs
and large area deposition applications, that are anticipated to be used in innovative, self-luminous displays with the potential in the future to replace current display technologies such
as liquid crystal displays (LCDs) and plasma displays (PDPs) in addition to future potential lighting, solar cells, and electronic OLED applications.

As
AIXTRON and customer applications are still in the market entry phase, AIXTRON market share information is neither available nor meaningful at this point in time.

For
CVD, AVD® and ALD applications, AIXTRON competes with a variety of other equipment companies, including Applied Materials, Inc. (USA), Tokyo Electron, Ltd.
(Japan), ASM International N.V. (Netherlands), Veeco Instruments, Inc. (USA), IPS Technology (South Korea), Jusung Engineering Co., Ltd. (South Korea), Aviza
Technology, Inc. (USA) and Hitachi Kokusai Electric Co., Ltd (Japan). With the Company's currently available silicon semiconductor manufacturing technologies, AIXTRON is
potentially well positioned for the adoption of sub 45 nm memory and logic integrated circuits (ICs). These technologies enable extremely high precision in depositing very thin

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material
layers and facilitate the consistent coating of complex three-dimensional microelectronic device structures. These technologies offer the semiconductor industry new material coating
possibilities for the next generation of computer chips and devices, and, in AIXTRON's opinion, present high development potential for the future.

Based
on market research by VLSI it is estimated that in 2007 AIXTRON held a single digit share in the developing ALD systems market (total 2007 market value:
USD 236 million), and an approximate 62% share of the market for tungsten silicide CVD systems specifically sold to DRAM and NAND Flash memory chip manufactures (total 2007 market value:
USD 84 million). In line with all capital equipment companies serving the memory device market, AIXTRON has experienced a significant decrease in orders and revenues from its memory
customers in 2008.

Key Performance Indicators

The Executive Board has implemented numerous systems and procedures to manage, monitor, analyze, and document Company risks and
opportunities, including a Key Performance Indicator (KPI) system addressing all business areas. In 2008, the areas "Market", "Finance" and "Technology Development" were the most prominent control
areas AIXTRON's Executive Board was focused on.

In
the "Market" control area, using third party reports and direct customer dialogue, AIXTRON is continuing to pursue a market-led product development strategy through the
careful examination of market trends and customer requirements. Our latest common platform high capacity compound systems were available for sale twelve months before our largest competitor.

In
the "Finance" control area, the Executive Board uses a range of internal and external key performance indicators, most importantly: total sales revenue, contribution margins, net
result data and cash flow. Due to the favorable market conditions, total 2008 sales revenues increased year on year and an improved net income performance was reported despite a continuation of the US
dollar weakness on average in 2008 against the Euro currency.

In
the "Technology Development" control area, the Executive Board uses a range of internal and external key performance indicators, including: total sales revenue, net result data
arising from new AIXTRON products launched, R&D expenditure in comparison to Sales Revenue and the Management regularly reviews project progress against target timelines and objectives. AIXTRON's
latest Compound Common Platform systems made up 88% of compound system orders and 80% of compound system revenues during 2008.

Government Regulation

Due to the nature of AIXTRON's products, the shipment of some products to customers in certain countries requires the Company to obtain
an export license from legal and statutory authorities in the US, Germany, U.K. and Sweden, including, for example, the Department of State and the Department of Commerce in the U.S., the Bundesamt
für Wirtschaft und Ausfuhrkontrolle ("BAFA") in Germany, and the Department of Trade and Industry in the U.K.

Research
and development activities, as well as the manufacturing and demonstration of the Company's products involve the use of potentially harmful chemical and hazardous materials and
radioactive compounds and as a result, AIXTRON is subject to environmental and safety regulations in connection with its business operations.

Because
AIXTRON's securities are publicly traded in the US, the Company is also subject to the rules and regulations promulgated by the SEC, including those promulgated under the
Sarbanes Oxley Act of 2002. In addition, AIXTRON is subject to the provisions of the US Foreign Corrupt Practices Act relating to the maintenance of books and records and anti-bribery.

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C.    Organizational Structure

The table below shows a list of the significant AIXTRON-subsidiaries as of December 31, 2008:

Name

Jurisdiction of
Incorporation

Ownership
InterestAIXTRON Ltd.*

England and Wales


100
%AIXTRON AB**

Sweden


100
%AIXTRON Korea Co. Ltd.

South Korea


100
%AIXTRON KK

Japan


100
%AIXTRON Taiwan Co. Ltd.

Taiwan


100
%AIXTRON, Inc.***

USA


100
%Genus Trust****

USA


n.a.


---

D.    Property, Plant and Equipment

The Company's registered office is located in Aachen, Germany, and had a total of 10 facilities worldwide, owned or rented, as of
December 31, 2008:

Facility location

Use

Approx. size

Lease expiry(as of December 31, 2008)

(sq. m.)Aachen, Germany (owned)

Research and Development


7,260


*Herzogenrath, Germany (owned)

Manufacturing, Sales and Service, Engineering, Research and Development


12,457


*Herzogenrath, Germany (leased)

Headquarters, Administration and Sales


2,419


31-Jul-2011Cambridge, UK (leased)

Manufacturing, Sales and Service, Engineering


2,180


13-Sep-2014Lund, Sweden (leased)

Engineering, Service


449


31-Dec-2011Sunnyvale, CA, USA (leased)

Manufacturing, Sales and Service, Engineering, Research and Development


9,300


31-Dec-2012Seoul, South Korea (leased)

Sales and Service


1,032


31-Aug-2010Shanghai, China (leased)

Representative Office


492


30-Jun-2013Hsinchu, Taiwan (leased)

Sales and Service


1,418


31-Dec-2011Tokyo, Japan (leased)

Sales and Service


311


31-Mar-2010


---

Agreement was reached in 2008 to sell the company facility in Aachen to the State of North Rhine-Westphalia, for the use by the University of
Aachen ("RWTH"). The sale was completed in January 2009 at a selling price marginally above book-value. AIXTRON will retain a small research laboratory within the facility and therefore
will continue its successful cooperation with the RWTH. The administrative headquarters and sales functions had already been relocated from the Aachen facility to the leased facility in Herzogenrath
in December 2008. The proposed official transfer of the company's registered seat to the leased facility in Herzogenrath will be submitted to the Annual General Meeting in May 2009 for approval.

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Environmental Issues

The research and development activities, as well as the manufacturing and demonstration of AIXTRON's products conducted in some of its
facilities, involve the use of potentially harmful chemical and other hazardous or potentially hazardous materials and radioactive compounds. Failure or inability to comply with existing or future
environmental regulations could result in significant remediation liabilities, the imposition of fines and/or the suspension or termination of production.

Environmental
protection and the responsible use of resources are an essential part of AIXTRON's business strategy. The Company's engineers work diligently to continuously improve
AIXTRON's systems, both in terms of resource conservation and environmentally-friendly design and function. The development process is supported by simulation techniques, which are important tools to
reduce material and energy-intensive manufacturing and testing processes as well as reducing natural resource consumption to a minimum.

Item 4A:    Unresolved Staff Comments

None.

Item 5:    Operating and Financial Review and Prospects

Global Economy

Prior events in the global financial markets have played a pivotal role in shaping the state of the global economy in 2008: what in
summer 2007 appeared to be a problem
limited to the US subprime loans sector, quickly spread across all other credit segments and the broader financial markets, to the point where large parts of the global financial system stopped
functioning effectively. Severely impaired financial markets have also had a detrimental effect on real economies worldwide, and most developed economies have now slipped into recession.

Consequently,
central bankers around the globe reduced interest rates to historically low levels. Authorities have also recently started to pump hundreds of billions into ailing banks
and financial markets, and into some segments of the real economy.

Currency
markets experienced considerable swings. In particular, the US-Dollar/Euro exchange rate displayed significant volatility during 2008. In the first half of the year,
while markets initially hoped that the rest of the world could avoid most of the US' problems, the US-Dollar continued to depreciate against the Euro. The US-Dollar then
appreciated strongly during the second half of the year, when it became apparent that the economic downturn would be both severe in scale and global in scope, driven mainly by the perception that the
US-Dollar is a safer risk harbor in difficult times. The currency pared some of its gains in the final weeks of the year, but the US-Dollar still appreciated 4.68% during 2008
overall. However, the currency still ended the year weaker on average against 2007: the 2008 average exchange rate against the Euro was USD 1.47, more than 7% lower than the USD 1.37
average of 2007.

The Semiconductor Equipment Market

While world real gross domestic product still grew by an estimated 3.4%* in 2008 and growth in the electronics equipment industry was
1.8%*, semiconductor industry revenues declined by an estimated 4.4%*. Spending on Wafer Front End equipment (WFE), which includes spending on deposition tools supplied by AIXTRON, decreased year on
year, by an estimated 30.9%*.

---

In contrast to this general industry trend, AIXTRON revenues actually increased year over year by 28% in 2008 principally due to a growing
investment in AIXTRON MOCVD equipment, driven by the increasing adoption of LEDs used in lighting and backlight units for LCD displays. However, after the significant capacity investments made by the
LED-manufacturers in late 2007 and early 2008, new orders for compound semiconductor equipment have been declining throughout 2008; in line with the predicted down-cycle in
LED-equipment demand. The 2008
capital spending for silicon semiconductor equipment remains very restricted due to the continuously increasing pricing pressure on silicon semiconductors, especially for memory devices used in
electronic consumer applications, driven by production over-capacity at the current technology nodes.

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Despite
the current phasing of the previously predicted MOCVD equipment investment cycle of LED manufacturers and the suppressed silicon semiconductor capital spending, coupled with a
protracted slowdown in consumer and corporate spending worldwide, the fundamental outlook of the semiconductor equipment industry remains positive in the mid to long-term. There is a
significant potential for long term growth, enabling economic and environmental benefits for generations of consumers to come. None of the current difficulties, the semiconductor industry has had to
face recently, deters AIXTRON from remaining focused on being a primary global market provider of high-quality deposition equipment. Once the markets start to recover, AIXTRON should
continue to be in the very strong position of benefitting directly from the positive long term outlook.

AIXTRON-specific Factors

Full-year guidance fulfilled despite difficult market conditions

With € 274.4 million of revenues, representing the strongest revenue performance in AIXTRON'S
25-year history, and with an improved operating result relative to revenues ratio of 12%, the Company was able to deliver within the range of the original full-year 2008
guidance. With the benefits of more profitable new products and an extremely cost-effective organization, which does not depend on any of the available cash bank credit lines, the Company
was able to avoid the worst effects of the predicted down-cycle in LED equipment demand, the severe over-capacity in the silicon industry, the turbulent financial market
conditions, the global recession, and the negative currency headwinds. Although 2009 will be even more challenging, we expect that the order backlog figure of
€ 105.0 million as of December 31, 2008, combined with the anticipated order intake and a highly flexible operations facility will enable efficient labor
utilization and manufacturing output, despite a projected reduction in revenue in 2009.

US-Dollar/Eurorevenue/cost balance

A weaker average US-Dollar/Euro exchange rate as described in "Global Economy" above had a negative currency effect on the
AIXTRON 2008 operating results, as over 70% of the Company's sales revenue was generated in US-Dollars while more than 70% of the costs were incurred in Euros. However, due to the use of
derivative financial instruments (governed by internal policies and principles on foreign exchange rate risk), improved cost-management, and more profitable new products, the positive
earnings margin development was not impaired.

88% penetration of higher margin common platform systems

In 2008, the percentage of the latest generation common platform system orders grew to approximately 88% of the total compound
semiconductor system orders received (2007: 72%). The positive margin effect of increased sales of these latest generation systems helped to partially offset the negative effect of the weaker average
USD/EUR-exchange rate experienced in 2008. The rapid market adoption of these high capacity MOCVD systems has been sustained by long-term purchase orders from important LED
market-players such as Epistar, Samsung and many other prominent AIXTRON-customers.

More new LED backlit products

During 2008, several manufacturers launched new LED backlit LCD devices: Samsung, Philips, Toshiba, Fujitsu, Sony and Apple are only
some of the major producers who contributed to the increasing penetration rate of LEDs in products such as laptops, monitors and TVs. As an example; the 2008 penetration of LEDs in laptop computers is
estimated to have reached about 10%, with strong expected market volume growth and penetration rates over the next 3-5 years. AIXTRON deposition systems sold to manufacture LEDs
represented 84% (or € 206.6 million) of AIXTRON's equipment revenues versus 61% (or € 113.4 million) in 2007), growing by 82% in
2008 and reflecting the increasing adoption of LED technology.

EU phases out incandescent lighting

In December 2008, the EU followed initiatives already taken in the US, Australia and other countries and approved a proposed
EU-wide phase-out of incandescent light bulbs starting in 2009. Switching to more energy-efficient lighting such as fluorescent bulbs, halogen or LED lights will help to reduce
domestic energy consumption and prevent CO2 pollution in the future. We believe that

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AIXTRON
will profit from this trend in the longer term, when LED solid-state lighting becomes more extensively used globally.

Low order intake for silicon equipment mirrors depressed memory market conditions

As previously predicted, with the current severe over-capacity in the memory market, the order intake for AIXTRON silicon
deposition equipment decreased in 2008 to only 5% of total order intake, due to the very restricted capital spending of AIXTRON's principal NAND flash memory and DRAM production customers. AIXTRON is
currently discussing with key customers a new system technology, developed over the past three years, aimed at next-generation devices for both the memory and the logic market. The initial
response from customers has been positive.

AIXTRON AG converts to registered shares

To facilitate more direct communication with AIXTRON shareholders, AIXTRON converted its entire 90,894,616 stock of bearer shares into
registered shares, as of September 22, 2008. This conversion was approved by the Annual Shareholders' Meeting on May 14, 2008. The Company believes that a more transparent shareholder
structure and the potential cost savings is to the long-term benefit of AIXTRON shareholders.

Management Assessment of Company Situation

Despite the many negative events in the global financial system, AIXTRON's Management can reflect on a very good business performance
in 2008, from which the
Company emerges stronger strategically, operationally and financially. Therefore, although 2009 will be a difficult year for the whole semiconductor industry, we believe that AIXTRON is better
prepared than most of our competitors: We are the industry's technology and market leader, we have a close and mutually beneficial relationship with our customers and we are generating good margins
and profitability for our shareholders. Our balance sheet is stronger than ever and without bank borrowings amid unprecedented economic and financial turmoil worldwide. As a result, AIXTRON's
Management is looking to the future with confidence, and regards 2009 as a challenging year with equal levels of opportunity.

A.    Operating Results

You should read the following operating and financial review of AIXTRON's results of operations and financial condition together with
AIXTRON's Consolidated Financial Statements prepared in accordance with IFRS included elsewhere in this report.

The
following discussions include "forward-looking statements" that involve risks and uncertainties that are discussed more fully in "Risk Factors" and "Forward-looking statements
notice" included in this annual report. Actual results could differ materially from future results expressed or implied by the forward-looking statements.

Development of Revenues

In fiscal year 2008, AIXTRON recorded revenues of € 274.4 million, an increase of
€ 59.6 million, or 28%, compared to € 214.8 million in 2007 (2006: € 171.7 million). This
has been achieved despite a weaker average US-Dollar/Euro exchange rate, the general slowdown in semiconductor equipment spending, and the effects of the global recession and the credit
crisis.

The
increase in revenues was largely driven by increasing sales of our compound semiconductor deposition equipment, predominantly for the production of LEDs
(€ 235.7 million in 2008; € 145.2 million in 2007; € 97.0 million in 2006). Revenues from
silicon semiconductor deposition equipment, NAND-Flash and DRAM-production systems, decreased in 2008 to € 11.6 million
(€ 41.7 million in 2007; € 46.1 million in 2006). This is the result of the very depressed memory market conditions that exist
today and consequently suppressed capital spending by AIXTRON's customers.

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Table of Contents

Equipment
sales generated 90% of revenues in 2008 2007: 87%; 2006: 83%). The remaining revenues were generated by sales of spare parts and service, which declined due to customers
cutting back on spare orders and reducing spare inventories in the current environment.

2008

2007

2006

2008-2007Full Year

Full Year

Full YearRevenues by Technology

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)Revenues


274.4


100
%

214.8


100
%

171.7


100
%

59.6


28
%of which from sale of silicon semiconductor equipment


11.6


4
%

41.7


19
%

46.1


27
%

(30.1
)

(72
%)of which from sale of compound semiconductor equipment and other equipment (OVPD®, SiC)


235.7


86
%

145.2


68
%

97.0


56
%

90.5


62
%of which other revenues (service, spare parts, etc.)


27.1


10
%

27.9


13
%

28.6


17
%

(0.8
)

(3
%)


87% of total revenues in 2008 (2007: 81%; 2006: 79%) were delivered to customers in Asia. The remaining revenues were generated in Europe and in
the United States.

2008

2007

2006

2008-2007Full Year

Full Year

Full YearRevenues by Region

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)Asia


238.1


87
%

174.1


81
%

135.2


79
%

64.0


37
%Europe


18.5


7
%

18.8


9
%

22.2


13
%

(0.3
)

(2
%)USA


17.8


6
%

21.9


10
%

14.2


8
%

(4.1
)

(19
%)Total


274.4


100
%

214.8


100
%

171.7


100
%

59.6


28
%


Development of Results

2008

2007

2006

2008-2007Full Year

Full Year

Full YearCost Structure

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)Cost of Sales


161.5


59
%

129.8


60
%

108.2


63
%

31.7


24
%Gross profit


112.9


41
%

85.0


40
%

63.4


37
%

27.9


33
%Operating Costs


80.4


29
%

64.4


30
%

57.7


34
%

16.0


25
%Selling expenses


27.8


10
%

27.2


13
%

23.4


14
%

0.6


2
%General and administration expenses


18.0


7
%

16.0


7
%

17.3


10
%

2.0


13
%Research and development costs


28.3


10
%

26.5


12
%

23.9


14
%

1.8


7
%Net other operating (income) and expenses


6.3


2
%

(5.3
)

(2
%)

(6.9
)

(4
%)

11.6


(219
%)


Cost of Sales

Cost of sales increased year on year by 24% in absolute terms from € 129.8 million in 2007 (2006:
€ 108.2 million) to € 161.5 million in 2008, whilst cost of sales relative to revenues improved to 59% from 60% in 2007 (63% in
2006), benefitting from a more favorable product mix and a favorable currency movement towards the end of the year.

Gross Profit, Gross Margin

The Company's gross profit increased, in line with revenues and cost of sales, by 33% to
€ 112.9 million in 2008 (2007: € 85.0 million; 2006: € 63.4 million), resulting in a one
percentage-point higher gross margin of 41%, helped by more favorable currency exchange rates towards the end of the year.

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Operating Costs

Operating costs increased in 2008 by 25% to € 80.4 million (2007:
€ 64.4 million; 2006: € 57.7 million) in absolute terms. However, operating costs relative to revenues decreased from 30% in
2007 to 29% in 2008 (2006: 34%), influenced by the following factors:

Selling Expenses

The slight increase of selling expenses by 2% to € 27.8 million (2007:
€ 27.2 million; 2006: € 23.4 million) was mainly due to volume related elements of expenses, including sales commissions.
Selling costs relative to revenues decreased by three percentage points to 10%, reflecting the low fixed elements of expenses and lower warranty expenditures despite higher volumes.

General and administration expenses

The general and administration expenses increased by 13% to reach € 18.0 million in 2008 (2007:
€ 16.0 million; 2006: € 17.3 million) principally due to variable elements of expenses and investments in infrastructure.
Overall, general and administration expenses relative to revenues remained stable in 2008 and 2007 at 7%.

2008

2007

2006

2008-2007Key R&D Information

Full Year

Full Year

Full Year

%R&D costs (million EUR)


28.3


26.5


23.9


7
%R&D costs, % of revenues


10
%

12
%

14
%R&D employees (period average)


213


210


181


1
%R&D employees, % of total headcount (period average)


35
%

36
%

32
%


Research and Development costs

As indicated in the table above, research and development costs increased over the last three years to
€ 28.3 million in 2008 due to increased development activities, including additional personnel, material expenses and depreciation. Although increasing in absolute
terms, R&D costs relative to revenues decreased from 12% in 2007 to 10% in 2008 (2006: 14%). R&D-activity remains strong in the development of both silicon and compound systems, seen as a
key factor supporting our technological leadership.

Personnel Costs

2008

2007

2006

2008-2007(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)

(%)Cost of Sales


13.2


12.2


12.2


1.0


8
%Selling, General and Administrative expenses


16.2


17.8


16.5


(1.6
)

(9
)%Research and Development costs


16.4


15.0


13.3


1.4


9
%Total


45.8


45.0


42.0


0.8


2
%


With the number of global employees increasing by 10 to 619 at year end 2008 (2007: 609; 2006: 566 employees), personnel expenses remained
virtually stable at € 45.8 million in 2008 (2007: € 45.0 million; 2006: € 42.0 million).

Net
other operating income and expenses decreased from a net income of € 5.3 million in 2007 (€ 6.9 million in
2006) to a net loss of € 6.3 million in 2008. The net other operating loss incurred in 2008 is mainly due to hedging losses of
€ 9.4 million incurred towards the end of the year. More details on other operating income and expenses can be found in Note 6 "Other operating income" and
Note 7 "Other operating expenses" to the Company's consolidated financial statements.

Operating Result

The operating result rose 58% from € 20.6 million in 2007 (2006:
€ 5.7 million) to € 32.5 million in 2008, driven largely by the 28% increase in revenues but only a 25% increase in cost of
sales.

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Table of Contents

Result Before Taxes

Result before taxes increased 59% from € 22.4 million in 2007 (2006:
€ 6.6 million) to € 35.7 million in 2008, in line with an improved operating income performance and higher net interest income
due to higher average interest rates.

2008

2007

2006

2008-2007Interest & Taxes

(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)

(%)Net Finance Income


3.2


1.8


0.9


1.4


78
%Interest Income from financial assets


3.2


1.9


1.0


1.3


68
%Interest Expenses from financial liabilities


0.0


(0.1
)

(0.1
)

0.1Taxes on Income


12.7


5.2


0.8


7.5


144
%


AIXTRON recorded a tax on income expense of € 12.7 million or an effective tax rate of 36% in fiscal year
2008. In comparison, the previous two years' effective tax rates were lower (23% of the profit before taxes in 2007; 12% in 2006) largely due to the recognition of tax losses in those years. Tax loss
carry-forwards remaining unrecognized as deferred tax assets in 2008 totaled € 20.6 million (2007: € 39.1 million; 2006:
€ 57.3 million).

Profit/Loss Attributable to the Equityholders of AIXTRON AG (after taxes)

The 2008 after-tax profit attributable to the equityholders of the AIXTRON Group was
€ 23.0 million, 33% up from the € 17.3 million in 2007 (2006: € 5.9 million).

Net Income AIXTRON AGUse of Results

AIXTRON AG, the parent company of the AIXTRON Group, recorded a net accumulated income in accordance with German generally accepted
accounting principles, (German GAAP) based on the German Commercial Code (Handelsgesetzbuch, "HGB") of € 30.0 million for 2008 (2007:
€ 12.3 million; 2006: € 2.8 million). AIXTRON's Executive and Supervisory Boards will propose to the shareholders' meeting that
a dividend of € 8.2 million or € 0.09 per share (€ 6.3 million or
€ 0.07 per share for 2007) be distributed. No dividend was distributed for 2006.

