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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, 2012ORo

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, 2012: 101,975,023 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



PART I


3Item 1:

Identity of Directors, Senior Management and Advisers


3Item 2:

Offer Statistics and Expected Timetable


3Item 3:

Key Information


3A.

Selected Financial Data


3Five Year Financial Summary


3Exchange Rate Information


3B.

Capitalization and Indebtedness


4C.

Reasons for the Offer and Use of Proceeds


4D.

Risk Factors


4Company-Related Risk


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


11Item 4:

Information on the Company


13A.

History and Development of the Company


13Introduction


13Important Events


13Capital Expenditures


14B.

Business Overview


14Business Model


14Employees


14Technology, Products and Services


15Research and Development


17Intellectual Property


18Manufacturing


18Marketing Channels


19Customers and Principal Markets


19Seasonality


19Competitive Positioning


19Key Performance Indicators


20Government Regulation


20C.

Organizational Structure


21D.

Property, Plant and Equipment


21Item 4A:

Unresolved Staff Comments


22Item 5:

Operating and Financial Review and Prospects


22The Semiconductor Equipment Market


22AIXTRON-specific Factors


23Management Assessment of Company Situation


24A.

Operating Results


25Development of Revenues


25Development of Results


26Development of Orders


29B.

Liquidity and Capital Resources


30Corporate Financial Management


30Funding


30Investments


31Cash 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


34Critical Accounting Policies and Key Sources of Estimation and Uncertainty


34Recently Issued Accounting Standards


35Item 6:

Directors, Senior Management and Employees


36A.

Directors and Senior Management


36Supervisory Board


37Executive Board


37B.

Compensation


38


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Table of Contents

Executive 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


46Item 8:

Financial Information


46A.

Consolidated Financial Statements and Other Financial Information


46Export Revenues


46Legal Proceedings


46Policy on Dividend Distributions


46B.

Significant Changes


46Item 9:

The Offer and Listing


46A.

Offer and Listing Details


46Trading Markets


46Market Price Information


47B.

Plan of Distribution


48C.

Markets


48D.

Selling Shareholders


48E.

Dilution


48F.

Expenses of the Issue


48Item 10:

Additional Information


49A.

Share Capital


49B.

Memorandum and Articles of Association


49Articles of Association


49Corporate Governance


51Sarbanes-Oxley Act Requirements and NASDAQ Rules


52C.

Material Contracts


54Employment contracts of current members of the Executive Board


54Intellectual Property Agreements


54D.

Exchange Controls


55E.

Taxation


55German Taxation


55U.S. Federal Taxation


58F.

Dividends and Paying Agents


61G.

Statement by Experts


61H.

Documents on Display


62I.

Subsidiary Information


62Item 11:

Quantitative and Qualitative Disclosure about Market Risk


62Exchange Rate Risk


62Foreign Currency Risk


62Interest Rate Risk


63Item 12:

Description of Securities other than Equity Securities


63PART II


65Item 13:

Defaults, Dividend Arrearages and Delinquencies


65Item 14:

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


65Item 15:

Controls and Procedures


65Item 16A:

Audit Committee Financial Expert


67Item 16B:

Code of Ethics


67Item 16C:

Principal Accountant Fees and Services


67Item 16D:

Exemptions from the Listing Standard for Audit Committees


68Item 16E:

Purchases of Equity Securities by the Issuer and Affiliated Purchasers


68Item 16F:

Change in Registrant's Certifying Accountant


68Item 16G:

Corporate Governance


68


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Item 16H:

Mine Safety Disclosure


68PART III


69Item 17:

Financial Statements


69Item 18:

Financial Statements


69Item 19:

Exhibits


69Signatures


70Report of Independent Registered Public Accounting Firm


71Consolidated 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 and revenues


F-154.    Research and development


F-175.    Other operating income


F-176.    Other operating expenses


F-187.    Personnel expense


F-188.    Net finance income


F-189.    Income tax expense/benefit


F-1910.  Current tax receivable and payable


F-2011.  Property, plant and equipment


F-2012.  Intangible assets


F-2113.  Other non-current assets


F-2414.  Deferred tax assets and liabilities


F-2415.  Long-term receivable from current tax


F-2516.  Inventories


F-2617.  Trade receivables and other current assets


F-2618.  Other financial assets


F-2719.  Cash and cash equivalents


F-2720.  Shareholders' Equity


F-2821.  Earnings/Loss per share


F-2922.  Employee benefits


F-2923.  Share-based payment


F-3124.  Provisions


F-3325.  Trade payables and other current liabilities


F-3426.  Financial instruments


F-3427.  Operating leases


F-3928.  Capital commitments


F-3929.  Contingencies


F-4030.  Identity of related parties


F-4031.  Consolidated entities


F-4532.  Events after the reporting period


F-4533.  Auditors' fees


F-4534.  Employees


F-4635.  Statement of compliance with the German Corporate Governance Code


F-4636.  Supervisory Board and Executive Board


F-4637.  Critical accounting judgments and key sources of estimation and uncertainty


F-47


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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.

Due
to rounding, numbers presented throughout this report may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures.

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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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,

2012
IFRS

2011
IFRS

2010
IFRS

2009
IFRS

2008
IFRS(thousand EUR, except share and per share data)Consolidated Income Statement Data:Revenues


227,832


610,960


783,775


302,857


274,404Operating result


(132,267
)

112,880


275,510


62,725


32,489Profit/Loss attributable to the equity holders of AIXTRON SE (after taxes)


(145,436
)

79,536


192,496


44,766


22,994Basic earnings per share


(1.44
)

0.79


1.93


0.49


0.26Diluted earnings per share


(1.44
)

0.78


1.89


0.48


0.25Dividend payments(1)


25,155


60,708


15,100


8,181


6,332Dividends declared per common share(1) (EUR)


0.25


0.60


0.15


0.09


0.07Dividends declared per common share(1) (USD(2))


0.32


0.84


0.20


0.13


0.10Consolidated Statement of Financial Position Data:Total assets


559,971


777,259


823,432


573,094


314,827Total liabilities


89,951


148,919


223,108


159,565


101,938Minority interests


0


0


0


0


0Total shareholders' equity and net assets


470,020


628,340


600,324


413,529


212,889Fully paid capital


100,896


100,711


100,101


99,588


89,692Other Data:Adjusted weighted average number of shares outstandingbasic


100,805,804


100,530,006


99,871,834


91,609,912


89,478,415diluted


101,805,804


101,834,717


101,746,466


93,015,677


90,494,901


(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 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

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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 last five 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
Rate2012


1.28592011


1.39312010


1.32612009


1.39332008


1.4695


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

Month ended

High

LowFebruary 2013 (through February 15, 2013)


1.3334


1.3692January 2013


1.3047


1.3584December 2012


1.2930


1.3260November 2012


1.2715


1.3010October 2012


1.2876


1.3133September 2012


1.2566


1.3142August 2012


1.2149


1.2583


On
February 15, 2013, the noon buying rate was USD 1.3362 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.

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 and its sensitivity to general economic conditions. Although semiconductors are used in many different products, the markets for those products

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are
interrelated to various degrees. The industry has historically experienced sudden changes in supply and demand for semiconductors based on general economic conditions. The timing, length and
severity of these industry cycles are difficult to predict. The cyclical nature of AIXTRON's operations tends to reflect and be amplified by changes in economic conditions, both in Asia and
internationally, supply/demand imbalances and foreign currency exchange fluctuations. Economic downturns or a prolonged period of slow growth in Asia and foreign markets or any of the industries in
which AIXTRON operates that are contributing to a softer demand environment for the Company's products could have a material adverse effect on the Company's results of operations, financial condition
and cash flows. 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 global macroeconomic situation, may adversely impact AIXTRON's financial position and results of
operations.

In 2012, the global economy continued to face major challenges arising from the sovereign debt crisis in certain Eurozone countries and
the fiscal cliff and public debt ceiling debates in the U.S. which have created an economic environment of decreasing global growth and a consequent decline in global trade and employment levels that
might continue in 2013. In addition, although financial market tensions have declined in 2012, there is no guarantee that the crisis will not flare up again. Although AIXTRON had no bank borrowings
during 2012, 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 subdued global economic development might adversely affect AIXTRON's customers and suppliers. In addition to
the potential for pricing pressure and 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 and could result in inventory write downs. These conditions might make it challenging for AIXTRON to plan and adapt, which could adversely impact AIXTRON's
results of operations.

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

AIXTRON's customer base has been in the past and may in the future be highly concentrated. Orders from a relatively limited number of
customers have accounted for, and
likely will continue to account for, a substantial portion of the Company's revenues, which may lead customers to demand pricing and other terms less favorable to the Company. If a principal customer
discontinues its relationship with AIXTRON or suffers economic setbacks, AIXTRON's business, financial condition and operating results could be materially and adversely affected. AIXTRON's ability to
increase revenues in the future will depend in part upon its ability to obtain orders from new customers. AIXTRON cannot be certain that it will be able to do so. In addition, because a relatively
small number of large manufacturers, many of whom are AIXTRON's customers, dominate the industries in which they operate, it may be especially difficult for the Company to replace these customers if
it loses their business. A large portion of orders in AIXTRON's order backlog are orders from its principal customers. Furthermore, AIXTRON does not have long-term contracts with many of
its customers. The Company's customers may delay existing or new orders because of raw material shortages, credit/liquidity tightness 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

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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 affected 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:



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.

