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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, 2010oro

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 SE(Exact Name of Registrant as Specified in Its Charter)

Federal Republic of Germany
(Jurisdiction of Incorporation or Organization)

Kaiserstr. 98
52134 Herzogenrath
Federal Republic of Germany(Address of Principal Executive Offices)

Guido Pickert, +49 241 8909-444, +49 241 8909-445, AIXTRON SE, Kaiserstr. 98, 52134 Herzogenrath, Federal Republic of Germany

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

American Depositary Shares, each representing one Ordinary Share
Ordinary shares, no par value (not for trading, but only in connection with the listing of its American Depositary Shares on
The NASDAQ Global Select Market)
(Title of Class)

The NASDAQ Global Select Market
(Name of each Exchange on which registered)

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

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of December 31, 2010: 101,179,866 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 ý    No o

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 has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files) Yes o    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 ý

Accelerated filer o

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 Standards 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


5Risks 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


14B.

Business Overview


14Business Model


14Employees


15Technology, Products and Services


15Research and Development


17Intellectual Property


18Manufacturing


19Marketing Channels


19Customers and Principal Markets


19Seasonality


20Competitive Positioning


20Key Performance Indicators


20Government Regulation


21C.

Organizational Structure


21D.

Property, Plant and Equipment


22Item 4A:

Unresolved Staff Comments


22Item 5:

Operating and Financial Review and Prospects


23Global Economy


23The Semiconductor Equipment Market


23AIXTRON-specific Factors


24Management Assessment of Company Situation


25A.

Operating Results


26Development of Revenues


26Development of Results


27Development of Orders


29B.

Liquidity and Capital Resources


30Corporate Financial Management


30Funding


30Investments


32Cash Flow


32Assessment of Liquidity and Capital Resources


33C.

Research and Development, Patents and Licenses, etc.


33D.

Trend Information


33E.

Off-Balance Sheet Arrangements


34F.

Tabular Disclosure of Contractual Obligations


34Preparation of Consolidated Financial Statements under IFRS


35Critical Accounting Policies and Key Sources of Estimation and Uncertainty


35Recently Issued Accounting Standards


36


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Table of Contents

Item 6:

Directors, Senior Management and Employees


36A.

Directors and Senior Management


36Supervisory Board


36Executive Board


37B.

Compensation


38Executive Board Remuneration


38Supervisory Board Remuneration


41C.

Board Practices


42Audit Committee


42Compliance with NASDAQ Listing Standards on Corporate Governance


43D.

Employees


43E.

Share Ownership


43Beneficial Ownership


43Employee Options


44Item 7:

Major Shareholders and Related Party Transactions


45A.

Major Shareholders


45B.

Related Party Transactions


45C.

Interests of Experts and Counsel


45Item 8:

Financial Information


46A.

Consolidated Statements and Other Financial Information


46Export Revenues


46Legal Proceedings


46Policy on Dividend Distributions


46B.

Significant Changes


46Item 9:

The Offer and Listing


47A.

Offer and Listing Details


47Trading Markets


47Market Price Information


47B.

Plan of Distribution


47C.

Markets


48D.

Selling Shareholders


48E.

Dilution


48F.

Expenses of the Issue


48Item 10:

Additional Information


48A.

Share Capital


48B.

Memorandum and Articles of Association


48Articles of Association


48Corporate Governance


50Sarbanes-Oxley Act Requirements and NASDAQ Rules


51C.

Material Contracts


53Employment contracts of current members of the Executive Board


53Intellectual Property Agreements


54D.

Exchange Controls


54E.

Taxation


54German Taxation


54U.S. Federal Taxation


57F.

Dividends and Paying Agents


60G.

Statement by Experts


60H.

Documents on Display


60I.

Subsidiary Information


61Item 11:

Quantitative and Qualitative Disclosure about Market Risk


61Foreign Currency Exchange Rate Risk


61Interest Rate Risk


62Item 12:

Description of Securities other than Equity Securities


62


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Table of Contents

PART II


64Item 13:

Defaults, Dividend Arrearages and Delinquencies


64Item 14:

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


64Item 15:

Controls and Procedures


64Item 16A:

Audit Committee Financial Expert


66Item 16B:

Code of Ethics


66Item 16C:

Principal Accountant Fees and Services


66Item 16D:

Exemptions from the Listing Standard for Audit Committees


67Item 16E:

Purchases of Equity Securities by the Issuer and Affiliated Purchasers


67Item 16F:

Change in Registrant's Certifying Accountant


67Item 16G:

Corporate Governance


67PART III


68Item 17:

Financial Statements


68Item 18:

Financial Statements


68Item 19:

Exhibits


68Signatures


69Report of Independent Registered Public Accounting Firm


70Consolidated Income Statement


F-1Consolidated Statement of Other Comprehensive
Income


F-2Consolidated Statement of Financial Position


F-3Consolidated Statement of Cash Flow


F-4Consolidated Statement of Changes in Equity


F-5Notes to the Consolidated Financial Statements


F-61.     General principles


F-62.    Significant accounting policies


F-63.    Segment reporting


F-144.    Research and development


F-165.    Other operating income


F-176.    Other operating expenses


F-177.    Personnel expense


F-178.    Net finance income


F-179.  Income tax expense/benefit


F-1810.  Current tax receivables and payables


F-1811.  Property, plant and equipment


F-1912.  Intangible assets


F-2013.  Other non-current assets


F-2114.  Deferred tax assets and liabilities


F-2215.  Long-term receivables from current tax


F-2316.  Inventories


F-2417.  Trade receivables and other current
assets


F-2418.  Other financial assets


F-2519.  Cash and cash equivalents


F-2520.  Shareholders' Equity


F-2621.  Earnings per share


F-2722.  Employee benefits


F-2723.  Share-based payment


F-2924.  Provisions


F-3125.  Trade payables and other current
liabilities


F-3226.  Financial instruments


F-3227.  Operating leases


F-3628.  Capital commitments


F-3729.  Contingencies


F-3730.  Related parties


F-3731.  Consolidated entities


F-3932.  Events after the reporting period


F-3933.  Auditors' fees


F-3934.  Employees


F-3935.  Statement of compliance with the German Corporate Governance
Code


F-4036.  Supervisory Board and Executive Board


F-4037.  Critical accounting judgments and key sources of estimation and
uncertainty


F-41


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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," the "Group" or "the Company" are to AIXTRON SE (formerly AIXTRON AG) and its consolidated subsidiaries. References to "Management" are to the Executive Board of AIXTRON SE.
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 lawful currency of the Federal Republic
of Germany and other participating member states of the European Union. "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.

For
convenience only (except where noted otherwise), some of the Euro amounts have been translated into US-Dollar amounts at the noon buying rate in New York for cable
transfers in Euros certified by the Federal Reserve Bank of New York for customs purposes. 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. Refer to "Key
InformationSelected Financial DataExchange Rate Information" for certain exchange rates between the Euro and the US-Dollar.

Certain
figures and other amounts included in this report may reflect rounding adjustments for clarity of presentation. In particular, figures and other amounts shown as totals in
certain tables may not be an arithmetic aggregation of the figures and other amounts that precede them.

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,

2010
IFRS

2009
IFRS

2008
IFRS

2007
IFRS

2006
IFRS(thousand EUR, except share and per share data)Consolidated Income Statement Data:Revenues


783,775


302,857


274,404


214,815


171,685Operating result


275,510


62,725


32,489


20,643


5,699Profit/Loss attributable to the equity holders of AIXTRON SE (after taxes)


192,496


44,766


22,994


17,250


5,857Basic earnings per share


1.93


0.49


0.26


0.20


0.07Diluted earnings per share


1.89


0.48


0.25


0.19


0.07Dividend payments(1)


15,100


8,181


6,332


0


0Dividends declared per common share(1) (EUR)


0.15


0.09


0.07


0.00


0.00Dividends declared per common share(1) (USD(2))


0.20


0.13


0.10


0.00


0.00Consolidated Statement of Financial Position Data:Total assets


823,432


573,094


314,827


296,827


263,482Total liabilities


223,108


159,565


101,938


98,473


79,540Minority interests


0


0


0


0


0Total shareholders' equity and net assets


600,324


413,529


212,889


198,354


183,942Subscribed capital


100,101


99,588


89,692


89,139


87,836Other Data:Adjusted weighted average number of shares outstandingbasic


99,871,834


91,609,912


89,478,415


88,163,952


87,824,321diluted


101,746,466


93,015,677


90,494,901


88,947,886


87,902,699


(1)Dividends
paid/declared in each year relate to prior year earnings.(2)Dividend
amounts given in Euros have been translated for convenience only into US-Dollar amounts at the average noon buying rate in New York for
cable transfers in Euros certified by the Federal Reserve Bank of New York for customs purposes for the applicable fiscal year. Refer to "Presentation of Information."


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

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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 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
Rate2010


1.32612009


1.39332008


1.46952007


1.37032006


1.2661


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

Month ended

High

LowFebruary 2011 (through February 11, 2011)


1.3793


1.3520January 2011


1.3715


1.2944December 2010


1.3395


1.3089November 2010


1.4224


1.3036October 2010


1.4066


1.3688September 2010


1.3638


1.2708August 2010


1.3282


1.2652


On February 11, 2011, the noon buying rate was USD 1.3520 per EUR 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.

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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 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 a failure 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 ADSs.

Uncertainties of economic and political conditions, in particular by the current global macroeconomic slowdown, may adversely impact AIXTRON's financial position and results
of operations.

The U.S. economy and several other major economies experienced a sustained slowdown. Although AIXTRON had no bank borrowings during
2010, 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. A global economic slowdown 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 production 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 concentrated industries.

AIXTRON's customer base has been and may in the future be 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

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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. In times of substantial demand for Metal Organic Chemical Vapor Deposition ("MOCVD") systems, certain
customers may delay existing or new orders because of raw material shortages or delays in preparing their facilities. Any such delays could have a negative impact on customer acceptance of AIXTRON's
systems, and ultimately, on its ability to generate revenues. 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. Because of the significant size of some orders and the limited ability of the Company to reduce expenses quickly in response to such delays, the Company may experience volatility in its
results of operations.

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. AIXTRON generally does not have long-term supply agreements with many of its suppliers. Consequently, the Company could experience
significant price increases and/or 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. 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.

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:



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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 AIXTRON's 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.

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:



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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 such 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 96.04% of the Company's total revenues for the year ended December 31, 2010, versus
86.30% for the year ended December 31, 2009, and 93.27% of total revenues for the year ended December 31, 2008. Revenues from AIXTRON's Asian-based customers accounted for 91.46% for the
year ended December 31, 2010, versus 82.56% for the year ended December 31, 2009, and 86.79% of total revenues for the year ended December 31, 2008. 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:



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.

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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. AIXTRON may not be able to effectively reduce or 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 carryforwards, 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 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.

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.

In
addition, new climate change regulations could require AIXTRON to change its manufacturing processes or obtain substitute materials that may cost more or be less available for its
manufacturing operations. Furthermore, new restrictions on carbon dioxide or other greenhouse gas emissions could result in significant costs for AIXTRON. The Company expects increased worldwide
regulatory activity

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in
the future. The cost of complying, or of failing to comply, with these and other climate change and emissions regulations could have an adverse effect on AIXTRON's business plans and operating
results.

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 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 Germany and 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

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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 access to less information about AIXTRON and fewer opportunities 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:



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 EUR 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

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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, unless such U.S. holder is able to
ameliorate the tax consequences somewhat by making a mark-to-market election or "QEF election". 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.

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 SE 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. In 2010, AIXTRON converted from a German stock corporation ("Aktiengesellschaft" or "AG") to a stock corporation in the form of a European Company ("Societas Europaea" or "SE"). As such, AIXTRON
SE is subject not only to the German stock corporation law, but also to the superseding European SE regulations and the German SE Implementation Act (SE-Ausführungsgesetz).
As a result of such conversion, AIXTRON will continue to be treated to a large extent like a German stock corporation, including with respect to capital measures, shareholders' meetings and
accounting. AIXTRON is headquartered in Herzogenrath, Germany and has wholly-owned subsidiaries in the United Kingdom, Japan, South Korea, Sweden, Taiwan, P.R. of China (est. February 21, 2011)
and the United States. AIXTRON's principal executive office is located at Kaiserstrasse 98, D-52134 Herzogenrath, Germany, and the Company's telephone number there is
+49-241-8909-0. AIXTRON's agent for service of process in the United States is AIXTRON, Inc., 1139 Karlstad Drive, Sunnyvale, California 94089.

Important Events

AIXTRON expands to new R&D facilities

In 2010, AIXTRON started to build a new, state-of-the-art Research and Development ("R&D") center
at its premises in Herzogenrath to support the Company's accelerated R&D program and increased focus on new product development. Phase 1 of the project, which consists of a modular designed
office building with more than 300 employee workspaces, was completed in October 2010, when the first 250 staff members relocated into the new facility. Phase 2 of the project, which consists
of new application laboratories and a prototype production facility for an additional 150 staff members

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is
currently under construction and is scheduled to be completed early 2012. In total, AIXTRON expects to have invested in excess of EUR 40 million of its cash resources in such project. The
new facilities will total approximately 16,000 square meters, employing an energy efficient design, including LED lighting, to minimize its carbon footprint. The facilities will be able to host up to
450 engineers, significantly increasing the resources available to develop next generation complex material deposition systems.

Conversion into European Company (SE)

At the General Meeting held on May 18, 2010, the AIXTRON shareholders resolved upon the conversion of the legal form of AIXTRON
from a German AG into a stock corporation in the form of a European Company SE (Societas Europaea) and to adopt the name AIXTRON SE. With the entry into the commercial register of the Aachen municipal
court on December 22, 2010, AIXTRON confirmed the completion of the conversion into a European SE. On that day, the shareholders of AIXTRON AG automatically became shareholders of AIXTRON SE
without their shareholders' rights being affected by the conversion. There are also no changes to the manner AIXTRON prepares its financial information or to the content of such financial information
as a result of the conversion. An SE legal entity is a European Company under German law. The supranational legal form reflects AIXTRON's European and international orientation and is a natural step
in respect of AIXTRON's global operations and business development. Nearly half of AIXTRON's employees work, and more than 90% of the Company's revenues are generated outside of Germany.

Amendments to Articles of Association

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

For information regarding capital expenditures, refer to Item 5.B. "Liquidity and Capital ResourcesInvestments" in
this report.

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 complex material deposition systems and small scale systems for Research and Development ("R&D") 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.

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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 success very much depends on the respective achievements and motivation of the Company's staff. The employees are recruited
on the basis of professional and personal qualifications and experience. To hire new employees, AIXTRON participates in job fairs and other career events, publishes dedicated press articles, and,
among other measures, closely co-operates with the Aachen University RWTH.

During
the last years, the Company has implemented various measures to increase the attractiveness of AIXTRON as an employer, with the aim of achieving long-term retention of
employees, including, among other things, flexible work times, internal training programs, individual work place design, dedicated team work and regular performance feedbacks.

The
Company's training center offers a number of internal training programs, including new hire orientation classes and 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.

As
a global company with an international corporate culture, AIXTRON has also set up a diversity management program.

In
2010, the total number of employees increased by 14%, from 687 employees at the end of 2009 (2008: 619) to 784 at December 31, 2010, due to personnel requirements arising from
a higher operating output. AIXTRON considers its labor relations to be satisfactory. The largest individual increase in employees occurred in the group who work in R&D, which grew by 20% in 2010. In
2010, the largest group of permanent employees was employed in Manufacturing and Service positions.

2010

2009

2008

2010-2009Employees by Function

Dec 31.

%

Dec 31.

%

Dec 31.

%

abs.

%Sales


62


8


72


10


75


12


(10
)

(14
)Research and Development


248


32


206


30


200


32


42


20Manufacturing and Service


375


48


316


46


261


42


59


19Administration


99


12


93


14


83


14


6


6Total


784


100


687


100


619


100


97


14


As of December 31, 2010, the majority of AIXTRON's worldwide permanent employees were based in Europe.

2010

2009

2008

2010-2009Employees by Region

Dec 31.

%

Dec 31.

%

Dec 31.

%

abs.

%Asia


154


20


116


17


84


14


38


33Europe


524


67


472


69


428


69


52


11USA


106


13


99


14


107


17


7


7Total


784


100


687


100


619


100


97


14


Technology, Products and Services

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 larger diameter wafers, employing MOCVD or Hydride Vapor Phase Epitaxy ("HVPE")
or organic thin film deposition on up to Gen. 3.5 substrates, including Polymer Vapor Phase Deposition ("PVPD") or Organic Vapor Phase Deposition ("OVPD®") or large area deposition for
Organic Light Emitting Diodes ("OLED") applications or Plasma Enhanced Chemical Vapor Phase Deposition ("PECVD") for depositing complex Carbon Nanostructures (Carbon Nanotubes, Nanowires or Graphene).

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AIXTRON also manufactures full production and research scale deposition systems for silicon semiconductor 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").

The
following table summarizes the products and technologies AIXTRON offers to its customers for use in specific applications and devices:

Material

Compound
Semiconductors

Organic Semiconductors

Silicon SemiconductorsSystems Technology

MOCVD

OVPD®

CVDCVD

PVPD

ALDPECVD



AVD®HVPEProducts

Planetary Reactor®

Gen1 R&D Tool

Lynx CVD200 series

Gen 2 Production Tool

Tricent® ALDClose Coupled Showerhead®

Gen 3.5 Production Tool

Tricent® AVD®Nano CVD Reactors; 'Black Magic Series'



QXP-8300Hot-Wall Reactors: VP seriesPotential Applications/Devices

LEDs

OLEDs for displays

Metal and Oxide films for complementary metal oxide semiconductor ("CMOS") gate stacksOptoelectronics (photo diodes, lasers, modulators for telecom/datacom)

OLEDs for solid state lighting

Metal and Oxide films for capacitor structures in dynamic random access memory ("DRAMs") and ferroelectric random access memory ("FeRAMS")Laser devices for consumer electronics (CDs, DVDs)

Organic transparent thin film solar cellsHigh-Frequency devices ((such as Hetero Bipolar Transistors and High Electron Mobility Transistors)) for wireless datacom

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


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AIXTRON also 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. The Company also assists its customers in designing the
production layouts for the gas supply to thin film deposition systems. Additionally, the Company offers its customers training, consulting and support services.

AIXTRON
is constantly working on the improvement of existing technologies and products. In the course of the last three years, AIXTRON has introduced several new system generations and
technologies, such as the QXP-8300 silicon semiconductor technology, the G5 planetary reactor and the CRIUS® II Close Coupled Showerhead® reactor technology. For
more information, please refer to item 5. "AIXTRON-specific Factors".

Research and Development

With 248 Research & Development employees, AIXTRON maintains a strong, well funded and focused R&D program within the business.
The R&D infrastructure is currently being extended with the new R&D center under construction at the Company's Herzogenrath/Aachen County premises. The R&D activities the Company is engaged in are
deemed critical for the Company's long-term strategy to maintain its position as a leading provider of deposition equipment for the manufacturing of complex device structures for the
semiconductor industry.

In
2010, R&D expenditures increased year on year, in line with expectations, by € 13.2 million, from
€ 32.9 million in 2009 (2008: € 28.3 million) to € 46.1 million, reflecting our
determination to further strengthen our technological positioning. For more information regarding R&D expenses from fiscal year 2008 through 2010, refer to Item 5.A "Operating
ResultsDevelopment of ResultsOperating Costs" in this report.

Supported
by the strong financial performance in 2010, AIXTRON plans to further increase R&D expenditures in 2011, underlining the commitment to remain a recognized technology and market
leader. In the current market environment, where the number of market participants is increasing, especially in China, and product cycle times are becoming shorter, Management believes that focused
and market-led R&D is a critical success factor for AIXTRON.

In
the short to medium term, AIXTRON plans to further increase the R&D focus on the opportunities that will arise from the development of a market for LED lighting devices. AIXTRON will
also remain focused on the continual improvement programs for existing technologies e.g. through more integration, automation or by developing new system architectures, all of which are
targeted at enabling customers to achieve improvements in throughput and efficiencies. In addition, the Company will continue to pursue new opportunities to leverage its core knowledge of complex
material deposition into new market and technology areas, as demonstrated by the involvement in many internally and externally funded research projects AIXTRON is actively engaged in.

AIXTRON
maintains R&D laboratories in Aachen and Herzogenrath in Germany, in Cambridge, United Kingdom and in Sunnyvale, United States. These comprehensive in-house research
laboratories are equipped with the latest version AIXTRON systems and are used for researching new equipment, materials and processes for the production of semiconductors structures.
The projects pursued in the R&D laboratories are supported by cutting-edge simulation systems and techniques, which have been developed in-house, to become critical tools in
significantly shortening development times in addition to reducing material and energy-intensive manufacturing and testing processes to a minimum.

AIXTRON's
global R&D organization works as a technology matrix, with each project drawing on the expertise that resides within each center of excellence, regardless of location. The R&D
team also works closely with the global sales and service organization to develop systems, tailored to customers' individual needs. Most of the work done by the AIXTRON R&D team is also in conjunction
and collaboration with many well-known universities, research centers and industrial partners worldwide, including many publicly and regionally funded development projects.

The
following are examples of current R&D projects:

Research project "Neuland"

The principal aim of this German government funded project, which was started in the second quarter of 2010, is to further develop
MOCVD technology for Gallium Nitride on Silicon applications,

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focused
on a route to eventual mass production. The proposed new reactor and process technology could result in an increased usage of MOCVD equipment for high power applications. On a device level, it
will potentially enable a substantial increase in the energy efficiency of electronic material structures contributing to the global focus on the search for energy efficient electronic devices.