Development of Orders

2008

2007

2006

2008-2007Full Year

Full Year

Full YearEquipment Orders

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)Equipment order intake


250.8


100
%

247.7


100
%

178.0


100
%

3.1


1
%of which silicon semiconductor equipment


13.7


5
%

39.1


16
%

41.2


23
%

(25.4
)

(65
)%of which compound semiconductor equipment and other equipment (OVPD®, SiC)


237.1


95
%

208.6


84
%

136.8


77
%

28.5


14
%Equipment order backlog (end of period)


105.0


100
%

132.0


100
%

85.1


100
%

(27.0
)

(20
)%of which silicon semiconductor equipment


6.8


6
%

5.8


4
%

11.4


13
%

1.0


17
%of which compound semiconductor equipment and other equipment (OVPD®, SiC)


98.2


94
%

126.2


96
%

73.7


87
%

(28.0
)

(22
)%


Equipment Order Intake

AIXTRON saw a slight increase in 2008 cumulated equipment order intake, which at € 250.8 million
was 1% up year-on-year (2007: € 247.7 million; 2006: € 178.0 million) and represents a healthy order
intake level considering the current environment. However, quarterly order intake declined during the year (Q1: € 85.5 million, Q2:
€ 72.5 million, Q3: € 52.2 million, Q4: € 40.6 million), reflecting the previously predicted
digestion stage in the current investment cycle in the LED industry and the arrival of the global credit crisis and recession.

27

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Table of Contents

The
2008 order intake is characterized by a solid demand for compound semiconductor equipment, predominantly for the production of LED end-market applications throughout the
year. Order intake for compound equipment rose by 14% to € 237.1 million from € 208.6 million in 2007 (2006:
€ 136.8 million), and consequently represents 95% of the total value of equipment orders received by AIXTRON in fiscal year 2008 (2007: 84%; 2006: 77%). The
proportion of orders received for silicon semiconductor equipment, compared to total equipment orders received in 2008, dropped to 5%, from 16% in 2007 (2006: 23%). In absolute numbers, the order
intake for silicon semiconductor equipment decreased, due to a persistently negative memory market environment with very restricted capital spending, by 65% to
€ 13.7 million in 2008 from € 39.1 million in 2007 (2006: € 41.2 million).

Equipment Order Backlog

The equipment order backlog of € 105.0 million at December 31, 2008 is 20% lower than at the
same point in time in 2007 (€ 132.0 million; 2006: € 85.1 million).

The
order backlog for compound semiconductor equipment was at € 98.2 million as of December 31, 2008 (94% of backlog) representing a 22%
decrease year on year, in line with a difficult market environment. The remaining backlog figure of € 6.8 million (6% of backlog) is made up of silicon system
orders.

As
a matter of internal policy, AIXTRON records only systems as order intake and order backlog, if the Company has received a firm purchase order, an appropriate deposit and a
customer-confirmed delivery date.

B.    Liquidity and Capital Resources

Corporate Financial Management

AIXTRON has a central financial management system to control its global liquidity, interest and currency management. The Company's need
for cash is generally provided for, through operating cash flows and, to a smaller extent, through grants. AIXTRON's Management follows a strategy of financing the business primarily through equity.
Furthermore, the Annual General Meeting has previously approved Management's request for conditional and authorized capital instruments that allow AIXTRON to take advantage of financing its business
on the capital market if needed. Due to the potentially volatile nature of its business, a sufficient level of cash is essential to expeditiously finance potential business needs. Financial hedging
instruments are used to partly offset currency effects and are not used for speculative purposes.

Funding

The Company's stated share capital (Grundkapital) as of December 31, 2008 amounts to € 90,894,616
(December 31, 2007: € 90,444,213; December 31, 2006: € 89,799,397) divided into 90,894,616 registered shares.

The
Company has a number of stock option programs in place that grant employees the right to purchase AIXTRON shares under certain conditions. In fiscal year 2008, 553,473 options (2007:
1,302,707 options; 2006: no options) were exercised, resulting in delivery of 553,473 shares or AIXTRON-ADS. Under the 2008 tranche of the AIXTRON stock option plan 2007, 779,000 new
options were granted in fiscal year 2008 (2007 tranche: 759,100 options).

A
more detailed description of the different stock option plans and a summary of all the stock option transactions can be found in Note 25 to the Company's consolidated financial
statements "Share-based payment".

The
Company recorded no bank borrowings as of December 31, 2008, 2007 and 2006.

Where
necessary, AIXTRON AG provides loans and financial security facilities to its subsidiaries to enable operations to continue efficiently. The Company has granted no security
interest in its own land and buildings.

The
total shareholders' equity relative to total assets ratio remained virtually stable at 68% as of December 31, 2008 compared to 67% as of December 31, 2007
(December 31, 2006: 70%), principally due to a profit related increase in equity, offsetting the increase in total assets.

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Table of Contents

In
order to support future developments, the Company continuously explores and assesses additional funding opportunities available in the market. Additional funding needs could be
covered by the additional capital as authorized by the annual shareholders' meeting.

Funding Sources
(EUR or number of shares)

31-Dec
2008

Approved since

Expiry Date

2008-2007

31-Dec
2007

31-Dec
2006Issued shares


90,894,616








450,403


90,444,213


89,799,397Authorized Capital 1Capital increase for cash or contribution in kind with existing shareholders' preemptive rights


35,919,751


18/05/2005


17/05/2010


0


35,919,751


35,919,751Authorized Capital 2Capital increase for cash excluding existing shareholders' preemptive rights


8,979,937


18/05/2005


17/05/2010


0


8,979,937


8,979,937Conditional Capital 1Convertible Bond 1997


cancelled


24/10/1997


14/05/2008





43,680


44,160Conditional Capital 2Stock Options Program 1999


1,926,005


26/05/1999


31/12/2017


0


1,926,005


2,924,328Conditional Capital 4Stock Options Program 2002


2,039,821


22/05/2002


31/12/2016


(450,403
)

2,490,224


3,511,495Conditional Capital I 2007Authorization to potentially issue convertible notes or warrants in future


35,875,598


22/05/2007


21/05/2012


0


35,875,598


Conditional Capital II 2007Stock Options Program 2007


3,919,374


22/05/2007


31/12/2018


0


3,919,374





In accordance with section 71 (1) no. 8 German Corporations Act, AktG, the Company is authorized until November 13,
2009, with the approval of the Supervisory Board, to purchase its own shares representing an amount of up to € 9,044,421 of the share capital.. This authorization may not
be used by the Company for the purpose of trading in own shares. The authorization may be exercised in full or in part, once or several times by the Company. The shares may be purchased (1) on
the stock market or (2) by way of a public offer to all shareholders made by the Company.

A
total of 1.2 million AIXTRON shares, which were issued in connection with the acquisition of Genus, Inc. were deposited into a trust during 2005 to service the
AIXTRON, Inc. employee stock options program and to cover warrants issued by AIXTRON, Inc. AIXTRON treats these specific shares as its own shares. Because AIXTRON's own shares are
deducted from its subscribed capital, AIXTRON records shareholders' equity net of its own shares.

Investments

The AIXTRON Group's capital expenditures of fiscal year 2008 amounted to € 12.9 million, (2007:
€ 8.1 million; 2006: € 2.4 million), of which € 11.6 million (2007:
€ 6.1 million; 2006: € 2.2 million) were related to purchases of technical equipment (including testing and laboratory
equipment) and € 1.3 million (2007: € 2.0 million; 2006: € 0.2 million) were related to
intangible assets including software licenses. The increasing capital expenditures are in line with the increasing business volume. 2008 investments in technical equipment include new laboratory
development tools and investments in the facility in Herzogenrath. Investments in intangible assets in 2007 and 2008 consisted mainly of SAP software licenses.

Additionally,
the reduction in bank deposits with a maturity of at least three months totaling € 1.8 million are recorded in fiscal year 2008 as cash
inflow from investing activities (2007 and 2006: cash outflows of € 2.1 million and € 2.8 million respectively).

In
2008, net cash outflow from investing activities totaled € 11.4 million (2007: € 10.5 million; 2006:
€ 5.1 million).

29

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Table of Contents

All
2008, 2007 and 2006 expenditures were funded out of operating cash flow and available cash resources.

Cash Flow

Cash and cash equivalents, including bank deposits with a maturity of at least three months (for more information, refer to
"Investments" above), decreased by 8% with € 70.5 million
(€ 67.5 million + € 3.0 million) year-on-year (2007:
€ 76.7 million; 2006: € 49.5 million). Cash inflow from higher net profit was offset by higher inventory, capital expenditures
and the dividend payment as well as currency translation differences.

There
are currently no material restrictions on the Company's use of cash resources.

Assessment of Liquidity and Capital Resources

The Company's liquidity is affected by many factors, some of which are related to its ongoing operations and others which are related
to the nature of the semiconductor equipment industry and to the economics of the countries in which the Company operates. Although the cash requirements fluctuate based on the timing and extent of
these factors, the Company believes that the liquidity provided by existing cash resources and financing arrangements, as well as the ability to raise equity capital, will be sufficient to fund
working capital, capital expenditures and other ongoing business requirements for at least the next twelve months. Should the market and economic environment currently experienced by AIXTRON change to
a period of continued weakness, lower customer demand for the Company's products and services and continued fixed costs could result in cash generated by operations to be lower than forecasted and not
to be sufficient. In such a situation, the Company might need to pursue accessing short-term credit facilities or additional
equity financing offerings. For more information about the risks facing by the Company, refer to Item 3.D. "Key InformationRisk Factors" in this report.

C.    Research and Development, Patents and Licenses, etc.

For information regarding research and development, patents and licenses, refer to Item 4.B. "Information on the
CompanyBusiness OverviewResearch and Development", "Intellectual Property" and Item 5.A. "Operating and Financial Review and
ProspectsOperating ResultsDevelopment of RevenuesOperating Costs" in this report.

D.    Trend Information

The development of state-of-the-art deposition technology is expected to remain the Company's core
competency and competitive advantage. Therefore, AIXTRON plans to further expand its established product portfolio, in the areas of compound semiconductor (MOCVD, and PECVD) equipment, organic
semiconductor (OVPD®, PVPD) equipment, and silicon semiconductor (AVD®, ALD, CVD) equipment, into existing and future markets.

AIXTRON
expects to maintain its market leadership position, with an estimated market share in excess of 60% in the market for MOCVD systems. Market research company VLSI has estimated
this market to be valued at USD 438.4 million by the end of 2009 (2008e: USD 464 million).

AIXTRON
plans to drive forward with its strategy to introduce its OVPD® and PVPD technologies to a broader OLED display and lighting market. With the delivery of a
large-area deposition tool, which will be used within the manufacturing process of flexible organic backplanes, to Plastic Logic Ltd. in the first half of 2008, AIXTRON provided
evidence of its ability to diversify its core gas phase deposition technology into new emerging markets. As with all emerging technologies, there is risk associated with the timing of AIXTRON's
OVPD® and PVPD technology being adopted by the market. Estimates of an accessible OLED-market size or market share are neither available nor meaningful at this point in time.

30

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Table of Contents

AIXTRON is currently at a transition stage with its silicon semiconductor technology. The current AIXTRON CVD deposition system revenues are expected to be
replaced by a new system technology, developed over the past three years, and aimed at next-generation devices for both the memory and the logic market. The initial response from customers
has been positive, and the Company continues to actively engage potential customers of AIXTRON's ALD and AVD® equipment in dialogue, product evaluations, system assessments and joint
development programs as part of a pre-sales process in order to successfully launch the latest product technologies, as soon as the memory market has been able to address the industry's
pricing and over-capacity issues. The specific market niche to be addressed by AIXTRON's ALD and AVD® systems for the production of specialized applications such as gate stacks
and capacitors is estimated by Gartner Dataquest to be valued at USD 99 million by the end of 2009 (2008e: USD 145 million).

E.    Off-Balance Sheet Arrangements

As of December 31, 2008, the Company had entered into purchase commitments with suppliers in the amount of
€ 15.9 million (December 31, 2007: € 49.2 million; December 31, 2006:
€ 23.4 million) for purchases
within the next 12 months. Commitments for capital expenditures at December 31, 2008 were € 1.8 million (December 31,
2007 € 2.8 million, December 31, 2006: € 44 thousand).

Contingencies

The Company is involved in various legal proceedings, none of which management believes are material.

For
more information regarding contingencies, refer to Item 5.F. "Operating and Financial Review and ProspectsTabular Disclosure of Contractual Obligations" in this
report.

F.     Tabular Disclosure of Contractual Obligations

In the ordinary course of business, AIXTRON's primary contractual obligations regarding cash involve purchase commitments, operating
lease commitments and capital expenditures.

The
following table summarizes contractual obligations for future cash outflows as of December 31, 2008:

Payments Due by Period(as of December 31, 2008)

Total

Less than
1 year

1-3 years

3-5 years

More than
5 years(EUR million)Long-Term Debt Obligations


0.00


0.00


0.00


0.00


0.00Finance lease commitments


0.00


0.00


0.00


0.00


0.00Operating lease commitments


9.68


2.35


4.96


2.22


0.16Purchase commitments


17.72


15.89


1.83


0.00


0.00Total contractual obligations


27.41


18.24


6.79


2.22


0.16


At December 31, 2007, the Company's commitments for capital expenditures were € 1.83 million (2007:
€ 2.84 million; 2006: € 44,000).

No
obligations for funding of pension plans existed as of December 31, 2008.

The
Company outsources a substantial portion of the manufacturing of its operations to third party suppliers. As the Company's products are technologically complex, the lead times for
purchases from its suppliers can vary up to six months. Principally, but not exclusively, contractual commitments are made for specific customer orders or forecast orders. In some circumstances, where
contractual commitments to suppliers for multiple modules or systems reduce the Company's purchase prices per module or system, purchase commitments may be made against anticipated demand. For the
majority of purchase commitments, the Company has flexible delivery schedules depending on the market conditions, which allow the Company, to a certain extent, to delay delivery beyond originally
planned delivery schedule estimates, if necessary.

The
Company leases certain office and plant facilities, office furniture and motor vehicles under various operating leases. Regarding most of the lease commitments for office and plant
facilities the Company
has options to renew the leasing contracts. The leases typically run for a period between one and 15 years. None of the leases includes contingent rentals.

31

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Table of Contents

Preparation of consolidated financial statements under IFRS

The consolidated financial statements of AIXTRON AG and its subsidiaries ("AIXTRON" or "Company") have been prepared in accordance
with, and fully comply with



In
March 2008, final rules eliminating the requirement that "Foreign Private Issuers" such as AIXTRON file U.S. GAAP-based financial statements (or a
reconciliation thereto) became effective with the U.S. Securities and Exchange Commission (the "SEC") accepting reporting based solely on IFRS for fiscal years ending after November 15, 2007.
Consequently, beginning with fiscal year 2007, AIXTRON simplified its reporting by moving to IFRS as its sole reporting standard and discontinued reporting a reconciliation to U.S. GAAP.

Critical accounting policies and key sources of estimation and uncertainty

The preparation of AIXTRON's Consolidated Financial Statements requires the Company to make certain estimates, judgments and
assumptions that the Company believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts and related disclosures and are made in order to
fairly present the Company's financial position and results of operations. The following accounting policies are significantly impacted by these estimates and judgments that AIXTRON believes are the
most critical to aid in fully understanding and evaluating its reported financial results include the following:

Revenue Recognition

Revenue is generally recognized in two stages for the supply of equipment to customers, partly on delivery and partly on final
installation and acceptance (see Note 2(p) to AIXTRON's Consolidated Financial Statements). The Company believes, based on past experience, that this method of recognizing revenue fairly states
the revenues of the Company.

Goodwill

As stated in the accounting policies, the Company tests at least annually whether goodwill has suffered impairment. If there is an
indication, the recoverable amount of the cash generating unit has to be estimated. This is the greater of the fair value less costs to sell and the value in use. The determination of the value in use
involves making adjustments and estimates relate to the projection and discounting of future cash flows. Although the Company believes the assumptions used to calculate recoverable amount are
appropriate, any unforeseen changes in these assumptions could result in impairment charges to goodwill which could adversely affect the future financial position and operating results.

Valuation of Inventories

Inventories are stated at the lower of cost and net realizable value. This requires the Company to make judgments concerning
obsolescence of materials. This evaluation requires estimates, including both forecasted product demand and pricing environment, both of which may be susceptible to significant change.

In
future periods, write-downs of inventory may be necessary due to (1) reduced demand in the markets in which the Company operates, (2) technological obsolescence due to
rapid developments of new products and technological improvements, or (3) changes in economic or other events and conditions that impact the market price for the Company's products. These
factors could result in adjustment to the valuation of inventory in future periods, and significantly impact the Company's future operating results.

32

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Table of Contents

Income Taxes

At each balance sheet date, the Company assesses whether the realization of future tax benefits is sufficiently probable to recognize
deferred tax assets. This assessment requires the exercise of judgment on the part of management with respect to future taxable income. The recorded amount of total deferred tax assets could be
reduced if estimates of projected future taxable income are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company's ability to
utilize future tax benefits.

Recently Issued Accounting Standards

The company has not adopted any new accounting standards during 2008. During 2008 four interpretations issued by the International
Financial Reporting Interpretation Committee (IFRIC) became effective. IFRIC 11 IFRS 2Group Treasury Share Transactions; IFRIC 12 Service concession Arrangements;
IFRIC 14 IAS 19The Limit of a Defined Benefit Asset and IFRIC 16Hedges of a Net Investment in a Foreign Operation. The adoption of these interpretations
has not led to any changes in the company's accounting policies.

The
following list shows IFRS standards, amendments to IFRS and to IFRIC`s not compulsory and not applicable to reporting periods ended on December 31. 2008. These standards were
not applied earlier than required. AIXTRON is currently analyzing the impact of the new standards on its consolidated financial statements. The Company does not expect the adoption of these standards
to have a material impact on its consolidated financial statements.

Amendment to IAS 1

Financial Statement Presentation Phase AIssued: September 2007Amendment to IAS 32 & IAS 1

Puttable Financial Instruments and Obligations Arising on LiquidationIssued: February 2008Amendment to IFRS 3 & IAS 27

Business CombinationsIssued: January 2008Amendment to IFRS 1 & IAS 27

Cost of an investment in a subsidiaryIssued: May 2008Amendment to IAS 23

Borrowing CostsIssued: March 2007Amendment to IAS 39

Eligible Hedged ItemsIssued: July 2008Amendment to IAS 39 & IFRS 7

Reclassification of Financial InstrumentsIssued: October/November 2008Amendment to IFRS 1

First Time Adoption of IFRS (restructured)Issued: November 2008Amendment to IFRS 2

Vesting conditions and cancellationsIssued: January 2008IFRS 8

Operating SegmentsIssued: November 2006Amendment to IFRIC 23

Borrowing CostsIssued: March 2007IFRIC 13

Customer Loyalty ProgramsIssued: June 2007IFRIC 15

Agreements for the Construction of Real EstateIssued: July 2008IFRIC 17

Distribution of Non-cash Assets to OwnersIssued: November 2008IFRIC 18

Transfers of Assets from CustomersIssued: January 2009


33

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Table of Contents

Item 6:   Directors, Senior Management and Employees

A.    Directors and Senior Management

In compliance with German lawthe German Stock Corporation Act (Aktiengesetz)governing a stock corporation
such as the Company, AIXTRON has a Supervisory Board (Aufsichtsrat) and an Executive Board (Vorstand). The two boards are separated and no individual may simultaneously be a member of both boards. The
Executive Board is responsible for managing the Company's business in accordance with applicable laws, AIXTRON's Articles of Association and the Bylaws of the Executive Board, and as such it
represents the Company in its dealings with third parties. The Supervisory Board appoints and removes the members of the Executive Board. The Supervisory Board is responsible for overseeing AIXTRON's
management policy, practice and decisions taken, but is not permitted by law to participate in such decisions.

Supervisory Board

The Supervisory Board appoints and removes from office the members of the Executive Board, who may serve for a maximum term of five
years before being reappointed.

As
of December 31, 2008 AIXTRON's Supervisory Board consisted of the following six individuals:

Name

Position

Member
sinceKim Schindelhauer*

Chairman of the Supervisory Board


2002Dr. Holger Jürgensen*

Deputy Chairman of the Supervisory Board


2002Prof. Dr. Wolfgang Blättchen*

Financial Expert/Chairman of the Audit Committee


1998Karl-Hermann Kuklies




1997Prof. Dr. Rüdiger von Rosen




2002Joachim Simmroß*




1997


---

34

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Table of Contents



No
member of AIXTRON's Supervisory Board serves as a director of an SEC-reporting company in the United States.

The
Supervisory Board's business address is Kackertstrasse 15-17, 52072 Aachen, Germany.

Executive Board

The Executive Board is responsible for managing the Company's business in accordance with applicable laws, AIXTRON's Articles of
Association and the Bylaws of the Executive Board, and as such it represents the Company in its dealings with third parties.

As
of December 31, 2008 AIXTRON's Executive Board ("Management") consisted of the following three individuals:

Executive Board

Name

Position

First
Appointment

End of TermPaul Hyland

Chairman, President and
Chief Executive Officer


April 1, 2002


March 31, 2010Wolfgang Breme

Executive Vice President and
Chief Financial Officer


April 1, 2005


March 31, 2013Dr. Bernd Schulte

Executive Vice President and
Chief Operating Officer


April 1, 2002


March 31, 2010




If
a change of control situation exists, Wolfgang Breme, Member of the Executive Board, is entitled to terminate the service relationship with AIXTRON with a notice period of three
months to the end of the month and to resign from his post on the termination date. Mr. Breme will then be entitled to receive a settlement in accordance with the stipulations of his service
contract with AIXTRON AG. A change of control situation exists if a third party or a group of third parties who contractually combine their shares in order to act subsequently as a third party,
directly or indirectly holds more than 50% of the Company's authorized capital.

The
Executive Board's business address is Kackertstrasse 15-17, 52072 Aachen, Germany.

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Table of Contents

B.    Compensation

The Supervisory Board is responsible for establishing the structure of the remuneration system and the remuneration of the individual
members of the Executive Board. It regularly discusses and reviews the remuneration structure in terms of appropriateness. In accordance with the Executive Board rules of procedure, new contracts for
AIXTRON Executive Board members are generally concluded for 3 years, and contract extensions generally amount to 3 to 5 years.

The
level of remuneration of the Executive Board members of AIXTRON AG is aligned with the size of the Company, the commercial and financial situation of the Group and the level and
structure of Executive Board remuneration at comparable companies. In addition, the responsibilities, experience and contribution of each individual Executive Board member are taken into account when
calculating the remuneration.

Executive
Board remuneration consists of three components: fixed remuneration including benefits in kind and payments into a private pension insurance, a variable bonus and stock-based
remuneration. In the Executive Board contracts of employment, an annual income is stipulated for the fixed remuneration component. The variable bonus is aligned to the consolidated net income for the
year. As far as stock-based remuneration is concerned, Executive Board members participate in the AIXTRON stock option plans. The appropriateness of the above-mentioned payments is reviewed on a
regular basis by the Supervisory Board.