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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 affect its business.

Some of AIXTRON's competitors have greater financial, engineering, manufacturing and marketing resources than the Company. 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 affect 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:



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,

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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 90.63% of the Company's total revenues for the year ended December 31, 2012, versus
95.69% for the year ended December 31, 2011, and 96.04% of total revenues for the year ended December 31, 2010. Revenues from AIXTRON's Asian-based customers accounted for 77.92% for the
year ended December 31, 2012, versus 89.66% for the year ended December 31, 2011, and 91.46% of total revenues for the year ended December 31, 2010. 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.

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 production costs are
denominated in currencies other than the Euro. As a result, fluctuations

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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. In addition, changes in monetary
or other policies, including as a result of the sovereign debt crisis in certain Eurozone countries, respective spillover effects and the fiscal cliff and public debt ceiling debates in the U.S.,
would also likely affect foreign currency exchange rates. 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 jurisdictions, the Company is exposed to a number of different tax risks.

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

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

AIXTRON is exposed to risks associated with acquisitions.

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



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.

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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 affect 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 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.

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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 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.

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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 € 100,000 of the stated share capital of the stock corporation may apply in court for authorization to assert claims for damages
of the Company against members of the Executive Board and/or the Supervisory Board in their own name. However, the Company may at any time assert its claims for damages on its own behalf; in such case
any pending authorization or court proceeding initiated by a shareholder of the Company related to the same claims for damages will then be inadmissible. As a result, a shareholder of a German stock
corporation may not be able to protect his or her interest in the shares as well as a shareholder of a U.S. corporation could.

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

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

If
AIXTRON was classified as a PFIC, unless a U.S. holder made a timely specific election, a special tax regime would apply to any "excess distribution", which would be such holder's
share of distributions in any year that are greater than 125% of the average annual distributions received by such holder in the three preceding years or such holder's holding period, if shorter; and
any gain realized on the sale
or other disposition of the ADSs. Under this regime, any excess distribution and realized gain would be treated as ordinary income and would be subject to tax as if the excess distribution or gain had
been realized ratably over such holder's holding period for the ADSs. A U.S. holder will generally be required to pay taxes on

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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, China, Japan, South Korea,
Sweden, Taiwan 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

Disclosure of changes in the Executive Board

Paul Hyland (Chairman, President and CEO) will resign from office by mutual agreement effective as of February 28, 2013. On
March 1, 2013, Martin Goetzeler, will join AIXTRON as Chairman, President and CEO of AIXTRON.

Disclosure of changes in the Supervisory Board

Effective as of January 30, 2013, Dr. Holger Jürgensen (deputy chairman of the Supervisory Board) and
Karl-Hermann Kuklies (ordinary member of the Supervisory Board) resigned from office. Successor candidates are expected to be proposed for election at the next Annual General Meeting on
May 23, 2013.

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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 optoelectronic 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 applications.

AIXTRON's
business activities include developing, producing and installing equipment for the deposition of 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 process of advanced microelectronic and optoelectronic devices.

AIXTRON
supplies its customers with both production-scale material deposition systems and small scale systems for Research & Development ("R&D") or small scale 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.

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 achievements and motivation of the Company's staff. The employees are recruited on the basis
of professional and personal qualifications and experience. Apart from the direct advertising of job opportunities to attract new employees, AIXTRON regularly participates in job fairs and other
career events, publishes dedicated press articles, and enjoys close collaborative relationships with universities worldwide, including locally; the RWTH Aachen University and the University of
Cambridge.

As
a global company with an international corporate culture, AIXTRON manages diversity with the aim of creating a productive work atmosphere, to prevent social discrimination, and to
cultivate equal opportunities. AIXTRON considers its labor relations to be satisfactory.

In
2012, the total number of employees decreased slightly by 1%, from 978 employees at December 31, 2011 (2010: 784) to 964 at December 31, 2012. While the
Manufacturing & Service and Administration departments required less personnel due to the low business volume, the number of R&D employees increased, driven by the Company's strong commitment
to R&D. The largest group of permanent employees was employed in Manufacturing and Service positions. In 2011, the biggest individual increase in employees occurred in the groups who work in Sales and
R&D, which grew by 37%

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and
28% respectively, and the largest group of permanent employees was employed in Manufacturing and Service positions.

2012

2011

2010

Development from
2011 to 2012Employees by Function

Dec 31.

%

Dec 31.

%

Dec 31.

%

abs.

%Sales


88


9


85


9


62


8


3


4Research and Development


333


35


318


33


248


32


15


5Manufacturing and Service


427


44


450


46


375


48


(23
)

(5
)Administration


116


12


125


13


99


12


(9
)

(7
)Total


964


100


978


100


784


100


(14
)

(1
)


As
of December 31, 2012, the majority of AIXTRON's worldwide permanent employees wereas in previous yearsbased in Europe. The decrease of the US
headcount by 15% or 21 employees in 2012 was mainly due to cost reduction measures having been applied.

2012

2011

2010

2011 to 2012Employees by Region

Dec 31.

%

Dec 31.

%

Dec 31.

%

abs.

%Asia


188


20


181


19


154


20


7


4Europe


660


68


660


67


524


67


0


0USA


116


12


137


14


106


13


(21
)

(15
)Total


964


100


978


100


784


100


(14
)

(1
)


Technology, Products and Services

AIXTRON's product range includes customized full production scale and research systems capable of depositing material films on a
diverse range of different substrate sizes and materials.

The
deposition process technologies include Metal-Organic Chemical Vapor Deposition ("MOCVD") for the deposition of compound materials as well as thin film deposition of organic
materials on up to Gen. 3.5 substrates. These include Polymer Vapor Phase Deposition ("PVPD®"), Organic Vapor Phase Deposition ("OVPD®") or large area deposition for Organic
Light Emitting Diodes ("OLED") applications. Plasma Enhanced Chemical Vapor Phase Deposition ("PECVD") is being employed for the deposition of complex Carbon Nanostructures (Carbon Nanotubes,
Nanowires or Graphene). For silicon semiconductor applications, AIXTRON systems are capable of depositing material films on wafers of up to 300mm in diameter, by employing technologies such as:
Chemical Vapor Deposition ("CVD"), Atomic Vapor Deposition ("AVD®") and Atomic Layer Deposition ("ALD").

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The
following table summarizes the 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®Products

Planetary Reactor®

Gen1 R&D Platform

Lynx CVDClose Coupled Showerhead®

Cluster Environment for R&D Platform

Tricent® ALDNano CVD Reactors BM Series

Production Tools for cluster and in-line integration on different substrate sizes (e.g. Gen2, Gen3.5 and larger)

Tricent® AVD®Hot Wall Reactors: VP series



QXP-8300Potential Applications/ Devices

LEDs

OLEDs for displays

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

OLEDs for solid state lighting

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

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

Electronic semiconductor structures, e.g. for flexible displaysSilicon Carbide ("SiC") based High Power Devices

Functional polymer layersGallium Nitride ("GaN") based power electronics

Dielectric or passivating polymer filmsSolar cellsCarbon Nanostructures for electronic, display & heat sink applicationsGraphene structures for electronic applications


AIXTRON also offers a comprehensive range of peripheral equipment and services. Additionally, the Company offers its customers training,
consulting and support services.

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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® platform family including its latest member, the G5+, the CRIUS®
II-XL Close Coupled Showerhead® reactor technology and the PRODOS line of PVPD® systems in the organic semiconductor material space. For more information, please
refer to item 5. "AIXTRON-specific Factors".

Research and Development

In addition to the state-of-the-art R&D center at its headquarters in Herzogenrath, AIXTRON also
operates R&D laboratories in Aachen (Germany), in Cambridge (United Kingdom) and in Sunnyvale (United States). These in-house research laboratories are equipped with the latest version
AIXTRON systems and are used for researching and developing new equipment, materials and processes for the production of semiconductor structures.

Even
in the past year's difficult economic environment AIXTRON maintained a strong, well-funded and focused R&D program within its business. Management retains a strong focus
on optimizing its internal R&D projects and processes to ensure a most efficient and
market-oriented use of the Company's R&D budget. The Company's strong R&D culture is recognized as the cornerstone of its past market success and is considered as a key enabling asset to achieve the
Company's ambitions in future markets for which AIXTRON is currently developing products. This focused Management policy was in average pursued by a team of 337 dedicated and highly skilled R&D
employees in 2012 (2011: 279; 2010: 240). In 2012, R&D expenditures increased year-on-year, in line with expectations, by € 22.5 million, from
€ 50.4 million in 2011 (2010: € 46.1 million) to € 72.9 million, reflecting the importance
of the Company's market-driven R&D focus for its future operational success.

For
more information regarding R&D expenses from fiscal year 2010 through 2012, refer to Item 5.A "Operating ResultsDevelopment of ResultsOperating
Costs" in this report.

Underlining
the commitment to remain a recognized technology and market leading Company, R&D activities in 2012 included continual improvement programs for AIXTRON's existing products
and markets, i.e. the delivery of more process capabilities, factory integration, increased automation and the development of new system architectures, all of which are targeted at enabling
customers, who are faced with increasing margin pressure, to achieve improvements in throughput efficiencies and total cost of ownership.