Research project "EEMI450" aiming at 450mm silicon wafer equipment

This joint research project, formally started in the third quarter of 2010 and funded by the EU and the German government, is based
upon an industrial initiative by European equipment and material suppliers eager to become engaged and competitive in 450mm wafer size technologies. The main task of AIXTRON will be to lead the
efforts for the design, development and building of a 450mm showerhead deposition chamber for multi-component materials. AIXTRON is aware of the increasing market opportunities in the area of Silicon
based micro technology and expects to directly benefit from this project by further strengthening the Company's competitive positioning.

Research project "NANOWIRING": From fundamental physics to device applications

The interest in semiconductor nanowires has been growing steadily in the last few years due to their potential as basic building blocks
of nanoscale devices and circuits, while the scaling down of conventional semiconductor technology faces increasing technological and fundamental challenges. The aim of the NANOWIRING
EU-funded joint research project, in which AIXTRON is one of two industry partners, is to increase European competitiveness in what is seen as an important emerging technological field.
The main technological issues that the joint research program, which was formally started in November 2010, intends to address are the following: semiconductor nanowires for (1) sensors,
(2) optoelectronic, (3) nanoelectronic and (4) energy harvesting applications.

VEROM project (vaporization of organic materials)

As part of a German research project to produce and study organic solar cells, which was approved in the fourth quarter of 2010,
AIXTRON is developing, constructing and qualifying a new OVPD® source technology, to be used for research into organic solar cells. This involves implementing a new modular source concept
and investigating it with project partners. The concept allows a low thermal load to be employed in the deposition process, requiring only a small quantity of organic materials. This innovative source
concept will enhance the investigation of several new organic materials for use in connection with organic solar cell technology.

Intellectual Property

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, 2010, 187 patent-protected inventions were in use, of which 16 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 2011 and 2030.

To
enable a more efficient use of resources throughout the Group and more accurately reflect the Group's technology matrix in support of the increased focus on R&D, AIXTRON has
consolidated the intellectual property of its subsidiary AIXTRON, Inc. into the parent company AIXTRON SE as of July 1, 2010. This consolidation project included all production
technologies, patents and inventions.

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 important 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

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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 most of the assemblies required to manufacture the equipment from third-party suppliers. Prices of such components have
not shown a material volatility in the past. AIXTRON's contractors and suppliers are carefully selected and qualified to be able to source, supply and/or partially assemble and test individual
equipment parts and sub-assemblies. There are typically several suppliers for each AIXTRON equipment component/assembly. However, AIXTRON single sources some key components for its systems
and is therefore dependent on contracts with the specific supplier of such components. AIXTRON's own staff manages and executes the final system assembly and product configuration and testing
procedures.

Since
1994, AIXTRON has been annually assessed and awarded unlimited ISO 9001 certification. In 2003, the process-oriented management system was successfully certified in
accordance with worldwide quality standard DIN EN ISO 9001:2000. In October 2009, this certification was upgraded to DIN EN ISO 9001:2008.

The
Company complies with international standards and procedures for the equipment industry. The "CE" label confirms the conformity of AIXTRON products with the applicable European
standards. Moreover, the "UL" standard for product admission to the US market and the tighter regulations of the global industry association serving the manufacturing supply chains for
the microelectronic, display and photovoltaic industries (SEMI) are also complied with. When developing new equipment the "Restriction of Hazardous Substances Directive, RoHS" is also adhered to.
Internal controls for compliance with these rules and standards have been implemented at AIXTRON accordingly. In addition, several independent certification companies, such as "TÜV" in
Germany or "UL" or "ETL" in the US also confirmed compliance with their requirements and specifications through the issuance of the respective examination certifications.

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.

AIXTRON's
Sales and Service Organization provides a full range of customer services, from the initial support of the customized development of an AIXTRON system to the final
installation, ongoing customer training and operational support of such system.

Customers and Principal Markets

Our semiconductor device customers are principally, but not exclusively, focused on the manufacturing of LEDs, wireless,
optoelectronics, logic and data storage components. Some of these customers are vertically integrated device manufacturers who serve the entire value chain down to the end consumer. Others 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. 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.

No
single AIXTRON customer represented more than 10% of total revenues in 2010.

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.

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Seasonality

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

Competitive Positioning

AIXTRON's main competitor in MOCVD applications is Veeco Instruments Inc. (USA) with part of its "LED & Solar" business
segment. AIXTRON also competes with a number of Asian manufacturers including Taiyo Nippon Sanso (Japan), amongst others. As a consequence of the rising LED end-market expectations and
positive prospects for MOCVD equipment demand, there is speculation that equipment companies from adjacent industries are considering developing their own MOCVD tools. For example, both Applied
Materials Inc. (USA) and Jusung Engineering Co. Ltd. (South Korea) are currently in the development process for an in-house equipment solution for the production of
LEDs. Based on market research by Gartner Dataquest (as of March 2010), it is estimated that the share of the worldwide MOCVD equipment market (estimated 2009 total market value: USD 533m) held
by AIXTRON in 2009 was around 68%. The Company's strongest competitor in terms of sales, Veeco Instruments, Inc., had an estimated market share of approximately 26% for the same period. AIXTRON
continues to anticipate a market leading position of approximately 60% of the global MOCVD market.

Market
research company Gartner Dataquest estimated in December 2010 that the value of the MOCVD equipment market would be approximately USD 1.5 billion by the end of 2010.

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 other smaller companies. While these competitors use established vacuum
thermal evaporation ("VTE") technology and polymer technology to produce OLEDs, AIXTRON offers OLED manufacturers its own highly innovative OVPD® and PVPD large area deposition
technologies. In AIXTRON's opinion, due to a perceived superior process technology and the potential for reducing manufacturing costs, these technologies have the potential to compete successfully
with VTE and polymer technologies. AIXTRON is potentially well positioned as a deposition system supplier for next generation of OLEDs and large area deposition applications that are anticipated to be
used in innovative, self-luminous displays as well as future potential lighting, solar cell, and other electronic OLED applications.

As
AIXTRON's system technology and customer applications are still in the market entry phase, Organic Semiconductor 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), IPS Technology (South Korea), Jusung Engineering Co. Ltd. (South Korea), and Hitachi Kokusai Electric Co. Inc.
(Japan). With the Company's currently available silicon semiconductor manufacturing technologies, AIXTRON is potentially well positioned to offer advanced films for sub 32nm memory and sub 22nm logic
integrated circuits (ICs). These technologies enable extremely high precision in depositing very thin material layers and facilitate the consistent coating of complex three-dimensional microelectronic
device structures. Moreover, they 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.

The
specific market niche to be addressed by AIXTRON's system technologies for the production of specialized applications such as gate stacks and capacitors is estimated by Gartner
Dataquest (in December 2010) to be valued at USD 240 million by the end of 2010 (2009: USD 166 million). In line with other capital equipment companies targeting future sub
32nm memory and sub 22nm logic integrated circuits, AIXTRON has continued to experience low order intake and revenue levels in 2010. AIXTRON's market share in this area is therefore not considered
meaningful at this point in time.

Key Performance Indicators

The Executive Board has implemented numerous control systems and procedures to manage, monitor, analyze, and document Company risks and
opportunities, including a Key Performance

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Indicator
system addressing all relevant business areas, with a primary focus on the "Market", "Finance" and "Technology Development" control areas.

In
the "Market" control area, using third party reports and direct customer dialog, AIXTRON pursues a market-led product development strategy through the careful examination
of market trends and customer requirements. The objective of this strategy is to ensure the market availability of new and appropriately competitive product generations in line with customer
requirements.

In
the "Finance" control area, the Executive Board uses a range of internal and external key performance indicators, with particular focus on: total sales, contribution margins, net
result data and cash flow. The objective of these controls is to ensure that increasingly profitable revenue growth is matched by appropriate and prudent cash flow development.

In
the "Technology Development" control area, the Executive Board uses a range of internal and external key performance indicators to evaluate the progress and success of internal
projects. The Management regularly reviews project progress against target timelines and objectives, including: total sales revenue and net result data comparisons to the original targets. The
objective of this review
process is to ensure that ongoing projects retain the necessary level of technological and commercial competitiveness throughout the life of the product.

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 Germany, the UK and the US, including, for example, the Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA in Germany, the
Department for Business, Innovation and Skills in the UK as well as the Department of State and the Department of Commerce in the US.

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 defined 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
controls.

C.  Organizational Structure

The table below shows a list of the AIXTRON-subsidiaries as of December 31, 2010:

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
%Nanoinstruments Ltd

England & Wales


100
%Genus Trust*

USA


n.a.


*The
shares in the Genus Trust are attributed to AIXTRON as the beneficial owner, as control exists due to the trust relationship with AIXTRON SE


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D.  Property, Plant and Equipment

The Company has its registered office in Herzogenrath, Germany, and had a total of 15 facilities worldwide owned or rented as of December 31, 2010:

Facility location

Use

Approx.
size (m2)

Lease expiryHerzogenrath, Germany (owned)

Headquarters, Manufacturing, Service, Engineering


12,457


Herzogenrath, Germany (owned)

Research and Development


7,515


Herzogenrath, Germany (leased)

Administration, Sales


2,419


31/12/2011Aachen, Germany (leased)

Research and Development


200


29/01/2014Alsdorf, Germany (leased)

Manufacturing


1,588


31/12/2011Cambridge, UK (leased)

Manufacturing, Engineering, Research and Development


2,180


13/09/2019Cambridge, UK (leased)

Sales and Service, Engineering


1,386


27/06/2020Cambridge, UK (leased)

Manufacturing


2,093


29/04/2011Lund, Sweden (leased)

Engineering, Service


449


31/12/2011Sunnyvale, CA, USA (leased)

Manufacturing, Sales and Service, Engineering, Research and Development


9,300


31/10/2012Seoul, South Korea (leased)

Sales and Service


1,032


31/08/2011Shanghai, China (leased)

Representative Office


492


30/06/2013Hsinchu, Taiwan (leased)

Sales and Service


1,418


31/12/2011Tainan, Taiwan (leased)

Service


203


26/05/2013Tokyo, Japan (leased)

Sales and Service


534


30/09/2012


In 2010, AIXTRON started to build a new, state of the art R&D center at its premises in Herzogenrath in support of the Company's R&D strategy. The
new facility will be mainly used for Engineering, Research and Development. Phase 1 of the building project was completed in October 2010, when the first 250 staff members relocated into the
new facility, which is modular in design. The 2nd phase includes new application laboratories and a prototype production facility for an additional 150 staff members is currently under
construction and is scheduled to be completed early 2012. The new facilities will total approximately 16,000 square meters, employing an energy efficient design, including LED lighting, to minimize
its carbon footprint.

For
more information regarding the capital expenditures relating to the R&D building project, refer to Item 5.B. "Liquidity and Capital ResourcesInvestments" in this
report.

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.

Item 4A:    Unresolved Staff Comments

None.

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Item 5:    Operating and Financial Review and Prospects

Global Economy

Optimism about a sustainable post-crisis economic recovery has considerably increased during 2010.

However,
the initial speed of recoverythe global economy expanded at an annualized rate of 5.25% during the first six months of 2010 compared to the same period in
2009positively surprised most observers. As growth slowed slightly in the second half of the year, the International Monetary Fund (IMF) forecasted the eventual full year 2010 increase
for the global economy would be 4.8%. However, there was considerable regional variety in the reported rate of economic growth for 2010.Emerging and developing countries stimulated the economic
recovery with growth rates in excess of 7%. The more developed Asian economies grew by 9.4%, with China leading this development with a growth rate of 10.5% according to the IMF. The dynamics of this
specific market were seen clearly in the significant demand growth that AIXTRON recorded for China in 2010.

In
comparison, the more advanced economies generated significantly lower growth rates, adding on average only 2.7% to their gross domestic product (GDP) compared with the prior year.
Again, the pace of recovery varied widely. In the US, a high unemployment rate of 9.7% was perceived to have suppressed domestic demand and limited GDP growth to 2%, according to the Organization for
Economic Co-operation and Development (OECD).In Europe, the threat of a debt crisis persisted. Difficulties in Greece, Ireland, Portugal and Spain weighed on European economic growth,
limiting it to 1.7% for 2010, according to the Economic Outlook of the OECD. Germany's export-driven economy, having been significantly affected by weak global trade in 2009 led the European economy
with a solid GDP growth of 3.3% in 2010. In comparison, other key European countries such as France, the UK and Italy achieved GDP growth rates of only 1.6%, 1.4% and 1.0% respectively, while Spain's
GDP decreased by 0.3%.

In
2010, stock markets continued the positive development first seen in the second half of 2009: the German DAX index rose from 5,957 points at the beginning of 2010 to 6,914 points
(+16%) at the end of December 2010. The TecDAX index, of which AIXTRON is now one of the highest ranking constituents concerning market capitalization and turnover, was volatile but largely unchanged
year on year, increasing from 818 points by only 33 points to 851 points as of December 31, 2010 (+4%). Major international indices such as the S&P 500 and the FTSE 100 ended 2010
up by 12% and 9%, respectively.

The
US-Dollar strengthened significantly during the first half of 2010, appreciating against the Euro by approximately 17% to 1.19 USD/EUR, while the Euro remained
under pressure, arising from continued tensions and uncertainties about fiscal saving plans and the future debt financing and redemption capabilities of the above mentioned Euro zone countries.

During
the second half of 2010, some of the previous US-Dollar gains against the Euro were lost again due to the continued weakness of the US domestic economy, sharply
increasing national debt and raising unemployment. The exchange rates at December 31, 2010 reached 1.33 USD/EUR, which represented a gain of 8% for 2010 against the Euro.

AIXTRON
Management continues to monitor very carefully the developments in the global economy and the financial markets, and regularly examines what can be potentially done to mitigate
possible negative consequential effects on AIXTRON's business.

The Semiconductor Equipment Market

While the recorded world real gross domestic product increased in value terms by an estimated 4.8% (according to the IMF) in 2010, the
electronics equipment industry increased by 13.7% (according to Gartner Dataquest, December 2010).

Semiconductor
capital spending recovered strongly by about 109% in 2010, and spending on all Wafer Front End equipment (WFE), which includes spending on deposition tools supplied by
AIXTRON, increased by an estimated 133% year on year (according to Gartner Dataquest, December 2010).

The
customer end-market for High Brightness ("HB") LEDs, which can be produced with AIXTRON's compound semiconductor equipment, was estimated by Strategies Unlimited (an

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independent
semiconductor market research institute) in their August 2010 report, to grow by 52% in 2010, and unit volume sales were estimated to increase at least in line with revenue year on year.
Reflecting this growth estimation combined with the positive short to mid-term outlook for the HB LED market, AIXTRON's system revenues actually increased year on year by 168% in
2010. The main driver of this development was the continuously increasing adoption of LEDs used as backlighting for LCD TVs and the corresponding demand from LCD TV producers as well as the chip and
component manufacturers. Early stage demand for LED lighting production equipment was also more evident in 2010 and contributed to the emergence of more LED lighting devices.

AIXTRON-specific Factors

Market introduction of AIXTRON's new generation products

In February 2010, we announced the launch of AIXTRON's next generation MOCVD systems, the AIX G5 HT and CRIUS® II, which
can be configured as part of the new IC 2 platform. Based on the established Planetary and Showerhead Reactor designs, the AIX G5 HT and the CRIUS® II systems feature the largest proven
wafer capacity available on the market. The new systems have the potential to more than double AIXTRON's customers' productivity compared to the previous MOCVD system generation. If customers opt for
fully automated/clustered systems, they can potentially achieve further substantial cost of ownership improvements. With several new generation MOCVD system orders received during 2010 from
established LED production customers, the market acceptance has been progressing positively and in line with Management's expectations during the reporting year. In Q4/2010, around 55% of the
total LED production system orders were for the new generation G5 and CRIUS® II systems (full year 2010: 26%). AIXTRON believes that these high volume production systems are becoming
increasingly attractive for customers planning and preparing for the early adoption of LED lighting applications.

Regional revenue shift to China

With Chinese local government subsidies initiated in 2009 having been further extended into the current reporting year, demand from
China located customers continued to be strong with orders allowing the increase of production capacity, primarily targeted at LED lighting applications. Local government authorities, mandated by the
Chinese central government, have continued to support LED makers through substantial direct subsidies. Supported by these subsidies, many customers became financially able to place large multiple
orders in order to build up their LED production facilities.

AIXTRON's
2010 order book significantly benefited from these incentives, with orders from Chinese customers steadily increasing during the four quarters of 2010. Consequently, revenues
from Chinese customers significantly increased to become 25% of the total 2010 revenues and the second largest revenue region after Taiwanfor the first time in AIXTRON's history. The
sustainability of Chinese investments in the area of LED production equipment will not be disadvantaged by the stated objectives of the 12th Chinese 5-year plan, which is due for
full publication in March 2011. There is a widespread view that LED technology will be an integral part of this 5-year plan in order to enable China to support their growing needs for more
efficient energy consumption and their aspirations to become a meaningful global player in this market.

Tangible momentum in the development of LED lighting applications

The LED lighting industry has been seemingly gaining momentum throughout the year 2010, evidenced by an increasing number of LED
lighting devices being employed (for commercial, industrial and municipal applications) and an increasing number of LED replacement products for incandescent or fluorescent light bulbs becoming
commercially available in retail outlets (for domestic consumer applications).Government and public body regulatory requirements and financial incentive and support programs have been sustained in
many international markets, but particularly in Asia, encouraging and creating a healthy capital equipment investment environment in the emerging LED lighting industry.

In
2010, several leading companies including Osram Sylvania, Philips, GE, Cree, Toshiba, Sharp, Panasonic, LG and Samsung have launched or announced general-purpose LED lights designed
to replace incandescent, halogen, or compact fluorescent light sources. Most of those products produce the equivalent light output of a 60-watt or less incandescent bulb. In addition to
consuming far less electricity than incandescent light bulbs, LED bulbs could last for 20 years or more, they do not contain harmful mercury and have many other advantages versus incumbent
technologies.

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Whilst
early product positioning prices of around USD 40 for a 60-watt equivalent replacement product do not yet constitute the volume tipping point, the recent
ability and willingness of suppliers to drive this price down is encouraging. The attractiveness of even premium priced products is increasingly being driven by a greater awareness of the beneficial
total lifetime costs of LED lighting. The continuing momentum in this area, evident for the first time during this reporting period, is very encouraging.

AIXTRON expands to new R&D facilities

In 2010, AIXTRON started to build a new, state-of-the-art R&D center at its premises in
Herzogenrath to support the Company's accelerated R&D program and increased focus on new product development.

Phase 1
of the project, which consists of a modular designed office building with more than 300 employee workspaces, was completed in October 2010, when the first 250 staff
members relocated into the new facility. Phase 2 of the project, which consists of new application laboratories and a prototype production facility for an additional 150 staff members is
currently under construction and is scheduled to be completed early 2012.

In
total, AIXTRON expects to have invested in excess of € 40 million of its cash resources in such project.

The
new facilities will total approximately 16,000 square meters, employing an energy efficient design, including LED lighting, to minimize its carbon footprint. The facilities will be
able to host up to 450 engineers, significantly increasing the resources available to develop next generation complex material deposition systems.

Conversion into European Company (SE)

At the General Meeting held on May 18, 2010, the AIXTRON shareholders resolved upon the conversion of the legal form of AIXTRON
from a German AG into a European SE (Societas Europaea) and to adopt the name AIXTRON SE.

With
the entry into the commercial register of the Aachen municipal court on December 22, 2010, AIXTRON confirmed the completion of the conversion into a European Company. On that
day, the shareholders of AIXTRON AG automatically became shareholders of AIXTRON SE without their shareholders' rights being affected by the conversion. There are also no changes to the manner AIXTRON
prepares its financial information or to the content of such financial information as a result of the conversion. Furthermore, AIXTRON will continue to be treated to a large extent like a German stock
corporation, including with respect to capital measures, shareholders' meetings and accounting.

An
SE legal entity is a stock corporation in the form of a European Company. The supranational legal form reflects AIXTRON's European and international orientation and is a natural step
in respect of AIXTRON's global operations and business development. Nearly half of AIXTRON's employees work and more than 90% of the Company's revenues are generated outside of Germany.

Management Assessment of Company Situation

AIXTRON's 2010 business performance was again highly successful. AIXTRON has, for the third year in succession, delivered the best
operational performance in its history. The Company responded quickly and efficiently to the dramatic increase in customer demand for AIXTRON's production systems throughout the year, resulting in
record revenues and operating profit. The strong demand in 2010, was not only a continuation of the market driven demand for LEDs for TV backlighting, but also an increased effect of government
sponsored demand and some early investments by customers beginning to position themselves for the emerging LED lighting market.

The
foundation of AIXTRON's success in the past has been the commitment to innovative R&D and focused market-led Engineering, and these are exactly the same qualities that
are required to compete in the bigger and more dynamic markets the Group serves. Despite the ongoing global fiscal uncertainty, AIXTRON entered 2011 stronger than ever before and confident in the
efficiency of the business model and capability of the team the Company has.

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As
a result, AIXTRON's Management is looking forward with confidence to another profitable business performance in 2011, with the potential to increase sales for the fourth year in a
row, and is extending its positive outlook to 2012 and beyond.