The
fixed remuneration component is non-performance-related and is paid out on a monthly basis (13 times a year) as a salary. Additional payments in kind are made, chiefly
consisting of company car usage and payments for pension insurance.

The
variable remuneration is paid from an "accrued internal bonus", the total amount of which available to be paid as a bonus to all Executive Board members is limited to the lesser of
€ 6.5 million and 10% of the modified consolidated net income for the year concerned. The modified consolidated net income for the year is obtained from the
Company's Consolidated Financial Statements (IFRS) certified by the auditor, less a consolidated loss carry-forward figure and those amounts that are to be allocated to earnings reserves in the Annual
Financial Statements of AIXTRON AG by law or in accordance with the Articles of Association. The consolidated loss carry-forward is obtained from consolidated net losses from previous years, less
consolidated net income from subsequent fiscal years. Loss carry-forwards from fiscal years before January 1, 2006 are not taken into account. In 2008, € 1,379,663
is payable as the accrued internal bonus.

In
addition, as a variable component acting as a long-term incentive, the members of the Executive Board subscribe to the option rights arising from the stock option plans of
AIXTRON AG. The terms and conditions of the stock option plans, including potential exercise barriers, are resolved by the Annual General Meeting. The number of option rights for the Executive Board
is stipulated by the Supervisory Board. Further details on the outstanding stock options of the Executive Board as well as comments on the respective stock option plans are set out further on in this
report.

In
fiscal year 2008, the cash remuneration of the Executive Board (including benefits in kind and pension allowance) totaled € 2,507,112 (2007:
€ 2,641,498; 2006: € 1,665,915). Moreover, the Executive Board was granted 156,000 option rights in 2008 (2007: 156,000; 2006: 220.000) with
an option value at

36

---



Table of Contents

allocation
of € 276,120 (2007: € 677,040; 2006: € 336,600). The division between the individual members of the
Executive Board for the years 2006 to 2008 is presented in the table below.

Executive Board Member

Year

Fixed*

Variable

Total
fixed and
variable
Remuneration

Options
granted

Option
value on
allocation

Total EB
Remuneration(EUR)

(EUR)

(EUR)

(Number)

(EUR)

(EUR)Paul Hyland


2008
2007
2006


442,615
359,166
360,495


689,831
517,490
176,000


1,132,446
876,656
536,495


52,000
52,000
55,000


92,040
225,680
84,150


1,224,486
1,102,336
620,645Wolfgang Breme


2008
2007
2006


308,555
295,789
272,459


344,916
258,745
88,000


653,471
554,534
360,459


52,000
52,000
55,000


92,040
225,680
84,150


745,511
780,214
444,609Dr. Bernd Schulte


2008
2007
2006


376,279
310,926
310,926


344,916
258,745
88,000


721,195
569,671
398,926


52,000
52,000
55,000


92,040
225,680
84,150


813,235
795,351
483,076Dr. William W.R. Elder


2008
2007
2006


0
468,140
311,035


0
172,497
59,000


0
640,637
370,035


0
0
55,000


0
0
84,150


0
640,637
454,185Total


2008
2007
2006


1,127,449
1,434,021
1,254,915


1,379,663
1,207,478
411,000


2,507,112
2,641,498
1,665,915


156,000
156,000
220,000


276,120
677,040
336,600


2,783,232
3,318,538
2,002,515


---

In total, as at December 31, 2008, the AIXTRON Executive Board held options to subscribe to 650,516 shares in the Company
(December 31, 2007: 556,391; December 31, 2006: 617,876). The amounts of shares, underlying the options, are set out below. The realizable profits from exercising of the stock options
can differ significantly from the figures shown in the table.

Executive Board Member

Allocation

Outstanding

Exercisable

Option
Value on
Allocation

Exercise
Price

Maturity(shares)

(shares)

(EUR)

(EUR)Paul Hyland


Dec 2008
Dec 2007
May 2006
May 2004
May 2003
May 2002
May 2001
May 2000


52,000
52,000
55,000
35,000
27,500
27,500
5,000
5,400


0
0
13,750
26,250
27,500
0
0
1,350


92,040
225,680
84,150
107,800
48,950
152,625
106,500
114,507


4.17
10.09
3.83
6.17
3.10
7.48
26.93
67.39


Nov 2018
Nov 2017
Nov 2016
Nov 2014
Nov 2013
May 2017
May 2016
May 2015Wolfgang Breme


Dec 2008
Dec 2007
May 2006


52,000
52,000
55,000


0
0
13,750


92,040
225,680
84,150


4.17
10.09
3.83


Nov 2018
Nov 2017
Nov 2016Dr. Bernd Schulte


Dec 2008
Dec 2007
May 2006
May 2004
May 2003
May 2002
May 2001
May 2000
May 1999


52,000
52,000
55,000
35,000
0
27,500
5,000
2,640
2,976


0
0
13,750
26,250
0
0
0
660
2,976


92,040
225,680
84,150
107,800
48,950
152,625
106,500
55,981
35,640


4.17
10.09
3.83
6.17
3.10
7.48
26.93
67.39
18.70


Nov 2018
Nov 2017
Nov 2016
Nov 2014
Nov 2013
May 2017
May 2016
May 2015
May 2014Total





650,516


126,236


37

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Table of Contents

In accordance with IFRS 2, the "option value on allocation" is also the basis for inclusion as expenses in the profit and loss account for
options issued after November 7, 2002. For stock options issued before November 7, 2002, the fair value was calculated as per the Black-Scholes model.

In
the reporting year 2008, the Executive Board members exercised 6,875 (2007: 217,485; 2006: 0) option rights and none expired (2007: 0; 2006: 25,500).

The
current Executive Board members have no individual company pension benefits which would result in pension provisions. The pension allowances (a total of
€ 120,000 in year 2008) paid by AIXTRON and included in the fixed remuneration, are paid into independent insurance contracts with a benevolent fund allowance.

The
Company's net obligation in respect of defined benefit pension plans reflects commitments to two former members of the Executive Board of AIXTRON AG. As at the end of 2008, this
resulted in pension provisions totaling € 845,012 (2007: € 878,003; 2006: € 983,485).

The
Executive Board members receive no loans from the Company.

Supervisory Board Remuneration

Remuneration of the Supervisory Board is regulated by the Articles of Association of AIXTRON AG. Accordingly, the annual fixed
compensation for each individual member of the Supervisory Board is € 18,000. The Chairman's compensation is three times this amount and the Deputy Chairman's one and a
half times this amount. The members of the Supervisory Board also receive, in aggregate, a variable compensation of 1% of the Company's retained earnings, less an amount corresponding to 4% of the
paid-in contributions to the share capital. The Chairman of the Supervisory Board receives 6/17, the Deputy Chairman 3/17, and each other member of the Supervisory Board 2/17 of the
variable compensation. The variable compensation is limited to four times the fixed compensation per Supervisory Board member. In addition, members of the audit committee receive an attendance fee of
€ 1,500 for attending a committee meeting, with the Chairman of the committee receiving twice this amount. The total annual attendance fee per Supervisory Board member is
limited to one and a half times that individual's fixed compensation.

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Table of Contents

In
fiscal year 2008, the compensation of the Supervisory Board totaled € 448,865 (2007: € 269,751; 2006:
€ 183,000). The Supervisory Board compensation for the years 2006 to 2008 comprised in detail:

Supervisory Board Member

Year

Fixed

Variable

Attendance
Fee

Total(EUR)

(EUR)

(EUR)

(EUR)Kim Schindelhauer*
(Chairman of the Supervisory Board)


2008
2007
2006


54,000
54,000
54,000


93,162
30,618
0


6,000
6,000
6,000


153,162
90,618
60,000Dr. Holger Jürgensen*
(Deputy Chairman of the Supervisory Board)


2008
2007
2006


27,000
27,000
27,000


46,581
15,309
0


6,000
6,000
6,000


79,581
48,309
33,000Prof. Dr. Wolfgang Blättchen*
(Chairman of the Audit Committee)


2008
2007
2006


18,000
18,000
18,000


31,054
10,206
0


12,000
12,000
12,000


61,054
40,206
30,000Karl-Hermann Kuklies


2008
2007
2006


18,000
18,000
18,000


31,054
10,206
0


0
0
0


49,054
28,206
18,000Prof. Dr. Rüdiger von Rosen


2008
2007
2006


18,000
18,000
18,000


31,054
10,206
0


0
0
0


49,054
28,206
18,000Joachim Simmroß*


2008
2007
2006


18,000
18,000
18,000


31,054
10,206
0


6,000
6,000
6,000


55,054
34,206
24,000Total


2008
2007
2006


153,000
153,000
153.000


263,958
86,751
0


30,000
30,000
30,000


446,958
269,751
183,000


---

As in previous years, there were no payments made to any Supervisory Board member for advisory services in the year 2008.

C.    Board Practices

For general information of the Company's board practice, refer to Item 6.A. "Directors, Senior Management and
EmployeesDirectors and Senior Management" in this report. Also refer to Item 10.C. "Additional InformationMaterial Contracts" and Exhibits 4.4 to 4.8 to this
report for further information regarding the Company's directors' employment contracts.

No
additional benefits are generally paid to the Company's Executive Board Members upon termination of their employment contracts. If the employment contract of any of the Company's
Executive Board Members is terminated without notice for good cause on the part of the Executive Board Member and for which he has to bear responsibility, the entitlement to the profit sharing bonus
lapses from the time that the termination becomes effective.

Audit Committee

According to Article 16.1 of AIXTRON's Articles of Association, the Supervisory Board is authorized and, if prescribed by law,
required to form committees of its members.

The
Audit Committee primarily deals with matters such as accounting, risk management, the control system, the auditors' mandate, identification of areas to be audited, auditors' fee
arrangements, while at the same time ensuring the necessary independence of the auditors. The Chairman of the Committee regularly reports to the Supervisory Board with regard to the work performed.

39

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Table of Contents

AIXTRON's
Audit Committee operates under the terms of reference of a codified Audit Committee charter. The Audit Committee's charter includes the following terms of
reference:



Set
forth in the table below are the current members of the Audit Committee:

Committee

MembersAudit Committee

Prof. Dr. Wolfgang Blättchen (Chairman),
Dr. Holger Jürgensen,
Dipl.-Kfm. Kim Schindelhauer
Dipl.-Kfm. Joachim Simmroß


Compliance with NASDAQ Listing Standards on Corporate Governance

For information about the Company's compliance with the NASDAQ listing Standards on corporate governance, refer to Item 10.B.
"Additional InformationMemorandum and Articles of AssociationSarbanes-Oxley Requirements and NASDAQ Rules" In this report.

D.    Employees

For information regarding employees of the Company, refer to Item 4.B. "Information on the CompanyBusiness
OverviewEmployees" in this report.

E.    Share Ownership

The following table sets forth certain information known to AIXTRON regarding beneficial ownership of the Company's ordinary shares and
options to acquire its equity securities as of December 31, 2008 by (i) each of the Company's Supervisory and Executive Board members, (ii) each of the Company's executive
officers, and (iii) all directors and executive officers of AIXTRON as a group:

As of December 31, 2008

90,894,616 shares outstanding


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Table of Contents

Share Ownership of Board Members

Name And Address of Beneficial Owner **

Number of
Shares (1)

Percent of
Class (2)

Number of
Options to
Acquire AIXTRON
Equity SecuritiesProf. Dr. Wolfgang Blättchen


0

*


0Wolfgang Breme


0

*


159,000Paul Hyland


0

*


255,350Dr. Holger Jürgensen


7,924,608
(3)
8.72%


0Karl-Hermann Kuklies


3,600
(4)
*


0Prof. Dr. Rudiger von Rosen


1,100
(5)
*


0Kim Schindelhauer


1,039,604
(6)
1.14%


0Dr. Bernd Schulte


0

*


238,991Joachim Simmroß


37,000
(7)
*


0All Supervisory and Executive Board members as a group


9,005,912

9.91%


653,341Approximate percent held by U.S. holders (ADRs outstanding)


6,540,197
(8)
7.20%


---

As of December 31, 2008, members of the Company's Supervisory Board, a group of six persons, indirectly or directly, held 9,005,912 AIXTRON
ordinary shares.

Pursuant
to Section 15a of the German Securities Trading Act (WpHG), in effect during the reporting period, members of the Executive and Supervisory Boards were required to
disclose significant purchases or sales of shares of AIXTRON. In fiscal year 2008, Executive Board member Dr. Bernd Schulte reported he had sold 6,875 shares he received from executing his
stock options; Supervisory Board member Dr. Holger Jürgensen reported he had sold through his ownership stake in CAMMA GmbH 500,000 shares of AIXTRON; Supervisory Board
member Joachim Simmroß' wife bought 2,000 shares of AIXTRON.

Employee Bonds and Options

Employee Bonds

As of December 31, 2008, no bonds were outstanding and there are no liabilities from convertible bonds (December 31,
2007: € 0; December 31, 2006: € 3 thousand). During 2008, 2007 and 2006 no bonds were converted into common stock.

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Table of Contents

In November 1997, the Company issued 6% convertible bonds to employees, due November 2007, with a principal amount of
€ 320 thousand, interest payable annually in arrears. The remaining outstanding convertible bonds, amounting to € 3 thousand
expired in accordance with the terms in November 2007 without being exercised.

Share Option Programs

Share Options are part of the variable compensation employed as a long term incentive to retain the management and other key employees.

Based
on the Company's stock option program approved by the shareholder's meeting on May 22, 2007, a total of 450,403 AIXTRON AG bearer shares were exercised by employees in 2008
(2007: 644,336; no options were executed in 2006). 103,070 AIXTRON AG American Depositary Shares (ADS) were exercised by employees in 2008 (2007: 642,539 ADS; 2006: 39,540 ADS).

Under
the AIXTRON Stock Option Plan 2007, 779,000 share options were granted to management of AIXTRON AG and members of the management of affiliated companies, as well as to employees of
AIXTRON AG and of affiliated companies. 50% of the granted options may be exercised after a waiting period of not less than two years, an additional 25% of the granted options my be exercised after
three years and the remaining 25% of the granted options may be exercised after at least four years. The options expire 10 years after they have been granted.

Dec 31,
2008

Exercise

Expired/
Forfeited

Allocation

Dec 31,
2007AIXTRON ordinary sharesStock options


4,478,507


450,403


177,972


779,000


4,327,882Underlying shares


5,149,197


450,403


182,427


779,000


5,003,027AIXTRON ADSStock options


142,499


103,070


1,530





247,099Underlying shares


142,499


103,070


1,530





247,099


As part of the Genus, Inc. acquisition, completed in March 2005, a trust for the employee stock options of the AIXTRON Inc. group
employees was established, into which an appropriate number of AIXTRON AG ADSs were deposited.

See
Note 25 to AIXTRON's Consolidated Financial Statements for more information on AIXTRON's employee stock option plans.

Item 7:    Major Shareholders and Related Party Transactions

A.    Major Shareholders

As of December 31, 2008, Dr. Holger Jürgensen, one of the Company's founders and Deputy Chairman of the
Company's Supervisory Board, directly or indirectly, beneficially owned 8.72% of AIXTRON's ordinary shares through his ownership stake in Camma GmbH. For more information, refer to
Item 6. E. "Directors, Senior Management and EmployeesShare Ownership" in this report.

As
of December 31, 2008, cominvest Asset Management GmbH Frankfurt/Main, Germany, held 4,578,085 ordinary shares, or 5.04% of AIXTRON's shares outstanding.

As
of December 31, 2008, Oppenheimer Funds, Centennial, USA, held 4,612,929 ordinary shares, or 5.08% of AIXTRON's shares outstanding.

In
its capacity as AIXTRON's depositary bank, JPMorgan Chase Bank, N.A. held 6,540,197 ordinary shares as of December 31, 2008, represented by 6,540,197 ADSs, or 7.20% of
AIXTRON's shares outstanding.

To
the Company's knowledge and based on public filings, there was no other single natural or legal person that may be considered a beneficial owner of 5% or more of AIXTRON's outstanding
shares as of December 31, 2008.

As
of December 31, 2008, AIXTRON had 50,757 shareholders registered in its share register. As of December 31, 2008, 157 registered ADS holders (excluding DTC) held 80,152
ADSs representing less than 1 percent of total shares outstanding. A significant number of such registered ADS holders

42

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Table of Contents

may
be U.S. beneficial ADS holders, estimated to be 4,286 in total based on the number of holders reported by ADP for broker search as of December 31, 2008. For more information, refer to
Item 6.E. "Directors, Senior Management and EmployeesShare Ownership" in this report.

The
Company's major shareholders do not have voting rights that are different from any other shareholder.

B.    Related Party Transactions

None.

Item 8:    Financial Information

A.    Consolidated Statements and Other Financial Information

For the Company's consolidated financial statements and other financial information, refer to Item 5. "Operating and Financial
Review and Prospects" and Item 18. "Financial Statements" In this report.

Export Revenues

Revenues outside of Europe accounted for € 255.9 million or 93.26% of AIXTRON's total revenues for
the year ended December 31, 2008 (2007: € 196 million or 91.25%; 2006: € 149.5 million or 87.05%) Revenues to AIXTRON's
Asian-based customers accounted for € 238.1 million or 86.81% of the Company's total revenues for the year ended December 31, 2008 (2007:
€ 174.1 or 81.06%; 2006: € 135.2 million or 78.76%).

Legal Proceedings

In the normal course of business, the Company is subject to various legal proceedings and claims. The Company believes that the matters
the Company is aware of are not likely
to have a material adverse effect on its financial condition or results of operations. The Company is not aware of any unasserted claims that may have a material adverse effect on its financial
condition or results of operation.

International
Rectifier Corporation ("I.R."), of El Segundo, California, USA filed a complaint on September 8, 2008 in the U.S. District Court for the Central District of
California against seven of its former employees, including the founder and former CEO Alex Lidow, as well as five companies, including AIXTRON AG. I.R., accuses the seven former employees of
misappropriating, divulging into a business named Efficient Power Conversion Corporation ("EPCC") and illegally using trade secrets of I.R. relating to Gallium Nitride Technology ("GaN"). I.R. accuses
some of the companies, including AIXTRON AG, of aiding the seven main defendants by providing additional information relevant to the technology at issue. This lawsuit seeks unspecified damages
including punitive damages, and injunctive relief from all of the defendants without specifying exactly what form of relief and damages are sought from which defendants.

AIXTRON
AG fully rejects the allegation contained in the complaint and is vigorously defending itself against the allegation and claim raised in the action that has been brought against
AIXTRON AG in the USA.

Furthermore,
AIXTRON AG has filed an action in Germany for a negative declaratory judgment against I.R. with the aim of establishing in Germany that all allegations and claims that have
been raised against it are unfounded. In the German action, I.R. counterclaimed for injunctive relief and damages. AIXTRON AG fully rejects the allegation in the counterclaim as well as the claims
contained in it, and is also vigorously defending itself against the counterclaim.

AIXTRON
AG reserves the right to seek recovery from I.R. of any and all costs and damages that might result from I.R.'s unjustified allegations and the proceedings brought by I.R.
against AIXTRON.

Policy on Dividend Distributions

The maximum amount of dividends available for distribution to shareholders is based on the level of earnings (Bilanzgewinn), as
determined in accordance with the German Commercial Code

43

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Table of Contents

(Handelsgesetzbuch)
and the German Stock Corporation Act (Aktiengesetz). All dividends must be approved by the Company's shareholders.

AIXTRON
AG, the parent company of the AIXTRON Group, recorded a net accumulated income of € 30.0 million for 2008. AIXTRON's Executive and Supervisory
boards will propose to the shareholders' meeting that a dividend of € 8.2 million or € 0.09
per share be distributed for 2008. A dividend of € 6.3 million (€ 0.07 per share) was distributed for 2007. No dividends were
distributed for 2006.

B.    Significant Changes

For information regarding significant changes, see Note 34 ("Events After the Balance Sheet Date") to AIXTRON's Consolidated
Financial Statements and Item 4.A "Information on the CompanyHistory and Development of the CompanyImportant Events" In this report.

Item 9:    The Offer and Listing

A.    Offer and Listing Details

Trading Markets

The principal trading market for AIXTRON's ordinary shares is the Frankfurt Stock Exchange, where the shares trade under the symbol
"AIXA." AIXTRON's ADRs, each evidencing one ADS, which represents one ordinary share, trade on the NASDAQ Global Select Market under the symbol "AIXG."

Market Price Information

Frankfurt Stock Exchange

The table below sets forth, for the calendar periods indicated, the high and low XETRA closing prices (on the Deutsche
Börse's electronic trading system) for AIXTRON's ordinary shares. See the discussion under "Item 3. Key InformationExchange Rate Information" for information with
respect

44

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to
rates of exchange between the US-Dollar and the Euro applicable during the periods set forth below.

XETRA
closing price
per ordinary
share*(EUR)High

LowAnnual**2003


5.68


2.092004


7.08


3.052005


3.95


2.362006


4.01


2.462007


9.98


3.312008


10.39


2.92Quarterly2007First quarter


5.60


3.31Second quarter


7.11


5.25Third quarter


7.19


5.05Fourth quarter


9.98


6.702008First quarter


10.39


6.83Second quarter


10.30


6.53Third quarter


7.30


3.89Fourth quarter


4.76


2.92Monthly2008July


6.55


5.66August


7.30


5.72September


7.26


3.89October


4.19


2.92November


4.30


3.03December


4.76


3.332009January


4.77


3.42February (through February 13, 2009)


4.26


3.73


---

Source: Bloomberg

On
February 13, 2009, the XETRA closing price per ordinary share was € 4.04.

NASDAQ Stock Market

AIXTRON's ADSs are listed and trade on the NASDAQ Global Select Market.

45

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Table of Contents

The
following table sets forth, for the calendar periods indicated, the high and low closing prices per ADS as reported on the NASDAQ Global Select Market:

Price per ADR*(USD)High

LowAnnual2003


na


na2004


na


na2005


4.86


2.782006


4.92


2.952007


14.80


4.542008


16.08


3.53Quarterly2007First quarter


7.24


4.54Second quarter


9.42


6.91Third quarter


10.00


6.94Fourth quarter


14.80


9.692008First quarter


15.18


10.70Second quarter


15.92


10.29Third quarter


10.80


5.75Fourth quarter


6.90


3.53Monthly2008July


10.29


8.86August


10.80


8.85September


10.48


5.75October


5.90


3.53November


5.55


3.58December


6.90


4.412009January


6.58


4.44February (through February 13, 2009)


5.49


4.72


---

Source: Bloomberg

On
February 15, 2009, the closing price per ADS on NASDAQ Global Select Market was USD 5.02.

B.    Plan of Distribution

Not applicable.

C.    Markets

See Item 9.A. "Offer and Listing Details".

D.    Selling Shareholders

Not applicable.

E.    Dilution

Not applicable.

F.     Expenses of the Issue

Not applicable.

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Table of Contents

Item 10:    Additional Information

A.    Share Capital

Not applicable.

B.    Memorandum and Articles of Association

Copies of the Company's Articles of Association are publicly available from the commercial register (Handelsregister) of the local
court (Amtsgericht) in Aachen, Germany, under the entry number HRB 7002. An English translation of the Company's Articles of Association as of May 14, 2008 can be found in Exhibit 1.1.