Moreover,
the Company continued to pursue new potential opportunities to leverage its core know-how of material deposition into new market and technology areas beyond LEDs,
as evidenced by AIXTRON's many internally and externally funded research projects. Specific fields of interest here are:



A
specific example in the OLED area is the new German research project "PROLUX" which was approved and initiated in the second quarter of 2012. This publicly funded program aims at
significantly
increasing OLED efficiencies through improved deposition processes. The project is being jointly conducted by a number of eminent research partnersincluding AIXTRON, Philips, the RWTH
University in Aachen and the Fraunhofer Institute for Laser Technology ILTand is being funded by the state of North Rhine Westphalia, Germany. AIXTRON's specific role within the PROLUX
project is to develop and integrate new system technologies with the Company's existing OVPD®, organic large area and PVPD® equipment portfolio and to support the corresponding
development activities of the other partners.

In
the third quarter of 2012, AIXTRON started a new OLED project called "KOBALT", focused on the development of cost-efficient large-area OLEDs for use in the
lighting market. The project is partially funded by the German Ministry of Education and Research ("BMBF"). Together with Philips and BASF as industry partners, AIXTRON is examining and qualifying new
OLED substrates and materials that can

17

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contribute
to the development of high-efficiency white OLEDs. This project will also address interest in the utilization of cost-efficient standard glass substrates and will
engage in the development of flexible film substrates. The overall objective of the project is to improve the viability of a successful market introduction of OLED lighting applications with improved
device performance and longer lifetime.

The
announcement on July 5, 2012 of the successful conclusion of the European Commission-funded "TECHNOTUBES" project is a good example of the progress made in the emerging carbon
nanotubes field. The members of the project consortium were the University of Cambridge (coordinator), ETH Zurich, TU Denmark, TU Berlin, Fritz Haber Institute, CNR-Italy, Philips, THALES,
Cambridge CMOS Sensors, IMEC, and AIXTRON. The three year project concluded with a demonstration of AIXTRON's recently developed BM 300T automated production scale system. This new system is capable
of depositing various carbon nanotube structures that met the requirements of a wide variety of applications and integrate various processes into a single automated platform offering the performance
that industrial production partners demand. This system has already attracted considerable interest from several notable industrial parties.

Such
projects support AIXTRON Management's opinion that a strong and market-driven R&D culture is essential to enable the improvement of the cost of ownership and efficiency metrics for
AIXTRON's customers and to maintain AIXTRON's position as a technology leader.

Intellectual Property

AIXTRON aims to secure its technology by patenting and protecting inventions and know-how, provided it is strategically
expedient and possible for the Company to do so. As of December 31, 2012, 157 patent-protected inventions were in use, of which 14 were registered in the reporting period. Patent protection for
these inventions applies in those sales
markets relevant for AIXTRON, specifically in Europe, China, Japan, South Korea, Taiwan and the United States. These patents are maintained and renewed annually and will expire between 2013 and 2032.

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 materials, produced by thin film deposition processes
that enable the high precision liquid injection, evaporation and gas phase deposition of metal organic materials required to produce photoelectric and electronic devices. Similar principles are
employed in the design of Organic Vapor Phase Deposition equipment for use in the manufacture of organic light emitting devices. Management finds it impractical to quantify the portion of revenues
attributable to products that incorporate the technology governed by these agreements because all product sales can be aggregated into one group based upon the common technology.

Manufacturing

The AIXTRON Manufacturing operation is principally involved in the final assembly stage of production, including equipment
configuration, tuning and testing. The Company purchases all of the components and most of the assemblies required to manufacture the equipment from third-party contractors and suppliers. 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. For strategic
reasons, 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 the whole manufacturing process and in conjunction with in-house contractors executes the final
manufacturing steps as described above.

Since
1994, AIXTRON has been assessed annually 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 routinely complies with all applicable international standards and procedures for the equipment industry. The "CE" label qualification confirms the conformity of AIXTRON
products with the applicable European directives and standards. Moreover, the "UL" standard for product admission to the

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US
market and the recommended requirements of the SEMI organization are also complied with. When developing new equipment, the "Restriction of Hazardous Substances Directive, RoHS" is strictly adhered
to, as are the internal compliance requirements to meet these specific rules and standards. Several independent certification companies, such as "TÜV" and "ETL" have also
confirmed AIXTRON's 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 own direct sales organization, but also through appointed
dealers and sales 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
own Sales and Service Organization provides a full range of customer services, from the initial support of the customized development of an AIXTRON system, through to the final
installation and ongoing customer training as well as operational support of its systems.

Customers and Principal Markets

AIXTRON's semiconductor device customers are principally, but not exclusively, focused on the manufacturing of LEDs, wireless device,
power electronics, 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 chips and components produced on AIXTRON equipment to the next link in the value chain, namely, the electronic device manufacturers. The
Company's customers also include research centers and universities. Most of the world's leading electronic device manufacturers produce in Asia and consequently, the majority of AIXTRON sales continue
to be delivered into this region.

One
AIXTRON customer represented 11% of total revenues in 2012.

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

Seasonality

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

Competitive Positioning

Historically, AIXTRON's main competitor in MOCVD applications has been 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 evidence that equipment companies from adjacent industries continue to attempt to qualify their own
MOCVD tools with customers. For example; both Applied Materials Inc. (USA) and Jusung Engineering Co. Ltd. (South Korea) are known to have been active in the development process
for an in-house equipment solution for the production of LEDs. Some local Chinese companies have also commenced MOCVD equipment design and manufacturing plans supported by government
initiatives.

Based
on the latest published market share research by Gartner Dataquest (March 2012), it was estimated that the share of the worldwide MOCVD equipment market (estimated 2011 total
market value: USD 1.5 billion) held by AIXTRON in 2011 was around 50%. In the same report, the Company's strongest competitor in terms of sales, Veeco Instruments Inc., had an
estimated market share of approximately 47%. Viewed in the mid to long term, AIXTRON continues to target a market leading position in the global MOCVD market with AIXTRON and Veeco remaining the main
players in this market.

For
emerging 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 or polymer technology to produce organic light emitting diodes (OLEDs),

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AIXTRON
offers OLED manufacturers its own highly innovative organic vapor phase deposition (OVPD®) and PVPD® (polymer vapor phase deposition) 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 well positioned as a potential deposition
system supplier for next generation 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 28nm node and below for memory and
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 deposition possibilities for the next generation of semiconductor 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 was estimated by Gartner
Dataquest in October 2012 to be valued at USD 359 million for 2012. For memory device production systems of the 28nm node and below, AIXTRON continued to experience relatively low order
intake and revenue levels during 2012. AIXTRON's market share in this area is therefore not considered meaningful at this point in time. 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.

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 Indicator system addressing 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 timely 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 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.

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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 stringent 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 and the Dodd-Frank Act of 2010. In addition, AIXTRON is subject to other regulations for example the provisions of the US Foreign Corrupt Practices Act and the
UK Bribery 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, 2012

Name

Jurisdiction of
Incorporation

Ownership
InterestAIXTRON Ltd.

England and Wales


100
%AIXTRON AB

Sweden


100
%AIXTRON China Ltd.

China


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


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, 2012:

Facility location

Use

Approx. size

Lease expiry(m2)Herzogenrath, Germany (owned)

Headquarters, Manufacturing, Service, Engineering


12,457


Herzogenrath, Germany (owned)

Research & Development, Manufacturing, Engineering


16,000


Herzogenrath, Germany (leased)

Administration, Sales


2,419


12/31/2013Aachen, Germany (leased)

Research & Development


200


1/29/2014Cambridge, UK (leased)

Manufacturing, Engineering, Research & Development


2,180


9/13/2019Cambridge, UK (leased)

Sales, Service, Engineering


1,386


6/27/2020Lund, Sweden (leased)

Engineering, Service


449


12/31/2014Sunnyvale, CA, USA (leased)

Manufacturing, Sales, Service, Engineering, Research & Development


9,338


10/31/2017Seoul, South Korea (leased)

Sales, Service


1,032


12/31/2015Shanghai, China (leased)

Sales, Service


755


7/31/2014Suzhou, China (leased)

Sales, Service


537


12/31/2013Yangzhou, China (leased)

Sales, Service


90


10/14/2013Hsinchu, Taiwan (leased)

Sales, Service


1,893


12/31/2014Tainan, Taiwan (leased)

Service


203


5/26/2013Tokyo, Japan (leased)

Sales, Service


534


9/30/2014


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In 2011, AIXTRON entered into a formal cooperation agreement with the Suzhou Institute of Nano-tech and Nano-bionics
(SINANO) to establish a new MOCVD training and demonstration facility in Suzhou/China to train Chinese customers and potential customers' engineers. The training center is equipped with AIXTRON's
latest generation MOCVD systems, the CRIUS II and the AIX G5 HT. The 2012 investment of approximately € 10 million into the MOCVD training and demonstration
facility was funded out of operating cash flow and available cash resources. Out of the planned € 10 million investment,
€ 3.8 million have been invested by February 28, 2013.

The
new Research & Development ("R&D") center in Herzogenrath with an approximate size of 16,000 square meters and room for approximately 450 staff was fully completed on budget
and on time by the third quarter of 2010 (Phase I) and by the first quarter of 2012 (Phase II).