A.  Operating Results: 2008-2010

The following operating and financial review of AIXTRON's results of operations and financial condition should be read together with AIXTRON's Consolidated
Financial Statements prepared in accordance with IFRS included under item 8. of 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 2010, AIXTRON recorded revenues of € 783.8 million, an increase of
€ 480.9 million, or 159%, compared to € 302.9 million in 2009 (2008: € 274.4 million). This year on year
growth comparison figure is made more dramatic by the fact that the revenues in 2009 were partly dampened by the negative residual effects of the global recession in that year. AIXTRON was able to
rapidly adapt to the changing market conditions due to the business's flexible business model combined with the Company's outsourcing strategy. The increase in 2009 full year revenues has been
achieved despite the global recession, which had a negative influence on revenues until the end of the first quarter 2009. The US-Dollar/EUR exchange rate was in average 5% stronger than
2008 and therefore had a supportive effect on 2009 revenues.

The
increase in 2010 full year revenues was mainly driven by the 168% year on year increase in the Company's deposition equipment revenues (2010:
€ 735.7 million; 2009: € 275.0 million; 2008: € 247.3 million). The equipment bought by customers is
predominantly used for the production of LEDs, which in turn are primarily employed as backlighting devices in products such as TVs, monitors, laptops, netbooks, tablet PCs and emerging lighting
applications. Total equipment sales generated 94% of total revenues in 2010 (91% in 2009; 90% in 2008). In addition to the significant absolute sales volume effect, the revenue development in 2010 was
also favorably influenced by the stronger US-Dollar, which increased on an average rate basis by 5% over the Euro from USD/€ 1.39 in 2009 to
USD/€ 1.33 in 2010. The increase in 2009 compared to 2008 full year revenues was mainly driven by increasing sales of the Company's deposition equipment. The equipment sold is
predominantly used by clients for the production of LEDs.

The
remaining revenues were generated by sales of spare parts and service, which increased by € 20.2 million from
€ 27.9 million in 2009 to
€ 48.1 million in 2010 (2008: € 27.1 million). The revenue development from spares and service typically lags the revenue development from
equipment, since such services and parts are typically included or covered by warranty provided to customers in the after sales period. The revenues from spare parts and service in 2009, which
increased by only 3% in 2009 compared to 2008, principally because of customers minimizing all non-production costs in the early part of the year and concentrating investments on
increasing production capacities in the latter quarters.

2010

2009

2008

20102009(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)Revenues


783.8


100


302.9


100


274.4


100


480.9


159Equipment revenues


735.7


94


275.0


91


247.3


90


460.7


168Other revenues (service, spare parts, etc.)


48.1


6


27.9


9


27.1


10


20.2


72


A very high percentage of total revenues in 2010, 2009 and 2008 was generated by sales to customers in Asia (2010: 91%, 2009: 82%; 2008: 87%). 4%
of revenues in 2010 and 14% of revenues in 2009 were generated in Europe (7% in 2008). The remaining 5% in 2010 and 4% in 2009 were

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generated
in the USA (6% in 2008). The increase in the 2009 European revenue share was mainly due to the revenue recorded in connection with sales to one major customer in the first quarter of
2009.

2010

2009

2008

20102009Revenues by Region

(million
EUR)



(million
EUR)



(million
EUR)



(million
EUR)(%)

(%)

(%)

(%)Asia


716.9


91


250.0


82


238.1


87


466.9


187Europe


31.1


4


41.6


14


18.5


7


(10.5
)

(25
)USA


35.8


5


11.3


4


17.8


6


24.5


217Total


783.8


100


302.9


100


274.4


100


480.9


159


Development of Results

2010

2009

2008

20102009Cost Structure

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)

(million
EUR)(%)Cost of Sales


372.0


47


168.1


55


161.5


59


203.9


121Gross profit


411.8


53


134.7


44


112.9


41


277.1


206Operating Costs


136.2


17


72.0


24


80.4


29


64.1


89Selling expenses


48.9


6


25.5


8


27.8


10


23.4


92General and administration expenses


30.1


4


21.3


7


18.0


7


8.8


41Research and development costs


46.1


6


32.9


11


28.3


10


13.2


40Net other operating (income) and expenses


11.1


1


(7.7
)

(2
)

6.3


2


18.8


(244
)


Cost of Sales

The cost of sales increased year on year by 121% from € 168.1 million in 2009 (2008:
€ 161.5 million) to € 372.0 million in 2010, while cost of sales relative to revenues significantly improved by 8 percentage points
to 47% from 55% in 2009 (59% in 2008). This year on year improvement was mainly due to the increasing sales volume effect and a more favorable product mix. In 2009, the cost of sales increase compared
to 2008, while cost of sales relative to revenues improved to 55% from 59%, was mainly due to a stronger average USD/EUR exchange rate in 2009 coupled with a more favorable product mix.

Gross Profit, Gross Margin

While revenues increased by 159% and cost of sales, to a lesser extent, by 121%, the Company's gross profit increased in 2010 by 206%
year on year to € 411.8 million (2009: € 134.7 million; 2008: € 112.9 million), resulting in a
9 percentage points higher gross margin of 53% after 44% in 2009 (41% in 2008). The Company's gross profit in 2009 increased in line with revenues and cost of sales, by 19%,
resulting in a three percentage points higher gross margin.

Operating Costs

Operating costs in 2010 increased year on year by 89% to € 136.2 million (2009:
€ 72.0 million; 2008: € 80.4 million), in 2009, operating costs decreased by 10%. 2010 Operating costs relative to revenues were 17%,
7 percentage points lower than the 24% in 2009 (29% in 2008), 2009 operating costs relative to revenues decreased by 5 percentage points.

These
developments were affected by the following factors:

Selling
expenses increased year on year, by 92% to € 48.9 million (2009: € 25.5 million; 2008:
€ 27.8 million), mainly against a backdrop of higher warranty expenses in consequence of higher volume and sales commissions, which vary by territory, partially offset by
disproportionally lower increases in discretionary expenses. In 2009, the decrease in selling expenses was mainly due to a different geographical mix of sales, the consequent lower variable sales
commissions, and controlled discretionary expenses. 2010 selling expenses relative to revenues decreased year on year by 2 percentage points to 6%. In 2009, selling expenses decreased by two
percentage points to 8% of revenues (10% in 2008).

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The
year on year 41% increase in general and administration expenses to € 30.1 million in 2010 (2009: € 21.3 million; 2008:
€ 18.0 million) was principally due to profit-related variable administration expenses, IT infrastructure costs and consultancy. The 2009 increase in general and
administration expenses, was principally due to profit related variable administration expenses and IT infrastructure costs. General and administration expenses, relative to revenues, decreased from
7% in 2009 (2008: 7%) by 3 percentage points to only 4% in 2010, principally due to the higher sales volume effect. In 2009, general and administration expenses relative to revenues
remained stable.

Key R&D Information

2010

2009

2008

2009-2010(%)R&D expenses (million EUR)


46.1


32.9


28.3


40R&D expenses, % of sales


6
%

11
%

10
%R&D employees (period average)


240


197


195


22R&D employees, % of total headcount (period average)


32
%

31
%

32
%


Research and development expenses increased by 40% year on year from € 32.9 million in 2009 (2008:
€ 28.3 million) to € 46.1 million in 2010 and by 16% to € 32.9 million in 2009, both due to the increase in
development activities, including additional personnel, material expenses and depreciation. R&D costs decreased in relative terms from 11% of revenues in 2009 (10% in 2008) to 6% in 2010. R&D costs
relative to revenues increased from 10% in 2008 to 11% in 2009.

2010

2009

2008

20102009Personnel Costs

(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)(%)Cost of Sales


23.8


17.3


12.5


6.5


38Selling, General and Administrative expenses


24.3


17.9


15.5


6.4


36Research and Development costs


21.8


16.5


16.0


5.3


32Total


70.0


51.7


44.0


18.2


35


With the average number of Group employees increasing in line with the higher business volume, personnel expenses increased by 35% to
€ 69.9 million in 2010 and by 18% to € 51.7 million in 2009 (2008: € 44.0 million), but declined as a
percentage of sales from 17% in 2008 and 2009 to 9% in 2010. 2010 net other operating income and expenses resulted in an expense of € 11.1 million, compared with
€ 7.7 million of income in 2009 (2008: € 6.3 million of expense). In 2009, net other operating income and expenses increased mainly due to
the gains made from the sale of the Aachen office building of € 1.3 million recorded in the first quarter, compensation payments of
€ 3.5 million for cancelled orders, an increase of € 1.4 million in R&D grants, a decrease of € 1.1 million in
impaired
receivables, and a reduction of € 5.6 million in negative foreign exchange effects, all of which had a positive influence.

In
2010, a net currency expense of € 17.2 million and in 2009, a net currency expense of € 1.4 million (2008:
€ 7.0 million) was incurred largely from USD/EUR hedging contracts. In 2010, expenses of € 20.8 million relate to hedge contracts, including
premiums on option contracts. A gain of € 3.6 million was recorded in 2010 from transactional and translation differences which do not involve hedge contracts. In 2009, a
gain of € 0.3 million related to hedge contracts, including premiums on option contracts was realized. A loss of € 1.7 million was recorded
in 2009 from transactional and translation differences which do not involve hedge contracts. In 2008 a loss of € 7.0 million was recorded, mainly from hedging contracts.

€ 3.5 million
of R&D grants, received in 2010 and € 3.3 million received in 2009 (2008:
€ 1.9 million), were recorded as other operating income.

Operating Result

The operating result significantly increased by 339% from € 62.7 million in 2009 (2008:
€ 32.5 million) to € 275.5 million in 2010, with a 14 percentage points higher operating margin of 35% (21% in 2009; 12% in 2008).
This development was principally due to the positive effects of the increase in revenue and the relatively lower costs as described above. At the same time, the expense from currency hedges and
currency translation effects offset, to a limited extent, some of the positive effects on the operating result and margin in 2010. In 2009, the operating result significantly increased by 93%,
principally due to the positive effects of the increase in revenue and the factors described

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above,
a strengthening of the average USD/EUR exchange rate during 2009 compared to 2008, and a higher other operating income.

Result Before Taxes

Result before taxes increased by 335% to € 278.2 million in 2010 from
€ 64.0 million in 2009 (2008: € 35.7 million), with a net finance income of € 2.7 million in 2010 and
€ 1.3 million in 2009 (2008: € 3.2 million).

2010

2009

2008

20102009Interest & Taxes

(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)(%)Net Finance Income/Expense


2.7


1.3


3.2


1.4


108Finance Income from financial assets


2.8


1.3


3.2


1.5


115Finance Expenses from financial liabilities


(0.1
)

0.0


0.0


(0.1
)

n/aTaxes on Income


(85.7
)

(19.2
)

(12.7
)

(66.5
)

346


AIXTRON recorded a tax on income expense of € 85.7 million in 2010 at a relatively stable effective tax rate of 31%
compared to 2009 and a tax on income expense of € 19.2 million at a 6 percentage points lower tax rate of 30% compared to 2008 (2009:
€ 19.2 million or 30%; 2008: € 12.7 million or 36%). The 2009 tax charge was lower than in 2008 because of reduced tax rates in different
jurisdictions. Tax loss carryforwards, remaining unrecognized as deferred tax assets in 2010 totaled € 17.1 million (2009: € 21.2 million;
2008: € 20.6 million).

Profit/Loss Attributable to the Equity holders of AIXTRON SE (after taxes)

The 2010 after-tax profit attributable to the equity holders of the AIXTRON SE was
€ 192.5 million (25% of revenues), 330% up from the € 44.8 million (15% of revenues) in 2009 which was up 95% from the
€ 23.0 million or 8% of revenues in 2008.

Net Income AIXTRON SEUse of Results

AIXTRON SE, 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 (HGB) of € 124.9 million for 2010 (2009: € 42.5 million; 2008:
€ 30.0 million).

AIXTRON's
Executive and Supervisory Boards will propose to the shareholders' meeting that a dividend of € 60.7 million or € 0.60 per
share (€ 15.1 million or € 0.15 per share for 2009; € 8.2 million or € 0.09 per share for
2008) be distributed for the fiscal year 2010.

Development of Orders

2010

2009

2008

20102009Equipment Orders

(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)(%)Equipment order intake


748.3


370.1


250.8


378.2


102Equipment order backlog (end of period)


274.8


203.8


105.0


71.0


35


Equipment Order Intake

As with revenue development; equipment order intake significantly increased in 2010, 2009 and 2008. 2010 order intake was 102% up year
on year, at € 748.3 million (2009: € 370.1 million; 2008: € 250.8 million).

As
a matter of internal policy, order intake in US-Dollars was recorded at a budget exchange rate, which had been set at 1.50 USD/EUR for 2010 (2009:
1.40 USD/EUR; 2008: 1.40 USD/EUR).

The
continued positive market development for compound semiconductor equipment reflects the increased adoption of LED backlighting in TV and other display applications. Moreover,
included in more recent order intake, are a number of orders linked to LED lighting applications, which underlines a growing momentum for the emergence of an LED lighting market and the earlier than
anticipated development of the demand for production equipment for LED devices destined for lighting applications. In 2009, the positive development for compound semiconductor equipment marked the

29

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beginning
of a new LED investment cycle, which started after the low point of demand in the first quarter 2009, and was primarily driven by the increased adoption of LED TV applications.

Equipment Order Backlog

The total equipment order backlog of € 274.8 million at December 31, 2010 was 35% higher than at
the same point in time in 2009 (€ 203.8 million; 2008: € 105.0 million).

In
2010, US-Dollar denominated order backlog was recorded at a budget exchange rate, which had been set at 1.50 USD/EUR (2009: 1.40 USD/EUR; 2008:
1.40 USD/EUR). 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 agreed deposit, any specific
shipment dependant documentation, and a system specific customer-confirmed delivery date.

Currency Fluctuation

Fluctuations between the value of the Euro and other major currencies, in particular the US-Dollar and the Pound Sterling
can affect the Company's operating results. The Company enters into a variety of derivative financial instruments to manage approximately 50 to 90% of its exposure to foreign currency risk. See
"Item 11Quantitative and Qualitative Disclosure about Market Risk" for further details.

B.  Liquidity and Capital Resources

Corporate Financial Management

AIXTRON has a central financial management system to control its global liquidity, interest and currency management.

Due
to the potentially volatile nature of its business, a sufficient level of cash is essential to expeditiously finance potential business needs. The Company's need for cash is
generally provided for, through operating cash flows and, to a smaller extent, through grants. In order to secure growth financing and support an acceleration and expansion of the R&D activities, the
Company is able to access its strong equity capital base. Furthermore, approved by the Shareholders Meeting, and subject to Supervisory Board approval, the Company has the authority to issue equity
instruments to be able to raise additional liquidity on the capital market if required.

AIXTRON
conducts a large part of its business in foreign currencies, i.e. in currencies other than the Euro. The most prevalent foreign currency relevant to AIXTRON is the
US-Dollar. In order to hedge foreign exchange risks, the Company routinely employs currency hedging instruments. With these instruments, expected cash flows from customer orders and
expected customer orders are hedged.

Funding

The Company's stated share capital (Grundkapital) as of December 31, 2010 amounted to € 101,179,866
(December 31, 2009: € 100,667,177; December 31, 2008: € 90,894,616) divided into 101,179,866 registered shares with a proportional interest
in the share capital of € 1.00 per no-par value registered share. Each no-par value share represents the proportionate share in AIXTRON's stated share
capital and carries one vote at the Company's annual shareholders' meeting. All registered shares are fully paid in. The Company has issued a share certificate representing multiples of shares (global
share); shareholders do not have the right to the issue of a share certificate representing their share(s). There are no voting or transfer restrictions on AIXTRON's registered shares that are related
to the Company's articles of association. There are no classes of securities endowed with special control rights, nor are there any provisions for control of voting rights, if employees participate in
the share capital without directly exercising their voting rights.

The
Company has a number of stock option programs in place that grant the members of the Executive Board and employees the right to purchase AIXTRON shares or ADSs under certain
conditions. In fiscal year 2010, 513,014 stock options (2009: 915,662 options; 2008: 553,473 options) were exercised, resulting in delivery of in total 513,014 ordinary shares and AIXTRON ADS. Under
the 2010 tranche of the AIXTRON stock option plan 2007, 779,950 new stock options were granted in fiscal year 2010 (2009 tranche: 778,850 grants; 2008 tranche: 779,000 grants).

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For a more detailed description of the different stock option plans and a summary of all the stock option transactions, refer to Item 18 "Financial
StatementsNote 23. Share-based payment".

The
Company recorded no bank borrowings as of December 31, 2010, 2009 and 2008.

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

The
total shareholders' equity relative to total assets remained relatively stable at 73% as of December 31, 2010, compared to 72% as of December 31, 2009
(December 31, 2008: 68%), with a 44% higher balance sheet total in 2010 compared to 2009 which was mainly due to the profit related increase in equity. In 2009, the total shareholders' equity
relative to total assets ratio increased principally due to the equity capital increase of October 2009 and the significant profit related increase in equity, resulting in a 82% higher balance sheet
total compared to 2008.

With
the high profit for the year achieved in 2010, the return on equity (ROE) based on the 2010 Group's net profit in proportion to the average total shareholders' equity at the start
and end of the year, was 38% for 2010 (2009: 14%; 2008: 11%).

In
order to support future developments, the Company regularly explores and assesses on an ongoing basis, potential funding opportunities available in the market. Additional funding
needs could also be covered by the additional capital as authorized by the annual shareholders' meeting and laid out in the following table:

Funding Sources
(EUR or number of shares)

31-Dec
2010

Approved since

Expiry Date

31-Dec
2009

31-Dec
2008

2010-2009Issued shares


101,179,866








100,667,177


90,894,616


512,689Conditional Capital 2Stock Options Program 1999


1,926,005


26/05/1999


31/12/2017


1,926,005


1,926,005


0Conditional Capital 4Stock Options Program 2002


972,183


22/05/2002


31/12/2016


1,247,197


2,039,821


(275,014
)Conditional Capital I 2007Authorization to potentially issue convertible notes or warrants in future


35,875,598


22/05/2007


21/05/2012


35,875,598


35,875,598


0Conditional Capital II 2007Stock Options Program 2007


3,681,699


22/05/2007


31/12/2018


3,919,374


3,919,374


(237,675
)Authorized Capital 1Capital increase for cash or contribution in kind with existing shareholders' preemptive rights


expired


18/05/2005


17/05/2010


35.919.751


35.919.751


(35.919.751
)Authorized Capital 2Capital increase for cash excluding existing shareholders' preemptive rights


0


18/05/2005


17/05/2010


0


8.979.937


0


In accordance with section 71 (1) no. 8 German Corporations Act (AktG), the Company is authorized until May 17, 2015,
with the approval of the Supervisory Board, to purchase its own shares representing an amount of up to € 10,088,195 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 on several occasions 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.

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Any
amendment to the Articles of Association related to capital measures requires a 75% majority of the share capital represented at the general shareholders' meeting (Article 59
SE-VO; §179 German Corporations Act). Other amendments to the Articles of Association require a majority of two thirds of the votes cast or, if at least one half of the share
capital is represented, a simple majority of the votes cast.

Investments

The AIXTRON Group's total capital expenditures of fiscal year 2010 amounted to
€ 51.9 million (2009: € 9.8 million; 2008: € 12.9 million). In 2010,
€ 48.6 million were related to the new R&D center and purchases of technical equipment (including testing and laboratory equipment), of which
€ 39.5 million were invested in the new R&D center currently under construction at the Company's Herzogenrath/Aachen County premises.
€ 11.6 million had been invested into Phase 1 for the modular designed office building of the new R&D center. Another
€ 27.9 million had been invested to date into Phase 2 as assets under construction for the new prototyping factory and laboratories that will be completed in
early 2012. In 2009, € 8.8 million were related to purchases of technical equipment (including testing and laboratory equipment) (2008:
€ 11.6 million).

The
remaining amounts (2010: € 3.3 million; 2009: € 1.0 million; 2008:
€ 1.3 million) were related to intangible assets including software licenses (mainly consisting of SAP software licenses).

Almost
the entire capital expenditures (94%) for the year 2010 were invested in Germany and such expenditures for 2011 are also generally expected to be invested primarily
in Germany.

The
increase of € 113.6 million in bank deposits with a maturity of at least three months in 2010 was recorded as cash outflow from investing
activities. In 2009, € 87.0 million of additional bank deposits, arising largely from part of the proceeds of the October 2009 capital increase, were also recorded
as cash outflow from investing activities (2008: € 1.8 million of cash inflow).

All
2010, 2009 and 2008 expenditures were funded out of operating cash flow and available cash resources. Capital commitments are disclosed in Item 18 "Financial
StatementsNote 28. Capital commitments" and are expected to be funded out of available cash resources.

Cash Flow

A cash inflow from operating activities of € 147.7 million (2009:
€ 78.9 million; 2008: € 15.7 million) was recorded. The increase in 2010 was mainly caused by increased profits of
€ 192.5 million (2009; € 44.8 million; 2008: € 23.0 million). Increased working capital
requirements resulting from the increased business, were the cause of the difference between the profit and cash flow from operating activities for each of the years 2010, 2009 and 2008.

Cash
investments of € 165.4 million in 2010 (2009: € 90.1 million; 2008:
€ 11.3 million) include € 113.6 million (2009: 87.0 million; 2008: -1.8 million) invested in money
market deposits and therefore re-classified from cash and cash equivalents to "other financial assets". In 2010, capital expenditure amounted to
€ 51.9 million chiefly on the new R & D facilities in Herzogenrath, Germany. In 2009, capital expenditure amounted to
€ 9.8 million and € 12.9 million in 2008. Disposal proceeds, chiefly from the sale of the former headquarters in Aachen, of
€ 6.7 million in 2009 reduced the net investment in capital equipment that year. Disposals were not significant in 2008 or 2010.