According
to article 2 of AIXTRON's Articles of Association, the purpose of the Company is the manufacture and sale of products, as well as research and development and services
for the implementation of semiconductor technologies and other physicochemical technologies, particularly those bearing the AIXTRON trademark. The Company is authorized to conduct all transactions
suitable for promoting the Company's purpose indirectly and directly. The Company may establish branch offices in Germany and abroad, may acquire equity interests in other companies in Germany and
abroad, as well as purchase or establish such companies. The Company may outsource all or part of its operations to affiliates.

With
respect to Items 10.B.2 through 10.B.10, see "Description of the AIXTRON Ordinary Shares" and "Description of the American Depositary Shares" in the Registration Statement on
Form F-4 (Reg. No. 333-122624) filed on February 8, 2005. Regarding the "Description of the AIXTRON Ordinary Shares, incorporated by reference, please note
that meanwhile (i) the acquisition of Genus, Inc. has been completed and (ii) in particular the following additional changes have occurred:

The
amount of the stated share capital of AIXTRON has changed and amounts to € 90,894,616 as of December 31, 2008. It is divided into 90,894,6161
no-par value registered shares. Shareholders are not entitled to be issued a share certificate representing their share(s).

The
no-par value bearer shares of the Company have been converted into no-par value registered shares by retaining the current division into shares as of
September 22, 2008. All affected passages of the AIXTRON Articles of Association have been adapted accordingly to reflect the conversion.

Article 19
sentence 2 of the Articles of Association (Convening the General Meeting) is hereby revised and will read as follows: "Notice of a General Meeting shall be given no
later than thirty days prior to the day by the end of which the shareholders must have given notice of attendance (Article 20 clause 2)."

Article 20
of the Articles of Association (Attendance of the General Meeting) is hereby revised and will read as follows:

Corporate Governance

AIXTRON's Declaration of Conformity with the recommendations of the Government Commission of the German Corporate Governance Code
(Regierungskommission Deutscher Corporate Governance Kodex) was last updated in March 2009 and states the Company's complete compliance

47

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with
the Corporate Governance Code. It is posted in the "Investor Relations" section of AIXTRON's website at www.aixtron.com.

Sarbanes-Oxley Act Requirements and NASDAQ Rules

To facilitate the Company's compliance with the Sarbanes-Oxley Act, the U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules of the NASDAQ Stock Market (the "NASDAQ Rules"), AIXTRON has established a Disclosure Committee that is responsible for reviewing and approving its public disclosures. AIXTRON also
has procedures for handling complaints related to accounting practices and a Code of Ethics.

In
conjunction with the its annual report for the year ending December 31, 2008, the Company is required to include a report from its management relating to its evaluation of the
Company's internal control over financial reporting, as required pursuant to Section 404 of the U.S. Sarbanes-Oxley Act, see Item 15 in this annual report on
Form 20-F.

AIXTRON
generally complies with applicable German corporate governance practice rather than certain of the corporate governance requirements of NASDAQ Rule 4350
("Rule 4350"). The requirements of Rule 4350 that AIXTRON is not following and its non-conforming practices in lieu thereof are as follows:



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Other
significant differences between AIXTRON's governance practices and those of U.S. domestic NASDAQ-listed companies are as follows:

Two-Tier Board

The German Corporation Act requires AIXTRON to have a two-tier board structure consisting of an Executive Board and a
Supervisory Board, which is not comparable to the one-tier or unitary board system in the U.S. The two-tier system provides a strict separation of management and supervision.
Roles and responsibilities of each of the two boards are clearly defined by law.

Independence

Under this two-tier board system, except as described above, AIXTRON's methods for determining and ensuring the
independence of its Supervisory Board differ from those of NASDAQ Rule 4350, which generally contemplates a U.S.-style, one-tier system. In contrast to the NASDAQ Rules, which
require the board to affirmatively determine the independence of the individual directors with reference to specific tests of
independence, German law does not require the Supervisory Board to make such affirmative findings on an individual basis. At the same time, the Bylaws of AIXTRON's Supervisory Board contain several
provisions to help ensure the independence of the Supervisory Board's advice and supervision. Furthermore, the members of AIXTRON's Supervisory and Executive Boards are strictly independent from one
another. A member of one board is legally prohibited from being concurrently active on the other. Supervisory Board members have independent decision making authority and are legally prohibited from
following the direction or instruction of any affiliated party. Moreover, Supervisory Board members may not enter into advisory, service or certain other contracts with AIXTRON, unless approved by the
Supervisory Board.

Compliance with the requirements of NASDAQ Marketplace Rule 4350 applicable to foreign private issuers

Under Rule 4350(a)(1), as amended, AIXTRON is required to comply with Rule 4350(b)(1)(B)(relating to disclosure of "going
concern" qualifications), Rule 4350(j)(relating to execution of NASDAQ form listing agreements) and Rule 4350(m)(relating to issuer notices to NASDAQ of material noncompliance with
Rule 4350); and to have an Audit Committee that satisfies Rule 4350(d)(3)(regarding compliance with Rule 10A-3 of the Exchange Act) and to ensure that such Audit
Committee's members meet the independence requirement in 4350(d)(2)(A)(ii)(regarding independence required under Rule 10A-3 of the Exchange Act).

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AIXTRON's
Supervisory Board has determined that as of December 31, 2008, the Company is in compliance with the aforementioned requirements applicable to foreign private issuers
pursuant to Rule 4350. In particular, AIXTRON's Supervisory Board has determined that each member of the Audit Committee is "independent" as set forth in Rule 10A-3 of the
Exchange Act and as required by Rule 4350(d)(2)(A)(ii).

Corporate Governance Guidelines

AIXTRON has adopted a Code of Ethics that applies to the members of the Company's Executive Board and senior financial officers
nominated by the Executive Board.

Various
documents pertaining to AIXTRON's corporate governance, including its Articles of Association and the report on the Company's fulfillment of the requirements of the German
Corporate Governance Code, may be found on AIXTRON's internet website atwww.aixtron.com. The information available on AIXTRON's website is not
incorporated by reference into this report.

C.    Material Contracts

Employment contracts of current members of the Executive Board.

The Company's employment contract withPaul Hyland, effective as of April 1,
2002 and amended as of November 16, 2007, provides for a base salary of € 390,000 per year and a bonus in accordance with the employment contract (3% of AIXTRON's
annual Group net income adjusted by additions to and withdrawals from revenue reserves ("modified annual AIXTRON Group net income")). The total amount available to be paid as a bonus to all Executive
Board members as a group is limited to the lesser of € 6.5 million or 10% of the modified annual AIXTRON Group net income. For the purposes of a pension scheme, the
Company pays Mr. Hyland € 40,000 per year as the premium for a life insurance of his choice to be taken out or as an additional component of his gross salary. In
addition, the Company pays Mr. Hyland the employer's contribution to the compulsory health insurance or the same amount to an alternative insurance with waiver. Mr. Hyland's present
employment contract will expire on March 31, 2010.

The
Company's employment contract withWolfgang Breme, effective as of April 1, 2005 and amended as of May 21, 2007,
provides for a base salary of € 260,000 per year and a bonus in accordance with the employment contract (1.5% of AIXTRON's annual Group net income adjusted by additions to
and withdrawals from revenue reserves ("modified annual AIXTRON Group net income")). The total amount available to be paid as a bonus to all Executive Board members as a group is limited to the lesser
of € 6.5 million or 10% of the modified annual AIXTRON Group net income. For the purposes of a pension scheme, the Company pays Mr. Breme
€ 40,000 per year as the premium for a life insurance of his choice to be taken out or as an additional component of his gross salary. In addition, the Company pays
Mr. Breme the employer's contribution to the compulsory health insurance or the same amount to an alternative insurance with waiver. Mr. Breme's present employment contract will expire
on March 31, 2013.

The
Company's employment contract withDr. Bernd Schulte, effective April 1, 2002 and amended as of November 16,
2007, provides for a base salary of € 325,000 per year and a bonus in accordance with the employment contract (1.5% of AIXTRON's annual Group net income adjusted by
additions to and withdrawals from revenue reserves ("modified annual AIXTRON Group net income")). The total amount available to be paid as a bonus to all Executive Board members as a group is limited
to the lesser of € 6.5 million or 10% of the modified annual AIXTRON Group net income. For the purposes of a pension scheme, the Company pays Dr. Schulte
€ 40,000 per year, as the premium for a life insurance of his choice to be taken out or as an additional component of his gross salary. In addition, the Company pays
Dr. Schulte the employer's contribution to the compulsory health insurance or the same amount to an alternative insurance with waiver. Dr. Schulte's present employment contract will
expire on March 31, 2010.

Intellectual Property Agreements

Certain information, such as fees and royalties in the exclusive patent and know-how license agreement with Centre National
de la Recherche Scientifique ("CNRS") and the Institut National Polytechnique de Grenoble ("INPG") executed December 17, 2002 (the "CNRS Agreement") is

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confidential
and has been redacted from the copies of the CNRS Agreement AIXTRON filed with the SEC.

The
CNRS Agreement deals with the system for injection of precursors into a vacuum vapor deposition chamber (the "Product"). CNRS and INPG grant AIXTRON an exclusive license to develop,
manufacture, use, sell the Product and exploit the patents and know-how in the entire world with the right to grant certain sub-licenses. Except for the specified
sub-license grants, the CNRS Agreement is personal, not assignable and non-transferable. The CNRS Agreement remains in force during the life of the patents unless it is
terminated by any of the parties to this agreement.

D.    Exchange Controls

At present, Germany does not restrict the movement of capital between Germany and other countries or individuals except certain
persons, entities and countries subject to embargoes in accordance with German law and applicable resolutions adopted by the United Nations and the European Union.

For
statistical purposes, with certain exceptions, every corporation or individual residing in Germany must report to the German Central Bank any payment received from or made to a
non-resident corporation or individual if the payment exceeds € 12,500 (or the equivalent in a foreign currency). Additionally, corporations and individuals
residing in Germany must report to the German Central Bank any claims of a resident against, or liabilities payable to, a non-resident corporation or individual exceeding an aggregate of
€ 5 million (or the equivalent in a foreign currency) at the end of any calendar month. Resident corporations and individuals are also required to report annually
to the German Central Bank any stakes of 10% or more they hold in the equity of non-resident corporations with total assets of more than € 3 million.
Corporations residing in Germany with assets in excess of € 3 million must report annually to the German Central Bank any stake of 10% or more in the company held
by an individual or a corporation located outside Germany.

E.    Taxation

German Taxation

The following discussion is a summary of certain material German tax consequences for beneficial owners of AIXTRON's ordinary shares or
ADSs:



The
discussion is based on tax laws of Germany as in effect on the date of this annual report, including the Convention between the United States of America and the Federal Republic of
Germany for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income and Capital and to Certain Other Taxes (the "Treaty"). Such laws are subject to
change. The discussion is also based in part upon the representations of the Depositary and assumes that each obligation in the Deposit Agreement and any related agreement will be performed in
accordance with its terms.

The
following discussion does not purport to be a comprehensive discussion of all German tax consequences that may be relevant for Non-German Holders. AIXTRON's discussion
does not address all aspects of German taxation that may be relevant to you in light of your particular circumstances. You should consult your tax advisor regarding the German federal, state and local
tax consequences of the purchase, ownership and disposition of AIXTRON's shares or ADSs and the procedures to follow to obtain a refund of German taxes withheld from dividends.

Taxation of the Company in Germany

German Corporations are subject to a corporate tax rate of 15%. A 5.5% solidarity surcharge is imposed on the Corporation Tax,
resulting in an overall tax rate of 15.825%.

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In addition, German corporations are by virtue of their legal form subject to a municipal profit-related German Trade Tax. Trade Tax is calculated on the basis of
the taxable Corporation Tax income as shown in the annual statutory profit and loss accounts of the corporation which, however, is subject to certain particular Trade Tax add-backs and
deductions. The effective Trade Tax rate applicable depends on the municipality in which the corporation maintains a permanent establishment and ranges between approximately 7% and 17%. With effect
from 2008 Trade Tax cannot be deducted for Trade Tax and Corporate Tax purposes anymore.

German
Corporation Tax and Trade Tax combined will result in an overall tax burden for German corporations amounting to approximately 30% at an average instead of over 40% before 2008.

The
deduction for a taxable loss carry forward for the fiscal year is unlimited up to a threshold of € 1,000,000, thereafter taxable income can only be
offset to the extent of 60%. The temporary loss carry forward is reduced by the amount used and remains unlimited in life. However, there are limitations on the use of loss carry forwards upon a
transfer of more than 25% of a corporation's shares or voting rights to one purchaser, a related party or group of purchasers within a specified time period.

Withholding Tax on Dividends

According to the German Business Tax Reform 2008 for dividend distributions made by AIXTRON in 2009, the withhold tax from dividends
has increased to 25%. A solidarity surcharge of 5.5% on the withholding tax has been retained, resulting in a surcharge amount to 1.375% (5.5% × 25%), and a total effective
withholding tax rate from dividends of 26.375%. For many Non-German Holders, the withholding tax rate is reduced under applicable income tax treaties. Under most income tax treaties to
which Germany is a party, the rate of dividend withholding tax is reduced to 15%. To reduce the withholding to the applicable treaty rate of 15%, a Non-German Holder must apply for a
refund of withholding taxes paid. The application for refund must be filed with the German Federal Tax Office. The relevant forms can be obtained from the German Federal Tax Office or from German
embassies and consulates.

Special Tax Rules for tax resident in Germany

From January 1, 2009 onwards 100% of dividends of shares held as private assets will be subject to a 25% fixed tax rate plus
5.5% solidarity surcharge thereon. If church tax is individually applicable for the shareholder this part of taxation will be subject of the withholding as well. This tax will be final unless the
individual tax rate of the shareholder is less than 25% and the shareholder opts for the tax assessment. Moreover, from 2009 capital gains from the sales of shares, acquired after December 31,
2008, will be taxable as well. The lump sum deduction of investment income related expenses amounts to € 801 for individuals and € 1,602 for
married couples. Further investment income related expenses will not be tax deductible.

Regarding
shares held as business assets of the shareholder, 60% of the dividends will be subject to personal income tax (part income taxation). Accordingly, 60% of the income related
expenses are deductible.

Special Tax Rules for U.S. Shareholders

Under the Treaty, the withholding tax rate generally is reduced to 15% of the gross amount of the dividends. Dividend payments to an
eligible U.S. holder made by AIXTRON will be subject to a 15% general withholding tax rate under the Treaty.

Dividend
distributions made by the Company are subject to a 25% withholding tax plus a solidarity surcharge of 5.5% on the withholding tax resulting in an aggregate German withholding
tax of 26.375% of the declared dividend, and eligible U.S. holders (as defined below under "U.S. Taxation") are entitled to receive a payment from the German tax authorities equal to 11.375% of the
declared dividend.

Accordingly,
for a declared dividend of 100, an eligible U.S. holder initially will receive 73.625: 100 minus the 26.375% withholding tax. The eligible U.S. holder is then entitled to a
refund from the German tax authorities of 11,375 and will, as a result, effectively receive a total of 85 (i.e., 85% of the declared dividend). In addition to this the taxation of capital gains
resulting from sales from disposal of shares invested after January 1, 2009 are subject to the withholding tax rate of 26.375% as well.

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Withholding Refund Procedure for U.S. Shareholders

For shares and ADSs kept in custody with The Depository Trust Company in New York or one of its participating banks, the German tax
authorities have introduced a collective procedure for the refund of German dividend, capital withholding tax and the solidarity surcharge thereon on a trial basis. Under this procedure, The
Depository Trust Company may submit claims for refunds payable to eligible U.S. holders under the Treaty collectively to the German tax authorities on behalf of these eligible U.S. holders.

The
German Federal Tax Office will pay the refund amounts on a preliminary basis to The Depository Trust Company, which will redistribute these amounts to the eligible U.S. holders
according to the regulations governing the procedure. The German Federal Tax Office may review whether the refund was made in accordance with the law within four years after making the payment to The
Depository Trust Company. Details of this collective procedure are available from The Depository Trust Company. Individual claims for refunds may be made on a special German form which must be filed
with the German Federal Tax Office (Bundeszentralamt für Steuern, Dienstsitz Bonn, An der Küppe 1, 53225 Bonn, Germany). Copies of this form can be downloaded from the
following website:

http://www.bzst.bund.de/003_menue_links/008_kapertragsteuer/084_ausl_a ntragsteller/843_vordruck/004
_E_USA.pdf

or
can be obtained from the Embassy of the Federal Republic of Germany, 4645 Reservoir Road, N.W., Washington, D.C. 20007-1998. Claims must be filed within a four-year period
from the end of the calendar year in which the dividend was received.

As
part of the individual refund claim, an eligible U.S. holder must submit to the German tax authorities the original bank voucher (or a certified copy thereof) issued by the paying
agent documenting the tax withheld, and an official certification on IRS Form 6166 of its last United States federal income tax return. IRS Form 6166 may be obtained by filing a request
with the Internal Revenue Service Center in Philadelphia, Pennsylvania, Foreign Certification Request, P.O. Box 16347, Philadelphia, PA 19114-0447. Requests for certification
must include the eligible U.S. holder's name, Social Security or Employer Identification Number, tax return form number, and tax period for which the certification is requested. Requests for
certifications can include a request to the
Internal Revenue Service to send the certification directly to the German tax authorities. If no such request is made, the Internal Revenue Service will send a certification on IRS Form 6166 to
the eligible U.S. holder, who then must submit this document with his refund claim.

Taxation of Capital Gains for U.S. Shareholders

The Income Tax Treaty provides that the German capital gains tax does not apply to gains on the sale or other disposition of ADSs or
Ordinary shares.

Inheritance and Gift Tax

The Estate Tax Treaty provides that an individual whose domicile is determined to be in the United States for purposes of such Treaty
will not be subject to German inheritance and gift tax (the equivalent of the United States federal estate and gift tax) on the individual's death or making of a gift unless the ADSs or Ordinary
Shares (1) are part of the business property of a permanent establishment located in Germany or (2) are part of the assets of a fixed base of an individual located in Germany and used
for the performance of independent personal services. An individual's domicile in the United States, however does not prevent imposition of German inheritance and gift tax with respect to an heir,
donee, or other beneficiary who either is or is deemed to be resident in Germany at the time the individual died or the gift was made.

The
Estate Tax Treaty also provides a credit against U.S. federal estate and gift tax liability for the amount of inheritance and gift tax paid to Germany, subject to certain
limitations, in a case where the ADSs or Ordinary Shares are subject to German inheritance or gift tax and U.S. federal estate or gift tax.

Other Taxes

No German transfer, stamp or similar taxes apply to the purchase, sale or other disposition of shares or ADSs by Non-German
Holder. Currently, net worth tax is not levied in Germany.

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U.S. Federal Taxation

The following is a summary of the principal U.S. federal income tax consequences that may be relevant with respect to the acquisition,
ownership and disposition of AIXTRON's shares or ADSs. This summary addresses only the U.S. federal income tax considerations of holders that hold shares or ADSs as capital assets. This summary does
not address tax considerations applicable to holders that may be subject to special tax rules, such as:



Moreover,
this summary does not address the U.S. federal estate and gift or alternative minimum tax consequences of the acquisition, ownership and disposition of AIXTRON's shares or
ADSs. This summary is based on (1) the federal tax laws of the United States as in effect and available on the date of this annual report, including the Internal Revenue Code of 1986, as
amended (the "Code"), judicial and administrative interpretations thereof, and currently effective and proposed U.S. Treasury Regulations, each as available on the date hereof, and (2) in part
on the representations and covenants of the Depositary and the assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms. All of
the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below.

For
purposes of this summary, a "U.S. Holder" is a beneficial owner of AIXTRON's shares or ADSs that, for U.S. federal income tax purposes, is: (1) a citizen or resident of the
U.S., (2) a partnership or corporation created or organized in or under the laws of the United States or any state thereof or the District of Columbia, (3) an estate, the income of which
is subject to U.S. federal income taxation regardless of its source or (4) a trust if such trust validly elects to be treated as a U.S. person for U.S. federal income tax purposes or if
(a) a court within the U.S. is able to exercise primary supervision over its administration and (b) one or more U.S. persons have the authority to control all of the substantial
decisions of the trust. A "Non-U.S. Holder" is a beneficial owner of AIXTRON's shares or ADSs that is not a U.S. Holder.

If
a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds AIXTRON's shares or ADSs, the tax treatment of such partnership and a partner
in such partnership generally will depend on the status of the partner and the activities of the partnership. Such a partnership or partner should consult its own tax advisor as to its consequences.

Each
prospective purchaser should consult his/her own tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning or disposing of
AIXTRON's shares or ADSs.

Ownership of ADSs in general

For U.S. federal income tax purposes, a holder of ADSs generally will be treated as the owner of the shares represented by such ADSs.
The U.S. Treasury Department has expressed concern that depositaries for ADSs, or other intermediaries between the holders of shares of an issuer and the

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issuer,
may be taking actions that are inconsistent with the claiming of U.S. foreign tax credits by U.S. Holders of such receipts or shares. Accordingly, the analysis regarding the availability of a
U.S. foreign tax credit for German taxes and sourcing rules described below could be affected by future actions that may be taken by the U.S. Treasury Department.

Distributions

Subject to the discussion below under "Passive Foreign Investment Company Considerations," the gross amount of any
distribution the Company makes of cash or property (other than certain distributions, if any, of shares distributed pro rata to all AIXTRON shareholders, including holders of ADSs) with respect to
shares or ADSs, before reduction for any German taxes withheld there from, will be includible in income by a U.S. Holder as dividend income to the extent such distributions are paid out of the
Company's current or accumulated earnings and profits as determined under U.S. federal income tax principles. Subject to the discussion below under "Passive Foreign Investment Company
Considerations," individuals who are U.S. Holders may be taxed on any such dividends received in a taxable year beginning on or before December 31, 2010 at the lower tax rate applicable to
long-term capital gains (i.e., gains from the sale of capital assets held for more than one year). In order to qualify for the preferential rate of taxation, certain requirements
must be met, including certain holding period requirements and the absence of certain risk reduction transactions with respect to the shares or ADSs. Such dividends will not be eligible for the
dividends received deduction generally allowed to corporate U.S. Holders. Subject to the discussion below under "Passive Foreign Investment Company Considerations," to the extent, if any,
that the amount of any distribution AIXTRON makes exceeds its current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a
tax-free return of the U.S. Holder's adjusted tax basis in the shares or ADSs and thereafter as capital gain. AIXTRON does not maintain calculations of its earnings and profits under U.S.
federal income tax principles.

Any
such dividend paid in Euros will be included in the gross income of a U.S. Holder in an amount equal to the US-Dollar value of the Euros on the date of receipt, which in
the case of ADSs, is the date they are received by the depositary. The amount of any distribution of property other than cash will be the fair market value of such property on the date of
distribution. A U.S. Holder may elect to deduct in computing his/her taxable income or, subject to certain complex limitations on foreign tax credits generally, credit against its U.S. federal income
tax liability German withholding tax at the rate applicable to such U.S. Holder. As discussed under "German TaxationSpecial Tax Rules for U.S. Shareholders" above in this Item 10
under the Treaty, dividends paid by AIXTRON to a U.S. Holder generally will be subject to a German withholding tax rate of 15%. Such reduced rate of withholding will apply only if such U.S. Holder is
treated as a resident of the U.S. for purposes of such Treaty and otherwise is entitled to the benefits of
such treaty and the dividends are not effectively connected with a permanent establishment or fixed base of such U.S. Holder that is situated in Germany.