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.

Item 5:    Operating and Financial Review and Prospects

The Semiconductor Equipment Market

In 2012, the electronics equipment industry grew by 3.2% (according to Gartner Dataquest, December 2012), which was in line with
recorded world real GDP growth (according to the IMF World Economic Outlook update published on January 23, 2013).

In
comparison, the subset, semiconductor capital spending, showed a decline of about 3% in 2012. A further subset, specific spending on Wafer Fab equipment ("WFE"), which includes
spending on deposition tools supplied by AIXTRON, declined by 17.4% year-on-year (according to Gartner Dataquest, December 2012). The worldwide MOCVD equipment market, as subset of the WFE market,
declined by 60% to approximately USD 600 million in 2012, from a total market value of USD 1.5 billion in 2011 (Gartner Dataquest, March 2012 and
October 2012).

The
largest revenue driver for AIXTRON in 2012 continued to be the sale of MOCVD systems for the manufacturing of High Brightness ("HB") LEDs, which represented 48% (2011: 83%; 2010:
93%), of its total equipment revenues.

The HB LED Market

The market for HB LED Device units, which can be produced with AIXTRON's compound semiconductor equipment, was expected to grow by 34%
according to a report from Strategies Unlimited (an independent semiconductor market research institute) published in August 2012. However, according to industry sources, LED prices have dropped by
20-30% throughout the year and are expected to decline at the same rate in 2013. Concurrently, the HB LED market was predicted to grow in 2012 by only 1.5% to
USD 12.7 billion from 12.5 billion in 2011 (Strategies Unlimited, August 2012).

The
continuous reduction of LED prices, governmental policy changes and efforts from the supply chain, have all contributed positively to increasing the momentum for LED lighting
adoption across commercial, industrial and consumer segments.

In
September of last year, the final stage of the phase-out of all general lighting incandescent lamps was implemented across the European Union. This means that standard
incandescent bulbs can no longer

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be
produced or sold within the EU. In China, where incandescent light bulbs are being phased out in a similar fashion, a three stage phase-out commenced on October 1, 2012, with the
prohibition of 100W and higher rated incandescent bulbs. This will be followed by the removal of 60W and above by October 1, 2014, and 15W and above by October 1, 2016. The
implementation of these programs is increasing the average consumer's awareness of the value and acceptance of energy-efficient lighting products, including LED lighting.

The
Chinese government has also progressed from only subsidizing LED manufacturing equipment, to proactively supporting the purchase of LED products by consumers. In August 2012, Chinese
authorities selected a number of companies to receive a first tranche of funding to support the discounting of LED products to consumers in China. Although the exact scope and scale of the plan has
not yet been released, it clearly indicates the Chinese government's commitment to support the LED industry.

Other
governments are also starting to promote the adoption of energy and cost effective LED lighting solutions. All such initiatives have the potential to further stimulate demand.

Manufacturers
of LED lighting products are progressively offering better quality LED products at lower prices. OSRAM, a leading European lighting manufacturer, announced in September
2012 that they would be offering LED-based replacements for 40W incandescent lamps in Europe
at a retail price below € 10 (USD 13), representing a 50% reduction on the previous year.

Another
possible indicator for an acceptable price level that could initiate greater adoption of LED lighting by consumers was the success of a promotion by the world's largest
supermarket discounter. ALDI, who offered 806 lumen or 60W equivalent LED light bulbs at a price of € 9.99 (USD 13) in the third quarter of 2012 and were sold out
within the first few hours.

AIXTRON-specific Factors

Reluctant investment behavior sustained throughout 2012



Due
to the persistently subdued level of demand in the market, AIXTRON Management decided to substantially write down inventories in the third quarter. This non-cash effect significantly
influenced the Company's full year result, leading to a gross profit of 0.4 million and an EBIT of € -132.3 million in 2012.



Market introduction of new products



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Non-LED activities gaining traction

In the third quarter of 2012, AIXTRON announced a multi-tool order by a leading Korean DRAM manufacturer for AIXTRON's new
QXP-8300 ALD deposition tool. The film developed on this QXP-8300 production system has been successfully pre-qualified by this manufacturer for a
sub-30nm DRAM technology node and was subsequently successfully production qualified in the fourth quarter of 2012. The QXP-8300 ALD tools offer a compelling and
cost-effective technology solution and consequently the Company is well positioned to support the anticipated ramp up in advanced DRAM chip manufacturing in the coming years. Interest in
AIXTRON's silicon systems has greatly increased since the release of the QXP-8300 and Management foresees further significant growth opportunities for high throughput ALD technology with
this product.

In
2012, AIXTRON experienced increasing demand for R&D and production tools for the power electronics market. These specific tools are used by customers to produce highly efficient
Gallium Nitride (GaN) and Silicon Carbide (SiC) based power devices. These are material solutions that are increasingly being applied to energy efficient power management and conversion applications,
addressing market trends in smart grid, hybrid and electrical automotive, as well as energy efficient telecom devices. The Company has a long track record in this area and has the expertise and tools
to address the very large end-market opportunities. According to IMS Research, the power electronics device market is expected to grow to USD 70 billion per annum in value by
2021 with a total accessible equipment market of approximately USD 1 billion over the next ten years.

AIXTRON
has also recorded several new orders for its dedicated carbon nano-technology equipment where the Company's BM systems are designed to deliver turn-key
solutions for carbon nanotube and graphene R&D and production applications. AIXTRON expects that the increasing investments being made in these material applications will have a potentially
significant impact on future generations of electronic devices.

Management Assessment of Company Situation

Against the backdrop of a very challenging macro-economic environment, 2012 proved to be a very difficult year for AIXTRON with weaker
revenues and profitability than the previous year. It was Management's view, at the start of 2012, that it would be a transitory year, with lower revenues and potential customer consolidation in the
first half of the year, but with the prospect of a significantly better second half.

However,
the economic situation deteriorated further as the year progressed, which in turn negatively impacted the timing of equipment orders and shipments. There was a slight increase
in order intake in the second half of 2012, but not as strong as had been originally expected.

As
a consequence of this unrealized second half market recovery and after a thorough internal review of the immediate outlook, Management announced in October that AIXTRON would not
achieve profitability for 2012. The accompanying risk assessment that was conducted as part of this business review also concluded that the likelihood of ongoing subdued demand necessitated the
reduction in value of

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certain
work in progress assemblies, components and spare parts. As a result, a substantial amount of inventories were written off.

The
small increase in demand that took place in the second half of 2012 encourages Management to believe that the bottom of the current trough has been reached. However the absolute
level of market activity remains weak.

Going
forward, Management sees 2013 being better than 2012 both in terms of revenues and earnings with 2014 potentially being an even stronger year. The major short term growth driver
will be growth in the LED general lighting market but growth is also expected from other end market applications including production equipment needed for power electronics applications, silicon
semiconductor and organic semiconductor equipment demand. However, the macroeconomic environment, particularly in Europe, remains fragile and this could impact the timing risk on predicted orders and
shipments. Overall there are indicators of further improving momentum and Management believes that orders for AIXTRON products will increase from the current trough levels.

A.    Operating Results: 2010-2012

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 2012, AIXTRON recorded revenues of € 227.8 million, a decrease of
€ 383.2 million, or 63%, compared to € 611.0 million in 2011
(2010: € 783.8 million). The most important factor in this development was the generally reluctant investment behavior of AIXTRON's customers in the light of
uncertain end-markets. This reluctance was particularly evident in the LED TV and LED lighting equipment markets where we experienced significantly lower demand for MOCVD deposition
equipment than anticipated. In 2011, the revenue development had been mainly affected by the abrupt deterioration in the market demand specifically during the second half of the year, where revenues
were down 40% compared to the first half year. This second half demand effect in 2011 has continued throughout all four quarters of 2012.

The
decrease in full year 2012 revenues was mainly attributable to the 68% reduction in the Company's deposition equipment revenues
(2012: € 176.9 million; 2011: € 556.3 million; 2010: € 735.7 million).
The significant decrease of total equipment sales in 2012 was principally due to the still very reluctant investment behavior of AIXTRON's customers throughout the whole fiscal year. The decrease in
2011 compared to 2010 was mainly attributable to the 26% reduction in the Company's deposition equipment revenues. The Company's products bought by AIXTRON's customers are predominantly used for the
production of LEDs, which in turn are primarily employed as backlighting devices for LCD displays and emerging lighting applications. Total equipment sales generated 78% of total revenues in 2012 (91%
in 2011; 94% in 2010).

The
remaining 22% of total revenues in 2012 were generated by sales of spare parts and service, which is 13 percentage points higher than in 2011 (9% in 2011; 6% in 2010) which is
mainly due to an overall lower equipment revenues baseline. In absolute terms, sales of spare parts & service were 7% lower in 2012 compared to 2011
(2012: € 51.0 million; 2011: € 54.7 million; 2010: € 48.1 million). In
2011, revenues from spares and services increased by 14% compared to 2010. The described pattern is a result of prior years equipment sales as such revenues typically lag behind the revenue
development from equipment, since services and parts are typically included or covered by warranty provided to customers in the after

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sales
period. In 2011, the decrease of total equipment sales was mainly attributable due to the rapid deterioration in the business environment during the second half of the year.