Cash
outflow from financing activities of € 11.6 million (2009: cash inflow of € 153.6 million; 2008: cash outflow
on € 3.7 million) includes the dividend payments to shareholders of € 15.1 million (2009:
€ 8.2 million; 2008: € 6.3 million) and cash received from the issue of new shares of
€ 3.5 million (2009: € 161.7 million; 2008: € 2.6 million).

Cash
and cash equivalents, including bank deposits with a maturity of at least three months, most of which is held in Euros (for more information, refer to "Investments"
above), increased by 28% to € 384.7 million (€ 182.1 million + € 202.6 million) as of
December 31, 2010 (December 31, 2009: € 211.2 million + € 90.0 million; December 31, 2008:
€ 67.5 million + € 3.0 million).

Following
the capital increase of October 2009, parts of the proceeds, of approximately € 159.4 million, are included in the 2009 and 2010 year
end liquidity positions.

Specific
proceeds that increased the 2010 year end liquidity position came from, amongst other factors, the 2010 net profit (€ 192.5 million),
an increase of advanced payments of customers

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(€ 28.8 million),
stock option exercises (€ 3.5 million), and in total, were greater than the Q2/2010 dividend payment
(€ 15.1 million), higher inventories, higher trade receivables, and the above mentioned capital expenditures.

Specific
proceeds increasing the 2009 year end liquidity came, amongst other factors, from the 2009 net profit (€ 44.8 million),
non-cash expenses (€ 14.0 million), an increase of advanced payments of customers (€ 34.9 million), the sale of the
Aachen office building (€ 6.7 million), stock option exercises (€ 4.1 million), and were not offset by the dividend payment
(€ 8.2 million), higher inventories, higher trade receivables, and the above mentioned capital expenditures.

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, following the October 2009 capital increase, the liquidity provided by operating cash flows, grants, existing cash resources and financing arrangements, is
sufficient to fund working capital, capital expenditures and other ongoing business requirements. Should the market and economic environment currently experienced by AIXTRON change to a period of
continued weakness and lower customer demand for the Company's products and services, cash generated by operations could be lower than forecasted and not be sufficient. In such a situation, the
Company might need to pursue obtaining short-term credit facilities or additional equity financing offerings. There can be no assurance that any such supplemental funding, if sought, could
be obtained, or if obtained, would be adequate or on terms acceptable to AIXTRON. However, AIXTRON believes that its balance sheet at December 31, 2010 should provide additional sources of
liquidity if required.

As
of December 31, 2010, € 202.6 million (2009: € 90.0 million; 2008:
€ 3.0 million) of the Company's cash resources were held, mostly in Euros, in bank deposits with a maturity of at least three months.

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 ResultsOperating Costs" in this report.

D.  Trend Information

The development of state-of-the-art complex material deposition technology remains the Company's core competency and one which
the Company has developed a competitive advantage, with a 68% share of the worldwide market for MOCVD equipment in 2009 (according to Gartner Dataquest as of March 2010). The AIXTRON Management
intends to continue this 'Pure Play' positioning and 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 both existing and emerging markets.

Due
to an expectation that the speed of development and the competitive environment in the equipment markets that AIXTRON addresses will become more challenging and consequently, product
life cycles will become shorter, AIXTRON intends to further accelerate and expand its research and product development activities. AIXTRON expects to maintain its MOCVD equipment market leadership
position, with a market share of approximately 60%. Market research company Gartner Dataquest estimated in December 2010 that the value of the MOCVD equipment market would be approximately
USD 1.5 billion by the end of 2010 and would remain at this level in 2011.

AIXTRON
will continue to implement its strategy to address the large area OLED display and lighting market with the Company's OVPD® and PVPD technologies and additionally
seeks to make further inroads into the research community with its PECVD technology aimed at Carbon Nanostructures including Carbon Nanotubes, Carbon Nanowires and Graphene. As with all emerging

33

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technologies,
there is an element of risk associated with the timing of AIXTRON's OVPD®, PVPD and PECVD technology being adopted by the market. Estimates of an accessible OLED or Carbon
Nanostructure market size or market share are neither available nor meaningful at this point in time.

AIXTRON
has developed a new high throughput ALD tool aimed at next-generation devices for the memory and logic device markets. The likely point at which the memory production
market, including AIXTRON's potential customers, may adopt the ALD technology the Company is developing is thought to be at sub 32nm structure dimensions.

With
the intention of addressing a new end-market opportunity, the Company has developed an AVD® technology which is targeting the logic device market. The likely
point at which the logic production market may adopt the AVD® technology the Company is developing is thought to be at sub 22nm structure dimensions.

The
Company is currently actively engaged in dialogue with potential customers of these new products. The AIXTRON Sales and Engineering teams are conducting product evaluations, system
assessments and joint development programs as part of a pre-sales process in order to successfully place the AIXTRON's ALD and AVD® equipment in customers' laboratories for
evaluation. AIXTRON expects to generate revenues with these technologies, as soon as the memory and logic market will invest into new equipment for the production of devices with structures smaller
than 32nm and 22nm respectively.

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 (in December 2010) to be valued at USD 240 million by the end of 2010 (2009: USD 166 million).

E.  Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably like to have a current or future effect on its financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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, 2010:

(million EUR)

Total

Less than
1 year

1-3 years

3-5 years

More than
5 yearsLong-Term Debt Obligations


0.00


0


0.00


0.00


0.00Finance lease commitments


0.00


0


0.00


0.00


0.00Operating lease commitments


10.15


4.18


4.40


0.64


0.93Purchase commitments


98.79


98.79


0.00


0.00


0.00Total contractual obligations


108.94


102.97


4.40


0.64


0.93


Commitments for capital expenditures were € 6.5 million as of December 31, 2010 (December 31,
2009: € 0.3 million; December 31, 2008: € 1.8 million).

Net
obligations for funding of defined benefit pension plans of € 17 thousand existed as of December 31, 2010 (December 31,
2009: € 1,064 thousand, December 31, 2008: € 845 thousand).

The
Company's net pension commitments to two former members of the AIXTRON Executive Board were outsourced to a third party insurance company in 2010.

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

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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.

Preparation of Consolidated Financial Statements under IFRS

The Consolidated Financial Statements of AIXTRON SE and its subsidiaries ("AIXTRON" or "Company") have been prepared in
accordance with, and fully comply with



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. The Company believes, based on past experience, that this method of recognizing revenue fairly states the revenues of the Company. For more information regarding revenue
recognition, refer to Item 18 "Financial StatementsNote 2. Significant accounting policies".

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

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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 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

Amendments to the following standards and interpretations were adopted during 2010:



The
adoption of these interpretations and amended standards has not led to any changes in the company's accounting policies. The standards, amendments to standards and interpretations
have all been adopted earlier than required.

At
the date of authorization of these financial statements, the following Standards (or amendment to existing standards), which have not been applied in these financial statements, were
in issue but not yet effective and not yet adopted by the EU.



The
adoption of IFRS 9 which the Company plans to adopt on 1st January 2013 will impact both the measurement and disclosures of Financial Instruments.

For
more information regarding recently issued accounting standards, refer to Item 18 "Financial StatementsNote 2. Significant accounting policies".

Item 6:    Directors, Senior Management and Employees

A.  Directors and Senior Management

As a European Company, AIXTRON SE is subject not only to the German Stock Corporation Law, but also to the superseding European SE regulations and
the German SE Implementation Act (SE-Ausführungsgesetz). It has a dual management and supervisory board structure consisting of an Executive Board and a Supervisory Board.
The two boards are separated and no individual may simultaneously be a member of both boards.

Supervisory Board

The Supervisory Board is responsible for the appointment and employment terms of Executive Board members. It oversees and advises the
Executive Board regarding its management duties.

Pursuant
to Article 11 of AIXTRON SE's Articles of Association, the Supervisory Board consists of six members. The General Shareholders' Meeting can specify any other
number of Supervisory

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Board
members divisible by three. The members of the Supervisory Board are generally appointed for terms that run until the end of the General Shareholders' Meeting, in which the shareholders
represented, resolve on the approval of the Supervisory Board's activities for AIXTRON SE's fourth fiscal year following the beginning of such term and not counting the fiscal year in which the
term began. The maximum term is six years and repeated appointments are permitted. The members of AIXTRON SE's first Supervisory Board are being appointed in accordance with the
SE Regulation. The Supervisory Board elects a Chairman and a Deputy Chairman from its members. The Supervisory Board Chairman or, if he is prevented from doing so, his Deputy, convenes the
meetings of the Supervisory Board and leads them.

As
of December 31, 2010 AIXTRON's Supervisory Board consisted of the following six individuals:

Name

Position

Member
since

End of TermKim Schindelhauer*/**/****

Chairman of the Supervisory Board


2002


AGM 2011
***Dr. Holger Jürgensen*/**/****

Deputy Chairman of the Supervisory Board, Chairman of the Nomination Committee


2002


AGM 2011
***Prof. Dr. Wolfgang Blättchen*/**

Chairman of the Audit Committee, Financial Expert*****


1998


AGM 2011
***Karl-Hermann Kuklies




1997


AGM 2011
***Prof. Dr. Rüdiger von Rosen




2002


AGM 2011
***Joachim Simmroß*




1997


AGM 2011
***


*Member
of the Audit Committee**Member
of the Nomination Committee***Current
members of the first Supervisory Board are appointed until the end of the General Shareholders' Meeting that resolves on the approval of the
Supervisory Board's activities for AIXTRON SE's first fiscal year (i.e., until the end of the Annual General Shareholders' Meeting that is
scheduled to be held in May 2011), but in any event for a maximum term of three years****Former
AIXTRON Executive Board Member*****Since
2005


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 Kaiserstrasse 98, 52134 Herzogenrath, Germany.

For
more information regarding the members of the Supervisory Board, refer to Item 18 "Financial StatementsNote 36. Supervisory Board and Executive Board".

Executive Board

Pursuant to the guidelines set forth in the German Stock Corporation Act, to which AIXTRON SE is subject via the SE
statutes, the Executive Board of AIXTRON SE is responsible for the management of the Company and informs the Supervisory Board regularly, comprehensively and without delay, of any appropriate
issues or developments regarding business trends, corporate planning and strategy, and on the Company's risk status.

According
to Article 8 of AIXTRON SE's Articles of Association, the Executive Board is to comprise of two or more persons. The Supervisory Board determines the number of
Executive Board members and also decides whether there should be a Chairman and whether deputy members or a Deputy Chairman should be appointed.

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As
of December 31, 2010, AIXTRON's Executive Board ("Management") consisted of the following three individuals:

Name

Position

First
Appointment

End of Term

Date of BirthPaul Hyland

Chairman, President and Chief Executive Officer


April 1, 2002


March 31, 2015


October 20, 1953Wolfgang Breme

Executive Vice President and Chief Financial Officer


April 1, 2005


March 31, 2013


May 15, 1960Dr. Bernd Schulte

Executive Vice President and Chief Operating Officer


April 1, 2002


March 31, 2015


August 22, 1962




The
Executive Board's business address is Kaiserstrasse 98, 52134 Herzogenrath, Germany.

B.  Compensation

Executive Board Remuneration

The Supervisory Board is responsible for establishing the structure of the remuneration system and the total remuneration for
individual members of the Executive Board. It regularly discusses and reviews the remuneration for appropriateness. In addition, on May 18, 2010, the General Shareholders' Meeting, acting in
accordance with Article 120(4) of the German Stock Corporation Act (Aktiengesetz, or AktG), approved the remuneration system summarized below.

The
level of remuneration of the Executive Board members of AIXTRON SE is aligned with the commercial and financial situation and future prospects of the Group and the level and
structure of Executive Board remuneration at comparable companies as well as the compensation structure in place in other areas of the Company. In addition, the responsibilities, experience and
contribution of each individual Executive Board member, and the desire to retain them, are taken into account when calculating the remuneration. Executive Board remuneration currently consists of
three components: fixed remuneration (including benefits in kind and payments into a private pension insurance), a variable bonus, and stock-based remuneration.

The
Executive Board employment contracts stipulate an annual income for the fixed remuneration component. 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 private pension insurance.

The
variable bonus (profit-sharing) is based on consolidated net income for the year and is paid from an "accrued internal bonus", defined as up to 10% of the modified consolidated net
income for the year, but not to exceed € 6.5 million. The modified consolidated net income for the year is obtained from the Company's audited Consolidated
Financial Statements (IFRS), less a consolidated loss

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carryforward
figure and those amounts that are to be allocated to retained earnings in the Annual Financial Statements of AIXTRON 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.

In
addition, as a variable component acting as a long-term incentive with an element of risk, the members of the Executive Board receive a share-based payment in the form of
options that are granted under AIXTRON's stock option plans. The stock option plans, including the exercise thresholds, are adopted at each General Shareholders' Meeting. The number of options granted
to 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 in Item 6.E "Directors, Senior Management and EmployeesShare OwnershipEmployee Bonds and OptionsShare Option Programs" and Item 18
"Financial StatementsNote 23. Share-based payment". The appropriateness of the above-mentioned remuneration components is regularly reviewed by the Supervisory Board. Attention is
also paid to ensuring that the terms of the remuneration components do not induce the Executive Board to take inappropriate risks.

In
fiscal year 2010, the total fixed and variable remuneration of the Executive Board (including benefits in kind and pension allowance) totaled € 7,620,046
(2009: € 5,148,351; 2008: € 2,507,112). Moreover, the Executive Board was granted 156,000 options in 2010 (2009: 156,000; 2008: 156,000) with
a grant-date fair value of € 1,383,720 (2009: € 1,344,720; 2008: € 276,120). The division between the
individual members of the Executive Board for the years 2008 to 2010 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


2010


434,191


2,888,890


3,323,081


52,000


461,240


3,784,3212009


433,554


1,790,641


2,224,195


52,000


448,240


2,672,4352008


442,615


689,831


1,132,446


52,000


92,040


1,224,486Wolfgang Breme


2010


308,968


1,805,555


2,114,523


52,000


461,240


2,575,7632009


308,968


1,119,151


1,428,118


52,000


448,240


1,876,3582008


308,555


344,916


653,471


52,000


92,040


745,511Dr. Bernd Schulte


2010


376,887


1,805,555


2,182,442


52,000


461,240


2,643,6822009


376,887


1,119,151


1,496,038


52,000


448,240


1,944,2782008


376,279


344,916


721,195


52,000


92,040


813,235Total


2010


1,120,046


6,500,000


7,620,046


156,000


1,383,720


9,003,7662009


1,119,409


4,028,942


5,148,351


156,000


1,344,720


6,493,0712008


1,127,449


1,379,663


2,507,112


156,000


276,120


2,783,232


*Incl.
benefits in kind and allowance for pensions


As of December 31, 2010, the AIXTRON Executive Board held a total of 953,758 Company stock options to subscribe to 962,516 ordinary shares
of the Company (December 31, 2009: 806,516 shares; December 31, 2008: 650,516 shares).The number of shares underlying the options is set out below. The

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actual
profits from exercising the stock options may 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


Nov 2010


52,000


0


461,240


26.60


Nov 2020Nov 2009


52,000


0


448,240


24.60


Nov 2019Nov 2008


52,000


0


92,040


4.17


Nov 2018Dec 2007


52,000


26,000


225,680


10.09


Dec 2017May 2006


55,000


41,250


84,150


3.83


Nov 2016May 2004


35,000


35,000


107,800


6.17


Nov 2014May 2003


27,500


27,500


48,950


3.10


Nov 2013May 2002


27,500


0


152,625


7.48


May 2017May 2001


5,000


0


106,500


26.93


May 2016May 2000


5,400


1,350


114,507


67.39


May 2015Wolfgang Breme


Nov 2010


52,000


0


461,240


26.60


Nov 2020Nov 2009


52,000


0


448,240


24.60


Nov 2019Nov 2008


52,000


0


92,040


4.17


Nov 2018Dec 2007


52,000


26,000


225,680


10.09


Dec 2017May 2006


55,000


41,250


84,150


3.83


Nov 2016Dr. Bernd Schulte


Nov 2010


52,000


0


461,240


26.60


Nov 2020Nov 2009


52,000


0


448,240


24.60


Nov 2019Nov 2008


52,000


0


92,040


4.17


Nov 2018Dec 2007


52,000


26,000


225,680


10.09


Dec 2017May 2006


55,000


41,250


84,150


3.83


Nov 2016May 2004


35,000


35,000


107,800


6.17


Nov 2014May 2003


0


0


48,950


3.10


Nov 2013May 2002


27,500


0


152,625


7.48


May 2017May 2001


5,000


0


106,500


26.93


May 2016May 2000


2,640


660


55,981


67.39


May 2015May 1999


2,976


2,976


35,640


18.70


May 2014Total





962,516


304,236


In accordance with IFRS 2, the "grant-date fair value of the options" is also used as the basis for recognizing options issued
after November 7, 2002 under expenses on the Income Statement. For stock options issued after November 7, 2002, the fair value is calculated using a binomial lattice model, for stock
options issued before November 7, 2002, the fair value was calculated using the Black-Scholes model.

In
fiscal year 2010, the Executive Board members exercised no options (2009: 0; 2008: 6,875) and none (2009: 0; 2008: 0) expired.

The
current Executive Board members have no individual company pension benefits which would result in pension provisions being required to be made by the Company. Instead, the combined
Executive Board annual pension allowance (€ 120,000 p.a. in 2010, 2009 and 2008), paid by AIXTRON and included in the fixed remuneration, is transferred by the
Executive Board members into independent insurance contracts with a benevolent fund allowance (or similar plan).

The
Company's net pension commitments to two former members of the AIXTRON Executive Board under defined benefit pension plans were outsourced to a third party pension fund in 2010. At
the end of 2010, the existing pension provisions were therefore released (2009 € 1,028,464; 2008: € 845,012). The non-recurring
net expenditure recorded for 2010 amounted to € 926,383.

The
Executive Board members receive no loans from the Company.

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Supervisory Board Remuneration

Remuneration of the Supervisory Board is regulated by AIXTRON's Articles of Association. Accordingly, the annual fixed compensation for
individual members 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 the amount
received by a member of the Supervisory Board. The members of the Supervisory Board also receive, in aggregate, a variable compensation of 1% of the Company's net income, 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, committee members
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.

The
remuneration of the members of AIXTRON SE's first Supervisory Board will be set by the General Shareholders' Meeting that resolves on the approval of the activities of
AIXTRON SE's first Supervisory Board members.

In
fiscal year 2010, the compensation of the Supervisory Board totaled € 801,000 (2009: € 567,350; 2008:
€ 446,958). The Supervisory Board compensation for the years 2008 through 2010 can be broken down as follows:

Supervisory Board Member

Year

Fixed

Variable

Attendance

Total(EUR)

(EUR)

(EUR)

(EUR)Kim Schindelhauer*/**/***


2010


54,000


216,000


7,500


277,500(Chairman of the Supervisory Board)


2009


54,000


135,653


6,000


195,6532008


54,000


93,162


6,000


153,162Dr. Holger Jürgensen*/**/***


2010


27,000


108,000


9,000


144,000(Deputy Chairman of the Supervisory Board,


2009


27,000


67,826


6,000


100,826Chairman of the Nomination Committee)


2008


27,000


46,581


6,000


79,581Prof. Dr. Wolfgang Blättchen*/**


2010


18,000


72,000


13,500


103,500(Chairman of the Audit Committee)


2009


18,000


45,218


12,000


75,2182008


18,000


31,054


12,000


61,054Karl-Hermann Kuklies


2010


18,000


72,000


0


90,0002009


18,000


45,218


0


63,2182008


18,000


31,054


0


49,054Prof. Dr. Rüdiger von Rosen


2010


18,000


72,000


0


90,0002009


18,000


45,218


0


63,2182008


18,000


31,054


0


49,054Joachim Simmroß*


2010


18,000


72,000


6,000


96,0002009


18,000


45,218


6,000


69,2182008


18,000


31,054


6,000


55,054Total


2010


153,000
****

612,000
*****

36,000


801,0002009


153,000


384,350


30,000


567,3502008


153,000


263,958


30,000


446,958


*Member
of the Audit Committee**Member
of the Nomination Committee***Former
AIXTRON Executive Board member****of
which € 149 thousand is for the period from January 1, 2010 to December 21, 2010 for duties performed
as the Supervisory Board of AIXTRON AG and, subject to the resolution of the Annual General Meeting according to § 113 sec. 2 AktG,
€ 4 thousand for the period from December 22, 2010 to December 31, 2010 for duties performed as the Supervisory Board of AIXTRON SE*****of
which € 595 thousand for the period from January 1, 2010 to December 21, 2010 for duties performed as
the Supervisory Board of AIXTRON AG and, subject to the resolution of the Annual General Meeting according to § 113 sec. 2 AktG,
€ 17 thousand for the period from December 22, 2010 to December 31, 2010 for duties performed as the Supervisory Board of AIXTRON SE


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Table of Contents

As
in previous years, there were no payments made to any Supervisory Board member for advisory services in the year 2010.

The
Supervisory Board members receive no loans from the Company.