Dividends
received by a U.S. Holder with respect to ordinary shares or ADSs will be treated as foreign source income, which may be relevant in calculating such holder's foreign tax
credit limitation. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For purposes of calculating the U.S. foreign tax credit,
dividends paid by AIXTRON generally will constitute "passive category income," or in the case of certain U.S. Holders, "general category income." U.S. Holders should consult their tax advisors
regarding the availability of, and limitations on, any such foreign tax credit.

Subject
to the discussion under "Backup Withholding Tax and Information Reporting Requirements" below in this section, a Non-U.S. Holder of shares or ADSs generally will not
be subject to U.S. federal income or withholding tax on dividends received on shares or ADSs, unless such income is effectively connected with the conduct by such Non-U.S. Holder of a
trade or business in the United States.

Sale or exchange of shares or ADSs

Subject to the discussion below under "Passive Foreign Investment Company Considerations," a U.S. Holder generally will
recognize gain or loss on the sale or exchange of shares or ADSs equal to the difference between the amount realized on such sale or exchange and the U.S. Holder's adjusted tax basis in the shares or
ADSs. Such gain or loss will be capital gain or loss. In the case of a non-corporate U.S. Holder, the maximum marginal U.S. federal income tax rate applicable to such gain

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will
be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income (other than certain dividends) if such U.S. Holder's holding period for such shares or ADSs exceeds
one year. Gain or loss, if any, recognized by a U.S. Holder generally will be treated as U.S. source income or loss for U.S. foreign tax credit purposes. The deductibility of capital losses is subject
to limitations.

A
U.S. Holder's initial tax basis in shares or ADSs will be the US-Dollar value of the Euro denominated purchase price determined on the date of purchase. If the shares or
ADSs are treated as traded on an "established securities market," a cash basis U.S. Holder, or, if it elects, an accrual basis U.S. Holder, will determine the dollar value of the cost of such shares
or ADSs by translating the amount paid at the spot rate of exchange on the settlement date of the purchase. If a U.S. Holder converts US-Dollars to Euros and immediately uses that currency
to purchase shares or ADSs, such conversion generally will not result in taxable gain or loss to such U.S. Holder. With respect to the sale or exchange of shares or ADSs, the amount realized generally
will be the US-Dollar value of the payment received determined on (1) the date of receipt of payment in the case of a cash basis U.S. Holder and (2) the date of disposition
in the case of an accrual basis U.S. Holder. If the shares or ADSs are treated as traded on an "established securities market," a cash basis taxpayer, or, if he/she elects, an accrual basis taxpayer,
will determine the US-Dollar value of the amount realized by translating the amount received at the spot rate of exchange on the settlement date of the sale.

Subject
to the discussion under "Backup Withholding Tax and Information Reporting Requirements" below in this section, a Non-U.S. Holder of shares or ADSs generally will not
be subject to U.S. federal income or withholding tax on any gain realized on the sale or exchange of such shares or ADSs unless (1) such gain is effectively connected with the conduct by such
Non-U.S. Holder of a trade or business in the U.S. or (2) in the case of any gain realized by an individual Non-U.S. Holder, such holder is present in the U.S. for
183 days or more in the taxable year of such sale or exchange and certain other conditions are met.

Passive Foreign Investment Company Considerations

A Non-U.S. corporation will be classified as a "passive foreign investment company," or a PFIC, for U.S. federal income tax
purposes in any taxable year in which, after applying certain look-through rules, either: (i) at least 75% of its gross income is "passive income;" or (ii) at least 50% of
the average value of its gross assets is attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes
dividends, interest, royalties, rents and gains from commodities and securities transactions.

Based
on certain estimates of the Company's gross income and gross assets and the nature of the Company's business, AIXTRON does not believe it was a PFIC for the taxable year ending
December 31, 2008. AIXTRON's status in future years will depend on its assets and activities in those years. AIXTRON has no reason to believe that its assets or activities will change in a
manner that would cause the Company to be classified as a PFIC, but there can be no assurance that AIXTRON will not be considered a PFIC for any taxable year. If AIXTRON were a PFIC, U.S. Holders
generally would be subject to imputed interest charges and other disadvantageous tax treatment with respect to any gain from the sale or exchange of, and certain distributions with respect to, shares
or ADSs.

If
AIXTRON were a PFIC, U.S. Holders could make a variety of elections that may alleviate certain tax consequences referred to above, and one of these elections may be made
retroactively. However, it is expected that the conditions necessary for making certain of such elections will not apply in the case of AIXTRON's shares and the ADSs. U.S. Holders should consult their
own tax advisor regarding the tax consequences that would arise if AIXTRON were to be treated as a PFIC.

Backup withholding tax and information reporting requirements

U.S. backup withholding tax and information reporting requirements generally apply to certain payments to certain
non-corporate holders of stock. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, shares or ADSs made within the
United States, or by a U.S. payor or U.S. middleman to a holder of shares or ADSs, other than an "exempt recipient," including a corporation, a payee that is not a U.S. person that provides an
appropriate certification, and certain other persons. A payor will be required to withhold backup withholding tax from any payments of dividends on, or the proceeds from the, sale or redemption of,
shares or ADSs within the United States to a holder, or by a U.S. payor or U.S. middleman, other than

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an
"exempt recipient," if such holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, such backup withholding tax
requirements. The backup withholding rate is 28% for taxable years through 2010.

In
the case of such payments made within the U.S. to a foreign simple trust, a foreign grantor trust or a foreign partnership, other than payments to a foreign simple trust, a foreign
grantor trust or a foreign partnership that qualifies as a "withholding foreign trust" or a "withholding foreign partnership" within the meaning of the applicable U.S. Treasury Regulations and
payments to a foreign simple trust, a foreign grantor trust or a foreign partnership that are effectively connected with the conduct of a trade or business in the U.S., the beneficiaries of the
foreign simple trust, the persons treated as the owners of the foreign grantor trust or the partners of the foreign partnership, as the case may be, will be required to provide the certification
discussed above in order to establish an exemption from backup withholding tax and information reporting requirements. Moreover, a payor may rely on a certification provided by a payee that is not a
U.S. person only if such payor does not have actual knowledge or a reason to know that any information or certification stated in such certificate is incorrect.

The
above summary is not intended to constitute a complete analysis of all tax consequences that may be relevant to the acquisition, ownership and disposition of shares or ADSs, and does
not address state, local, foreign or other tax laws. Holders of shares or ADSs should consult their own tax advisors concerning the tax consequences of their particular situations.

F.     Dividends and Paying Agents

Not applicable.

G.    Statement by Experts

Not applicable.

H.    Documents on Display

AIXTRON is subject to the informational requirements of the U.S. Exchange Act. In accordance with these requirements, AIXTRON files
reports and other information with the SEC. These materials, including this report and the exhibits thereto, may be inspected and copied at the SEC's Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. Copies of the materials may be obtained from the SEC's Public Reference Room at prescribed rates. The public may obtain information on the operation of the SEC's Public
Reference Room by calling the SEC in the United States at 1-800-SEC-0330. AIXTRON's filings, including this report, are also available on the SEC's website at www.sec.gov.

I.     Subsidiary Information

Not applicable.

Item 11:    Quantitative and Qualitative Disclosure about Market Risk

The global nature of AIXTRON's businesses exposes the Company to market risks resulting from changes in foreign currency exchange rate
and interest rates. Accordingly, changes in foreign currency exchange rates and interest rates may adversely affect its operating results and financial condition. AIXTRON is also exposed to commodity
price risks. AIXTRON seeks to manage and control these market risks primarily through monitoring of its operating and financial activities and the use of derivative financial instruments.

Exchange Rate Risk

Transaction Risk and Currency Risk Management

The global nature of AIXTRON's businesses exposes its operations and reported financial results and cash flows to the risks arising
from fluctuations in the exchange rates of the dollar, the Euro and other world currencies. AIXTRON's businesses are exposed to transaction risk whenever the Company has revenues in a currency that is
different from the currency in which it incurs the costs of generating those revenues. When AIXTRON converts the revenues into the currency in which it incurs the costs,

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the
value of the revenues may have declined in the interim relative to the currency in which the Company incurred the costs. These risks primarily affect the Company's business in Europe, which
generates a part of AIXTRON's system revenues in foreign currencies, primarily US-Dollars, and incurs manufacturing costs primarily in Euros.

Effects of Currency Translation

Most of AIXTRON's subsidiaries are located outside the Euro zone. Since the Company's financial reporting currency is the Euro, AIXTRON
translates the income statements of these subsidiaries into Euros so that the Company can include their financial results in its Consolidated Financial Statements.
Period-to-period changes in the average exchange rate for a particular country's currency can significantly affect the translation of both revenues and operating income
denominated in that currency into Euros.

AIXTRON
has assets and liabilities outside the Euro zone. These assets and liabilities are denominated in local currencies and reside primarily at AIXTRON's subsidiaries in the United
States and the United Kingdom.

When
AIXTRON converts net asset values into Euros, currency fluctuations result in period-to-period changes in those net asset values. The Company's equity
position reflects these changes in net asset values. AIXTRON generally does not hedge against this type of risk.

Foreign Currency Risk

The Company's activities expose it to the financial risks of changes in foreign currency exchange rates. The Company enters into a
variety of derivative financial instruments to manage its exposure to foreign currency risk, including forward exchange contracts and options to hedge the exchange rate risk arising from the exporting
of equipment. The main exchange rates giving rise to the risk are those between the US-Dollar, pound sterling, and Euro.

The
Company's use of derivative financial instruments is governed by the Company's policies, approved by the Supervisory Board, which provide principles on foreign exchange rate risk and
the use of derivative financial instruments. Exposures are reviewed on a regular basis. The Company does not enter into derivative financial instruments for purely speculative purposes.

Exposure
to exchange rate risk is managed by the Company through sensitivity analysis. The following table details the Company's historical sensitivity to a 10% increase/decrease in the
value of the Euro against the principal foreign currencies involved.

This
represents AIXTRON's assessment of the possible change in foreign exchange rates. The sensitivity analysis of the Company's exposure to foreign currency risk at the reporting date
has been determined based on the change taking place at the beginning of the applicable financial year and sustained throughout such fiscal year, the effects of changes in the opening and closing
balance sheet

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values
have been ignored in this analysis. A negative number indicates a decrease in revenue and net income or net loss where the Euro strengthens against the US-Dollar or the Pound
Sterling.

Impact of 10% increase of EUR vs. USD exchange rate

2008

2007

2006(EUR thousands)Revenues


(20.941
)

(15.740
)

(11.319
)Net Result


(4.863
)

(5.034
)

93.651
)




Impact of 10% increase of EUR vs. GBP exchange rate

2008

2007

2006(EUR thousands)Revenues


(40
)

(415
)

(291
)Net Result


2.477


2.391


499




Impact of 10% decrease of EUR vs. USD exchange rate

2008

2007

2006(EUR thousands)Revenues


20.941


15.740


11.319Net Result


4.863


5.034


3.651




Impact of 10% decrease of EUR vs. GBP exchange rate

2008

2007

2006(EUR thousands)Revenues


40


415


291Net Result


(2.477
)

(2.391
)

(499
)


The sensitivity of the Company's net income to exchange rate risk is reduced, in comparison with the effect on revenue, by the use of foreign
currency exchange contracts and by the "natural hedge" effect of costs incurred in those currencies.

It
is the Company's policy to enter into foreign exchange contracts to cover specific foreign currency receipts within the range of 80 to 90% of the expected exposure. The Company also
enters into foreign exchange contracts to manage the risk associated with anticipated sales transactions, generally in the range of 15 months and generally within 50 to 60% of the exposure
generated.

Interest Rate Risk

The Company's income is subject to effects from interest rate fluctuations relating to interest rate influenced cash and cash
equivalents, short term investments and bank loans. During 2008 the Company received € 3.17 million of net interest income.

See
Note 28 to the Company's Consolidated Financial Statements ("Financial Instruments") for more information on the credit, interest rate, and currency risks arising in AIXTRON's
normal course of business.

Item 12:    Description of Securities other than Equity Securities

Not applicable.

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Table of Contents

PART II

Item 13:    Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14:    Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15:    Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, Management of AIXTRON conducted an evaluation, under the supervision and with the
participation of AIXTRON's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of AIXTRON's disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act).

Based
on such evaluation, AIXTRON's Chief Executive Officer Paul Hyland and Chief Financial Officer Wolfgang Breme have concluded that, as of December 31, 2008, AIXTRON's
disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by AIXTRON in the reports that it files or
submits under the Exchange Act and are effective in ensuring that information required to be disclosed by AIXTRON in the reports that it files or submits under the Exchange Act is accumulated and
communicated to AIXTRON's Management, including AIXTRON's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

AIXTRON's Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Rule 13a-15(f) under the Exchange Act, for AIXTRON. Under the supervision and with the participation of AIXTRON's Chief Executive Officer and Chief Financial Officer,
AIXTRON's Management conducted an evaluation of the effectiveness of AIXTRON's internal control over financial reporting based upon the framework in "Internal ControlIntegrated Framework"
issued by the Committee of Sponsoring Organizations of the Treadway Commission as of the end of the period covered by this report.

Based
on that evaluation, Management has concluded that AIXTRON's internal control over financial reporting was effective as of December 31, 2008 at providing reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of
America.

Deloitte &
Touche GmbH, an independent registered public accounting firm, has audited the consolidated financial statements included in this annual report on
Form 20-F and, as part of the audit, has issued an attestation report, included therein, on the effectiveness of AIXTRON's internal control over financial reporting.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2008 there have been no changes in our internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Procedures in Internal Control over Financial Reporting

It should be noted that any system of controls, however well-designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

60

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Table of Contents

Item 16A:    Audit Committee Financial Experts

As of December 31, 2008, AIXTRON's Supervisory Board has determined that Prof. Dr. Wolfgang Blättchen is
an "Audit Committee financial expert." The Supervisory Board has determined that the "Audit Committee financial expert" is "independent" as set forth in Rule 10A-3 of the Exchange
Act.

Item 16B:    Code of Ethics

AIXTRON has adopted a code of ethics that applies to the members of the Company's Executive Board and senior financial officers
nominated by AIXTRON's Executive Board. All of these Executive Board members and senior financial officers have agreed to abide by this code of ethics. AIXTRON's code of ethics, which is filed as an
exhibit to this annual report on Form 20-F, is consistent with the requirements of the German Code of Corporate Governance and the NASDAQ Stock Market. The Company has revised its
code of ethics in 2007 and has published the updated version of the code of ethics on its website at www.aixtron.com. A copy of the code of ethics may be obtained free of charge by written request to
AIXTRON AG, Kackertstr. 15-17, 52072 Aachen, Germany or from the contact form on AIXTRONs website.

Item 16C:    Principal Accountant Fees and Services

Aggregate fees billed to AIXTRON for the years ended December 31, 2008 and 2007 by AIXTRON's independent principal accountant,
Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates are as follows:

Type of Fees

Dec 31,
2008

Dec 31,
2007(€ millions)Audit Fees


0.69


0.73Audit-Related Fees


0.06


0.03Tax Fees


0.21


0.09All Other Fees


0.00


0.02Total


0.96


0.87


In the above table, "audit fees" are the aggregate fees for professional services in connection with the audit of the Company's Consolidated
Financial Statements, reviews of interim financial statements, as well as audits of statutory financial statements of AIXTRON and its subsidiaries. Also included in "audit fees" are amounts for
attestation services in relation to regulatory filings and other compliance requirements. "Audit-related fees" are fees for accounting advice on actual or contemplated transactions, due diligence
engagements related to acquisitions, attestation regarding compliance with certain agreements and other agreed-upon procedures. "Tax fees" are fees for tax advice on actual or contemplated
transactions, tax compliance and expatriate employee tax services. "All Other Fees" are miscellaneous items.

Audit Committee Pre-Approval Policies

In accordance with German law, AIXTRON'S independent auditors are appointed at the Annual Shareholders' Meeting based on a
recommendation of the Company's Supervisory Board. The Audit Committee of the Supervisory Board prepares the Board's recommendation on the selection of the independent auditors. Subsequent to the
auditors' appointment, the Supervisory Board awards the contract and in its sole authority approves the terms and scope of the audit and all audit engagement fees, as well as monitors the auditors'
independence. On May 14, 2008, at the Annual General Meeting of Shareholders, Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Düsseldorf,
Germany ("Deloitte & Touche") was appointed to serve as the Company's independent auditors for the year ending December 31, 2008.

In
order to assure the integrity of independent audits, AIXTRON's Audit Committee established a policy to approve all audit and permissible non-audit services provided by the
Company's independent auditors prior to the auditors' engagement. As part of this approval process, the Audit Committee adopted pre-approval policies and procedures pursuant to which the
Audit Committee annually pre-approves certain types of services to be performed by AIXTRON's independent auditors. Under

61

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Table of Contents

the
policies, the Company's independent auditors are not allowed to perform any non-audit services which may impair the auditors' independence under the rules of the SEC. In fiscal year
2008 the Supervisory Board pre-approved 100% of the performance by Deloitte & Touche of the above specified audit and permitted non-audit services.

Item 16D:    Exemptions from Listing Standards for Audit Committees

Not applicable.

Item 16E:    Purchases of Equity Securities by the Issuer

Not applicable.

Item 16F:    Change in Registrant's Certifying Accountant

Not applicable.

Item 16G:    Corporate Governance

AIXTRON is a stock corporation organized under the laws of the Federal Republic of Germany and AIXTRON's ADSs are listed on NASDAQ
Stock Market. AIXTRON generally complies with applicable German corporate governance practice rather than certain of the corporate governance requirements of NASDAQ Rule 4350. In addition, the
German Corporation Act requires AIXTRON to have a two-tier board structure. For more information regarding how AIXTRON's corporate governance practices are different from a domestic
issuer, refer to Item 10.B "Additional InformationMemorandum and Articles and Association" in this report.

62

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Table of Contents

PART III

Item 17:    Financial Statements

Not applicable.

Item 18:    Financial Statements

See pages F-1 to F-58, incorporated herein by reference.

Item 19:    Exhibits

Exhibit
Number

Description of Exhibit1.1

Articles of Association (Satzung) as amended May 14, 2008.4.2

Manufacturing License and Technical Services Agreement, dated as of August 10, 1989, between AIXTRON Aktiengesellschaft and Laboratoires D'Electronique Philips (incorporated by reference to Exhibit 10.2 to
Form F-4, dated February 8, 2005, File No. 333-122624).4.3

Exclusive Patent and KnowHow License Agreement among AIXTRON Aktiengesellschaft, Centre National de la Recherche Scientifique and the Institut National Polytechnique de Grenoble (incorporated by reference to
Exhibit 10.3 to Form F-4, dated February 8, 2005, File No. 333-122624).4.4

Contract between AIXTRON AG and Mr. Paul Hyland, effective April 1, 2002. (English translation; incorporated by reference to Exhibit 4.4 to Form 20-F, dated June 22, 2006, File
No. 000-51196).4.5

Amendment to contract between AIXTRON AG and Mr. Paul Hyland, dated October 20, 2004. (English translation; incorporated by reference to Exhibit 4.5 to Form 20-F, dated June 22, 2006, File
No. 000-51196).4.6

Contract between AIXTRON AG and Mr. Wolfgang Breme, effective April 1, 2005. (English translation; incorporated by reference to Exhibit 4.5 to Form 20-F, dated March 15, 2007, File
No. 000-51196).4.7

Contract between AIXTRON AG and Dr. Bernd Schulte, effective April 1, 2002. (English translation; incorporated by reference to Exhibit 4.7 to Form 20-F, dated June 22, 2006, File
No. 000-51196).4.8

Amendment to contract between AIXTRON AG and Dr. Bernd Schulte, dated October 20, 2004. (Incorporated by reference to Exhibit 4.8 to Form 20-F, dated June 22, 2006, File
No. 000-51196).8.1

List of Subsidiaries (incorporated by reference to the list of significant subsidiaries set forth in this report under the caption "Item 4. Information on the CompanyOrganizational Structure.")11.1

Code of Ethics, revised in 2007 (Incorporated by reference to Exhibit 11.1 to Form 20-F, dated March 13, 2008, File No. 000-51196).12.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.12.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.13.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.14.1

Consent of Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft.


63

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Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on its behalf.

Date:
March 12, 2009

AIXTRON AKTIENGESELLSCHAFT/s/ PAUL HYLANDName:

Paul HylandTitle:

Chairman, President and Chief Executive Officer




/s/ WOLFGANG BREMEName:

Wolfgang BremeTitle:

Executive Vice President and
Chief Financial Officer


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Table of Contents

Report of Independent Registered Public Accounting Firm

To
The Supervisory Board
AIXTRON AG
Aachen, Germany

We
have audited the accompanying consolidated balance sheets of AIXTRON Aktiengesellschaft and subsidiaries (the "Company") as of December 31, 2008 and 2007 and the related consolidated
statements of income, changes in equity, statement of recognised income and expenses and cash flows for each of the three years in the period ended December 31, 2008. These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of AIXTRON Aktiengesellschaft and subsidiaries as of December 31, 2008
and 2007 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with International Financial Reporting
Standards as issued by the International Accounting Standards Board (IASB).

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of
December 31, 2008, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March, 11 2009 expressed an unqualified opinion on the Company's internal control over financial reporting.

Deloitte
& Touche GmbH
Wirtschaftsprüfungsgesellschaft

Duesseldorf,
Germany
March 11, 2009

65

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Table of Contents

CONSOLIDATED INCOME STATEMENT

Note

2008

2007

2006(in EUR thousands)Revenues


3


274,404


214,815


171,685Cost of sales





161,525


129,779


108,245Gross profit





112,879


85,036


63,440Selling expenses





27,842


27,163


23,366General administration expenses





17,997


16,030


17,266Research and development costs


5


28,286


26,532


23,942Other operating income


6


5,192


6,612


8,468Other operating expenses


7


11,457


1,280


1,635Operating result





32,489


20,643


5,699Finance Income





3,189


1,857


1,003Finance Expense





23


99


56Net Finance Income


9


3,166


1,758


947Result before taxes





35,655


22,401


6,646Taxes on income


10


12,661


5,151


789Profit/loss attributable to the equityholders of AIXTRON AG (after taxes)





22,994


17,250


5,857Basic earnings per share (€)


23


0.26


0.20


0.07Diluted earnings per share (€)


23


0.25


0.19


0.07


See accompanying notes to consolidated financial statements.