2012

2011

2010

2012-2011Revenues by Technology

million
EUR

%

million
EUR

%

million
EUR

%

million
EUR

%Equipment revenues


176.9


78


556.3


91


735.7


94


(379.4
)

(68
)Other revenues (service, spare parts, etc.)


51.0


22


54.7


9


48.1


6


(3.7
)

(7
)Total


227.8


100


611.0


100


783.8


100


(383.2
)

(63
)


A very high percentage, namely 78% of total revenues in 2012, continues to be generated by sales to customers in Asia. However, due to the
reluctant investment behavior of AIXTRON's main Asian customer base during 2012 and the increased relative percentage of sales to customers in Europe and the U.S., revenues generated by sales to
customers in Asia is 12 percentage points lower than the 90% recorded in 2011 (91% in 2010).

9%
of revenues in 2012 were generated in Europe (4% in 2011; 4% in 2010) and the remaining 13% in the USA (6% in 2011; 5% in 2010).

2012

2011

2010

2012-2011Revenues by Region

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)

(million
EUR)

(%)Asia


177.5


78


547.8


90


716.9


91


(370.3
)

(68
)Europe


21.4


9


26.3


4


31.1


4


(4.9
)

(19
)USA


29.0


13


36.9


6


35.8


5


(7.9
)

(21
)Total


227.8


100


611.0


100


783.8


100


(383.2
)

(63
)


Development of Results

2012

2011

2010

2012-2011Cost Structure

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)

(million
EUR)

(%
Revenues)

(million
EUR)

(%)Cost of Sales


227.4


100


379.6


62


372.0


47


(152.2
)

(40
)Gross profit


0.4


0


231.4


38


411.8


53


(231.0
)

[
]Operating Costs


132.7


58


118.5


19


136.2


17


14.3


12Selling expenses


34.8


15


32.1


5


48.9


6


2.7


8General and administration expenses


19.6


9


34.0


6


30.1


4


(14.4
)

(42
)Research and development costs


72.9


32


50.4


8


46.1


6


22.5


45Net other operating (income) and expenses


5.4


2


2.0


0


11.1


1


3.4


170


Cost of Sales

Cost of sales decreased year-on-year by 40% in absolute terms from € 379.6 million in 2011 to
€ 227.4 million in 2012
(2010: € 372.0 million). This cost base was only slightly below the revenues booked in 2012, principally due to the significant third quarter of 2012
inventory write-downs, against the backdrop of the slower than expected recovery of orders and business volume within the second half of 2012, which in turn led to a continued under-recovery of
production overhead costs. The relatively high absolute cost base in 2011 was mainly due to a write-down of unsold excess inventory (approximately
€ 40 million) in combination with an increasing sales volume effect in the first half of the year, accounting for more than 50% of total cost of sales. The strong
increase relative to revenues was attributable to the above mentioned write-down of inventories combined with a reduced full year sales volume as well as a less favorable product and
pricing mix compared to the year 2010.

Gross Profit, Gross Margin

Due to the high relative cost of sales base in 2012, the Company's gross profit decreased to
€ 0.4 million in 2012 (2011: € 231.4 million; 2010: € 411.8 million),
resulting in a 0% gross margin after 38% in 2011 (53% in 2010).

26

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Table of Contents

Operating Costs

Operating costs increased year-on-year by 12% to € 132.7 million in 2012
(2011: € 118.5 million; 2010: € 136.2 million), mainly due to a significant increase in R&D spending. Operating
costs relative to revenues were 58% in 2012, 39 percentage points higher than the 19% in 2011 (17% in 2010). This development was influenced by the following factors:

Selling
expenses were up slightly year-on-year in absolute terms to € 34.8 million (2011: € 32.1 million;
2010: € 48.9 million), which, in spite of the lower sales volume, is mainly due to increased provisions for after sales services. Selling expenses relative
to revenues were also up year-on-year from 5% in 2011, by 10 percentage points, to 15% in 2012 (2010: 6%). The slight 2011 decrease in selling expenses was mainly due to lower sales
commissions resulting from the change in the geographical mix of sales, and lower warranty expenses.

In
2012, general and administration expenses declined by 42% year-on-year to € 19.6 million
(2011: € 34.0 million; 2010: € 30.1 million). This was principally a result of lower profit related elements of
the administration costs, a reduced number of temporary staff and lower fees for external services and
consulting. In contrast, the 13% cost increase in 2011 was due to the increased number of employees within general and administration and higher IT infrastructure and consultancy costs. General and
administration expenses, relative to revenues, increased from 6% in 2011 by 3 percentage points to 9% in 2012 (2010: 4%), principally due to the lower sales volume effect in connection
with the disproportionate cost reduction.

Key R&D Information

2012

2011

2010

2012-2011%R&D expenses (million EUR)


72.9


50.4


46.1


45R&D expenses, % of sales


32


8


6R&D employees (period average)


337


279


240


21R&D employees, % of total headcount (period average)


34


32


32


Research and development expenses increased by 45% year-on-year from € 50.4 million recorded in 2011
(2010: € 46.1 million) to € 72.9 million in 2012, reflecting AIXTRON's continued high level of commitment to strategic
investments in research and development. In 2011, R&D costs had already gone up by 9% due to the planned further expansion of development activities, including additional personnel and material
expenses. These activities were based on the strategic necessity to maintain an intensive R&D engagement to secure the Company's technology leading position. As a result of the increased R&D
investments and the decline in revenues, R&D costs as a percentage of revenues increased from 8% in 2011 (6% in 2010) to 32% in 2012.

Personnel Costs

2012

2011

2010

2012-2011(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)

(%)Cost of Sales


30.9


26.5


23.8


4.4


17Selling, General and Administrative expenses


19.3


25.9


24.3


(6.6
)

(26
)Research and Development costs


30.9


24.2


21.8


6.7


28Total


81.1


76.6


70.0


4.5


6


With the average number of Group employees increasing from 864 in 2011 to 980 in 2012, mainly in R&D and regional sales, personnel expenses
increased by 6% in total from € 76.6 million in 2011 (2010: € 70.0 million) to
€ 81.1 million in 2012. For the most part, this reflects the Management's commitment to invest into focused R&D programs (the average number of R&D employees being
up 21% in 2012 compared to 2011) deemed necessary to support the Company's determination to retain its technical market leadershipa key element in the Company's long-term
strategy.
Mainly due to the lower revenue figure, personnel expenses, as a percentage of sales, were up 23 percentage points from 13% in 2011 (9% in 2010) to 36% in 2012. In absolute terms, the number of
employees decreased from 978 as of December 31, 2011 to 964 as of December 31, 2012. Offsetting some of the increase in R&D personnel were personnel reductions during the year in
administration (116 in 2012 vs. 125 in 2011) and manufacturing and service (427 in 2012 vs. 450 in 2011).

2012
net other operating income and expenses resulted in an expense of € 5.5 million, compared to an expense of
€ 2.0 million in 2011 (2010: expense of € 11.1 million), mainly due to the impact from currency effects not being offset
by increased R&D grants received during the year.

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Table of Contents

In
2012, a net currency expense of € 6.9 million (2011: € 2.1 million;
2010: € 17.2 million) was incurred largely from USD/EUR hedging contracts (€ 6.8 million). In 2011, a net currency
expense of € 2.1 million was incurred largely from USD/EUR hedging contracts. Income of € 1.6 million related to hedge
contracts, including premiums on option contracts. Expenses of € 3.7 million were recorded from transactional and translation differences which do not involve hedge
contracts.

The
€ 2.7 million of R&D grants, that were received in 2012 (2011: € 1.4 million;
2010: € 3.5 million), were, as usual, recorded as other operating income.

Operating Result

The absolute operating result decreased significantly in a year-on-year comparison and turned negative to
€ -132.3 million in 2012 (2011: € 112.9 million;
2010: € 275.5 million) resulting in an EBIT margin of -58% (18% in 2011; 35% in 2010). This development was principally due to the significantly
reduced gross profit, resulting from the previously described cost of sales development coupled with an increased absolute operating cost base as described above. The decline of the 2011 operating
result was a result of the Company's weaker full year revenue development and the relatively higher cost base including the write-down of inventories as described above.

Result Before Taxes

Result before taxes also turned negative and decreased from € 115.0 million in 2011
(2010: € 278.2 million) to € -129.9 million in 2012, with a net finance income of
€ 2.3 million in 2012 (2011: € 2.1 million; 2010: € 2.7 million).

2012

2011

2010

2012-2011Interest & Taxes

(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)

(%)Net Finance Income/Expense


2.3


2.1


2.7


0.2


10Finance Income from financial assets


2.3


3.4


2.8


(1.1
)

(32
)Finance Expenses from financial liabilities


0.0


(1.3
)

(0.1
)

1.3


(100
)Taxes on Income


(15.5
)

(35.4
)

(85.7
)

19.9


56


In 2012, AIXTRON recorded a tax expense of € 15.5 million resulting mainly from derecognition of previously
capitalized tax assets. This adjustment has become necessary due to the lack of visibility persisting throughout the year in combination with a still pending meaningful recovery of market demand for
LED manufacturing equipment (2011: tax expense of € 35.4 million or 31%; 2010: tax expense of € 85.7 million or
31%). Tax loss carry-forwards, remaining unrecognized as deferred tax assets in 2012 totaled € 90.9 million
(2011: € 15.9 million, 2010: € 17.1 million).