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" for further information regarding the Company's directors' 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, but if it is not for an important reason or if the Executive Board Member
terminates the employment relationship after a change in control, each member of the Executive Board will receive a severance pay in an amount equal to the fixed and variable compensation expected to
be owed by the Company for the remaining term of the service contract, however, not exceeding an amount equal to twice the annual compensation. 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. No
additional benefits are generally paid to the Company's Executive Board Members upon regular termination of their employment contracts.

None
of the members of the Supervisory Board has a service contract with the Company or any of its subsidiaries, providing for benefits upon termination of employment.

The
Company has a D&O insurance contract in place, covering the activities of members of the Executive Board and members of the Supervisory Board. Following the entry into force of the
Act on the Appropriateness of Executive Board Compensation (VorstAG), the D&O insurance policies for members of the Executive Board and members of the Supervisory Board of AIXTRON were adjusted to
reflect such new legal requirements. Effective January 1, 2010, the deductible amounts to a minimum of 10% of the respective potential loss incurred, but cannot exceed a factor of 1.5 of the
respective annual fixed remuneration.

Audit Committee

According to Article 16 of AIXTRON's Articles of Association, the Supervisory Board is authorized and, if prescribed by law,
required to form committees of its members.

The
by-laws for the Supervisory Board specify that the Audit Committee is responsible, in particular, for preparing, on behalf of the Supervisory Board, proceedings and
resolutions concerning accounting issues, the accounting process and the effectiveness of the internal control system, the risk management system and the internal audit system, as well as supervising
the audit of the financial statements (and especially the independence of the auditors and any additional services performed by the auditors) and the handling of compliance issues. In addition, the
Audit Committee is responsible for issuing the mandate to audit the annual accounts and the consolidated Group accounts and to carry out any examination of interim reports of AIXTRON SE, for
identifying the main focus areas of the audit and for agreeing on the fee arrangements with the auditors. The Audit Committee forwards to the Supervisory Board its recommendation on which firm should
be appointed as auditor. The Chairman of the Committee regularly reports to the Supervisory Board with regard to the work performed.

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:



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

Committee

MembersAudit Committee

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


Aixtron does not have a Remuneration Committee that assists the Supervisory Board in establishing the structure of the remuneration system.
However, the structure of the Executive Board remuneration system is regularly approved by the shareholders at the General Shareholders' Meeting.

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

Beneficial 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 February 28, 2011 by (i) each of the Company's Supervisory and Executive Board members and (ii) all Supervisory and Executive Board
members of AIXTRON as a group:

Name and Address(1) of Beneficial Owner

Number of
Shares(2)

Percent of
Class(3)

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


0

*


0Wolfgang Breme


0

*


263,000Paul Hyland


0

*


359,350Dr. Holger Jürgensen


7,650,000
(4)
7.56%


0Karl-Hermann Kuklies


3,600
(5)
*


0Prof. Dr. Rüdiger von Rosen


1,300

*


0Kim Schindelhauer


1,039,604
(6)
1.03%


0Dr. Bernd Schulte




*


331,408Joachim Simmroß


37,000
(7)
*


0All Supervisory and Executive Board members as a group


8,731,504

8.63%


953,758


*Less
than 1%.(1)Except
as indicated otherwise, the address is: c/o AIXTRON SE, Kaiserstrasse 98, 52134 Herzogenrath, Germany.(2)Except
as otherwise indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of common stock shown as beneficially owned by them.


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(3)Applicable
percentage is based on 101,179,866 shares of common stock outstanding as of February 28, 2011 (according to German GAAP rules based on the
German Commercial Code HGB). Beneficial ownership is determined in accordance with the rules of the SEC, based on factors including voting and investment power with respect to shares.(4)Dr. Jürgensen,
directly or indirectly, beneficially owns 7,650,000 shares through his ownership stake in CAMMA GmbH.(5)Includes
1,900 shares owned indirectly by Mr. Kuklies's wife and 1,700 shares owned by his daughter.(6)Mr. Schindelhauer,
directly or indirectly, beneficially owns 1,039,604 shares through his ownership stake in SBG Beteiligung GmbH.(7)Includes
20,000 shares owned directly, and 17,000 owned indirectly by Mr. Simmroß's wife.


As of February 28, 2011, members of the Company's Supervisory Board, a group of six persons, indirectly or directly, held 8,731,504 AIXTRON
ordinary shares.

Pursuant
to Section 15a of the German Securities Trading Act (WpHG), members of the Executive and Supervisory Boards were required to disclose significant purchases or sales of
shares of AIXTRON ("Directors Dealings"). In fiscal year 2010, Supervisory Board member Dr. Holger Jürgensen reported he had sold through his ownership stake in CAMMA GmbH
a total of 74,608 shares of AIXTRON. Furthermore, Supervisory Board member Joachim Simmroß reported that he and his wife had purchased discount certificates and convertible bonds, which at
a later stage may lead to a purchase of or conversion into AIXTRON shares. Prof. Dr. von Rosen purchased 200 shares during 2010.

Employee Options

Share Option Programs

The Company has a number of stock option programs in place that grant the members of the Executive Board, management and employees the
right to purchase AIXTRON shares or ADS under certain conditions. Since the stock option programs have been installed as part of the variable remuneration, the stock options themselves are granted
without purchase price.

In
fiscal year 2010, 513,014 stock options (2009: 915,662 options; 2008: 553,473 options) were exercised, resulting in delivery of 513,014 ordinary shares and ADSs. Under the 2010
tranche of the AIXTRON stock option plan 2007, 779,950 new stock options were granted in fiscal year 2010 (2009 tranche: 778,850 grants; 2008 tranche: 779,000 grants). Half of those granted options
may be exercised after a waiting period of not less than two years, an additional 25% may 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.

December 31,
2010

Exercise

Expired/
Forfeited

Allocation

December 31,
2009AIXTRON ordinary sharesstock options


4,486,534


512,689


110,205


779,950


4,329,478underlying shares


5,154,752


512,689


111,195


779,950


4,998,686AIXTRON ADSstock options


6,610


325


0


0


6,935underlying shares


6,610


325


0


0


6,935


See Item 18 "Financial StatementsNote 23. Share-based payment" for a more detailed description of the different stock
option plans and a summary of all the stock option transactions.

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Item 7:    Major Shareholders and Related Party Transactions

A.  Major Shareholders

As of February 21, 2011, Dr. Holger Jürgensen, one of the Company's founders and Deputy Chairman of the Company's Supervisory Board,
directly or indirectly, beneficially owned 7.56% 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.

In
its capacity as AIXTRON's depositary bank as of December 31, 2010, JPMorgan Chase Bank, N.A. held 5,896,421 ordinary shares as of December 31, 2010, represented by
5,896,421 ADSs, or 5.83% of AIXTRON's shares outstanding.

As
of December 30, 2010, DWS Investment GmbH, Frankfurt am Main, Germany, held 5,132,629 shares, which represented 5.07% 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 February 21, 2011.

As
of December 31, 2010, AIXTRON had 53,522 shareholders registered in its share register of ordinary shares, 164 registered ADS holders, and an estimated 13,884 beneficial
holders of ADSs.

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

For related party transaction information, refer to Item 18 "Financial StatementsNote 30. Related parties." During 2010, there were no
outstanding personal loans or guarantees to members of the Executive Board or the Supervisory Board.

C.  Interests of Experts and Counsel

Not applicable.

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Item 8:    Financial Information

A.  Consolidated Financial 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. "Consolidated Financial Statements."

Export Revenues

Revenues outside of Europe accounted for € 752.7 million or 96.04% of the AIXTRON's total revenues for
the year ended December 31, 2010 (2009: € 261.4 million or 86.30%; 2008: € 255.9 million or 93.27%). Revenues from AIXTRON's
Asian-based customers accounted for € 716.9 million or 91.46% of the Company's total revenues for the year ended December 31, 2010 (2009: 250.0 million or
82.56%; 2008: € 238.1 million or 86.79%).

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 (IRC), of El Segundo, California, USA had filed a complaint on September 8, 2008 in the U.S. District Court for the Central District of
California against seven of IRC's former employees, including IRC's founder and former CEO Alex Lidow, as well as five companies, including AIXTRON. Having had its lawsuit dismissed in the U.S.
District Court, IRC re-filed essentially the same lawsuit in California state court in March 2009 based on the California state claims alone, and alleged five causes of action against
AIXTRON. After multiple rounds of motions to dismiss, IRC dropped some of its claims against the defendants, and the California court dismissed additional claims. As at December 31, 2010, two
of IRC's claims remained in the case against AIXTRON.

On
January 24, 2011, AIXTRON and IRC entered into a settlement agreement in which IRC agreed to withdraw its action in return for voluntary disclosure by AIXTRON of certain
documents as well as witness statements to IRC in support of IRC's still pending action against the remaining defendants. On February 3, 2011, the Superior Court of California, County of Los
Angeles, California, USA has filed and entered the dismissal with prejudice of the action against AIXTRON.

Policy on Dividend Distributions

The maximum amount of dividends available for distribution to shareholders is based on the level of earnings, as determined in
accordance with the German Commercial Code HGB and the German Stock Corporation Act AktG. All dividends must be approved by the Company's shareholders.

AIXTRON
SE, 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 HGB, of € 124.9 million for 2010 (2009: € 42.5 million; 2008: € 30.0 million).

AIXTRON's
Executive and Supervisory Boards will propose to the shareholders' meeting that a dividend of € 60.7 million or € 0.60 per
share for 2010 (€ 15.1 million or € 0.15 per share for 2009; € 8.2 million or € 0.09 per share
for 2008) be distributed.

B.  Significant Changes

For information regarding significant changes, refer to Item 18 "Financial StatementsNote 32. Events after the reporting period."

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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 ADSs, each evidencing one ADS, which represents one ordinary share, trade on the NASDAQ Global Select Market under the symbol "AIXG."

Market Price Information

The table below sets forth, for the calendar periods indicated, the high and low XETRA/Germany closing prices (Before 2010: trading on
XETRA, the Deutsche Börse's electronic trading system; from 2010: Trading on all German stock markets including XETRA) for AIXTRON's ordinary shares, and the high and low closing prices
per ADS as reported on the NASDAQ Global Select Market. See also the discussion under "Item 3. Key InformationExchange Rate Information" for information with respect to rates of
exchange between the US Dollar and the Euro applicable during the periods set forth below.

XETRA/
Germany
Closing
Price per
Ordinary Share
(EUR)



NASDAQ
Closing Price
per ADS
(USD)High

Low



High

LowAnnual*







Annual2006


4.01


2.46

2006


4.92


2.952007


9.98


3.31

2007


14.80


4.542008


4.76


10.39

2008


6.81


16.082009


25.29


3.15

2009


38.24


3.882010


28.87


18.99

2010


38.56


23.11Quarterly







Quarterly2009







2009First quarter


4.77


3.15

First quarter


6.58


3.88Second quarter


8.89


3.96

Second quarter


12.43


5.21Third quarter


18.93


9.21

Third quarter


27.43


12.93Fourth quarter


25.29


17.25

Fourth quarter


38.24


25.052010







2010First quarter


27.00


20.00

First quarter


36.48


27.63Second quarter


28.75


19.12

Second quarter


38.56


23.11Third quarter


25.60


19.15

Third quarter


33.60


24.3Fourth quarter


28.20


20.61

Fourth quarter


37.79


28.25Monthly







Monthly2010







2010July


25.60


20.26

July


33.60


25.63August


23.03


19.15

August


30.40


24.30September


21.83


19.59

September


29.92


24.78October


23.62


20.61

October


33.04


28.25November


25.05


23.08

November


34.64


30.66December


28.20


23.85

December


37.79


31.282011







2011January


33.35


27.65

January


43.92


36.89February (through February 22,
2011)


32.14


29.69

February (through February 22,
        2011)


43.90


41.11


On February 22, 2011, the closing price in Germany per ordinary share was € 29.89.

On
February 22, 2011, the closing price per ADS on NASDAQ Global Select Market was USD 41.11.

B.  Plan of Distribution



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C.  Markets

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

D.  Selling Shareholders

Not applicable.

E.  Dilution



F.  Expenses of the Issue



Item 10:    Additional Information

A.  Share Capital

Not applicable.

B.  Memorandum and Articles of Association

Articles of Association

This section summarizes the material provisions of AIXTRON's Articles of Association. This is only a summary and does not describe the
Articles of Association in their entirety. Copies of AIXTRON's Articles of Association are publicly available from the commercial register of the local court in Aachen, Germany under the entry number
HRB 16590, and an English translation of AIXTRON's Articles of Association as of January 24, 2011 is also available on the AIXTRON website and can be found in Exhibit 1.1 of this report.

Share Capital

The Company's share capital amounts to € 101,179,866.00 as per January 24, 2011. It is composed of
101,179,866 no-par value registered shares. A share capital in the amount of € 100,667,177.00 has been contributed through the conversion of the corporate form of
AIXTRON Aktiengesellschaft into AIXTRON SE.

Purpose

According to Section 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 purpose of subsidiaries and investees may differ from that referred to above insofar as
it seems capable of promoting the purpose of the Company. The Company may outsource all or part of its operations to affiliates.

Future Share Capital; Preemptive Rights

AIXTRON's stated share capital may be increased against either contributions of cash or contributions-in-kind
by a resolution of AIXTRON's General Shareholders' Meeting with a 75% majority of the share capital represented at
the meeting at which the resolution is adopted, or under AIXTRON's Articles of Association by a resolution of the Executive Board with the consent of the Supervisory Board by using AIXTRON's
authorized share capital.

In
accordance with the German Stock Corporation Law, an existing shareholder in a stock corporation has a preemptive right to subscribe for any issue of new shares, debt instruments
convertible into shares (Wandelschuldverschreibungen) and participating debt instruments (Genussrechte) in proportion to the number of shares held by that shareholder in the existing stated share
capital of the company. The General Shareholders' Meeting may exclude this preemptive right by

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a
majority of at least 75% of the share capital represented at the meeting at which the resolution authorizing the capital increase is adopted. In addition to these formal procedural requirements, the
exclusion requires a substantive justification. The Executive Board is required to submit a written report concerning this justification to the General Shareholders' Meeting. The goal pursued by the
corporation through the issuance of the new security must outweigh the elimination of this preemptive right and that the goal could not be reasonably achieved without it.

The
preemptive rights are freely assignable and may be traded on German stock exchanges for a specified time within the subscription period. The preemptive rights lapse if they are not
exercised.(1)

---

Dividend and Liquidation Rights

The ordinary shares underlying the AIXTRON ADSs are fully entitled to any dividends as and when declared by AIXTRON. Upon proposal by
AIXTRON's Executive Board and Supervisory Board, the annual General Shareholders' Meeting approves the allocation of AIXTRON's net profits (Bilanzgewinn), which AIXTRON determines on the basis of its
unconsolidated annual financial statements prepared in accordance with the accounting principles generally accepted in Germany. The Executive Board and the Supervisory Board are authorized to
allocate, in their discretion, up to half of AIXTRON's net profit in any fiscal year to other retained earnings (andere Gewinnrücklagen).
Shareholders participate in dividends in proportion to the number of shares held by each shareholder.

In
accordance with the German Stock Corporation Law, upon AIXTRON's liquidation, shareholders will receive, in proportion to their shareholdings, any liquidation proceeds remaining after
payment of all of AIXTRON's liabilities.(2)

Voting Rights and General Shareholders' Meeting

A General Shareholders' Meeting of AIXTRON may be called by the Executive Board, the Supervisory Board or upon request of shareholders
whose aggregate holding is not less than 5% of the stated share capital.(3) The annual General Shareholders' Meeting must take place within the first six months of the fiscal
year. The Executive Board calls this meeting upon the receipt of the Supervisory Board's report on the annual financial statements.

Under
German law and AIXTRON's Articles of Association, AIXTRON must publish notices of shareholders meetings in the German electronic federal gazette
(elektronischer Bundesanzeiger). The General Meeting must be called at least 30 days prior to the date of the meeting. The minimum notice period
is extended by the days of the registration period.(4)

Under
AIXTRON's Articles of Association, those shareholders whose names are entered into the share register on the date of the General Shareholders' Meeting and who have registered for
participation in a timely manner shall be entitled to participate in such General Shareholders' Meeting and to exercise their voting rights. Such registration for participation must be received at the
Company under the address notified for this purpose in the call for the meeting in German or English in the form of text or, if so resolved by the Executive Board, electronically in a manner
determined in the call for the General Shareholders' Meeting, at least six days prior to the General Shareholders' Meeting, whereby the date of the General Shareholders' Meeting and the date of
receipt are not taken into account. Cancellations and new registration in the share register will not take place on the date of the General Shareholders' Meeting and during the last six days prior to
the General Shareholders' Meeting.

The
Executive Board is authorized to provide that shareholders can participate in the General Shareholders' Meeting without being present at its location and without a proxy and can
completely or partially exercise all or individual rights they have by means of electronic communication.

Each
ordinary share carries one vote at General Shareholders' Meeting. According to AIXTRON's Articles of Association, resolutions are generally passed with a simple majority of the
votes cast unless otherwise required by the Articles of Association or by law. Resolutions that require a majority of the share capital represented at the time of the adoption of the resolution are
passed with a simple majority of the share capital represented at the meeting of shareholders at which the resolution is considered, unless otherwise required by law. Resolutions about amending the
Articles of Association, to the extent legal provisions do not determine otherwise, require a majority of two thirds of the votes

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cast
or, if at least one half of the share capital is represented, a simple majority of the votes cast. Under the German Stock Corporation Law, a number of significant resolutions must be passed by a
majority of the votes cast and at least 75% of the share capital represented in connection with the vote taken on that resolution. The approval threshold required for some of these resolutions may be
lowered by the Articles of Association.

The
following resolutions require the approval of a majority of at least 75% of the share capital represented at the meeting:



Although
AIXTRON must notify shareholders of any ordinary or extraordinary shareholders' meeting as described above, neither the German Stock Corporation Law nor AIXTRON's Articles of
Association fixes a minimum quorum requirement. This means that holders of a minority of AIXTRON's shares could control the outcome of resolutions not requiring a specified majority of AIXTRON's
stated share capital.(5)

Notice Requirements

In accordance with the German Stock Corporation Law, each enterprise owning AIXTRON ordinary shares must notify AIXTRON promptly if the
aggregate number of ordinary shares it holds exceeds or falls below 25% of AIXTRON's share capital or if it acquires or disposes of the majority of AIXTRON's voting rights. For any period in which a
notice is not given, the enterprise is prevented from exercising its rights as an AIXTRON shareholder, including voting rights and dividend rights.

The
German Securities Trading Act (Wertpapierhandelsgesetz) provides for extensive notification requirements. It requires each person
whose voting rights reach, exceed or, after exceeding, fall below the 3%, 5%, 10%, 25%, 50% or 75% voting rights thresholds in a company to notify the company and the Federal Supervisory Agency
(Bundesanstalt für Finanzdienstleistungsaufsicht) in writing within seven calendar days after they have reached, exceeded or fallen below
that threshold. For any period in which a notice is not given, the shareholder is prevented from exercising its rights as an AIXTRON shareholder, including voting rights and dividend
rights.(6)

Notices, Paying Agent and Depository

AIXTRON publishes official notices exclusively in the German electronic federal gazette (elektronischer
Bundesanzeiger).(7)

In
addition, AIXTRON will file reports and other information with the SEC.

Deutsche
Bank AG is the German Paying Agent (Zahlstelle) for the AIXTRON ordinary shares.

There
are no limitations on rights to own AIXTRON ordinary shares.(8)

Corporate Governance

AIXTRON's Declaration of Conformity with the recommendations of the Government Commission of the German Corporate Governance Code was
last updated in February 2011 and states that the Company has been in full compliance with the Corporate Governance Code. It is posted

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together
with the "Declaration on Corporate Governance" in the "Investor RelationsCorporate Governance" section of AIXTRON's website at www.aixtron.com.

AIXTRON
has had a Code of Ethics procedure since 2006 for the Executive Board members and selected key managers in Finance. For more details to the Company's Code of Ethics refer to
Item 16B: Code of Ethics.

In
addition, AIXTRON has issued a Code of Conduct applicable to all employees in all Company offices throughout the world and holds them accountable to conduct that is ethical and in
conformity with the law. The Code covers, amongst other topics, the following issues: Responsibility and respect towards mankind and the environment, compliance with overall legal conditions, legal
and ethical conduct by each individual employee, loyalty to the Company, fair and respectful treatment of fellow employees, rejection of any form of discrimination, dealing responsibly with corporate
risks, acting in an environmentally aware manner, security in all operating areas, professional work, reliability and fairness in all business relationships, compliance with guidelines on
giving/taking unfair advantage, dealing with insider information and treatment of Company property. A copy of the Code of Conduct is available on the AIXTRON website www.aixtron.com under the section
Investors/Corporate Governance/Code of Conduct.

The
information available on AIXTRON's website is not incorporated by reference into this report.

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 its annual report for the year ending December 31, 2010, 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. The requirements of NASDAQ 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

In accordance with the requirements of the German Stock Corporation Act, to which AIXTRON SE is subject via the SE statutes, AIXTRON
has 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 governance system provides a strict separation of management and supervisory functions. 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 5605, 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

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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 Rule 5600 Series applicable to foreign private issuers

Under Rule 5615(a)(3), as amended, AIXTRON is required to comply with Rule 5625 (relating to the notification of material
noncompliance), Rule 5640 (relating to certain voting rights and to have an Audit Committee that satisfies Rule 5605(c)(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 5605(c)(2)(A)(ii) (regarding independence required under
Rule 10A-3 of the Exchange Act).