F-1

---



Table of Contents

CONSOLIDATED BALANCE SHEET

Note

12/31/2008

12/31/2007(in EUR thousands)AssetsProperty, plant and equipment


12


39,324


35,121Goodwill


13


58,719


58,974Other intangible assets


13


10,255


12,508Investment property


14


4,908


4,908Other non-current assets


15


672


745Deferred tax assets


16


3,161


4,773Tax assets


17


420


437Total non-current assets





117,459


117,466Inventories


18


77,086


60,013Trade receivables less allowance k€ 2,289 (2007: k€ 567)


19


38,814


33,490Current tax assets


11


59


59Other current assets


19


10,947


9,025Other financial assets


20


3,000


4,831Cash and cash equivalents


21


67,462


71,943Total current assets





197,368


179,361Total assets





314,827


296,827Liabilities and shareholders' equitySubscribed capital Number of shares: 89,692,328 (last year: 89,138,905)





89,692


89,139Additional paid-in capital





106,445


102,562Retained earnings





30,507


13,845Income and expenses recognised in equity





(13,755
)

(7,192
)Total shareholders' equity


22


212,889


198,354Provisions for pensions


26


845


878Other non-current liabilities





67


71Other non-current accruals and provisions


26


1,210


1,496Total non-current liabilities





2,122


2,445Trade payables


27


18,782


23,761Advance payments from customers





52,566


49,988Other current accruals and provisions


26


20,481


16,473Other current liabilities


27


1,866


1,303Current tax liabilities


11


6,085


4,254Deferred revenues





36


249Total current liabilities





99,816


96,028Total liabilities





101,938


98,473Total liabilities and shareholders' equity





314,827


296,827


See accompanying notes to consolidated financial statements.

F-2

---



Table of Contents

CONSOLIDATED CASH FLOW STATEMENT

Note

2008

2007

2006(in EUR thousands)Cash inflow from operating activitiesNet income for the year (after taxes)





22,994


17,250


5,857Reconciliation between profit and cash inflow/outflow from operating activitiesExpense from share-based payments





1,808


1,250


1,450Impairment expense





0


332


816Depreciation and amortization expense





10,753


9,748


9,900Net result from disposal of property, plant and equipment





68


36


38Deferred income taxes





2,314


620


1,351Other non-cash expenses





98


2,888


1,247Change inInventories





(20,087
)

(9,601
)

(21,388
)Trade receivables





(6,811
)

(8,086
)

(4,749
)Other assets





(3,930
)

(4,045
)

(1,640
)Trade payables





(3,192
)

(5,518
)

12,894Provisions and other liabilities





8,040


8,295


(3,773
)Deferred revenues





(215
)

(243
)

(151
)Non-current liabilities





(376
)

(452
)

(924
)Advance payments from customers





4,393


20,390


19,841Cash inflow from operating activities





15,857


32,864


20,769Cash inflow/outflow from investing activitiesCash from acquisitions





0


80


0Cost related to the acquisitions





(392
)

(458
)

0Capital expenditures in property, plant and equipment





(11,617
)

(6,090
)

(2,181
)Capital expenditures in intangible assets





(1,251
)

(2,029
)

(184
)Bank deposits with a maturity of more than 90 days


20


1,831


(2,050
)

(2,781
)Cash inflow/outflow from investing activities





(11,429
)

(10,547
)

(5,146
)Cash inflow/outflow from financing activitiesExercise of stock options





2,628


5,171


83Dividend paid to shareholders





(6,331
)

0


0Cash inflow/outflow from financing activities





(3,703
)

5,171


83Effect of changes in exchange rates on cash and cash equivalents





(5,206
)

(2,296
)

(390
)Net change in cash and cash equivalents





(4,481
)

25,192


15,316Cash and cash equivalents at the beginning of the period





71,943


46,751


31,435Cash and cash equivalents at the end of the period


21


67,462


71,943


46,751Interest paid





(119
)

(85
)

(166
)Interest received





3,141


1,850


971Income taxes paid





(3,105
)

(988
)

(1,313
)Income taxes received





59


376


8


See accompanying notes to consolidated financial statements.

F-3

---



Table of Contents

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Income and expense recognised directly in equitySubscribed
capital
under
HGB

Treasury
shares

Subscribed
capital
under
IFRS

Additional
paid-in-
capital

Currency
translation

Derivative
financial
instruments

Accumulated
deficit/
Retained
Earnings

Shareholders'
equity Total(in EUR thousands)Balance at January 1, 2008


90,444


(1,305
)

89,139
*

102,562


(8,383
)

1,191


13,845
*

198,354
*Net income for the period




















22,994


22,994Dividends to shareholders




















(6,332
)*

(6,332
)Expense for stock options











1,808
*










1,808Exercise stock options


450


103


553


2,075











2,628Currency translation














(5,372
)







(5,372
)Derivative financial instruments net of tax

















(1,191
)




(1,191
)Balance at December 31, 2008


90,894


(1,202
)

89,692
*

106,447
*

(13,755
)

0


30,507
*

212,889
*


---

Income and expense recognised directly in equitySubscribed
capital
under
HGB

Treasury
shares

Subscribed
capital
under
IFRS

Additional
paid-in-
capital

Currency
translation

Derivative
financial
instruments

Retained
Earnings/
Accumulated
deficit

Shareholders'
equity Total(in EUR thousands)Balance at January 1, 2006


89,800


(2,003
)

87,797


95,951


9,420


(305
)

(9,264
)

183,599Net income for the period




















5,857


5,857Expense for stock options











1,450











1,450Exercise of stock options





40


40


43











83Currency translation














(7,871
)







(7,871
)Derivative financial instruments net of tax

















824





824Balance at December 31, 2006


89,800


(1,963
)

87,836
*

97,444


1,549


519


(3,406
)*

183,942Balance at January 1, 2007


89,800


(1,963
)

87,836
*

97,444


1,549


519


(3,406
)*

183,942Net income for the period




















17,250


17,250Expense for stock options











1,250











1,250Exercise stock options


644


658


1,303


3,868











5,171Currency translation














(9,932
)







(9,932
)Derivative financial instruments net of tax

















672





672Balance at December 31, 2007


90,444


(1,305
)

89,139
*

102,562


(8,383
)

1,191


13,845
*

198,354
*


---

See accompanying notes to consolidated financial statements.

F-4

---



Table of Contents

STATEMENT OF RECOGNISED INCOME AND EXPENSE

2008

2007

2006(in EUR thousands)Net income/loss


22,994


17,250


5,857Losses/gains from derivative financial instruments before taxes


(1,707
)

961


1,122Currency translation adjustment


(5,372
)

(9,932
)

(7,871
)Deferred taxes


515


(289
)

(298
)Net loss recognised directly in equity


(6,564
)

(9,260
)

(7,047
)Total recognised income and expenses for the period


16,430


7,990


(1,190
)


See accompanying notes to consolidated financial statements.

F-5

---





Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.     General principles

AIXTRON AG ("AIXTRON AG") is incorporated as a stock corporation ("Aktiengesellschaft") under the laws of the Federal Republic of Germany. The Company is domiciled at
Kackertstraße 15-17, 52072 Aachen, Germany. AIXTRON AG is registered in the commercial register of the District Court ("Amtsgericht") of Aachen under HRB 7002.

The
consolidated financial statements of AIXTRON AG and its subsidiaries ("AIXTRON"or "Company") have been prepared in accordance with, and fully comply with



AIXTRON
is a leading provider of deposition equipment to the semiconductor and compound-semiconductor industry. The Company's technology solutions are used by a diverse range of
customers worldwide to build advanced components for electronic and opto-electronic applications based on compound, silicon, or organic semiconductor materials. Such components are used in
fibre optic communication systems, wireless and mobile telephony applications, optical and electronic storage devices, computing, signalling and lighting, displays, as well as a range of other
leading-edge technologies.

These
consolidated financial statements have been prepared by the Executive Board and have been submitted to the Supervisory Board for its meeting held on March 11, 2009.

2.     Significant accounting policies

(a)   Companies included in consolidation

Companies included in consolidation are the parent company, AIXTRON AG, and 7 significant companies, in which AIXTRON AG has a 100% direct shareholding or
control. The balance sheet date of all consolidated companies is December 31. A list of all significant consolidated companies is shown in note 33.

(b)   Basis of accounting

The consolidated financial statements are presented in Euro (EUR). The amounts are rounded to the nearest thousand Euro (kEUR). Some items in the balance sheet
and income statement have been combined under one heading to improve the clarity of presentation. Such items are disclosed and commented on individually in the notes.

The
financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments.

The
preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of income and expenses during the reported period. Actual results may differ from these estimates.

The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if this
revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments which have a significant effect on the
Company's financial statements are described in Note 39.

The
accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

The
accounting policies have been applied consistently by each consolidated company.

F-6

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

(c)   Bases of consolidation



(d)   Foreign currency

The consolidated financial statements have been prepared in Euro (EUR). In the translation of financial statements of subsidiaries outside the
Euro-Zone the local currencies are used as functional currencies of these subsidiaries. Assets and liabilities of these subsidiaries are translated to EUR at the exchange rate ruling at
the balance sheet date. Revenues and expenses are translated to EUR at average exchange rates for the year or at average exchange rates for the period between their inclusion in the consolidated
financial statements and the balance sheet date. Net equity is translated at historical rates. The differences arising on translation are disclosed in income and expenses reocognised in equity.

Exchange
gains and losses resulting from fluctuations in exchange rates in the case of foreign currency transactions are recognised in the income statement in "other operating income" or
"other operating expenses".

(e)   Property, plant and equipment



F-7

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)





Buildings

25 years

Machinery and equipment

3-14 years

Other plant, factory and office equipment

3-14 years


(f)    Intangible assets





Software

2-5 years

Patents and similar rights

5-18 years

Customer base and product and technology know how

6-7 years


F-8

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

(g)   Investment property

Investment properties are measured using the cost model.

(h)   Financial Instruments





F-9

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)



F-10

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

(i)    Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less
the estimated cost of completion and selling expenses. Cost is determined using weighted average cost.

The
cost includes expenditures incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of work in progress and finished goods, cost
includes direct material and production cost, as well as an appropriate share of overheads based on normal operating capacity.

Allowance
for slow moving, excess and obsolete, and otherwise unsaleable inventory is recorded based primarily on either the Company's estimated forecast of product demand and production
requirement for the next twelve months or historical trailing twelve month usage. When there has been no usage of an inventory item during a period of twelve months, the Company writes down such
inventories based on previous experience.

(j)    Operating Result

Operating result is stated before finance income, finance expense and tax.

(k)   Impairment of property, plant and equipment and intangible assets

Goodwill purchased as part of a business acquisition is tested annually for impairment, irrespective of whether there is any indication of impairment. For
impairment test purposes, the goodwill is allocated to cash-generating units. Impairment losses are recognised to the extent that the carrying amount exceeds the higher of net realisable
value or value in use (recoverable amount) of the cash-generating unit.

Property,
plant and equipment as well as other intangible assets are tested for impairment, where there is any indication that the asset may be impaired. Impairment losses on such assets
are recognised, to the extent that the carrying amount exceeds either the net realisable value that would be obtainable from a sale in an arm's length transaction, or the value in use.

In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments and
the risks associated with the asset.

Impairment
losses are reversed if there has been a change in the estimates used to determine the recoverable amount. Reversals are made only to the extent that the carrying amount of the
asset does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.

An
impairment loss in respect of goodwill is not reversed.

(l)    Earnings per share

Basic earnings per share are computed by dividing net income (loss) by the weighted average number of issued common shares and AIXTRON ADS (see note 23)
for the year. Diluted earnings per share reflect the potential dilution that could occur if options issued under the Company's stock option plans were exercised and convertible bonds were converted,
unless such conversion had an anti-dilutive effect.

(m)  Convertible bonds

Convertible bonds that can be converted to share capital at the option of the holder, where the number of shares issued does not vary with changes in their fair
value, are accounted for as compound financial instruments. Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and equity components in
proportion to the allocation of proceeds. The equity component of the convertible bonds is calculated as the excess of the issue proceeds over the present

F-11

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

value
of the future interest and principal payments, discounted at the market rate of interest applicable to similar liabilities that do not have a conversion option. The interest expense recognised
in the income statement is calculated using the effective interest rate method.

(n)   Employee benefits



(o)   Provisions

A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle this obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a
pre-tax interest rate that reflects current market assessments of the time value of money and, where appropriate, the risks associated with the liability.



F-12

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)



(p)   Revenue

Revenue is generated from the sale and installation of equipment, spare parts and maintenance services. The sale of equipment involves a customer acceptance test
at AIXTRON's production facility. After successful completion of this test, the equipment is dismantled and packaged for shipment. Upon arrival at the customer site the equipment is reassembled and
installed, which is a service generally performed by AIXTRON engineers. AIXTRON gives no general rights of return, discounts, credits or other sales incentives within its terms of sale. However,
occasionally some customers of AIXTRON have specifically negotiated terms and conditions of business.

Revenues
from the sale of products that have been demonstrated to meet product specification requirements are recognised upon shipment to the customer, if a full customer acceptance test
has been successfully completed at the AIXTRON production facility and the risk has passed to the customer.

Revenue
relating to the installation of the equipment at the customer's site is recognised when the installation is completed and the final customer acceptance has been confirmed. The
portion of the contract revenue deferred until completion of the installation services is determined based on either the fair value of the installation services or the portion of the contract amount
that is due and payable upon completion of the installation. Fair value of the installation services is determined based on an estimate of the materials and time required to complete the installation.

Revenue
related to products where meeting the product specification requirements has not yet been demonstrated, or where specific rights of return have been negotiated, is recognised
only upon final customer acceptance.

Revenue
on the sale of spare parts is recognised when title and risk passes to the customer, generally upon shipment. Revenue from maintenance services is recognised as the services are
provided.

(q)   Expenses



F-13

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

(r)   Other operating income



(s)   Tax

The tax expense represents the sum of the tax currently payable and deferred tax.

Deferred
tax assets and liabilities are recorded for all temporary differences between tax and commercial balance sheets and for losses brought forward for tax purposes as well as for
tax credits of the companies included in consolidation. The deferred taxes are calculated, based on tax rates applicable at the balance sheet date or known to be applicable in the future. Effects of
changes in tax rates on the deferred tax assets and liabilities are recognised upon adoption of the amended law.

A
deferred tax asset is recognised only to the extent that it is probable that future taxable profits can be set off against tax credits and tax loss carry forwards. Deferred tax assets
are reduced to the extent that it is no longer probable that the related tax benefit can be realised. The recoverability of deferred tax assets is reviewed at least annually.

(t)    Segment reporting

A business segment is a distinguishable component of the Company that is engaged in providing products or services which are subject to similar risks and rewards.
AIXTRON operates in worldwide
markets. As the risks and rates of return are primarily affected by projects and services, the primary format for the reporting of segment information is business segments with secondary information
reported geographically.

Internally
reported product lines are combined for group reporting in one business segment as defined in IAS 14.34, as they show only insignificant differences as to long term
profit forecasts and as they are materially similar in the assessment of the criteria used to distinguish the individual business segments as defined in IAS 14.9.

Accounting
standards applied in segment reporting are in accordance with the general accounting policies as explained in this section. The disclosed revenues earned with other segments
are at arm's length.

(u)   Cash flow statement

The cash flow statement is prepared in accordance with IAS 7. Cash flows from operating activities are prepared using the indirect method. Cash inflows and
cash outflows from taxes and interest are included in cash flows from operating activities.

(v)   Recently issued accounting standards

The company has not adopted any new accounting standards during 2008. During 2008 four interpretations issued by the International Financial Reporting
Interpretation Committee (IFRIC) became effective. IFRIC 11 IFRS 2Group Treasury Share Transactions; IFRIC 12 Service concession Arrangements; IFRIC 14
IAS 19The Limit of a Defined Benefit Asset and IFRIC 16Hedges of a Net Investment in a Foreign Operation. The adoption of these interpretations has not led to
any changes in the company's accounting policies.

F-14

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following list shows IFRS standards, amendments to IFRS and to IFRIC`s not compulsory and not applicable to reporting periods ended on December 31,
2008. These standards were not applied earlier than required. AIXTRON is currently analysing the impact of the new standards on its consolidated
financial statements. The Company does not expect the adoption of these standards to have a material impact on its consolidated financial statements.

Amendment
to IAS 1

Financial Statement Presentation Phase AIssued: September 2007Amendment
to IAS 32 & IAS 1

Puttable Financial Instruments and Obligations Arising on LiquidationIssued: February 2008Amendment
to IFRS 3 & IAS 27

Business CombinationsIssued: January 2008Amendment
to IFRS 1 & IAS 27

Cost of an investment in a subsidiaryIssued: May 2008Amendment
to IAS 23

Borrowing CostsIssued: March 2007Amendment
to IAS 39

Eligible Hedged ItemsIssued: July 2008Amendment
to IAS 39 & IFRS 7

Reclassification of Financial InstrumentsIssued: October/November 2008Amendment
to IFRS 1

First Time Adoption of IFRS (restructured)Issued: November 2008Amendment
to IFRS 2

Vesting conditions and cancellationsIssued: January 2008IFRS 8

Operating SegmentsIssued: November 2006Amendment
to IFRIC 23

Borrowing CostsIssued: March 2007IFRIC 13

Customer Loyalty ProgrammesIssued: June 2007IFRIC 15

Agreements for the Construction of Real EstateIssued: July 2008IFRIC 17

Distribution of Non-cash Assets to OwnersIssued: November 2008IFRIC 18

Transfers of Assets from CustomersIssued: January 2009


3.     Segment reporting

The following segment information has been prepared in accordance with IAS 14 "Segment Reporting". As AIXTRON has only one reportable business segment (see note 2 (t)), the
segment information provided relates only to the Company's geographical segments, this being secondary segment information.

The
Company markets and sells the majority of its products in Asia, Europe and the United States, mainly through its direct sales organisation and cooperation partners.

In
presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location
of the assets.

F-15

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.     Segment reporting (Continued)

Segment
capital expenditure consists of the total additions to segment assets that are expected to be used for more than one period.

Geographical segments

Asia

Europe

United States

Consolidation

Group(in EUR thousands)Revenues realised with third parties


2008


238,156


18,464


17,784





274,4042007


174,133


18,786


21,896





214,8152006


135,223


22,232


14,230





171,685Segment assets


2008


10,932


287,627


75,455


(136,623
)

237,3912007


10,034


250,782


80,044


(130,210
)

210,6502006


12,967


231,370


91,158


(132,530
)

202,965Segment capital expenditures


2008


44


10,716


2,108





12,8682007


25


6,188


1,892





8,1052006


202


1,953


700





2,855


Revenues are shown in the following table:

2008

2007

2006(in EUR thousands)Revenues for sale of goods


272,416


213,357


169,759Revenues for service and repair


1,988


1,458


1,926Total of revenues realised with third parties


274,404


214,815


171,685Finance Income


3,189


1,857


1,003277,593


216,672


172,688


4.     Acquisition of subsidiaries

All acquisitions are accounted for using the purchase method of accounting.

On
October 4, 2007 AIXTRON Ltd, Cambridge UK, acquired 100% of the issued share capital of Nanoinstruments Ltd. The consideration was an initial payment of
k€ 430 on October 4, 2007, a second payment of k€ 430 on January 2, 2008 and further payments of up to k€ 2,578,
depending on the level of future sales up to December 31, 2011. Nanoinstruments Ltd manufactures PECVD equipment for the production of carbon nanotubes and nanowires. The business was
transferred to AIXTRON Ltd on the October 4, 2007.

F-16

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.     Acquisition of subsidiaries (Continued)

The
net assets acquired and the consideration was:

Carrying
amount

Fair value
adjustment

Acquisition
cost(in EUR thousands)Intangible assets


0


823


823Inventories


40


0


40Trade and other receivables


3


0


3Cash and cash equivalents


80


0


80Acquired assets


123


823


946Trade and other payables


(83
)

0


(83
)Current tax liabilities


(8
)

0


(8
)Deferred tax liabilities


0


(228
)

(228
)Acquired liabilities


(91
)

(228
)

(319
)Net assets


32


595


627Goodwill arising on acquisition








278Total purchase price








905


(in EUR
thousands)Satisfied by:Cash paid October 4, 2007


458Cash payable January 2, 2008


447905


Net cash outflow arising on acquisition

2007

2008(in EUR
thousands)Cash consideration


430


377Directly attributable cost paid


28


15Less: cash and cash equivalents acquired


(80
)

0378


392


Cash consideration paid in 2008 differs from the amount payable as at 31 December 2007 because of currency exchange rate translation
differences.

5.     Research and development

Research and development costs, before deducting project funding received, were k€ 28,286, k€ 26,532 and k€ 23,942
for the years ended December 31, 2008, 2007 and 2006 respectively.

After
deducting project funding received and not repayable, net expenses for research and development were k€ 26,368, k€ 23,803 and
k€ 19,397 for the years ended December 31, 2008, 2007 and 2006 respectively.

Research
and development expenses in 2008 include impairment expenses for property, plant and equipment in the amount of k€ 0
(2007: k€ 332; 2006: k€ 816) and for intangible assets in the amount of k€ 0
(2007: k€ 0; 2006: k€ 0) (see notes 12 and 13 for details).

F-17

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.     Other operating income

2008

2007

2006(in EUR thousands)Research and development funding


1,918


2,729


4,545Income from resolved contract obligations


45


675


548Income from the reversal of provisions and the write-off of debts


490


1,727


1,883Other grants, reimbursements and costs passed on


0


0


99Compensation payments


2


2


12Foreign exchange gains


2,485


889


1,059Other


252


590


3225,192


6,612


8,468


The amount of exchange loss recognised in profit or loss except for those arising on financial instruments measured at fair value through profit
or loss was k€ -8,619 (2007 gains: k€ 1,165, 2006 gains: k€ 468).

7.     Other operating expenses

2008

2007

2006(in EUR thousands)Foreign exchange losses


9,439


575


905Losses from the disposal of property, plant and equipment


3


6


125Additions to allowances for receivables or
write-off of receivables


1,953


481


216Other


62


218


38911,457


1,280


1,635


8.     Personnel expense

2008

2007

2006(in EUR thousands)Wages and salaries


38,692


38,823


35,652Social insurance contributions


4,380


4,241


4,222Decrease/Increase in defined benefit plan obligations


(33
)

(106
)

5Expense for defined contribution plans


896


824


701Stock option expense


1,808


1,247


1,45045,743


45,029


42,030


9.     Net finance income

2008

2007

2006(in EUR thousands)Interest income from financial assets


3,189


1,857


1,003Interest expense from financial liabilities


(23
)

(99
)

(56
)Net finance income


3,166


1,758


947


F-18

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.   Income tax expense/benefit

The following table shows income tax expenses and income recognised in the consolidated income statement

2008

2007

2006(in EUR thousands)Current tax expense (+)/current tax income (-)for current year


11,168


5,022


424adjustment for prior years


(821
)

13


(827
)Total current tax expense


10,347


5,035


(403
)Deferred tax expense (+)/deferred tax income (-)from temporary differences


3,862


3,718


783expense from changes in local tax rate


81


1,518


0from reversals and write-downs


(1,629
)

(5,120
)

409Total deferred tax expense


2,314


116


1,192Taxes on income


12,661


5,151


789


Income before taxes on income and income tax expense relate to the following regions:

2008

2007

2006(in EUR thousands)Income before income taxesGermany


31,819


12,892


1,389Outside Germany


3,836


9,509


5,257Total


35,655


22,401


6,646Income tax expenseGermany


8,580


1,769


(623
)Outside Germany


4,081


3,382


1,412Total


12,661


5,151


789


The Company's effective tax rate is different from the German statutory tax rate of 30.91% (2007: 39.45%; 2006: 39.45%) which is
based on the German corporate income tax rate (including solidarity surcharge and trade tax)

F-19

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.   Income tax expense/benefit (Continued)

The
following table shows the reconciliation from the expected to the reported tax expense:

2008

2007

2006(in EUR thousands)Net result before taxes


35,655


22,401


6,646Income tax expense (German tax rate)


11,021


8,837


2,622Effect from differences to foreign tax rates


(1,722
)

(1,166
)

(680
)Non-deductible expenses


419


251


528Non-consideration of tax claims from loss carryforwards


4,773


(204
)

104Reversal of Allowance/write-off against deferred tax assets


(1,629
)

(5,120
)

409Expense from changes in local tax rate


0


1,518


0Effect of the use of loss carryforwards


(135
)

(243
)

(2,830
)Non-deductible impairment and amortisation of:Goodwill, acquired customer relations and product and technology know how


883


873


957Effect of permanent differences


18


216


252Other


(967
)

189


(573
)Taxes on income


12,661


5,151


789Effective tax rate


35.5
%

23.0
%

11.9
%


11.   Current tax assets and liabilities

As of December 31, 2008 the current tax assets and liabilities, i.e. those actually incurred because the amount of tax paid in the current or in prior periods was either
too high or too low, are k€ 59 (2007: k€ 59) and k€ 6,085 (2007: k€ 4,254)
respectively.