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

The 2012 after-tax result attributable to the equity holders of the AIXTRON SE was
€ -145.4 million, down from the € 79.5 million (13% of revenues) in 2011
(2010: € 192.5 million or 25% of revenues).

Net Income AIXTRON SEUse of Results

AIXTRON SE, the parent company of the AIXTRON Group, recorded a net accumulated loss in accordance with German generally accepted
accounting principles, (German GAAP) based on the German Commercial Code, HGB, of € -51.6 million for 2012 (profit
2011: € 77.0 million; profit 2010: € 124.9 million).

AIXTRON's
Executive and Supervisory Boards will propose to the Annual Shareholders' Meeting that the 2012 loss should be carried forward and consequently no dividend payment should be
made for 2012. For the fiscal year 2011 the Company had distributed a dividend of € 25.4 million or € 0.25 per share
(€ 60.7 million or € 0.60 for 2010).

28

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Table of Contents

Development of Orders

2012

2011

2010

2012-2011Equipment Orders

(million
EUR)

(million
EUR)

(million
EUR)

(million
EUR)

(%)Equipment order intake


131.4


513.4


748.3


(382.0
)

(74
)Equipment order backlog (end of period)


79.4


141.0


274.8


(61.6
)

(44
)


Equipment Order Intake

In 2012, equipment order intake was 74% down year-on-year, at € 131.4 million
(2011: € 513.4 million; 2010: € 748.3 million). Throughout fiscal year 2012, AIXTRON customers have been hesitant
in adding significant LED-manufacturing capacity as a result of the uncertain development of consumer markets in an uncertain global economic environment. As a matter of internal policy,
order intake in US Dollars was recorded at a budget exchange rate for 2012, which had been set at 1.40 USD/EUR at the beginning of the year (2011: 1.35 USD/EUR;
2010: 1.50 USD/EUR). For the fiscal year 2011, as with revenues; equipment order intake was slowing down significantly in the second half of the year and decreased by 31% year-on-year to
€ 513.4 million partially
because of the perceived lack of sufficiently developed end-market demand by Asian LED manufacturers, driven by the relatively easy availability of government funding, but also evidence of
some relevant financing pressures on certain Asian LED manufacturers, including both sovereign and bank suppression of credit lines and bank loans. The 2011, total order intake included
€ 100 million which was subsequently removed from the order backlog on September 15, 2011.

Equipment Order Backlog

The total equipment order backlog of € 79.4 million at December 31, 2012 was 44% lower than
at the same point in time in 2011 (2011: € 141.0 million; 2010: € 274.8 million). As of year-end 2012,
the US Dollar denominated order backlog was recorded at a 2012 budget exchange rate, which had been set at 1.40 USD/EUR at the beginning of the year (2011: 1.35 USD/EUR;
2010: 1.50 USD/EUR). This order backlog was revalued at the 2013 budget rate of 1.30 USD/EUR as per January 1, 2013, leading to an opening equipment order backlog of
€ 83.8 million for 2013.

As
a matter of strict internal policy, AIXTRON follows clear internal requirements before recording and reporting received equipment orders as order intake and order backlog. These
requirements comprise of all of the following minimum criteria:



In
addition and reflecting current market conditions; even if an order does fulfill all of the above criteria, the Company's Management reserves the right to assess whether the actual
realization of each respective system order is sufficiently likely to occur in a timely manner according to Management's opinion. When Management concludes, that there is an unacceptable degree of
risk of not realizing revenue on any specific system, Management will, until that risk is considered acceptable, exclude the
order, or a portion of the order, from the recorded order intake and order backlog figures, regardless of compliance with requirements of the points 1-4 above.

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 generally 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. Please also see "Item 3DRisk Factors" for further details.

29

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Table of Contents

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 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 future financing and support the indispensable R&D activities, the Company has access to a strong equity
capital base. Furthermore, approved by the Annual 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, 2012 amounted to
€ 101,975,023 (December 31, 2011: € 101,789,527; December 31, 2010: € 101,179,866)
divided into 101,975,023 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 General 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 American Depositary Shares
("ADS") under certain conditions. In fiscal year 2012, 185,496 stock options (2011: 609,661; 2010: 513,014 options) were exercised, resulting in delivery of in total 185,496 ordinary
shares. Under the 2012 tranche of the 2007 stock option plan 31,000 new stock options were granted in fiscal year 2012 (2011 tranche of the AIXTRON stock option plan 2007: 14,000 grants; 2010
tranche: 779,950 grants respectively).

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, 2012, 2011 and 2010.

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

The
equity ratio increased to 84% as of December 31, 2012, compared to 81% as of December 31, 2011 (December 31, 2010: 73%), principally due to a 28% lower
balance sheet total than in 2011 (-6% in 2011 compared to 2010). In 2011, the high equity ratio was largely achieved due to a € 38.8 million increase in
retained earnings.

In
2012, the return on equity (ROE) based on the negative 2012 Group's net result in proportion to the average total shareholders' equity at the start and end of the year was
-26% (2011: 13%; 2010: 38%).

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

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Table of Contents

covered
by the additional capital as authorized by the Annual Shareholders' Meeting and laid out in the following table:

Funding Sources
(€ or number of shares)

2012
31-Dec

Approved
since

Expiry Date

2011
31-Dec

2010
31-Dec

2012-2011Issued shares


101,975,023








101,789,527


101,179,866


185,496Authorized Capital 2012Capital increase for cash or contribution in kind with existing shareholders' preemptive rights


10,422,817


16/05/2012


15/05/2017


0


0


10,422,817Authorized Capital 2011Capital increase for cash or contribution in kind with or without existing shareholders' preemptive rights


40,471,946


19/05/2011


18/05/2016


40,471,946


0


0Conditional Capital I 2012Authorization to potentially issue convertible notes or warrants in future


40,715,810


16/05/2012


15/05/2017


0


0


40,715,810Conditional Capital I 2007Authorization to potentially issue convertible notes or warrants in future


cancelled


22/05/2007


21/05/2012


35,875,598


35,875,598


(35,875,598
)Conditional Capital II 2012Stock Options Program 2012


4,208,726


16/05/2012


15/05/2017


0


0


4,208,726Conditional Capital II 2007Stock Options Program 2007


3,136,628


22/05/2007


31/12/2018


3,298,774


3,681,699


(162,146
)Conditional Capital 4Stock Options Program 2002


722,097


22/05/2002


31/12/2016


745,447


972,183


(23,350
)Conditional Capital 2Stock Options Program 1999


1,926,005


26/05/1999


31/12/2017


1,926,005


1,926,005


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.

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 Regulation, SE-VO; §179 German Corporations Act, AktG). 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 in fiscal year 2012 amounted to € 16.5 million
(2011: € 30.2 million; 2010: € 51.9 million). In 2012, € 15.8 million
(2011: € 27.2 million;

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2010: € 48.6 million)
were related to property, plant and equipment (including testing and laboratory equipment). Thereof,
€ 3.8 million were related to investments mainly for the MOCVD training and demonstration facility in Suzhou/China as well as for laboratory equipment. In 2011,
€ 16.7 million had been invested into the R&D center (Phase II) under construction at that time. Investments in the MOCVD training and demonstration facility
in Suzhou/China commenced in 2011 and were completed in 2012. In 2013, investments will mainly be made for laboratory and test equipment.

The
remaining € 0.7 million (2011: € 3.0 million;
2010: € 3.3 million) were related to intangible assets including software licenses.

The
majority of capital expenditures (63%) for the year 2012 (2011: 88%; 2010: 94%) were invested in Germany and such expenditures for 2013 are also generally expected to
be invested primarily in Germany.

The
decrease of € 12.6 million in bank deposits with a maturity of at least three months in 2012 was recorded as cash inflow from investing
activities. In 2011 bank deposits with a maturity of at least three months decreased by € 80.3 million and were recorded as cash inflow from investing activities.

All
2012, 2011 and 2010 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 outflow from operating activities of € 45.2 million (2011: cash outflow of
€ 6.3 million; 2010: cash inflow of € 147.7 million) was recorded in 2012. The decrease in operating cash flow in 2012
was mainly caused by net losses of € 145.4 million (2011: net profits of € 79.5 million; 2010: net profits of
€ 192.5 million). In 2011, the decrease in operating cash flow in 2011 was mainly caused by decreased profits in 2011 compared to 2010.

A
cash outflow of € 4.4 million was recorded from investment activities in 2012 (2011: cash inflow of 50.5 million; 2010: cash
outflow of € 165.4 million). Money market deposits were liquidated in the amount of € 11.9 million (2011: 80.5;
2010: investment of 113.6 million), which were previously classified as "other financial assets". In 2011, a cash inflow of € 50.5 million was
recorded from investment activities. Money market deposits were liquidated in the amount of € 80.5 million, which were previously classified as "other financial
assets".