AIXTRON's
Supervisory Board has determined that as of December 31, 2010, the Company is in compliance with the aforementioned requirements applicable to foreign private issuers
pursuant to Rule 5600 Series. 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 5605(c)(2)(A)(ii).

C.  Material Contracts

Apart from the following material contracts, all contracts AIXTRON has entered into during the course of the year 2010 were entered in the ordinary course of
business.

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 April 24, 2009 provides for a base salary of € 390,000 per year and a bonus in accordance with the employment contract (4.0% 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, 2015.

The
Company's employment contract withWolfgang Breme, effective as of April 1, 2005 and amended as of April 24, 2009,
provides for a base salary of € 260,000 per year and a bonus in accordance with the employment contract (2.5% 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 April 24, 2009,
provides for a base salary of € 325,000 per year and a bonus in accordance with the employment contract (2.5% 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, 2015.

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Intellectual Property Agreements

See also item 4.B. "Information on the CompanyBusiness OverviewIntellectual Property".

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

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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%.

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%.

German
Corporation Tax and Trade Tax combined will result in an overall tax burden for German corporations amounting to approximately 30% at an average.

The
deduction for a taxable loss carryforward 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 carryforward is reduced by the amount used and remains unlimited in life. However, there are limitations on the use of loss carryforwards 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

Withholding Tax on Dividends in Germany constitutes 25%. A solidarity surcharge of 5.5% on the withholding tax results 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 on, capital gains from the sales of shares, acquired after
December 31, 2008, will be taxable as well, regardless of the percentage of the shareholding and of how long the shareholding has been held. Capital gains from the sale of shares acquired
before January 1, 2009 are tax exempt if the shareholding has been held for more than one year and the taxpayer has held less than 1% of the registered share capital of the company during a
five-year period immediately preceding the disposition. The lump sum deduction of investment income related expenses amounts to EUR 801 for individuals and EUR 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 current Treaty, the withholding tax rate generally is reduced to 15% of the gross amount of the dividends and a full refund
of the solidarity surcharge can be obtained
by U.S. holder. 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%

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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).

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
homepage of the German Federal Tax Office:

http://www.bzst.bund.de
or http://www.germantaxes.info

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. Form 6166 is a letter printed on U.S. Department
of Treasury stationery certifying that the individuals or entities listed are residents of the United States for purposes of the income tax laws of the United States. The Internal Revenue Service
(IRS) procedure for requesting a certificate of residency (Form 6166) from the Philadelphia Accounts Management Center is the submission of Form 8802, Application for United States
Residency Certification. This form may be obtained by filing a request with the Internal Revenue Service Center in Philadelphia, Pennsylvania, P.O. Box 71052, Philadelphia, PA
19176-6052 U.S.A. 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

Capital Gains earned by a Non-German holder from the sale or other disposition of ordinary shares or ADS are subject to tax
in Germany only if the Non-German holder has held, directly or indirectly, shares or ADSs representing 1% or more of the registered share capital of the company at any time during a
five-year period immediately preceding the disposition. Capital gains in general are not taxable if the above mentioned threshold is not exceeded and certain further conditions are met.

The
Income Tax Treaty provides that taxation in Germany on capital gains of U.S. residents does not apply to gains on the sale or other disposition of ADSs or Ordinary shares.

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Inheritance and Gift Tax

The current 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.

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

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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 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, 2012 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.

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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 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, 2010. 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

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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
have additional U.S. tax filing requirements and 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 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." 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 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 2012.

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.

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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 seeks to manage and control
these market risks primarily through monitoring of its operating and financial activities and the use of derivative financial instruments.

Foreign Currency Exchange Rate Risk

Transaction Risk and Currency Risk

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, the value of the revenues may
have declined in the interim relative to the currency in which the Company incurred the costs. The main billing currency in the semiconductor equipment industry, and therefore also for AIXTRON
equipment, continues to be the US-Dollar, while AIXTRON 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 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.

Management of Foreign Currency Exchange Rate 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

2010

2009

2008(EUR thousands)Revenues


(64,282
)

(21,016
)

(20,941
)Net Result


(16,205
)

(3,409
)

(4,863
)




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

2010

2009

2008(EUR thousands)Revenues


(87
)

(14
)

(40
)Net Result


5,940


4,427


2,477




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

2010

2009

2008(EUR thousands)Revenues


64,282


21,016


20,941Net Result


16,205


3,409


4,863




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

2010

2009

2008(EUR thousands)Revenues


87


14


40Net Result


(5,940
)

(4,427
)

(2,477
)


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 generally 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 2010, the Company received EUR 2.8 million (2009: EUR 1.3 million; 2008: EUR 3.2 million) of net interest income.

Since
AIXTRON has no bank borrowings, the Company does not enter into derivative financial instruments to manage exposure to interest rate risks.

Refer
to Item 18 "Financial StatementsNote 26. 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

On February 7, 2011, the deposit agreement dated March 10, 2005 with JPMorgan Chase Bank, N.A. ("JPMorgan"), as
depositary for the AIXTRON ADS program, was effectively replaced by a deposit agreement with The Bank of New York Mellon, dated as of February 7, 2011.

As
provided for in the American Depositary Receipt included as Exhibit A to the amended and restated deposit agreement among AIXTRON, The Bank of New York Mellon, as depositary
(the "Depositary") and all owners and holders of American Depositary Shares dated as of February 7, 2011, holders of American Depositary Shares may be charged, directly or indirectly, the
following amounts in relation to the ownership of depositary receipts held in the Company's ADS Program, which amounts are payable to the Depositary.

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The
following table shows the fees and charges that a holder of AIXTRON ADSs may have to pay, either directly or indirectly:

Depositary Actions

Associated FeeIssuance of ADSs, including as a result of a distribution of shares or rights or other property

Up to USD 5.00 for each 100 ADSs (or portion thereof)Cancellation of ADSs, including if the deposit agreement terminates

Up to USD 5.00 for each 100 ADSs (or portion thereof)Distribution of cash dividends

Up to USD 0.02 or less per ADS (or portion thereof)Distribution or sale of shares

Up to USD 5.00 for each 100 ADSs (or portion thereof)Depositary services

Up to USD 0.02 per ADS (or portion thereof) per annumExpenses incurred on behalf of Holders in connection with Taxes and other governmental charges Registration fees as may from time to time be in effect for the registration of transfers of
sharesCable, telex, facsimile transmission Expenses of the depositary in connection with the conversion of foreign currency into U.S.
dollars (which are paid out of such foreign currency) Any
other charge payable by depositary or its agents

Expenses payable at the sole discretion of the depositary by billing Holders or by deducting charges from one or more cash
dividends or other cash distribution.


Direct Payments made by the Depositary to AIXTRON

The Depositary, has agreed under certain conditions to reimburse certain reasonable expenses related to the AIXTRON ADS program and
incurred by us in connection with such program.

In
2010, there was no direct reimbursement made by JPMorgan to AIXTRON.

Indirect Payments made by the Depositary to AIXTRON

As part of its service to AIXTRON, JPMorgan had agreed to waive fees for the standard costs associated with the administration of the
AIXTRON ADS program, associated operating expenses and IR-related services, estimated to be approximately USD 200,000 annually.

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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, 2010, AIXTRON's
disclosure controls and procedures are effective.

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, 2010.

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 a report, included herein, on the effectiveness of AIXTRON's internal control over financial reporting.

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Table of Contents

Report of Independent Registered Public Accounting Firm

To
the Supervisory Board
AIXTRON SE
Herzogenrath, Germany

We
have audited the internal control over financial reporting of AIXTRON SE and subsidiaries (the "Company") as of December 31, 2010, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management's report on internal control over
financial reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We
conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could
have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year
ended December 31, 2010 of the Company and our report dated February 28, 2011 expressed an unqualified opinion on those consolidated financial statements.

/s/ Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft


Deloitte &
Touche GmbH
Wirtschaftsprüfungsgesellschaft

Düsseldorf,
Germany
February 28, 2011

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Changes in Internal Control over Financial Reporting

During the year ended December 31, 2010 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.

Item 16A:    Audit Committee Financial Expert

AIXTRON's Supervisory Board has determined that the Chairman of the Audit Committee Prof. Dr. Wolfgang Blättchen
is an "Audit Committee financial expert" and has determined that the "Audit Committee financial expert" is "independent" as set forth in Rule 10A-3 of the Exchange Act and NASDAQ
Rule 5605(a)(2). Prof. Dr. Wolfgang Blättchen is Chairman of the Audit Committee and acts as its independent financial expert since 2005.

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. The aim of the Code is to prevent misconduct and promote
upright and ethical conduct, including ethical handling of conflicts of interest, the complete, fair, precise, timely and transparent disclosure of quarterly and annual reports, compliance with
prevailing laws, rules and regulations, the immediate internal reporting of breaches of the Code and responsibility for compliance with the Code. 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 NASDAQ Stock Market. The Company has revised its Code of Ethics in 2007 and has published the updated
version of the code on its website at www.aixtron.com. A copy of the Code of Ethics is available on the AIXTRON website www.aixtron.com under the section Investors/Corporate Governance/Code of Ethics.

Item 16C:    Principal Accountant Fees and Services

Aggregate fees billed to AIXTRON for the years ended December 31, 2010 and 2009 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

December 31,
2010

December 31,
2009(EUR millions)Audit fees


0.84


0.73Audit-related fees


0.00


0.00Tax fees


0.24


0.14All other fees


0.01


0.01Total


1.09


0.88


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

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Table of Contents

miscellaneous
items. For more information, refer to Item 18 "Financial StatementsNote 33. Auditors' fees."

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 18, 2010, 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, 2010.

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 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 2010 the Audit Committee pre-approved 100% of the
performance by Deloitte & Touche of the above specified audit and permitted non-audit services.

Item 16D:    Exemptions from the Listing Standard for Audit Committees

Not applicable.

Item 16E:    Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Item 16F:    Change in Registrant's Certifying Accountant

Not applicable.

Item 16G:    Corporate Governance

AIXTRON is a stock corporation in the form of a European Company (Societas Europaea) under the laws of the Federal Republic of Germany
and AIXTRON's ADSs are listed on NASDAQ Global Select Market. AIXTRON generally complies with applicable German Corporate Governance practice rather than certain of the Corporate Governance
requirements of NASDAQ Rule 5600 Series. 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 of Association" in this report.

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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-41, incorporated herein by reference.

Item 19:    Exhibits

Exhibit
Number

Description of Exhibit1.1

Articles of Association (Satzung) as amended January 24, 2011.2.1

Amended and Restated Deposit Agreement dated as of February 7, 2011 among AIXTRON SE, The Bank of New York Mellon, as Depositary, and all Owners and Holders of American Depositary Shares (incorporated by
reference to Exhibit 1 to Form F-6, dated January 27, 2011, File No. 333-171890).4.1

Exclusive Patent and Know-How License Agreement among AIXTRON, 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).4.2

Contract between AIXTRON 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).4.3

Amendment to contract between AIXTRON 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).4.4

Contract between AIXTRON 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).4.5

Contract between AIXTRON 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).4.6

Amendment to contract between AIXTRON 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 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 2002.15.1

Consent of Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft.


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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:
February 28, 2011

AIXTRON SE/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 SE
Herzogenrath, Germany

We
have audited the accompanying consolidated statement of financial position of AIXTRON SE and subsidiaries (the "Company") as of December 31, 2010 and 2009, and the related
consolidated income statement, consolidated statement of other comprehensive income, consolidated statement of cash flow, and consolidated statement of changes in equity for each of the three years in
the period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated
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 SE and subsidiaries as of December 31, 2010 and
2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board (IASB).

We
have also 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, 2010, 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 February 28, 2011 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft


Deloitte &
Touche GmbH
Wirtschaftsprüfungsgesellschaft
Düsseldorf, Germany
February 28, 2011

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Table of Contents

CONSOLIDATED INCOME STATEMENT

Note

2010

2009

2008(in EUR thousands)Revenues


3


783,775


302,857


274,404Cost of sales





372,018


168,143


161,525Gross profit





411,757


134,714


112,879Selling expenses





48,935


25,465


27,842General administration expenses





30,076


21,288


17,997Research and development costs


4


46,126


32,917


28,286Other operating income


5


6,659


10,046


5,192Other operating expenses


6


17,769


2,365


11,457Operating result





275,510


62,725


32,489Finance income





2,851


1,283


3,189Finance expense





141


27


23Net finance income


8


2,710


1,256


3,166Result before taxes





278,220


63,981


35,655Taxes on income


9


85,724


19,215


12,661Profit for the year





192,496


44,766


22,994Thereof attributable to the owners of AIXTRON SE





192,496


44,766


22,994Basic earnings per share (EUR)


21


1.93


0.49


0.26Diluted earnings per share (EUR)


21


1.89


0.48


0.25


See
accompanying notes to consolidated financial statements.

F-1

---



Table of Contents

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

Note

2010

2009

2008(in EUR thousands)Profit for the year





192,496


44,766


22,994Losses/gains from derivative financial instruments before taxes





1,224


(1,417
)

(1,707
)Deferred taxes on derivative financial instruments


14


(449
)

302


516Currency translation adjustment





1,454


1,306


(5,372
)Other comprehensive income (loss)





2,229


191


(6,563
)Total comprehensive income for the year





194,725


44,957


16,431Thereof attributable to the owners of AIXTRON SE





194,725


44,957


16,431


See
accompanying notes to consolidated financial statements.

F-2

---



Table of Contents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note

Dec. 31, 2010

Dec. 31, 2009(in EUR thousands)AssetsProperty, plant and equipment


11


77,910


37,758Goodwill


12


62,201


58,275Other intangible assets


12


6,977


7,766Other non-current assets


13


807


644Deferred tax assets


14


19,469


13,869Tax receivables


15


332


373Total non-current assets





167,696


118,685Inventories


16


167,221


89,552Trade receivables less allowance kEUR 382 (2009: kEUR 717)


17


88,407


49,265Current tax receivables


10


696


59Other current assets


17


14,707


14,341Other financial assets


18


202,587


90,000Cash and cash equivalents


19


182,118


211,192Total current assets





655,736


454,409Total assets





823,432


573,094Liabilities and shareholders' equitySubscribed capital Number of shares: 100,100,941 (2009: 99,587,927)





100,101


99,588Additional paid-in capital





267,070


260,413Retained earnings





244,488


67,092Cumulated other comprehensive income and expense recognised in equity





(11,335
)

(13,564
)Total shareholders' equity


20


600,324


413,529Employee benefits


22


17


1,064Other non-current payables





636


70Other non-current provisions


24


387


790Deferred tax liabilities


14


0


275Total non-current liabilities





1,040


2,199Trade payables


25


39,643


21,419Advance payments from customers





117,477


87,918Other current provisions


24


43,536


26,164Other current liabilities


25


4,034


4,767Current tax payables


10


17,342


17,064Deferred revenues





36


34Total current liabilities





222,068


157,366Total liabilities





223,108


159,565Total liabilities and shareholders' equity





823,432


573,094


See
accompanying notes to consolidated financial statements.

F-3

---



Table of Contents

CONSOLIDATED STATEMENT OF CASH FLOW

Note

2010

2009

2008(in EUR thousands)Cash inflow from operating activitiesProfit for the year





192,496


44,766


22,994Reconciliation between profit and cash inflow/outflow from operating activitiesExpense from share-based payments





3,645


2,149


1,808Depreciation and amortization expense





13,101


12,247


10,753Net result from disposal of property, plant and equipment





(1
)

(1,207
)

(54
)Deferred income taxes





(5,053
)

(10,412
)

2,314Other non-cash expenses/income





(3,669
)

1,064


98Change inInventories





(75,870
)

(11,713
)

(20,087
)Trade receivables





(37,718
)

(10,506
)

(6,811
)Other assets





(263
)

(4,283
)

(3,930
)Trade payables





16,425


2,539


(3,192
)Provisions and other liabilities





16,935


19,265


8,040Deferred revenues





0


(6
)

(215
)Non-current liabilities





(1,146
)

55


(376
)Advance payments from customers





28,815


34,939


4,393Cash inflow from operating activities





147,697


78,897


15,735Cash inflow/outflow from investing activitiesCost related to the acquisitions





0


0


(392
)Capital expenditures in property, plant and equipment





(48,645
)

(8,791
)

(11,617
)Capital expenditures in intangible assets





(3,245
)

(1,008
)

(1,251
)Proceeds from disposal of fixed assets





105


6,723


122Bank deposits with a maturity of more than 90 days


18


(113,602
)

(87,000
)

1,831Cash inflow/outflow from investing activities





(165,387
)

(90,076
)

(11,307
)Cash inflow/outflow from financing activitiesDividend paid to shareholders





(15,100
)

(8,181
)

(6,331
)Proceeds from issue of equity shares





3,502


161,749


2,628Cash inflow/outflow from financing activities





(11,598
)

153,568


(3,703
)Effect of changes in exchange rates on cash and cash equivalents





214


1,341


(5,206
)Net change in cash and cash equivalents





(29,074
)

143,730


(4,481
)Cash and cash equivalents at the beginning of the period





211,192


67,462


71,943Cash and cash equivalents at the end of the period


19


182,118


211,192


67,462Interest paid





(261
)

(9
)

(119
)Interest received





1,772


778


3,141Income taxes paid





(90,344
)

(16,903
)

(3,105
)Income taxes received





86


122


59


See
accompanying notes to consolidated financial statements.

F-4

---



Table of Contents

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Subscribed
capital
under IFRS

Additional
paid-in-
capital

Currency
translation

Derivative
financial
instruments

Retained
Earnings/
Accumulated
deficit

Shareholders'
equity
attributable to
the owners of
AIXTRON SE
Total(in EUR thousands)Balance at January 1, 2008


89,139


102,562


(8,383
)

1,191


13,845


198,354Dividends to shareholders














(6,332
)

(6,332
)Share based payments





1,808











1,808Issue of shares for options


553


2,075











2,628Net Income for the year














22,994


22,994Other comprehensive income








(5,372
)

(1,191
)




(6,563
)Total comprehensive income for the year








(5,372
)

(1,191
)

22,994


16,431Balance December 31, 2008 and January 1, 2009


89,692


106,445


(13,755
)

0


30,507


212,889Dividends to shareholders














(8,181
)

(8,181
)Share based payments





2,140











2,140Issue of shares for options


916


3,196











4,112Issue of shares


8,980


148,657











157,637Currency translation





(25
)










(25
)Net Income for the year














44,766


44,766Other comprehensive income








1,306


(1,115
)




191Total comprehensive income for the year


0


0


1,306


(1,115
)

44,766


44,957Balance December 31, 2009 and January 1, 2010


99,588


260,413


(12,449
)

(1,115
)

67,092


413,529Dividends to shareholders














(15,100
)

(15,100
)Share based payments





3,645











3,645Issue of shares for options


513


2,989











3,502Issue of shares

















0Currency translation





23











23Net Income for the year














192,496


192,496Other comprehensive income








1,454


775





2,229Total comprehensive income for the year


0


0


1,454


775


192,496


194,725Balance December 31, 2010


100,101


267,070


(10,995
)

(340
)

244,488


600,324


See accompanying notes to consolidated financial statements.

F-5

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.     General principles

AIXTRON SE (formerly AIXTRON AG) is incorporated as a European Company (Societas Europaea) under the laws of the Federal Republic of Germany. The Company is domiciled at
Kaiserstraße 98, 52134 Herzogenrath, Germany. AIXTRON SE is registered in the commercial register of the District Court ("Amtsgericht") of Aachen under HRB 16590.

The
consolidated financial statements of AIXTRON SE 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 at its meeting held on February 28, 2011 for
approval and publication.

2.     Significant accounting policies

(a)   Companies included in consolidation

Companies included in consolidation are the parent company, AIXTRON SE, and 8 companies, in which AIXTRON SE has a 100% direct shareholding or control. The
balance sheet date of all consolidated companies is December 31. A list of all consolidated companies is shown in note 31.

(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 statement of
financial position 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 37.

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

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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 those companies. Assets and liabilities of those companies 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 Consolidated Statement of Changes 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

2-14 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)   Financial Instruments











F-9

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)









(h)   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

F-10

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

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.

(i)    Operating Result

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

(j)    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. The company assesses at the end
of each period whether there is an indication that an 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.

(k)   Earnings per share

Basic earnings per share are computed by dividing net income (loss) by the weighted average number of issued common shares (see note 21) 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.

(l)    Employee benefits





F-11

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)



(m)  Provisions

A
provision is recognised 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.







(n)   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 significant risks and rewards of ownership 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, if the company determines that
there may be a risk that the

F-12

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

economic
benefits of installation services may not flow to the company, 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 market rates for 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.

(o)   Expenses





(p)   Other operating income

Government grants

Government grants awarded for project funding are recorded in "Other operating income" if the Research and Development costs are
incurred and provided that the conditions for the funding have been met.

(q)   Tax

The
tax expense represents the sum of the current 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 substantively enacted amendments to the 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 losses carried forward. 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.

(r)   Segment reporting

An
operating segment is a distinguishable component of the Company that is engaged in business activities and whose operating results are reviewed regularly by the Chief Operating
Decision Maker, which the Company considers to be its Executive Board. The Executive Board regularly reviews financial information on a consolidated group basis. Aixtron has only one reportable
segment.

F-13

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant accounting policies (Continued)

Accounting
standards applied in segment reporting are in accordance with the general accounting policies as explained in this section.

(s)   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.

(t)    Recently issued accounting standards

Amendments
to the following standards and interpretations were adopted during 2010:



The
adoption of these interpretations and amended standards has not led to any changes in the company's accounting policies. The standards, amendments to standards and interpretations
have all been adopted earlier than required.