F-20

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   Property, plant and equipment

Development of property, plant and equipment

Land and
buildings

Technical
equipment
and machinery

Other plant,
factory
and office
equipment

Assets
under
construction

Total(in EUR thousands)CostBalance at January 1, 2007


31,095


30,247


9,338


273


70,953Acquisitions


19


1,948


780


3,343


6,090Disposals


0


332


219


1


552Transfers


0


262


0


(262
)

0Effect of movements in exchange rates


(140
)

(675
)

(267
)

0


(1,082
)Balance at December 31, 2007


30,974


31,450


9,632


3,353


75,409Balance at January 1, 2008


30,974


31,450


9,632


3,353


75,409Acquisitions


2,577


5,155


1,846


2,039


11,617Disposals


0


1,456


619


50


2,125Transfers


454


2,732


0


(3,186
)

0Effect of movements in exchange rates


(242
)

97


(12
)

71


(86
)Balance at December 31, 2008


33,763


37,978


10,847


2,227


84,815Depreciation and impairment lossesBalance at January 1, 2007


10,075


16,993


7,504


0


34,572Depreciation charge for the year


1,489


4,158


926


0


6,573Impairment losses


0


332


0


0


332Disposals


0


332


185


0


517Effect of movements in exchange rates


(86
)

(347
)

(239
)

0


(672
)Balance at December 31, 2007


11,478


20,804


8,006


0


40,288Balance at January 1, 2008


11,478


20,804


8,006


0


40,288Depreciation charge for the year


1,449


4,938


904


0


7,291Disposals


0


1,454


604


0


2,058Effect of movements in exchange rates


(133
)

103


0


0


(30
)Balance at December 31, 2008


12,794


24,391


8,306


0


45,491Carrying amountsAt January 1, 2007


21,020


13,254


1,834


273


36,381At December 31, 2007


19,496


10,646


1,626


3,353


35,121At January 1, 2008


19,496


10,646


1,626


3,353


35,121At December 31, 2008


20,969


13,587


2,541


2,227


39,324


Depreciation

Depreciation expense amounted to k€ 7,291 for 2008 and was k€ 6,573 and
k€ 6,537 for 2007 and 2006 respectively.

Impairments

During 2008 there were no impairments necessary.

Government grants

In 2008, the cost of machinery and equipment was reduced by k€ 1,643
(2007: k€ 17, 2006: 622), because of government grants. Of that amount, k€ 0 (2007: k€ 0,
2006: k€ 94) has been accrued as receivable and k€ 1,643 (2007: k€ 17,
2006: k€ 528) was paid in cash.

Construction in progress

Construction in progress relates to self-built systems for development laboratories.

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.   Intangible assets

Development of intangible assets

Goodwill

Other
intangible
assets

Total(in EUR thousands)CostBalance at January 1, 2007


84,482


37,860


122,342Acquisitions through business combinations


278


823


1,101Acquisitions


0


928


928Effect of movements in exchange rates


(8,111
)

(2,786
)

(10,897
)Balance at December 31, 2007


76,649


36,825


113,474Balance at January 1, 2008


76,649


36,825


113,474Acquisitions


0


1,251


1,251Disposals


0


3


3Effect of movements in exchange rates


(715
)

481


(234
)Balance at December 31, 2008


75,934


38,554


114,488Amortisation and impairment lossesBalance at January 1, 2007


19,430


22,763


42,193Depreciation charge for the year


0


3,175


3,175Effect of movements in exchange rates


(1,755
)

(1,621
)

(3,376
)Balance at December 31, 2007


17,675


24,317


41,992Balance at January 1, 2008


17,675


24,317


41,992Depreciation charge for the year


0


3,462


3,462Effect of movements in exchange rates


(460
)

520


60Balance at December 31, 2008


17,215


28,299


45,514Carrying amountsAt January 1, 2007


65,052


15,097


80,149At December 31, 2007


58,974


12,508


71,482At January 1, 2008


58,974


12,508


71,482At December 31, 2008


58,719


10,255


68,974


Amortisation and impairment expenses for other intangible assets

Amortisation and impairment expenses for other intangible assets are recognised in the income statement as follows:

2008

2007

2006Amortisation

Impairment

Amortisation

Impairment

Amortisation

Impairment(in EUR thousands)Cost of sales


1,188


0


1,194


0


1,300


0Selling expenses


1,231


0


1,322


0


1,445


0General administration expenses


326


0


182


0


206


0Research and development costs


717


0


477


0


412


03,462


0


3,175


0


3,363


0


In the fiscal years 2008, 2007 and 2006, no impairment losses were required

No
reversals were made in 2008, 2007 or 2006.

F-22

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.   Intangible assets (Continued)

The
amortisation expected to be charged on other intangible assets in the future years is as follows:

(in EUR
thousands)2009


3,2922010


3,0912011


1,7112012


6762013


605


The actual amortisation can differ from the expected amortisation.

Impairment of goodwill

The carrying amount of goodwill at the balance sheet date by entity is as follows:

2008

2007

2006(in EUR thousands)Cash generating unit:AIXTRON, Inc.


47,913


45,507


50,807AIXTRON Ltd.


8,828


11,489


12,267AIXTRON AB


1,791


1,791


1,791AIXTRON KK


187


187


18758,719


58,974


65,052


The impairment test for cash generating units is based on projections of cash flows on the basis of the latest business plan. To evaluate the
present value AIXTRON estimated the cash inflows for the period following the planning period of three to five years by carrying forward an estimated growth rate, which is based on individual market
studies, for the following years. The value in use for each cash generating unit was calculated, using a discounted cash flow. A pre-tax discount rate of 9.52% (2007 and 2006,
13%-15%) was applied in discounting the projected cash flows. The resulting value in use was compared to the carrying amount of the cash generating unit.

In
2008, 2007 and 2006 no impairment of goodwill was required.

14.   Investment property

The net book value at the balance sheet date of investment property located in Herzogenrath, Germany, amounted to k€ 4,908
(2007: k€ 4,908). Investment property relates to undeveloped land held for a purpose not yet determined. It may be used for a possible extension of production capacity.
The carrying amount is determined using the cost model. The fair value is equal to the carrying amount. The fair value of the land at December 31, 2008 was determined using related standard
land values.

15.   Other non-current assets

Other non-current assets totalling k€ 672 (2007: k€ 745) include mainly rent deposits for buildings.

F-23

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.   Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets

Liabilities

Net2008

2007

2008

2007

2008

2007(in EUR thousands)Property, plant and equipment


0


106


(208
)

(22
)

(208
)

84Trade receivables


823


105


0


0


823


105Inventories


3,484


1,019


0


0


3,484


1,019Employee benefits


49


69


0


0


49


69Deferred revenues


26


40


(190
)

(78
)

(164
)

(38
)Currency translation differences


2


0


0


0


2


0Provisions and other liabilities


38


29


(646
)

(166
)

(608
)

(137
)Customer advances


257


0


0


(251
)

257


(251
)Other


29


0


(348
)

(474
)

(319
)

(474
)Tax loss carryforwards


138


4,890


0


0


138


4,890Derivative financial instruments


0


0


(293
)

(494
)

(293
)

(494
)Deferred tax assets (+)/liabilities (-)


4,846


6,258


(1,685
)

(1,485
)

3,161


4,773


Deferred tax assets are recognised at the level of individual consolidated companies, in which a loss was realised in the current or preceding
financial year, only to the extent that realisation in future periods is probable. The nature of the evidence used in assessing the probability of realisation includes forecasts, budgets and the
recent profitability of the relevant entity. The carrying amount of deferred tax assets for entities which have made a loss in either the current or preceding year was k€ 0
(2007: k€ 623).

Deferred
taxes for tax losses in the amount of k€ 20,552 (2007: k€ 39,117) and on deductible temporary differences in the amount of
k€ 3,849, (2007: k€ 18,542) were not recognised. Tax losses in the amount of k€ 913 can be used indefinitely
(2007: k€ 5,044), k€ 10,038 expire by 2013 (2007: 6,688, by 2012) and k€ 9,601 expire after 2013
(2007: k€ 27,385 after 2012).

The
following table shows the development of temporary differences during the financial year:

Balance at
January 1,
2007

Recognised
in income
statement

Directly
recognised
in equity

Balance at
December 31,
2007(in EUR thousands)Property, plant and equipment


129


(45
)

0


84Trade receivables


550


(445
)

0


105Inventories


1,152


(133
)

0


1,019Provisions for pensions


155


(86
)

0


69Deferred revenues


(84
)

46


0


(38
)Provisions and other liabilities


(195
)

58


0


(137
)Customer advances


(220
)

(31
)

0


(251
)Other


(330
)

74


0


(255
)*Derivative financial instruments


(280
)

63


(278
)

(494
)*Tax loss carryforward


4,503


386


0


4,890
*5,380


(113
)

(278
)

4,992
*Acquisitions


(219
)4,773


---

*=rounded



F-24

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.   Deferred tax assets and liabilities (Continued)

Balance at
January 1,
2008

Recognised
in income
statement

Directly
recognised
in equity

Balance at
December 31,
2008(in EUR thousands)Property, plant and equipment


84


(292
)

0


(208
)Trade receivables


105


718


0


823Inventories


1,019


2,465


0


3,484Provisions for pensions


69


(20
)

0


49Deferred revenues


(38
)

(126
)

0


(164
)Currency adjustment


0


(185
)

185


0Provisions and other liabilities


(137
)

(473
)

0


(610
)Customer advances


(251
)

508


0


258
*Other


(255
)

157


0


(97
)*Derivative financial instruments


(494
)

(314
)

514


(293
)*Tax loss carryforwards


4,890


(4,753
)

0


138
*4,992


(2,315
)

699


3,380
*Acquisitions


(219
)







(219
)4,773








3,161


---

*=rounded

17.   Long-term receivables from current tax

Long term receivables from current tax include a receivable from corporate tax which will be refunded over a period of nine years from 1 January 2008. The amount included in long
term receivables is for the amounts receivable after more than one year from the balance sheet date.

18.   Inventories

2008

2007(in EUR
thousands)Raw materials and supplies


26,406


21,086Work in process


36,911


35,987Finished goods and services completed


89


1,507Inventories at customers' locations


13,680


1,43377,086


60,013


2008

2007(in EUR
thousands)Write-down of inventories during the year


4,587


2,140Inventories measured at net realisable value


9,378


15,285Inventories recognised as an expense during the period


128,075


102,445Reversals of write-downs recognised during the year


872


102


Inventories already shipped to customers but for which final customer acceptance is outstanding are presented as inventory at customers'
locations.

Due
to changes in the opportunity to use inventories, write-downs of k€ 872 (2007: k€ 102) on inventories were reversed and
recognised in income in the financial year.

F-25

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.   Trade receivables and other current receivables

2008

2007(in EUR thousands)Trade receivables


41,103


34,057Allowances for doubtful accounts


(2,289
)

(567
)Trade receivablesnet


38,814


33,490Prepaid expenses


733


675Reimbursement of research and development costs


1,533


1,016Advance payments for inventory


359


634VAT refund claims


1,543


2,627Other assets


2,390


1,328Derivatives that are designated and effective as hedging instrumentscarried at fair value


0


1,875Financial assets carried at fair value through the profit or loss (FVTPL)


4,389


870Total other current receivables


10,947


9,02549,761


42,515


Additions to allowances on trade receivables are included in other operating expenses, releases of allowances are included in other operating
income. Allowances on receivables developed as follows:

2008

2007(in EUR thousands)Allowance at January 1


567


311Translation adjustments


2


(8
)Impairment losses recognised


1,953


412Used


(8
)

(35
)Impairment losses reversed


(225
)

(113
)Allowance at December 31


2,289


567


Due to the worldwide spread of risks, there is a diversification of the credit risk for trade receivables. Generally, the Company demands no
securities for financial assets. In accordance with usual business practice for capital equipment however, the Company mitigates its exposure to credit risk by requiring payment by irrevocable letters
of credit and substantial payments in advance from most customers as conditions of contracts for sale of major items of equipment.

At
the balance sheet date two customers accounted for 22% and 18% respectively of the company's net trade receivables, no other single customer accounted for more than 10% of trade
receivables. In 2007 two customers accounted for 18% and 12% respectively of trade receivables, no other customer accounted for more than 10% of receivables. In determining concentrations of credit
risk the company defines counterparties as having similar characteristics if they are connected entities.

Included
in the Company's trade receivable balance are debtors with a carrying amount of k€ 5,975 (2007: k€ 4,420) which are past due at the
reporting date for which the Company has not provided. As there has not been a significant change in credit quality and, although the company has no collateral, the amounts are still considered
recoverable.

F-26

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.   Trade receivables and other current receivables (Continued)

In
determining the financial assets which may be individually impaired the Company has taken into account the likelihood of recoverability based on the past due nature of certain
receivables, and our assessment of the ability of all counter-parties to perform their obligations.

2008

2007(in EUR thousands)1-90 days past due


5,910


4,096More than 90 days past due


2,354


891


20.   Other financial assets

Other financial assets of k€ 3,000 (2007: k€ 4,831) are fixed deposits with banks with a maturity of more than three months at
inception of the contracts.

21.   Cash and cash equivalents

2008

2007(in EUR thousands)Cash-in-hand


7


5Bank balances


67,455


71,938Cash and cash equivalents in the consolidated cash flow statement


67,462


71,943


Cash and cash equivalents comprise short-term bank deposits with an original maturity of 3 months or less. The carrying amount
and fair value are the same.

Bank
balances included k€ 0 given as security (2007: k€ 214) at December 31, 2008.

22.   Shareholders' Equity

Subscribed capital

2008

2007January 1


89,138,905


87,836,154Shares for exercise of stock options


553,423


1,302,751Issued capital at December 31, under IFRS


89,692,328


89,138,905Treasury shares


1,202,288


1,305,308Stated share capital at December 31


90,894,616


90,444,213


The share capital of the company consists of no-par value shares and was fully paid-up during 2008 and 2007. Each share
represents a portion of the share capital in the amount of € 1.00.

Treasury
shares were contributed into a trust, as part of the Genus acquisition for the exercise of Genus stock and other options and for conversion of bonds.

AIXTRON AG
cannot dispose of the trust assets. Contrary to German Commercial Code and Company Law, IFRS (SIC 12) prescribes an allocation of the trust assets to
AIXTRON AG. In the IFRS financial statements the shares held in this trust are therefore shown as treasury shares and deducted from the stated share capital.

Both
the authorised capital I and the authorised capital II have remained unchanged compared to December 31, 2007.

F-27

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.   Shareholders' Equity (Continued)

At
December 31, 2008, AIXTRON AG's Executive Board is authorised:



The
Executive Board is also authorised, with the consent of the Supervisory Board, to define the rights embodied in a share and the other conditions and terms of the issuance of shares.

Paid-in capital

Paid-in capital mainly includes the premium on increases of subscribed capital as well as cumulative expense for
share-based payments.

Income and expenses recognised in equity

Currency
translation

Derivative
financial
instruments

Total(in EUR thousands)Balance at December 31, 2005


9,420


(305
)

9,115Change in currency translation


(7,871
)

0


(7,871
)Change in unrealised gains/losses before taxes


0


1,122


1,122Deferred taxes


0


(298
)

(298
)Balance at December 31, 2006


1,549


519


2,068Change in currency translation


(9,932
)

0


(9,932
)Change in unrealised gains/losses before taxes


0


961


961Deferred taxes


0


(289
)

(289
)Balance at December 31, 2007


(8,383
)

1,191


(7,192
)Change in currency translation


(5,372
)

0


(5,372
)Change in unrealised gains/losses before taxes


0


(1,706
)*

(1,706
)Deferred taxes


0


515


515Balance at December 31, 2008


(13,755
)

0


(13,755
)


---

The foreign currency translation adjustment comprises all foreign exchange differences arising from the translation of the financial statements of
foreign subsidiaries whose functional currency is not the Euro.

The
item "derivative financial instruments"comprises the gain or loss on foreign currency hedge contracts deferred in equity.

F-28

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23.   Earnings per share

Basic earnings per share

The calculation of the basic earnings per share at December 31, 2008, is based on the weighted-average number of common shares
outstanding during the reporting period.

Diluted earnings per share

The calculation of the diluted earnings per share at December 31, 2008 is based on the weighted-average number of outstanding
common shares and ADS and of common shares and ADS with a possible dilutive effect resulting from share options being exercised under the share option plan and in connection with the conversion of
issued convertible bonds and other options.

2008

2007

2006Earnings per shareNet profit/loss attributable to the shareholders of AIXTRON AG in k€


22,994


17,250


5,857Weighted average number of common shares and ADS at December 31


89,478,415


88,163,952


87,824,321Basic earnings per share (€)


0.26


0.20


0.07Earnings per share (diluted)Net profit/loss attributable to the shareholders of AIXTRON AG in k€


22,994


17,250


5,857Weighted average number of common shares and ADS at December 31


89,478,415


88,163,952


87,824,321Dilutive effect of convertible bonds


0


0


25,440Dilutive effect of share options


1,016,486


783,934


52,938Weighted average number of common shares and ADS at December 31 (diluted)


90,494,901


88,947,886


87,902,699Diluted earnings per share (€)


0.25


0.19


0.07


The following securities issued were not included in the computation of the diluted earnings per share, as their effect would be
anti-dilutive:

2008

2007

2006(Number of shares)Share options


2,631,692


2,151,017


5,681,172


24.   Employee benefits

Defined contribution plan

The Company grants retirement benefits to qualified employees through various defined contribution pension plans. The expenses incurred
for defined contribution plans mainly arise from two pension plans in subsidiaries. The contributions made do not exceed 10% of qualified employees' base salaries. In 2008 the expense recognised for
defined contribution plans amounted to k€ 896 (2007: k€ 824, 2006: k€ 701).

Defined benefit plan

The Company's net obligation in respect of defined benefit pension plans reflects commitments to two former members of the Executive
Board of AIXTRON AG. These are final salary plans. Provisions for pensions developed as follows:

2008

2007

2006(in EUR thousands)Interest expense


47


44


42Actuarial gains and losses


(80
)

(149
)

(37
)(33
)

(105
)

5


F-29

---





Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

24.   Employee benefits (Continued)

The
expense for pensions developed as follows:

2008

2007

2006

2005

2004(in EUR thousands)Present value of net obligations at January 1


878


983


978


703


37Income/Expense recognised in consolidated income statement (see below)


(33
)

(105
)

5


275


0Present value of net obligations at December 31 = Total provisions for pensions at December 31


845


878


983


978


37


In the income statement, the income (2005 and 2006: expense) of k€ 33 (2007: k€ 105;
2006: k€ 5; 2005: k€ 275; 2004: k€ 0) is recognised in general administration expense.

The
following table shows the principal actuarial assumptions:

2008

2007Biometrical calculation assumptions


Heubeck tables 2005G


Heubeck tables 2005GInterest rate at December 31


6.00
%

5.40
%Expected salary increase


0.00
%

0.00
%Expected pension increase


2.00
%

1.75
%


In the three years ending 2008 no payments were made under these plans. The value of the obligations from pension plans is determined annually at
December 31.

25.   Share-based payment

The Company has different fixed option plans which reserve shares of common stock and AIXTRON American Depository Shares (ADS) for issuance to members of the Executive Board, management
and employees of the Company. Each AIXTRON ADS represents the beneficial ownership in one AIXTRON common share. The following is a description of these plans:

AIXTRON stock option plan 1999

In May 1999, options were authorized to purchase 3,000,000 shares of common stock (after giving effect to capital increases, stock
splits, and the EURO conversion). The options were exercisable in equal instalments of 25% per year after the second anniversary of the date of grant, subject to certain conditions. Vested options
were only permitted to be exercised when the performance of the AIXTRON stock exceeds the performance of the Technology AS Price Index (formerly the New Market Index) by at least 5% in the reference
period or when the turnover reported by AIXTRON rose by at least 25% per year and the profit/revenue ratio was at least 12%. The period when the exercise of the options under those conditions could
take place has now lapsed. Regardless of fulfilment of the conditions, the stock options can be exercised when 15 years have elapsed since their issue. Under the terms of the 1999 plan, options
were granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date. All options are settled by physical delivery of shares.
Upon exercise of options new shares are issued. Under this plan 1,168,788 options for the purchase of 1,839,478 common shares were outstanding as of December 31, 2008.

In
2002, options were granted with the exercise price slightly less than fair market value. Fair market value is determined based upon the closing trading price on grant date.

AIXTRON stock option plan 2002

In May 2002, options were authorized to purchase 3,511,495 shares of common stock. The options are exercisable in equal instalments of
25% per year after the second anniversary of the date of grant, subject to certain conditions. Options expire ten years from date of grant. Under the terms of the 2002

F-30

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

25.   Share-based payment (Continued)

plan,
options are granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date, plus a premium of 20% over the average
closing price. No grants were issued with a strike price less than fair market value. All options are settled by physical delivery of shares. Upon exercise of options new shares are issued. A total of
1,802,319 options to purchase the same number of common stock were outstanding under this plan as of December 31, 2008.

AIXTRON stock option plan 2007

Under the AIXTRON stock option plan 2007, 759,100 share options were granted which are authorized to purchase 759,100 shares of common
stock. 50% of the granted options may be executed after a waiting period of not less than two years, further 25% after three years and the remaining 25% after at least four years. The options expire
10 years after they have been granted.
Under the terms of the 2007 plan, options are granted at prices equal to the average closing price over the last 20 trading days on the Frankfurt Stock Exchange before the grant date.

Under
the 2008 tranche of the AIXTRON stock option plan 2007, 779,000 new options were granted in fiscal year 2008 (2007 tranche: 759,100 options).