In
2012, capital expenditure amounted to € 16.5 million (2011: € 30.4 million;
2010: € 51.9 million) mainly on laboratory equipment. Thereof, € 3.8 million were related to investments mainly for the
Company's Chinese training and demo facility in Suzhou and for laboratory equipment. In 2011, capital expenditure amounted to € 30.4 million mainly on the new
R & D facilities in Herzogenrath, Germany under construction at that time.

A
cash outflow from financing activities of € 24.3 million (2011: cash outflow of € 57.5 million;
2010: cash outflow of € 11.6 million) in 2012 includes the dividend payments to shareholders of € 25.2 million
(2011: € 60.7 million; 2010: € 15.1 million) and cash received from the issue of new shares of
€ 883 thousand (2011: 3.2 million; 2010: € 3.5 million). In 2011, cash outflow from financing activities
includes the dividend payments to shareholders of € 60.7 million, which was partially offset by cash received from the issue of new shares totaling
€ 3.2 million.

Cash
and cash equivalents including cash deposits with a maturity of at least three months, most of which is held in Euros (also see "Investments"), decreased by 29% or
€ 85.7 million to € 209.5 million
(€ 99.7 million + € 109.8 million
financial assets) as of December 31, 2012 (December 31,
2011: € 172.9 million + € 122.3 million; December 31,
2010: € 182.1 million + € 202.6 million). Specific items that lowered the 2012 year end liquidity
came, amongst other factors, from the 2012 net loss (€ -145.4 million), reduced advance payments from customers, the dividend payment for the fiscal
year 2011 and the above mentioned capital expenditures. These cash outflows were not offset by factors including stock option exercises (€ 883 thousand) and reduced
trade receivables. As of December 31, 2011, cash and cash equivalents including cash deposits with a maturity of at least three months, most of which is held in Euros, decreased by 23% to
€ 295.2 million (€ 172.9 million + € 122.3 million financial assets). In 2011,
the increasing factors had been the 2011 net profit (€ 79.5 million) and stock option exercises (€ 3.2 million), but in total
were lower than the dividend payment (€ 60.7 million), reduced advance payments from customers, higher inventories, and the above mentioned capital expenditures.

32

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Table of Contents

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

Assessment of Liquidity and Capital Resources

The Company's liquidity is affected by many factors, some of which are related to its ongoing operations and others which are related
to the nature of the semiconductor equipment industry and to the economics of the countries in which the Company operates. Although the cash requirements fluctuate based on the timing and extent of
these factors, the Company believes that the liquidity provided by operating cash flows, grants, existing cash resources and financing arrangements, is sufficient to fund working capital, capital
expenditures and other ongoing business requirements. In a market and economic environment currently experienced by AIXTRON characterized by 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, 2012 should provide additional sources of liquidity if required.

As
of December 31, 2012, € 109.8 million (2011: € 122.3 million; 2010:
€ 202.6 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 material deposition technology remains AIXTRON's core
competency. It is an area where the Company has developed a global leadership position. AIXTRON Management intends to keep this focus and positioning while at the same time expanding this core
know-how into both existing and emerging markets. AIXTRON remains committed to investing in R&D to not only maintain the Company's leading technology position in MOCVD equipment but also
to enable greater penetration into markets such as for power management, organic semiconductors and next generation memory applications.

AIXTRON
has a leading position in the area of special Silicon Carbide ("SiC") epitaxial equipment utilizing its Hot-Wall Planetary Reactor® technology. This
leading position will be further strengthened over the coming years with the expected adoption by customers of AIXTRON's 6 × 6 inch multiwafer platform. Customers in Europe,
USA, China, Japan and South Korea are already using AIXTRON's SiC equipment for the production of low energy consuming, fast-switching diodes. These device applications can be found in
power solutions for computer servers, flat panel TVs and solar inverters.

Furthermore,
the Company is active in supplying equipment to the power electronics market for the production of Gallium Nitride-on-Silicon
("GaN-on-Si") devices, which are expected to progressively replace many conventional Silicon power management devices over the next few years.

AIXTRON
will also continue to implement its strategy to address the large area organic semiconductor application markets with the Company's deposition technology for organic materials,
OVPD® and PVPD®.

The
Company also aims to make further inroads into the research community with its PECVD technology, aimed at manufacturing Carbon Nanostructures including Carbon Nanotubes, Carbon
Nanowires and Graphene.

AIXTRON's
Silicon team has developed the high throughput QXP-8300 ALD deposition tool aimed specifically at providing innovative solutions for the next-generation
memory and logic device markets. AIXTRON's QXP product has been recently production qualified by a major Korean chip manufacturer and AIXTRON expects to generate significant revenues with this
technology as the industry moves to and beyond the 28nm technology node.

33

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Table of Contents

This
outlook may vary, positively or negatively from our expectations due to the risks and opportunities described elsewhere in the Report. See "Item 3: Key
InformationRisk Factors" and "Forward Looking Statements" at the beginning of the Report.

E.    Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely 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, 2012:

(million EUR)

Total

Less than
1 year

1-3 years

3-5 years

More than
5 yearsOperating lease commitments


10.09


3.58


3.74


2.33


0.44Purchase commitments


33.88


33.88


0.00


0.00


0.00Total contractual obligations


43.97


37.46


3.74


2.33


0.44


Commitments for capital expenditures were € 437 thousand as of December 31, 2012 (December 31,
2011: € 4.2 million; December 31, 2010: € 6.5 million).

No
obligations for funding of pension plans existed as of December 31, 2012 (December 31, 2011: € 0; December 31, 2010:
€ 17 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
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

34

---



Table of Contents

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:

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 estimated the fair value of outstanding installation services based on past experience. 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".

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.

As
disclosed in Item 18 "Financial StatementsNote 3. Segment Reporting", during the years 2012 and 2011 the Company incurred expenses of
€ 40.9 million and € 41.6 million respectively, and in 2010 an income of € 5.9 million
arising mainly from changes to past assumptions concerning excess and obsolete inventories.

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 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

In the current year, the following new and revised standards have been adopted. Their adoption has not had any significant impact on
the amounts reported in these financial statements.



The
company has applied IFRS 13 in advance of its effective date. The standard defines fair value; sets out in a single IFRS a framework for measuring fair value; and requires
disclosures about fair value measurements. The application of the new standard results in a change in the method of measuring the fair value of goodwill from a discounted cash flow model based on
internal projections to a valuation based on the company's quoted share price, which is observable data in an active market. The standard also requires certain disclosures associated with fair values.



The
amendments increase the disclosure requirements for certain financial instruments.



This
standard applies to deferred taxes on investment properties.

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



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 (SE VO) 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.

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Table of Contents

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 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, 2012 AIXTRON's Supervisory Board consisted of the following six individuals:

Name

Position

Member
since

End of
Term

Year of
birthKim Schindelhauer (1)(2)(3)(4)

Chairman of the Supervisory Board


2002


AGM 2016


1953Dr. Holger Jürgensen (1)(2)(4)

Deputy Chairman of the Supervisory Board


2002


Resigned as of
January 30, 2013


1957Prof. Dr. Wolfgang Blättchen (1)

Chairman of the Audit Committee, Independent Financial Expert (5)


1998


AGM 2016


1953Prof. Dr. Petra Denk (2)(3)

Chair of the Technology Committee


2011


AGM 2016


1972Karl-Hermann Kuklies




1997


Resigned as of
January 30, 2013


1953Prof. Dr. Rüdiger von Rosen (1)(3)

Chairman of the Nomination Committee


2002


AGM 2016


1943


(1)Member
of the Audit Committee(2)Member
of the Technology Committee(3)Member
of the Nomination Committee(4)Former
AIXTRON Executive Board Member(5)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

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also
decides whether there should be a Chairman and whether deputy members or a Deputy Chairman should be appointed.

As
of December 31, 2012, 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


Will resign as of
February 28, 2013


October 20, 1953Wolfgang Breme

Executive Vice President and Chief Financial Officer


April 1, 2005


March 31, 2016
(1)

May 15, 1960Dr. Bernd Schulte

Executive Vice President and Chief Operating Officer


April 1, 2002


March 31, 2015


August 22, 1962


(1)Was
reappointed as of December 5, 2012




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

B.    Compensation

Executive Board Remuneration

The remuneration system summarized below pursuant to Section 120(4) of the German Stock Corporation Act was approved by the
Annual Shareholders' Meeting on May 18, 2010.

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.

The
level of remuneration of AIXTRON's Executive Board members 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 are taken into account when calculating the remuneration.

Executive
Board remuneration currently consists of three components: fixed remuneration (including benefits in kind and payments for individual private pension insurance plans), a
variable bonus, and a share-based payment.

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. Payments in kind are made, chiefly consisting of company car usage and payments for individual private pension insurance plans.

38

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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 in total. The modified consolidated net income for the year is obtained from the Company's Consolidated
Financial Statements (IFRS) certified by the auditor, less a consolidated loss carry forward figure and those amounts that are to be allocated to 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 may 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 this report.

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
its meeting on December 5, 2012, the Supervisory Board decided to renew the contract of Wolfgang Breme, Chief Financial Officer and Executive Board member. The contract, which
would expire on March 31, 2013, has been prolonged until March 31, 2016. In this context, a new compensation scheme for this and future management contracts was agreed upon. The new
compensation scheme takes into account, in particular, the recommendations of the German Corporate Governance Code to apply a multi-year performance assessment. The scheme envisages the
provision of variable bonuses which will be paid half through a monetary element and half in shares. That part of the variable bonus payable in shares will be deferred for three years before being
granted to the Board members. The shares will be granted from treasury shares. The new compensation structure takes account of both positive and negative developments and is oriented toward a
sustainable growth of the Company. The new remuneration regime will be submitted to a vote at the Annual General Meeting on May 23, 2013.