At
the date of authorisation of these financial statements, the following Standards (or amendment to existing Standards), which have not been applied in these financial statements, were
in issue but not yet effective and not yet adopted by the EU.



The
adoption of IFRS 9 which the Company plans to adopt on 1 January 2013 will impact both the measurement and disclosures of Financial Instruments.

3.     Segment reporting

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Executive Board, as chief
operating decision maker, in order to allocate resources to the segments and to assess their performance.

The
Executive Board regularly reviews financial information on a consolidated group basis since the various activities of the group are largely integrated from an operational
perspective. In accordance with IFRS 8.5, AIXTRON has only one reportable segment.

The
company's reportable segment is based around the category of goods and services provided to the semiconductor industry.

F-14

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.     Segment reporting (Continued)

Segment revenues and results

2010

2009

2008(in EUR thousands)Equipment revenues


735,723


275,008


247,370Spares and service revenue


48,052


27,849


27,034Revenue from external customers


783,775


302,857


274,404Inventories recognized as an expense


298,872


121,296


128,075Employee benefits


69,964


51,705


43,965Depreciation


8,732


8,739


7,291Amortization


4,369


3,508


3,462Other expenses


132,987


64,930


64,314Other operating income


(6,659
)

(10,046
)

(5,192
)Segment profit


275,510


62,725


32,489Investment revenue


2,851


1,283


3,189Finance costs


(141
)

(27
)

(22
)Profit before tax


278,220


63,981


35,656


The accounting policies of the reportable segment are identical with the Group's accounting policies as described in note 2. Segment profit
represents the profit earned by the segment without the allocation of investment revenue, finance costs and income tax expense. This is the measure reported to the Executive Board for the purpose of
resource allocation and assessment of performance.

Segment assets and liabilities

31 December
2010

31 December
2009(in EUR thousands)Semi-conductor equipment segment assets


418,228


257,601Unallocated assets


405,204


315,493Total group assets


823,432


573,094


For the purpose of monitoring segment performance and allocating resources all assets other than tax assets, cash and other financial assets are
treated as allocated to the reportable segment. All liabilities are allocated to the reportable segment apart from tax liabilities and post-employment benefit liabilities.

31 December
2010

31 December
2009(in EUR thousands)Semi-conductor equipment segment liabilities


205,748


141,162Unallocated liabilities


17,360


18,403Total group liabilities


223,108


159,565


Additions to Property, Plant and Equipment, to Goodwill and to Intangible assets, and the depreciation and amortization expenses are given in
notes 11 and 12. Other non-current assets increased by k€ 163 during 2010 (reduction of k€ -75 in 2009).

Information
concerning other material items of income and expense for personnel expenses and R&D expenses can be found in notes 7 and 4.

Geographical information.

The Group's revenue from continuing operations from external customers and information about its non-current assets by
geographical location are detailed below. Revenues from external customers

F-15

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.     Segment reporting (Continued)

are
attributed to individual countries based on the country in which it is expected that the products will be used.

2010

2009

2008(in EUR thousands)Asia


716,872


250,034


238,156Europe


31,066


41,498


18,464USA


35,837


11,325


17,784Total


783,775


302,857


274,404


Sales from external customers attributed to Germany, Aixtron's country of domicile, and to other countries which are of material significance are
as follows:

2010

2009

2008(in EUR thousands)Germany


21,314


31,937


9,168South Korea


125,489


110,140


40,082China


193,768


24,445


35,675Taiwan


376,899


102,071


137,040


No customers accounted for more than 10% of Group revenues in 2010, sales to two customers amounted to 29% and 10% of total Group revenues
respectively in 2009; in 2008 sales to three customers each amounted to 12% of revenues.

Non-current assets31 December
2010

31 December
2009(in EUR thousands)Asia


1,310


805Europe excluding Germany


13,060


11,366Germany


78,726


38,102USA


55,132


54,542Total group non current assets


148,228


104,815


Non-current assets exclude deferred tax assets, financial instruments, post-employment benefit assets and rights arising
under insurance contracts.

4.     Research and development

Research and development costs, before deducting project funding received, were k€ 46,126, k€ 32,917, and
k€ 28,286 for the years ended December 31, 2010, 2009 and 2008 respectively.

After
deducting project funding received and not repayable, net expenses for research and development were k€ 42,588,
k€ 29,637, and k€ 26,368 for the years ended December 31, 2010, 2009 and 2008 respectively.

F-16

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.     Other operating income

2010

2009

2008(in EUR thousands)Research and development funding


3,538


3,280


1,918Income from resolved contract obligations


1,800


3,498


45Income from the reversal of provisions and the write-off of debts


741


1,596


490Gain from the disposal of fixed assets


4


1,262


56Compensation payments


154


16


2Foreign exchange gains


248


119


2,485Other


174


275


1966,659


10,046


5,192


The total amount of exchange gains and losses (see also note 6) recognised in profit or loss was a loss of
k€ -17,246, (2009 loss k€ -1,409; 2008 loss k€ -6,954).

2010

2009

2008Foreign exchange gains


248


119


2,485Foreign exchange losses (see note 6)


(17,494
)

(1,528
)

(9,439
)Net foreign exchange losses


(17,246
)

(1,409
)

(6,954
)Gains (losses) arising on financial instruments at FVTPL


(20,877
)

340


(1,819
)Other foreign exchange gains (losses)


3,631


(1,749
)

(5,135
)(17,246
)

(1,409
)

(6,954
)


6.     Other operating expenses

2010

2009

2008(in EUR thousands)Foreign exchange losses


17,494


1,528


9,439Losses from the disposal of fixed assets


3


55


3Additions to allowances for receivables or write-off of receivables


270


449


1,953Other


2


333


6217,769


2,365


11,457


7.     Personnel expense

2010

2009

2008(in EUR thousands)Payroll


58,534


43,738


36,914Social insurance contributions


5,767


4,629


4,380Decrease/Increase in defined benefit plan obligations


866


219


(33
)Expense for defined contribution plans


1,152


970


896Stock option expense


3,645


2,149


1,80869,964


51,705


43,965


8.     Net finance income

2010

2009

2008(in EUR thousands)Interest income from financial assets


2,851


1,283


3,189Interest expense from financial liabilities


(141
)

(27
)

(23
)Net finance income


2,710


1,256


3,166


Interest income relates to interest on cash and cash equivalents and held to maturity investments.

F-17

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.     Income tax expense/benefit

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

2010

2009

2008(in EUR thousands)Current tax expense (+)/current tax income (-)for current year


90,294


29,261


11,168adjustment for prior years


483


131


(821
)Total current tax expense


90,777


29,392


10,347Deferred tax expense (+)/deferred tax income (-)from temporary differences


(4,980
)

(4,561
)

3,862Income/expense from changes in local tax rate


26


(16
)

81from reversals and write-downs


(99
)

(5,600
)

(1,629
)Total deferred tax expense


(5,053
)

(10,177
)

2,314Taxes on income


85,725


19,215


12,661


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

2010

2009

2008(in EUR thousands)Income before income taxesGermany


225,802


88,822


31,819Outside Germany


52,418


(24,841
)

3,836Total


278,220


63,981


35,655Income tax expenseGermany


62,798


15,336


8,580Outside Germany


22,926


3,879


4,081Total


85,724


19,215


12,661


The Company's effective tax rate is different from the German statutory tax rate of 30.21% (2009: 30.20%; 2008: 30.91%) which is based on the
German corporate income tax rate (including solidarity surcharge and trade tax).

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

2010

2009

2008(in EUR thousands)Net result before taxes


278,220


63,981


35,655Income tax expense (German tax rate)


84,050


19,322


11,021Effect from differences to foreign tax rates


(1,074
)

(2,392
)

(1,722
)Non-deductible expenses


2,491


1,222


1,302Non-consideration of tax claims from losses carried forwards


0


977


4,773Reversal of allowance/write-off against deferred tax assets


(133
)

103


(1,629
)Expense from changes in local tax rate


26


(16
)

0Effect of the use of losses carried forwards


0


(168
)

(135
)Effect of permanent differences


(113
)

175


18Other


477


(8
)

(967
)Taxes on income


85,724


19,215


12,661Effective tax rate


30.8
%

30.0
%

35.5
%


10.   Current tax receivables and payables

As of December 31, 2010 the current tax receivables and payables, 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€ 696 (2009: k€ 59) and k€ 17,342 (2009: k€ 17,064) respectively.

F-18

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.   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, 2009


33,763


37,978


10,847


2,227


84,815Acquisitions


864


3,945


2,091


1,891


8,791Disposals


11,968


2,272


1,770


630


16,640Transfers


5,432


1,064


9


(1,597
)

4,908Effect of movements in exchange rates


54


(118
)

22


0


(42
)Balance at December 31, 2009


28,145


40,597


11,199


1,891


81,832Balance at January 1, 2010


28,145


40,597


11,199


1,891


81,832Acquisitions


11,106


4,267


4,143


29,128


48,644Disposals


171


725


1,086


35


2,017Transfers


172


1,500


(169
)

(1,503
)

0Effect of movements in exchange rates


49


873


261


5


1,188Balance at December 31, 2010


39,301


46,512


14,348


29,486


129,647Depreciation and impairment lossesBalance at January 1, 2009


12,794


24,391


8,306


0


45,491Depreciation charge for the year


1,471


6,270


998


0


8,739Disposals


6,371


1,965


1,725


0


10,061Effect of movements in exchange rates


32


(138
)

11


0


(95
)Balance at December 31, 2009


7,926


28,558


7,590


0


44,074Balance at January 1, 2010


7,926


28,558


7,590


0


44,074Depreciation charge for the year


1,678


5,650


1,404


0


8,732Disposals


118


721


1,073


0


1,912Transfers


114





(114
)




0Effect of movements in exchange rates


59


558


226


0


843Balance at December 31, 2010


9,659


34,045


8,033


0


51,737Carrying amountsAt January 1, 2009


20,969


13,587


2,541


2,227


39,324At December 31, 2009


20,219


12,039


3,609


1,891


37,758At January 1, 2010


20,219


12,039


3,609


1,891


37,758At December 31, 2010


29,642


12,467


6,315


29,486


77,910


Depreciation

Depreciation expense amounted to k€ 8,732 for 2010 and was k€ 8,739 and
k€ 7,291 for 2009 and 2008 respectively.

Impairments

During 2010, 2009 and 2008 no impairments were necessary.

Assets under construction

Assets under construction relate mainly to the new research and development centre in Germany and to self-built systems for
development laboratories.

F-19

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   Intangible Assets

Development of intangible assets

Goodwill

Other
intangible
assets

Total(in EUR thousands)CostBalance at January 1, 2009


75,934


38,554


114,488Acquisitions


0


1,008


1,008Disposals


0


0


0Effect of movements in exchange rates


(460
)

(362
)

(822
)Balance at December 31, 2009


75,474


39,200


114,674Balance at January 1, 2010


75,474


39,200


114,674Acquisitions


0


3,245


3,245Disposals


0


10,355


10,355Effect of movements in exchange rates


3,644


2,081


5,725Balance at December 31, 2010


79,118


34,171


113,289Depreciation and impairment lossesBalance at January 1, 2009


17,215


28,299


45,514Depreciation charge for the year


0


3,508


3,508Effect of movements in exchange rates


(16
)

(373
)

(389
)Balance at December 31, 2009


17,199


31,434


48,633Balance at January 1, 2010


17,199


31,434


48,633Depreciation charge for the year


0


4,369


4,369Disposals


0


10,355


10,355Effect of movements in exchange rates


(282
)

1,746


1,464Balance at December 31, 2010


16,917


27,194


44,111Carrying amountsAt January 1, 2009


58,719


10,255


68,974At December 31, 2009


58,275


7,766


66,041At January 1, 2010


58,275


7,766


66,041At December 31, 2010


62,201


6,977


69,178


Amortisation and impairment expenses for other intangible assets

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

2010

2009

2008Amortisation

Impairment

Amortisation

Impairment

Amortisation

Impairment(in EUR thousands)Cost of sales


1,296


0


1,175


0


1,188


0Selling expenses


1,301


0


1,303


0


1,231


0General administration expenses


1,119


0


458


0


326


0Research and development costs


653


0


572


0


717


04,369


0


3,508


0


3,462


0


F-20

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   Intangible Assets (Continued)

In
2010, 2009 and 2008, no impairment losses were incurred and no reversals of impairment losses were made.

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

(in EUR thousands)2011


3,0872012


1,8082013


8302014


5572015


199


The
actual amortisation can differ from the expected amortisation.

Impairment of goodwill

At the end of 2010 the Group assessed the recoverable amount of the goodwill and determined that no impairment loss had to be
recognised (2009: k€ 0; 2008 k€ 0). The carrying value of goodwill was k€ 62,201 (2009:
k€ 58,275; 2008: k€ 58,719).

As
at the end of 2010 the cash generating unit, to which the goodwill has been allocated, is the Aixtron Group operational segment. In 2009, goodwill had been allocated to separate cash
generating units for Silicon Semiconductor Technologies and Compound Semiconductor Technologies. The reason for the change and merger into one cash generating unit is because of increasing
inter-dependence and integration of the various parts of the business. The major activities which have integrated include the common use of resources in research and development, the merging of
functions for purchasing, sales
and manufacturing activities. Additionally, the management of the group has been increasingly centralised. Consequently, the internal reporting, which is the basis for the management of the group, has
been re-organised and the former cash generating units are no longer separately identifiable.

The
recoverable amount of the cash-generating unit is determined through a fair value less cost to sell calculation which uses cash flow projections based on financial
budgets and forecasts approved by the Executive Board covering the period up to 2012. Management has carried out checks to ensure that its internal projections are consistent with external forecasts
of sales and earnings.

The
key assumptions include



The
directors believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the
aggregate amount recoverable from the cash-generating unit.

13.   Other non-current assets

Other non-current assets totalling k€ 807 (2009: k€ 644) include mainly rent deposits for buildings.

F-21

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.   Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets

Liabilities

Net2010

2009

2010

2009

2010

2009(in EUR thousands)Property, plant and equipment


(95
)

(113
)

0


(57
)

(95
)

(170
)Trade receivables


7,086


2,602


0


0


7,086


2,602Inventories


6,962


5,903


0


4


6,962


5,907Employee benefits


43


92


0


(222
)

43


(130
)Deferred revenues


14


25


0


0


14


25Provisions and other liabilities


(2,033
)

(642
)

0


0


(2,033
)

(642
)Intangible assets


5,576


0


0


0


5,576


0Other


156


(163
)

0


0


156


(163
)Tax losses


2,455


5,605


0


0


2,455


5,605Derivative financial instruments


(695
)

560


0


0


(695
)

560Deferred tax assets (+) liabilities (-)


19,469


13,869


0


(275
)

19,469


13,594


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€ 3,180 (2009: k€ 6,070). Forecast transactions
are expected to give rise to taxable profits in 2011 in the entities where deferred tax assets have been recognised.

Deferred
taxes for tax losses in the amount of k€ 17,056 (2009: k€ 21,168) and on deductible temporary differences in the amount
of k€ 22,028 (2009: k€ 0) were not recognised. Tax losses in the amount of k€ 0 can be used indefinitely
(2009: k€ 270), k€ 0 expire by 2015 (2009: 0, by 2014) and k€ 17,056 expire after 2015 (2009:
k€ 20,898 after 2014).

The
deferred tax asset attributable to in tangible assets arises from a re-organisation of the Group's intangible assets during 2010.

F-22

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.   Deferred tax assets and liabilities (Continued)

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

Balance at
January 1,
2010

Recognised
in income
statement

Directly
recognised
in Other
Comprehensive
Income

Balance at
December 31,
2010(in EUR thousands)Property, plant and equipment


(163
)

76


(8
)

(95
)Trade receivables


2,603


4,483


0


7,086Inventories


5,955


1,005


2


6,962Employee benefits


(131
)

174


0


43Deferred revenues


29


(11
)

(4
)

14Currency adjustment


(38
)

(73
)

111


0Provisions and other liabilities


(643
)

(1,411
)

21


(2,033
)Intangible assets


0


5,576


0


5,576Other


(140
)

308


(12
)

156Derivative financial instruments


560


(806
)

(449
)

(695
)Tax losses carried forward


5,562


(4,268
)

1,161


2,45513,594


5,053


822


19,469




Balance at
January 1,
2009

Recognised
in income
statement

Directly
recognised
in Other
Comprehensive
Income

Balance at
December 31,
2009(in EUR thousands)Property, plant and equipment


(208
)

45


0


(163
)Trade receivables


823


1,780


0


2,603Inventories


3,484


2,471


0


5,955Employee benefits


49


(180
)

0


(131
)Deferred revenues


(164
)

193


0


29Currency adjustment


0


9


(47
)

(38
)Provisions and other liabilities


(609
)

(34
)

0


(643
)Customer advances


258


(257
)

0


0Other


(317
)

177


0


(140
)Derivative financial instruments


(293
)

551


302


560Tax losses carried forward


138


5,424


0


5,5623,161


10,179


255


13,594


15.   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 seven years. The amount included in long term receivables is for
the amounts receivable after more than one year from the balance sheet date.

F-23

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.   Inventories

December 31,
2010

December 31,
2009(in EUR thousands)Raw materials and supplies


52,816


29,504Work in process


108,909


56,781Finished goods and services completed


249


86Inventories at customers' locations


5,247


3,181167,221


89,552




December 31,
2010

December 31,
2009(in EUR thousands)Write-down of inventories during the year


730


5,890Inventories measured at net realisable value


0


6,877Inventories recognised as an expense during the period


298,872


121,296Reversals of write-downs recognised during the year


6,609


2,081


The
reason for the reversal of provisions was principally because some obsolete inventory was expensed as scrap and therefore the requirement for the provision no longer existed.

17.   Trade receivables and other current assets

December 31,
2010

December 31,
2009Trade receivables


88,789


49,982Allowances for doubtful accounts


(382
)

(717
)Trade receivablesnet


88,407


49,265Prepaid expenses


766


794Reimbursement of research and development costs


1,692


1,140Advance payments for inventory


915


1,181VAT refund claims


6,530


5,132Other assets


2,512


1,917Derivatives that are designated and effective as hedging instruments carried at fair value (see Note 26)


1,221


692Financial assets carried at fair value through the profit or loss (FVTPL) (see Note 26)


1,071


3,485Total other current assets


14,707


14,341103,114


63,606


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:

2010

2009(in EUR thousands)Allowance at January 1


717


2,289Translation adjustments


16


11Impairment losses recognised


223


928Used


(6
)

(1,225Impairment losses reversed


(568
)

(1,286
)Allowance at December 31


382


717


F-24

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.   Trade receivables and other current assets (Continued)

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.

Impairment
losses which were reversed in 2010 and 2009 were no longer necessary because the two customers involved settled their outstanding debts. The provisions for impaired
receivables were originally made because those customers were in financial difficulties; in both cases the companies were re-capitalised.

At
the balance sheet date one customer accounted for 11% of the company's net trade receivables, no other single customer accounted for more than 10% of trade receivables. In 2009 two
customers accounted for 33% and 17% 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 kEUR 12,807 (2009: k€ 2,309) 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.

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.

Ageing
of past due but not impaired receivables.

December 31,
2010

December 31,
2009(in EUR thousands)1-90 days past due


12,418


1,794More than 90 days past due


389


515


18.   Other financial assets

Other financial assets of k€ 202,587 (2009: k€ 90,000) are fixed deposits with banks with a maturity of more than three months
at inception of the contracts.

19.   Cash and cash equivalents

December 31,
2010

December 31,
2009Cash-in-hand


12


7Short term deposits


0


21,000Bank balances


182,106


190,185Cash and Cash equivalents


182,118


211,192


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 (2009: k€ 0) at December 31, 2010.

F-25

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20.   Shareholders' Equity

Subscribed capital

2010

2009January 1


99,587,927


89,692,328Exercise of employee stock options


513,014


915,662Capital Increase


0


8,979,937Issued capital at December 31, under IFRS


100,100,941


99,587,927Treasury shares


1,078,925


1,079,250Stated share capital at December 31


101,179,866


100,667,177


The share capital of the company consists of no-par value shares and was fully paid-up during 2010 and 2009. 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 SE
cannot dispose of the trust assets. IFRS (SIC 12) prescribes an allocation of the trust assets to AIXTRON SE. In the IFRS financial statements the shares
held in this trust are therefore shown as treasury shares and deducted from the nominal share capital.

8,979,937
shares of authorised capital II were issued by the company on October 29, 2009.These shares were issued at € 17,75 each and produced net proceeds
of k€ 157,637.

Authorised share capital

Authorised share capital, including stated capital, amounted to € 143,635,351 (2009: 179,555,102).

Additional paid-in capital

Additional 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 other comprehensive income

Currency
translation

Derivative
financial
instruments

Total(in EUR thousands)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
)Change in currency translation


1,306


0


1,306Change in unrealised gains/losses before taxes


0


(1,417
)

(1,417
)Deferred taxes


0


302


302Balance at December 31, 2009


(12,449
)

(1,115
)

(13,564
)Change in currency translation


1,454


0


1,454Change in unrealised gains/losses before taxes


0


1,224


1,224Deferred taxes


0


(449
)

(449
)Balance at December 31, 2010


(10,995
)

(340
)

(11,335
)


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.

F-26

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20.   Shareholders' Equity (Continued)

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

21.   Earnings per share

Basic earnings per share

The calculation of the basic earnings per share 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 is based on the weighted-average number of outstanding common shares and of common
shares with a possible dilutive effect resulting from share options being exercised under the share option plan.