Genus stock option plan 2000

With the acquisition of Genus, Inc. the company adopted the Genus Incentive Stock Option Plan 2000. Under this plan at the date
of acquisition options were authorized to purchase 3,948,014 shares of common stock. At the date of acquisition these were converted into options to purchase 2,013,487 AIXTRON ADS. Options granted
before October 3, 2003 vest over a three-year-period and expire five years from the date of grant. Options granted after October 3, 2003 vest over a
four-year-period and expire in ten years from the date of grant.

A
total of 142,499 options to purchase AIXTRON ADS were outstanding under this plan as of December 31, 2008. Upon exercise of options new shares are issued from the trust (see
note 22).

Summary of stock option transactions

AIXTRON share options

2008

2007Number of
shares

Average
exercise price

Number of
shares

Average
exercise price(EUR)



(EUR)Balance at January 1


5,003,027


13.76


5,060,565


12.93Granted during the year


779,000


4.17


759,100


10.09Exercised during the year


450,403


5.00


644,336


4.06Forfeited during the year


182,427


8.54


172,302


9.56Outstanding at December 31


5,149,197


13.76


5,003,027


13.76Exercisable at December 31


768,134


20.53


819,733


19.66


F-31

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

25.   Share-based payment (Continued)

Genus share options

2008

2007Number of
shares

Average
exercise price

Number of
shares

Average
exercise price(USD)



(USD)Balance at January 1


247,099


5.95


994,469


5.47Exercised during the year


103,070


5.68


658,371


5.39Expired during the year


1,530


4.69


88,999


4.72Outstanding at December 31


142,499


5.96


247,099


5.95Exercisable at December 31


142,499


5.96


182,896


6.66


The weighted-average share price of the options exercised was USD 5.68. The intrinsic value of options exercised amounted to
kUSD 585.

The
employees of Genus Inc. held 279,410 stock options representing the right to receive 142,499 ADS of AIXTRON AG as of December 31, 2008. As part of the
Genus, Inc. transaction, a trust for the employee stock options of Genus Inc. was set up, into which ADS of AIXTRON AG were deposited after the capital increase on
March 14, 2005.

AIXTRON stock options as of December 31, 2008

Exercise price (EUR)

Outstanding

Exercisable

Average
option life(in years)3.10


53,150


53,150


4.503.83


1,392,400


0


7.504.17


779,000


0


10.006.17


356,769


208,904


5.507.48


634,730


0


8.5010.09


728,400


0


9.0018.70


406,824


406,824


5.5026.93


400,900


0


7.5067.39


397,024


99,256


6.505,149,197


768,134


Genus stock options as of December 31, 2008

Range of exercise prices (USD)

Average
exercise price

Outstanding

Exercisable

Average
option life(USD)





(in years)3.49 to 4.27


3.56


63,377


63,377


5.95.00 to 6.80


5.47


15,308


15,308


5.47.20 to 9.41


8.23


59,734


59,734


5.012.06 to 12.73


12.55


4,080


4,080


4.9142,499


142,499


Assumptions used to calculate fair values and share-based payment expenses

The fair value of services received in return for stock options granted is measured by reference to the fair value of the stock options
granted. The fair value of the stock options is determined on the basis of a binomial lattice model. In accordance with IFRS 2 the measurement includes only options which were granted after
November 7, 2002. In 2008, the personnel expenses from share-based payments were k€ 1.808 (2007: k€ 1,247;
2006: k€ 1,450). As at December 31, 2008 an amount of k€ 4.649 relating to stock options granted prior to that date has not yet been
recognised as a personnel

F-32

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

25.   Share-based payment (Continued)

expense.
This amount will be charged over the period to 2013. The expected allocation of the expense is as follows: 2009: k€ 2,254,
2010: k€ 1.499, 2011: k€ 684 and after 2012: k€ 212.

AIXTRON share options granted

in 2008

in 2007

in 2006

in 2004

in 2003Fair value on grant date


1.77 €


4.34 €


1.53 €


3.08 €


1.78 €Price per share


4.30 €


8.69 €


2.71 €


4.84 €


2.79 €Exercise price


4.17 €


10.09 €


3.83 €


6.17 €


3.10 €Expected volatility


52.69%


52.48%


65.59%


73.54%


73.76%Option life


10.0 years


10.0 years


10.5 years


10.5 years


10.5 yearsExpected dividend payments


0.00 €


0.00 €


0.00 €


0.00 €


0.00 €Risk-free interest rate


4.04%


4.06%


3.90%


4.38%


4.40%


Genus share options granted

in 2005

in 2004

before 2004Average fair value on grant date

1.30 $

1.65 $

2.68 $Average price per share

2.04 $

2.51 $

3.97 $Average exercise price

2.04 $

2.51 $

3.97 $Average expected volatility

91.76%

95.38%

104.20%Average option life

10 years

10 years

9.53 yearsAverage expected dividend payments

0.00 $

0.00 $

0.00 $Average risk-free interest rate

4.11%

4.27%

4.18%


The expected volatility is based on historical volatility.

26.   Accruals and provisions

Development and breakdown of provisions:

01.01.2008

Exchange
rate
differences

Usage

Reversal

Addition

31.12.2008

thereof
short term(in EUR thousands)Provisions for pensions


878


0


0


41


8


845


0Provisions for personnel expenses


4,233


(51
)

3,117


207


3,592


4,450


4,450Warranties


3,115


(102
)

511


171


683


3,014


3,014Onerous contracts


1,807


93


320


50


0


1,530


320Provisions for commissions


1,237


(17
)

579


158


2,890


3,373


3,373Hedges


912


(214
)

106


0


1,884


2,476


2,476Other


6,665


(101
)

4,581


1,274


6,139


6,848


6,848Total


18,847


(392
)

9,214


1,901


15,196


22,536


20,481thereof long term


2,05522,536


Provisions for pensions

The provisions for pensions are commented on in note 24.

Provisions for personnel expenses

These include mainly provisions for holiday not yet taken and bonuses.

F-33

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26.   Accruals and provisions (Continued)

Provisions for onerous contracts

These include provisions for contracts connected with obligations, including rent payable and contract risks.

Fair value of derivative financial instruments

2008

2007(in EUR thousands)Derivatives that are designated and effective as hedging instruments carried at fair valueForward foreign currency contracts


0


138Financial assets carried at fair value through the profit or loss (FVTPL)Foreign currency options


1,829


774Forward foreign currency contracts


647


0Fair value of derivative financial instruments


2,476


912


Other provisions

Other provisions include auditors' fees in the amount of k€ 691.

27.   Trade payables and other current liabilities

The liabilities consist of the following:

2008

2007(in EUR thousands)Trade payables


18,782


23,761Other liabilities from grants


583


489Wage and church tax due, social security contributions


534


481VAT due


165


127Other liabilities


584


2061,866


1,30320,648


25,064


The carrying amount of trade payables and other current liabilities approximates their fair value. Trade payables generally fall due for payment
within 90 days of receipt of the relevant goods or services.

28.   Financial instruments

Details of the significant accounting policies and methods, the basis of measurement that are used in preparing the financial statements and the other accounting policies that are
relevant to an understanding of the financial statement are disclosed in note 2 to the financial statements.

Financial risk management objectives

The group seeks to minimise the effects of any risk that may occur from any financial transaction. Key aspects are the exposures to
liquidity risk, credit risk, interest rate risk and currency risk arising in the normal course of the Company's business.

The
AIXTRON Group's central management co-ordinates access to domestic and international financial institutions and monitors and manages the financial risks relating to the
operations of the Group through internal risk reports which analyse exposure to risk by likelihood and magnitude. These risks cover all aspects of the business, including financial risks, and the risk
management system is in

F-34

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

28.   Financial instruments (Continued)

accordance
with the corporate governance recommendations specified in the German Corporate Governance Code.

Derivative
financial instruments are used to hedge exposure to fluctuations in foreign exchange rates.

Liquidity risks

Liquidity risk is the risk that the Group is unable to meet its existing or future obligations due to insufficient availability of cash
or cash equivalents. Managing liquidity risk is one of the central tasks of AIXTRON AG. In order to be able to ensure the Group`s solvency and flexibility at all times cash and cash equivalents are
projected on the basis of regular financial and liquidity planning.

As
at December 31, 2008 the group had no borrowings (2007 nil) and k€ 67,462 cash and cash equivalents (2007 k€ 71,943).

Credit risks

Financial assets generally exposed to a credit risk are trade receivables (see note 19) and cash and cash equivalents.

The
Company`s cash and cash equivalents are kept with banks that have a good credit standing. Central management of the Group assesses the counter-party risk of each financial
institution dealt with and sets limits to the Group`s exposure to those institutions. These credit limits are reviewed from time to time so as to minimise the default risk as far as possible and to
ensure that concentrations of risk are managed.

Market risks

The Company's activities expose it to the financial risks of changes in foreign currency exchange rates and interest rate risks. The
Company does not use derivative financial instruments to manage its exposure to interest rate risk. Cash deposits are made with the Company's bankers at the market rates prevailing at inception of the
deposit for the period and currency concerned. There has been no change to the Company's exposure to market risk or the manner in which it manages and measures the risk.

Foreign currency risk

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk, including
forward exchange contracts to hedge the exchange rate risk arising on the export of equipment. The main exchange rates giving rise to the risk are those between the US Dollar, Pound Sterling
and Euro.

The
carrying amounts of the Group?s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Liabilities

Assets2008

2007

2008

2007(kEUR)

(kEUR)

(kEUR)

(kEUR)US Dollars


(21,345
)

(34,536
)

33,885


37,070GB Pounds


(6,276
)

(7,140
)

19,747


5,655


Exposures are reviewed on a regular basis and are managed by the Company through sensitivity analysis.

Foreign currency sensitivity analysis

The Company is mainly exposed to US Dollar and Pound Sterling exchange rate risks through its worldwide activities.

F-35

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

28.   Financial instruments (Continued)

The
following table details the Company's sensitivity to a 10 percent change in the value of the Euro against the Dollar and Pound. A positive number indicates an increase in
profit and other equity, a negative number indicates a reduction in profit and other equity.

USD Currency impact

GBP Currency impactIncrease in value of Euro by 10% kEUR

2008

2007

2008

2007(kEUR)

(kEUR)

(kEUR)

(kEUR)Profit or loss


1,574


(2,996
)

40


48Other equity


(5,241
)

757


(2,804
)

(5,511
)




USD Currency impact

GBP Currency impactDecrease in value of Euro by 10% kEUR

2008

2007

2008

2007(kEUR)

(kEUR)

(kEUR)

(kEUR)Profit or loss


(249
)

2,996


(10
)

(48
)Other equity


5,241


(757
)

2,804


5,511


The effect on profit or loss of changes in currency rates differs between increases and decreases in rates because of the asymmetrical effect of
changes in valuation of option contracts.

The
sensitivity analysis represents the foreign exchange risk at the year end date only. It is calculated by revaluing the Group's financial assets and liabilities, existing at
31 December, denominated in US Dollars or British Pounds, by 10%. It does not represent the effect of a 10% change in exchange rates sustained over the whole of the financial year, only the
effect of a different rate occurring on the last day of the year.

Forward foreign exchange contracts

The Company enters forward foreign exchange contracts to cover receipts from highly probable forecast sales denominated in US Dollars.

F-36

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

28.   Financial instruments (Continued)

The
following table details the forward foreign currency contracts outstanding as at the reporting date:

Foreign Currency

Contract Amount

Fair Value2008

2007

2008

2007

2008

2007($000s)

($000s)

(kEUR)

(kEUR)

(kEUR)

(kEUR)Cash flow hedgesSell US Dollars buy EurosLess than 3 months





17,700





12,816





8283 to 12 months





19,000





13,909





1,047Sell US Dollars buy GB PoundsLess than 3 months





21,000





14,293





283 to 12 months





63,000





42,880





(166
)Fair Value Hedges through the Profit or LossOptions to sell US Dollars buy EurosLess than 3 months


32,000


10,600


22,488


7,153


611


2423 to 12 months


100,000


23,900


70,320


16,129


3,778


628Options to sell US Dollars buy GB PoundsLess than 3 months





12,000





8,168





(109
)3 to 12 months





36,000





24,503





(666
)Options to sell Euros buy US DollarsLess than 3 months


15,000





10,345





(247
)

3 to 12 months


45,000





31,034





(1,582
)

Sell US Dollars buy GB PoundsLess than 3 months


4,000





2,083





(779
)

Sell GB Pounds buy US DollarsLess than 3 months


4,000





2,730





132





Foreign currency cash hedges

At 31st December 2008, the aggregate amount of unrealised gains on forward foreign exchange contracts deferred in the hedging
reserve relating to the exposure on anticipated future transactions is k€ 0 (2007 k€ 1,191).

The
unrealised gains of k€ 1,191 (31 December 2006: k€ 519) included in income and expenses recognised in equity as of
December 31, 2007 were fully reversed and recognised in income statement at maturity date of the contracts in the financial year. The losses actually realised in 2008 were
k€ 223 (2007: gains k€ 1,001).

Foreign currency option contracts

The company has also entered into option contracts to hedge the exchange rate risk on US Dollar sales proceeds in 2009. The contracts
are classified as at fair value through the profit and loss account.

Unrealised
gains of k€ 1,913 (2007 unrealised losses k€ 870) on forward exchange contracts are recognised in Other Operating Income in the
profit and loss statement.

F-37

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

28.   Financial instruments (Continued)

Fair values

The fair values and the carrying amounts of the financial instruments shown in the balance sheet are shown in the following table.
Financial assets are classified into categories.

FINANCIAL ASSETS 2008

Cash and
cash
equivalents

Loans and
receivables

Held
to-maturity
investments

At FVTPL

Hedging
Derivatives

Total
Carrying
amount and
fair value(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)Cash and cash equivalents


67,462


0


0


0


0


67,462Fair value of derivative financial instruments


0


0


0


4,389


0


4,389Other financial assets


0


0


3,000


0


0


3,000Other non-current assets


0


673


0


0


0


673Trade receivables


0


38,814


0


0


0


38,814Total


67,462


39,487


3,000


4,389


0


114,338




FINANCIAL LIABILITIES 2008

Cash and
cash
equivalents

Loans and
receivables

At
amortised
cost

At FVTPL

Hedging
Derivatives

Total
Carrying
amount and
fair value(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)Other current liabilities


0


2


0


0


0


2Fair value of derivative financial instruments


0


0


0


2,476


0


2,476Trade payables


0


0


18,782


0


0


18,782Advance payments from customers


0


0


52,566


0


0


52,566Total


0


2


71,348


2,476


0


73,826




FINANCIAL ASSETS 2007

Cash and
cash
equivalents

Loans and
receivables

Held
to-maturity
investments

At FVTPL

Hedging
Derivatives

Total
Carrying
amount and
fair value(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)Cash and cash equivalents


71,943


0


0


0


0


71,943Other financial assets


0


0


4,831


0


0


4,831Other non-current assets


0


1,241


0


0


0


1,241Trade receivables


0


33,490


0


870


1,875


36,235Total


71,943


34,731


4,831


870


1,875


114,250




FINANCIAL LIABILITIES 2007

Cash and
cash
equivalents

Loans and
receivables

At
amortised
cost

At FVTPL

Hedging
Derivatives

Total
Carrying
amount and
fair value(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)Other current liabilities


0


1


0


0


0


1Fair values of derivative financial instruments


0


0


0


774


138


912Trade payables


0


0


23,761


0


0


23,761Advance payments form customers


0


0


49,988


0


0


49,988Total


0


1


73,749


774


138


74,662


F-38

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

28.   Financial instruments (Continued)

Derivatives

The fair value is the estimated amount that a bank would receive or pay to terminate the derivative contracts at the reporting date,
taking into account current exchange rates, volatility and the credit-worthiness of the counterparties (mark-to-market).

Trade receivables/payables

For trade receivables/payables due within less than one year, the fair value is taken to be the face value. All other
receivables/payables are discounted to determine the fair value.

29.   Operating leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

(in EUR
thousands)2009


2,3482010


2,5762011


2,3832012


1,8212013


397after 2013


1579,682


The Company leases certain office and plant facilities, office furniture and motor vehicles under various operating leases. Under most of the
lease commitments for office and plant facilities the Company has options to renew the leasing contracts. The leases typically run for a period between one and fifteen years. None of the leases
include contingent rentals.

The
expenses for leasing contracts were k€ 2,174, k€ 1,944 and k€ 2,004 for 2008, 2007 and 2006 respectively.

30.   Capital commitments

As of December 31, 2008, the Company had entered into purchase commitments with suppliers in the amount of k€ 15,886 (2007:
k€ 49,223) for purchases within the next 12 months. Commitments for capital expenditures are k€ 1,834 (2007: k€ 2,840) as of
December 31, 2008.

31.   Contingencies

The Company is involved in various legal proceedings or can be exposed to a threat of legal proceedings in the normal course of business. The Executive Board regularly analyses these
matters, considering any possibilities of avoiding legal proceedings or of covering potential damages under
insurance contracts and has recognised, where required, appropriate provisions. It is not expected that such matters will have a material effect on the Company's net assets, results of operations and
financial position.

32.   Related parties

Identity of related parties

Related parties of the Company are members of the Executive Board and members of the Supervisory Board.

F-39

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

32.   Related parties (Continued)

Remuneration of Executive Board

Active members of the Executive Board are remunerated as follows:

2008

2007(in EUR
thousands)Short-term employee benefits


2,507


2,642Total cash remuneration


2,507


2,642Share-based payment


276


677Total remuneration


2,783


3,319


The following table shows the remuneration of the Executive Board for each individual member in 2008:

Executive Board Member

Fixed
remuneration

Variable
remuneration

Total
monetary
remuneration

Number
of granted
Options

Option
Value at
grant date

Total
Remuneration(kEUR)

(kEUR)

(kEUR)

(kpieces)

(kEUR)

(kEUR)Paul Hyland


442


690


1,132


52


92


1,224Wolfgang Breme


309


345


654


52


92


746Dr. Bernd Schulte


376


345


721


52


92


813Total


1,127


1,380


2,507


156


276


2,783


Remuneration of Supervisory Board

Remuneration of the members of the Supervisory Board consists of the following:

2008

2007(in EUR thousands)Fixed remuneration


153


153Variable remuneration


264


87Attendance fee


30


30Remuneration of Supervisory Board total


447


270


The following table shows the remuneration of the Supervisory Board in 2008 for each individual member:

Supervisory Board Member

Fixed

Variable

Attendance
Fee

TotalKim Schindelhauer* (Chairman of the Supervisory Board)


54


93


6


153Dr. Holger Jürgensen*


27


47


6


80(Deputy Chairman of the Supervisory Board)Prof. Dr. Wolfgang Blättchen* (Chairman of the Audit Committee)


18


31


12


61Karl-Hermann Kuklies


18


31


0


49Prof. Dr. Rüdiger von Rosen


18


31


0


49Joachim Simmroß*


18


31


6


55153


264


30


447


---

The remuneration of the Supervisory Board is included in other operating expenses (see note 7).

For
further details regarding the remuneration of Executive Board and Supervisory Board, refer to Item 6.B "Directors, Senior Management and EmployeesCompensation" in
this report.

F-40

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

33.   Consolidated entities

AIXTRON AG controls the following significant subsidiaries:

Share of
capital in %Country

2008

2007AIXTRON Inc

USA


100


100AIXTRON Ltd.

UK


100


100AIXTRON Korea Co. Ltd.

South Korea


100


100AIXTRON Taiwan Co. Ltd.

Taiwan


100


100AIXTRON AB *

Sweden


100


100AIXTRON KK

Japan


100


100Genus trust **

USA


n.a.


n.a.


---

34.   Events after the balance sheet date

There are no events after the balance sheet, of which the directors have knowledge, which would result in a different assessment of the Company's net assets, results of operation and
financial position.

35.   Auditors' fees

Fees expensed in the income statement for the services of the group auditor Deloitte & Touche are as follows:

2008

2007(in EUR thousands)for audit


691


729for other confirmation services


56


32for tax advisory services


208


87for other services


2


24957


872


Included in the total amount of fees are fees for Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft,
Duesseldorf, in the amount of k€ 437 for audit (2007: k€ 445), k€ 56 for other confirmation services
(2007: k€ 32), k€ 59 for tax services (2007: k€ 14) and k€ 2 for other services
(2007: k€ 24).

F-41

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

36.   Employees

Compared to last year, the average number of employees during the current year was as follows:

Employees by Function

2008

2007(average
number for
the year)Sales and Service


190


184Research and Development


213


202Manufacturing


134


132Administration


80


71Employees (§ 314 HGB)


617


589Executive board members


3


4Apprentices


11


9Total Employees


631


602


37.   Statement of compliance with the German Corporate Governance Code

In 2008, Executive and Supervisory Boards have made the declaration of compliance in accordance with Section 161 of AktG and this is available to shareholders on the Company's web
sitewww.aixtron.com.

38.   Supervisory Board and Executive Board

Composition of the Supervisory Board as of December 31, 2008







F-42

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

38.   Supervisory Board and Executive Board (Continued)



The
following gentlemen are members of the Company's Executive Board:



39.   Critical accounting judgments and key sources of estimation and uncertainty

The preparation of AIXTRON's Consolidated Financial Statements requires the Company to make certain estimates, judgments and assumptions that the Company believes are reasonable based
upon the information available. These estimates and assumptions affect the reported amounts and related disclosures and are made in order to fairly present the Company's financial position and results
of operations. The following accounting policies are significantly impacted by these estimates and judgments that AIXTRON believes are the most critical to aid in fully understanding and evaluating
its reported financial results include the following:

Revenue
Recognition

Revenue
is generally recognised in two stages for the supply of equipment to customers, partly on delivery and partly on final installation and acceptance (see
note 2 (p)). The Company believes, based on past experience, that this method of recognising revenue fairly states the revenues of the Company.

Goodwill

As
stated in the accounting policies, the Company tests at least annually whether goodwill has suffered impairment. If there is an indication, the recoverable
amount of the cash generating unit has to be estimated. This is the greater of the fair value less costs to sell and the value in use. The determination of the value in use involves making adjustments
and estimates relate to the projection and discounting of future cash flows. Although the Company believes the assumptions used to calculate recoverable amount are appropriate, any unforeseen changes
in these assumptions could result in impairment charges to goodwill which could adversely affect the future financial position and operating results.

F-43

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

39.   Critical accounting judgments and key sources of estimation and uncertainty (Continued)

Valuation
of Inventories

Inventories
are stated at the lower of cost and net realisable value. This requires the Company to make judgments concerning obsolescence of materials. This
evaluation requires estimates, including both forecasted product demand and pricing environment, both of which may be susceptible to significant change.

In
future periods, write-downs of inventory may be necessary due to (1) reduced demand in the markets in which the Company operates, (2) technological obsolescence due to
rapid developments of new products and technological improvements, or (3) changes in economic or other events and conditions that impact the market price for the Company's products. These
factors could result in adjustment to the valuation of inventory in future periods, and significantly impact the Company's future operating results.

Income
Taxes

At
each balance sheet date, the Company assesses whether the realisation of future tax benefits is sufficiently probable to recognise deferred tax assets. This
assessment requires the exercise of judgment on the part of management with respect to future taxable income. The recorded amount of total deferred tax assets could be reduced if estimates of
projected future taxable income are lowered, or if changes in current tax regulations are enacted that impose restrictions on the timing or extent of the Company's ability to utilize future tax
benefits.

F-44

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