2010

2009

2008Earnings per shareNet profit/loss attributable to the shareholders of AIXTRON SE in kEUR


192,496


44,766


22,994Weighted average number of common shares for the purpose of Earnings Per Share


99,871,834


91,609,912


89,478,415Basic earnings per share (EUR)


1.93


0.49


0.26Earnings per share (diluted)Net profit/loss attributable to the shareholders of AIXTRON SE in kEUR


192,496


44,766


22,994Weighted average number of common shares for the purpose of Earnings Per Share


99,871,834


91,609,912


89,478,415Dilutive effect of share options


1,874,632


1,405,764


1,016,486Weighted average number of common shares for the purpose of Earnings Per Share (diluted)


101,746,466


93,015,677


90,494,901Diluted earnings per share (EUR)


1.89


0.48


0.25


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

Number of shares

2010

2009

2008Share options


2,323,928


1,970,222


2,631,692


22.   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 2010 the expense recognised for
defined contribution plans amounted to k€ 1,152 (2009: k€ 970, 2008: k€ 896).

In
addition to the Company's retirement benefit plans, the company is required to make contributions to state retirement benefit schemes in most of the counties in which it operates. The
company is required to contribute a specified percentage of payroll costs to the retirement schemes in order to fund the benefits. The only obligation of the group is to make the required
contributions.

F-27

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.   Employee benefits (Continued)

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 SE. These are final salary plans.

Movements in the present value of defined benefit obligations

2010

2009

2008(in EUR thousands)Present value of defined benefit obligations at January 1


1,064


845


878Gains/losses recognized in income statement


(16
)

219


(33
)Present value of defined benefit obligations at December 31


1,048


1,064


845


The amount included in the consolidated statement of financial position arising from defined benefit obligations, as of December 31, is

2010

2009

2008

2007

2006(in EUR thousands)Present value of defined benefit obligations


1,048


1,064


845


878


983Fair value of scheme assetsfunded


(1,031
)

0


0


0


0Defined benefit liabilityunfunded


17


1,064


845


878


983


Expense recognised in the consolidated income statement

2010

2009

2008(in EUR thousands)Interest expense


54


87


47Actuarial gains and losses


812


132


(80
)866


219


(33
)


Development of plan assets

2010

2009

2008(in EUR thousands)at January 1


0


0


0Contributions by the sponsoring companies


1,913Actuarial gains and losses


(882
)at December 31


1,031


0


0


In the income statement, the expense (2008 income) of k€ 866 (2009 k€ 219; 2008:
k€ (33)) is recognised in general administration expense.

The
following table shows the principal actuarial assumptions:

2010

2009Biometrical calculation assumptions


Heubeck
tables 2005G


Heubeck
tables 2005GInterest rate at December 31


4.90
%

5.20
%Expected salary increase


0.00
%

0.00
%Expected pension increase


1.00
%

2.00
%


In the three years ending 2010 no payments were made under these plans. The value of the obligations from pension plans is determined annually at
December 31. During 2010 these obligations were contracted out to an insurance company. Following the transfer of the pension obligation to the

F-28

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.   Employee benefits (Continued)

insurance
company, the guaranteed increase in pensions is 1% only. The company does not expect to have any further obligation under these schemes.

23.   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 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. Under this plan 1,123,614 options for the purchase of 1,791,832 common shares were
outstanding as of December 31, 2010.

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 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 20%. No grants were issued with a strike price less than fair market
value. A total of 623,895 options to purchase the same number of common stock were outstanding under this plan as of December 31, 2010.

AIXTRON stock option plan 2007

Options were granted to purchase 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, plus 20%.

Options
were granted as follows:

2007


759,1002008


779,0002009


778,8502010


779,950


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 the equivalent of 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 ten years from the date of grant.

A
total of 6,610 options to purchase AIXTRON ADS were outstanding under this plan as of December 31, 2010. Upon exercise of options new shares are issued from the trust (see
note 20).

F-29

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23.   Share-based payment (Continued)

Summary of stock option transactions

AIXTRON share options

2010

2009Number of
shares

Average
exercise price

Number of
shares

Average
exercise price(EUR)



(EUR)Balance at January 1


4,998,686


16.52


5,149,197


13.76Granted during the year


779,950


26.60


778,850


24.60Exercised during the year


512,689


6.83


792,624


5.00Forfeited during the year


111,195


8.99


136,737


8.76Outstanding at December 31


5,154,752


19.17


4,998,686


16.52Exercisable at December 31


937,426


18.62


799,520


19.51


Genus share options

2010

2009Number of
shares

Average
exercise price

Number of
shares

Average
exercise price(USD)



(USD)Balance at January 1


6,935


7.33


142,499


5.96Exercised during the year


325


5.08


123,038


5.95Expired during the year








12,526


5.81Outstanding at December 31


6,610


7.44


6,935


7.33Exercisable at December 31


6,610


7.44


6,935


7.33


AIXTRON stock options as of December 31, 2010

Exercise price per share (EUR)

Underlying shares
represented by
outstanding options

Shares
represented by
exercisable
options

Average
option life (in years)18.70


406,824


406,824


3.567.39


393,728


109,132


4.526.93


392,900


0


5.57.48


598,380


0


6.53.10


30,150


30,150


2.56.17


80,170


80,170


3.53.83


513,575


197,775


5.510.09


453,225


113,375


7.04.17


748,500


0


8.024.60


763,150


0


9.026.60


774,150


0


10.05,154,752


937,426


F-30

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23.   Share-based payment (Continued)

Genus stock options as of December 31, 2010

Average exercise price (USD)

Outstanding

Exercisable

Average
option life (in years)3.55


1,000


1,000


3.97.20


4,590


4,590


3.312.35


1,020


1,020


2.96,610


6,610


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 2010, the personnel expenses from share-based payments were k€ 3,645 (2009: k€ 2,149; 2008: k€ 1,808).
As of December 31, 2010 an amount of k€ 11,506 relating to stock options granted prior to that date had not yet been recognised as a personnel expense. This amount will
be charged over the period to 2015. The expected allocation of the expense is as follows: 2011: k€ 5,189, 2012: k€ 3,792, 2013
k€ 1,824, 2014: k€ 619 and 2015: k€ 82.

AIXTRON share options granted

in 2010

in 2009

in 2008Fair value on grant date


8.87 €


8.62 €


1.77 €Price per share


23.54 €


19.00 €


4.30 €Exercise price


26.60 €


24.60 €


4.17 €Expected volatility


58.02%


56.38%


52.69%Option life


10.0 years


10.0 years


10.0 yearsExpected dividend payments


0.55 €


0.00 €


0.00 €Risk-free interest rate


2.62%


3.44%


4.04%


The expected volatility is based on historical volatility.

24.   Provisions

Development and breakdown of provisions:

January 1,
2010

Exchange
rate
differences

Usage

Reversal

Addition

December 31,
2010

Current

Non-
current(in € thousands)Personnel expenses


8,162


209


7,053


1,089


14,480


14,709


14,709


0Warranties


4,710


56


4,710


78


7,731


7,709


7,709


0Onerous contracts


1,182


93


0


465


329


1,139


752


387Commissions


4,002


(4
)

3,814


142


9,566


9,608


9,608


0Other


8,898


79


6,711


1,192


9,684


10,758


10,758


0Total


26,954


433


22,288


2,966


41,790


43,923


43,536


387


Personnel expenses

These include mainly provisions for holiday pay and bonuses.

F-31

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

24.   Provisions (Continued)

Provisions for onerous contracts

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

Other provisions

Other provisions consist mainly of the estimated cost of services received, customs duties and estimated obligations arising from
leases.

25.   Trade payables and other current liabilities

The liabilities consist of the following:

Dec. 31,
2010

Dec. 31,
2009(in EUR thousands)Trade payables


39,643


21,419Liabilities from grants


950


1,352Payroll taxes and social security contributions


883


685VAT and similar taxes


631


173Derivatives that are designated and effective as hedging instruments carried at fair value:Forward foreign currency contracts


735


1,692Financial instruments carried at fair value through the profit or loss (FVTPL):Foreign currency options


461


810Other liabilities


374


554,034


4,76743,677


26,186


The
carrying amount of trade payables and other current liabilities approximates their fair value. Trade payables, grant liabilities, taxes and other liabilities fall due for payment
within 90 days of receipt of the relevant goods or services. The maturities of currency contracts are shown in note 26.

26.   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 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.

F-32

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26.   Financial instruments (Continued)

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 SE. 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, 2010 the group had no borrowings (2009: nil). Financial liabilities of k€ 43,677 (2009: k€ 26,186) consisting of
trade payables and other liabilities and are shown in Note 25, together with an analysis of their maturity.

As
at December 31, 2010 the group had k€ 182,118 cash and cash equivalents (2009: k€ 211,192) and a further
k€ 202,587 of fixed deposits with banks (2009: k€ 90,000).

Credit risks

Financial assets generally exposed to a credit risk are trade receivables (see note 17) and cash and cash equivalents.

The
Group'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.

The
maximum exposure of the Group to credit risk is the total amount of receivables, financial assets and cash balances as described in notes 17, 18 and 19.

Market risks

The Company's activities expose it to the financial risks of changes in foreign currency exchange rates and interest rate risks.
Interest rate risks are not material as the
company only receives a minor amount of interest income. 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

Assets2010

2009

2010

2009(kEUR)

(kEUR)

(kEUR)

(kEUR)US Dollars


(4,483
)

(3,782
)

121,148


65,587GB Pounds


(11,991
)

(3,785
)

4,318


18,719


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-33

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26.   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 Effect

GBP Currency EffectIncrease in value of Euro by 10%

2010

2009

2010

2009(kEUR)

(kEUR)

(kEUR)

(kEUR)Profit or loss


6,776


(9,483
)

76


(132
)Other comprehensive income


12,515


3,788





5,428




USD Currency Effect

GBP Currency EffectDecrease in value of Euro by 10%

2010

2009

2010

2009(kEUR)

(kEUR)

(kEUR)

(kEUR)Profit or loss


(6,988
)

13,120


(76
)

132Other comprehensive income


(13,109
)

(3,788
)




(5,428
)


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 with banks to cover receipts from highly probable forecast sales denominated in
US Dollars.

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

Foreign Currency

Contract Amount

Fair ValueAssets

LiabilitiesDec. 31,2010

2009

2010

2009

2010

2009

2010

2009(kUSD)

(kUSD)

(kEUR)

(kEUR)

(kEUR)

(kEUR)

(kEUR)

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


45,000


39,000


33,827


27,294


350


594


(204
)

(385
)3 to 12 months


135,000


76,000


101,539


51,752


871


98


(531
)

(1,307
)Fair Value Hedges through the Profit or LossOptions to sell US Dollars buy EurosLess than 3 months


30,000


75,000


22,388


50,714


371


568





3 to 12 months


30,000


210,000


22,388


140,000


700


2,917





Options to sell Euros buy US DollarsLess than 3 months


30,000


15,000


24,234


11,538








(109
)

(17
)3 to 12 months


30,000


60,000


24,234


44,444








(352
)

(793
)


F-34

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26.   Financial instruments (Continued)

Foreign currency cash flow hedges

As of 31st December 2010, the aggregate amount of unrealised losses (2009: losses) on forward foreign exchange contracts
deferred in the hedging reserve relating to the exposure on anticipated future transactions is k€ 340 (2009: k€ 1,115).

The
unrealised losses of k€ 1,115 (31 December 2008: k€ 0) included in income and expenses recognised in equity as of
December 31, 2009 were fully reversed and recognised in the income statement at maturity date of the contracts in the financial year. The losses actually realised in 2010 were
k€ 7,951 (2009: losses k€ 0).

Foreign currency option contracts

The company has also entered into option contracts to hedge the exchange rate risk on US Dollar sales proceeds in 2011. The contracts
are classified as at fair value through the profit and loss account.

Unrealised
gains of k€ 610 (2009: k€ 2,675) on forward exchange contracts are recognised in Other Operating Income in the income statement.

Fair values

Cash and cash equivalents, loans and receivables and held to maturity investments are stated at amortised cost. At FVTPL and hedging
derivatives are stated at fair value.

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 2010

Cash and
cash
equivalents
at amortised
cost

Loans and
receivables
at amortised
cost

Held
to-maturity
investments
at amortised
cost

At FVTPL
at fair value

Hedging
Derivatives
at fair value

Total
Carrying
amount and
fair value(in EUR thousands)Cash and cash equivalents


182,118


0


0


0


0


182,118Fair value of derivative financial instruments


0


0


0


1,071


1,221


2,292Other financial assets


0


0


202,587


0


0


202,587Other non-current assets


0


807


0


0


0


807Trade receivables


0


88,407


0


0


0


88,407Total


182,118


89,214


202,587


1,071


1,221


476,211


FINANCIAL LIABILITIES 2010

Cash and
cash
equivalents
at amortised
cost

Loans and
receivables
at amortised
cost

Held
to-maturity
investments
at amortised
cost

At FVTPL
at fair value

Hedging
Derivatives
at fair value

Total
Carrying
amount and
fair value(in EUR thousands)Fair value of derivative financial instruments


0


0


0


461


735


1,196Trade payables


0


0


39,643


0


0


39,643Advance payments from customers (not in the scope of IFRS 7)


0


0


117,477


0


0


117,477Total


0


0


157,120


461


735


158,316


F-35

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26.   Financial instruments (Continued)

FINANCIAL ASSETS 2009

Cash and
cash
equivalents
at amortised
cost

Loans and
receivables
at amortised
cost

Held
to-maturity
investments
at amortised
cost

At FVTPL
at fair value

Hedging
Derivatives
at fair value

Total
Carrying
amount and
fair value(in EUR thousands)Cash and cash equivalents


211,192


0


0


0


0


211,192Fair value of derivative financial instruments


0


0


0


3,485


692


4,177Other financial assets


0


0


90,000


0


0


90,000Other non-current assets


0


644


0


0


0


644Trade receivables


0


49,265


0


0


0


49,265Total


211,192


49,909


90,000


3,485


692


355,278


FINANCIAL LIABILITIES 2009

Cash and
cash
equivalents
at amortised
cost

Loans and
receivables
at amortised
cost

Held
to-maturity
investments
at amortised
cost

At FVTPL
at fair value

Hedging
Derivatives
at fair value

Total
Carrying
amount and
fair value(in EUR thousands)Fair value of derivative financial instruments


0


0


0


810


1,692


2,502Trade payables


0


0


21,419


0


0


21,419Advance payments from customers (not in the scope of IFRS 7)


0


0


87,918


0


0


87,918Total


0


0


109,337


810


1,692


111,839


Derivatives

The fair value is the estimated amount that a financial institution 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). The values are derived from inputs
other than quoted prices that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices). This is level 2 in the hierarchy of fair value
measurement techniques.

Trade receivables/payables

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

27.   Operating leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

(in EUR
thousands)2011


4,1792012


2,6592013


9822014


7622015


641after 2015


92910,152


F-36

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

27.   Operating leases (Continued)

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€ 3,959 k€ 2,922 and k€ 2,174 for 2010, 2009 and 2008 respectively.

28.   Capital commitments

As of December 31, 2010, the Company had entered into purchase commitments with suppliers in the amount of k€ 92,277 (2009:
kE€ 75,759) for purchases within the next 12 months. Commitments for capital expenditures are k€ 6,514 (2009:
k€ 336) as of December 31, 2010.

29.   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.

International
Rectifier Corporation (IRC), of El Segundo, California, USA had filed a complaint on September 8, 2008 in the U.S. District Court for the
Central District of California against seven of IRC's former employees, including IRC's founder and former CEO Alex Lidow, as well as five companies, including AIXTRON. Having had its lawsuit
dismissed in the U.S. District Court, IRC re-filed essentially the same lawsuit in California state court in March 2009 based on the California state claims alone, and alleged five
causes of action against AIXTRON. After multiple rounds of motions to dismiss, IRC dropped some of its claims against the defendants, and the California court dismissed additional claims. As at
December 31, 2010, two of IRC's claims remained in the case against AIXTRON.

On
January 24, 2011, AIXTRON and IRC entered into a settlement agreement in which IRC agreed to withdraw its action in return for voluntary disclosure by AIXTRON of certain
documents as well as witness statements to IRC in support of IRC's still pending action against the remaining defendants. On February 3, 2011, the Superior Court of California, County of Los
Angeles, California, USA has filed and entered the dismissal with prejudice of the action against AIXTRON.

30.   Related parties

Identity of related parties

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

Remuneration of Executive Board

Active members of the executive board are remunerated as follows:

2010

2009(in EUR
thousands)Short-term employee benefits


7,620


5,149Total cash remuneration


7,620


5,149Share-based payment


1,383


1,344Total remuneration


9,003


6,493


F-37

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30.   Related parties (Continued)

The
following table shows the remuneration of the Executive Board for each individual member in 2010:

Executive Board Member

Fixed
remuneration

Variable
remuneration

Total
monetary
Remuneration

Number of
granted
Options

Option
Value at
grant date

Total
Remuneration(kEUR)

(kEUR)

(kEUR)

(No.)

(kEUR)

(kEUR)Paul Hyland


434


2,888


3,322


52,000


461


3,783Wolfgang Breme


309


1,806


2,115


52,000


461


2,576Dr. Bernd Schulte


377


1,806


2,183


52,000


461


2,644Total


1,120


6,500


7,620


156,000


1,383


9,003


Remuneration of Supervisory Board

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

2010

2009(in EUR
thousands)Fixed remuneration


153


153Variable remuneration


612


384Attendance fee


36


30Remuneration of Supervisory Board total


801


567


The
following table shows the remuneration of the Supervisory Board in 2010 for each individual member:

Supervisory Board Member

Fixed

Variable

Attendance
Fee

TotalKim Schindelhauer* (Chairman of the Supervisory Board)


54


216


7


277Dr. Holger Jürgensen* (Deputy Chairman of the Supervisory Board)


27


108


9


144Prof. Dr. Wolfgang Blättchen* (Chairman of the Audit Committee)


18


72


14


104Karl-Hermann Kuklies


18


72


0


90Prof. Dr. Rüdiger von Rosen


18


72


0


90Joachim Simmroß*


18


72


6


96153
**

612
***

36


801


*member
of the audit committee**of
which kEUR 149 is for the period from January 1, 2010 to December 21, 2010 for duties performed as the supervisory board of
AIXTRON AG and k€ 4 for the period from December 22, 2010 to December 31, 2010 for duties performed as the supervisory board of AIXTRON SE
(subject to the resolution of the Annual General Meeting according to §113 sec. 2 AktG)***of
which kEUR 595 is for the period from January 1, 2010 to December 21, 2010 for duties performed as the supervisory board of
AIXTRON AG and k€ 17 for the period from December 22, 2010 to December 31, 2010 for duties performed as the supervisory board of AIXTRON SE
(subject to the resolution of the Annual General Meeting according to §113 sec. 2 AktG)


The Remuneration Report which is included in the Corporate Governance report contains further details regarding the remuneration of Executive
Board and Supervisory Board.

F-38

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

31.   Consolidated entities

AIXTRON SE controls the following subsidiaries:

Share of
capital in %Country

2010

2009AIXTRON, Inc.

USA


100


100AIXTRON Ltd.

England & Wales


100


100AIXTRON Korea Co. Ltd.

South Korea


100


100AIXTRON Taiwan Co. Ltd.

Taiwan


100


100AIXTRON A.B.

Sweden


100


100AIXTRON K.K.

Japan


100


100Nanoinstruments Ltd

England & Wales


100


100Genus trust*

USA


n.a.


n.a.


*The
shares in Genus trust are attributed, as beneficial owner, to AIXTRON, as control exists through the trust relationship with AIXTRON SE.


32.   Events after the reporting period

There are no events which have occurred after the balance sheet date, 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.

33.   Auditors' fees

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

2010

2009(in EUR
thousands)for audit


773


640for other confirmation services


69


94for tax advisory services


242


142for other services


1


91,085


885


Included
in the total amount of fees are fees for the group auditor Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft, Duesseldorf, in the amount of
k€ 466 for audit (2009: k€ 409), k€ 62 for other confirmation services (2009:
k€ 94), k€ 134 for tax services (2009: k€ 113) and k€ 1 for other services (2009:
k€ 9).

34.   Employees

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

Employees by Function

Average number for the year

2010

2009Sales


68


71Research and Development


240


197Manufacturing and Service


351


278Administration


90


90Employees (§ 314 HGB)


749


636Executive board members


3


3Apprentices


12


16Total Employees


764


655


F-39

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

35.   Statement of compliance with the German Corporate Governance Code

In 2010, Executive and Supervisory Boards have made the declaration of compliance in accordance with Section 161 of AktG and this is permanently available on the Company's web
site athttp://www.aixtron.com/index.php?id=91&L=1.

36.   Supervisory Board and Executive Board

Composition of the Supervisory Board as of December 31, 2010





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



F-40

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

36.   Supervisory Board and Executive Board (Continued)





37.   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 (n)). The Company believes, based on past experience, that this method of recognising revenue fairly states the revenues of the Company. The judgements made by management include
an assessment of the point at which substantially all of the risks and rewards of ownership have passed to the customer.

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 judgements
and estimates related 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. The carrying amount of goodwill is disclosed in
note 12.

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. The carrying amount of inventories is disclosed
in note 16.

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 judgement 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. The carrying amount of deferred tax assets is disclosed in note 14.

F-41

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