In
fiscal year 2012, the total fixed and variable remuneration of the Executive Board (including benefits in kind and pension allowance) totaled € 1,124,274
(2011: € 7,623,754; 2010: € 7,620,046). In fiscal year 2012, the Executive
Board was not granted any options (2011: 0; 2010: 156,000). The division between the individual members of the Executive Board for the years 2010 to 2012 is presented in the table below.

Executive Board Member

Year

Fixed*

Variable

Total
fixed and
variable
remuneration

Options
granted

Grant date
fair value of
options

Total EB
Remuneration(EUR)

(EUR)

(EUR)

(number)

(EUR)

(EUR)Paul Hyland


2012


437,334


0


437,334


0


0


437,3342011


436,814


2,888,890


3,325,704


0


0


3,325,7042010


434,191


2,888,890


3,323,081


52,000


461,240


3,784,321Wolfgang Breme


2012


309,413


0


309,413


0


0


309,4132011


309,413


1,805,555


2,114,968


0


0


2,114,9682010


308,968


1,805,555


2,114,523


52,000


461,240


2,575,763Dr. Bernd Schulte


2012


377,527


0


377,527


0


0


377,5272011


377,527


1,805,555


2,183,082


0


0


2,183,0822010


376,887


1,805,555


2,182,442


52,000


461,240


2,643,682Total


2012


1,124,274


0


1,124,274


0


0


1,124,2742011


1,123,754


6,500,000


7,623,754


0


0


7,623,7542010


1,120,046


6,500,000


7,620,046


156,000


1,383,720


9,003,766


*Incl.
benefits in kind and allowance for pensions


As of December 31, 2012, the AIXTRON Executive Board held a total of 914,758 Company stock options to subscribe to a total of 923,516
ordinary shares of the Company (December 31, 2011: 962,516 shares; December 31, 2010: 962,516 shares). The number of shares underlying the options are set out

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below.
The 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 2012


0


0


0


0Nov 2011


0


0


0


0Nov 2010


52,000


0


461,240


26.60


Nov 2020Nov 2009


52,000


26,000


448,240


24.60


Nov 2019Nov 2008


52,000


39,000


92,040


4.17


Nov 2018Dec 2007


52,000


52,000


225,680


10.09


Dec 2017May 2006


55,000


55,000


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 2012


0


0


0


0Nov 2011


0


0


0


0Nov 2010


52,000


0


461,240


26.60


Nov 2020Nov 2009


52,000


26,000


448,240


24.60


Nov 2019Nov 2008


13,000


0


23,010


4.17


Nov 2018Dec 2007


52,000


52,000


225,680


10.09


Dec 2017May 2006


55,000


55,000


84,150


3.83


Nov 2016Dr. Bernd Schulte


Nov 2012


0


0


0


0Nov 2011


0


0


0


0Nov 2010


52,000


0


461,240


26.60


Nov 2020Nov 2009


52,000


26,000


448,240


24.60


Nov 2019Nov 2008


52,000


39,000


92,040


4.17


Nov 2018Dec 2007


52,000


52,000


225,680


10.09


Dec 2017May 2006


55,000


55,000


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








923,516


579,486


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 in 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 2012, the Executive Board members exercised 39,000 options (2011: 0; 2010: 0), and 0 expired (2011: 0; 2010: 0).

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 (a total of € 120,000 per year in 2012, 2011 and 2010) paid by AIXTRON and included in 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. The non-recurring net expenditure recorded for 2010 amounted to € 926,383. There was
no expenditure recorded in 2011 and 2012.

The
Executive Board members receive no loans from the Company.

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Table of Contents

Supervisory Board Remuneration

The remuneration of the Supervisory Board is regulated by the Articles of Association of AIXTRON SE, as defined and approved by the
Annual Shareholders' Meeting of May 19, 2011.

Accordingly,
the annual fixed compensation for individual members of the Supervisory Board is € 25,000. The Chairman's compensation is three times this
amount and the Deputy Chairman's one and a half times the amount received by a regular member of the Supervisory Board.

The
members of the Supervisory Board also receive, in aggregate, a variable compensation of 1% of AIXTRON's balance sheet profit (Bilanzgewinn), less an amount corresponding to 4% of the
paid-in contributions to the share capital. The Chairman of the Supervisory Board receives 6/17 of the variable compensation, the Deputy Chairman 3/17, and
each other member of the Supervisory Board 2/17. The variable compensation is limited to the fourfold of the fixed compensation per Supervisory Board member. In addition, committee
members receive an attendance fee of € 2,000 for attending a committee meeting, with the Chairman of the committee receiving triple this amount. The total annual
attendance fee per Supervisory Board member is limited to one and a half times that individual's fixed compensation.

In
a separate resolution approved by the Annual General Meeting, the remuneration of the first Supervisory Board of AIXTRON SE was approved to reflect the above described provision for
the period from January 1, 2011 to May 19, 2011 inclusive.

In
fiscal year 2012, the compensation of the Supervisory Board totaled € 302,500 (2011: € 1,024,933; 2010:
€ 801,000). The Supervisory Board compensation for the years 2010 to 2012 can be broken down as follows:

Supervisory Board Member

Year

Fixed

Variable

Attendance
Fee

Total(EUR)

(EUR)

(EUR)

(EUR)Kim Schindelhauer (1)(2)(3)(4)(5)


2012


75,000


0


18,000


93,000(Chairman of the Supervisory Board)


2011


75,000


257,333


16,000


348,3332010


54,000


216,000


7,500


277,500Dr. Holger Jürgensen (1)(2)(3)(5)(6)


2012


37,500


0


16,000


53,500(Deputy Chairman of the Supervisory Board)


2011


37,500


128,667


16,000


182,1672010


27,000


108,000


9,000


144,000Prof. Dr. Wolfgang Blättchen (1)(2)


2012


25,000


0


24,000


49,000(Chairman of the Audit Committee)


2011


25,000


85,778


24,000


134,7782010


18,000


72,000


13,500


103,500Prof. Dr. Petra Denk (3)(4)


2012


25,000


0


26,000


51,000(Chair of the Technology Committee)


2011


15,548


53,347


23,322


92,217(from May 19, 2011)


2010


0


0


0


0Karl-Hermann Kuklies (6)


2012


25,000


0


0


25,0002011


25,000


85,778


0


110,7782010


18,000


72,000


0


90,000Prof. Dr. Rüdiger von Rosen (1)(4)


2012


25,000


0


6,000


31,000(Chairman of the 2012 Nomination Committee)


2011


25,000


85,778


0


110,7782010


18,000


72,000


0


90,000Joachim Simmroß (1)


2012


0


0


0


0(until May 19, 2011)


2011


9,452


32,431


4,000


45,8832010


18,000


72,000


6,000


96,000Total


2012


212,500


0


90,000


302,5002011


212,500


729,111


83,322


1,024,9332010


153,000


612,000


36,000


801,000


(1)Member
of the Audit Committee(2)Member
of the 2011 Nomination Committee(3)Member
of the Technology Committee (since May 19, 2011)(4)Member
of the 2012 Nomination Committee(5)Former
Member of the AIXTRON Executive Board(6)Resigned
from the Supervisory Board as of January 30, 2013


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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 2012.

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 financial statements 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 (until January 30, 2013)
Dipl.-Kfm. Kim Schindelhauer
Prof. Dr. Rüdiger von Rosen (from February 2, 2013)


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.

Since
May 19, 2011, the Company has established a Technology Committee. The Technology Committee is composed of three members. It deals in particular with issues involving
AIXTRON's market positioning, product planning and developments, potential technology acquisitions or other diversification issues. The Committee Chair regularly reports to the Supervisory Board on
the activities of the Technology Committee. The members of the Technology Committee are currently Kim Schindelhauer and Prof. Dr. Petra Denk as Dr. Holger Jürgensen
resigned from the Supervisory Board as of January 30, 2013.

The
Company has established a Nomination Committee on December 5, 2012. The Nomination Committee is composed of three members. In the event of needing to replace one of the
Supervisory Board members, the Committee makes nomination proposals to the Supervisory Board plenum. On January 30, 2013 Dr. Holger Jürgensen as well as
Karl-Hermann Kuklies resigned from their offices with immediate effect. The Nomination Committee is elaborating proposals for the replacement of the vacant positions that shall be proposed
by the Supervisory Board on the Annual General Meeting on May 23, 2013.

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,

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Table of Contents

2013,
unless otherwise specified, 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

*


224,000Prof. Dr. Petra Denk


129

*


0Paul Hyland


0

*


359,350Dr. Holger Jürgensen(7)


7,650,000
(4)
7.50%


0Karl-Hermann Kuklies(7)


3,600
(5)
*


0Prof. Dr. Rüdiger von Rosen


1,300

*


0Kim Schindelhauer


766,500

*


0Dr. Bernd Schulte


0

*


331,408All Supervisory and Executive Board members as a group


8,421,529

8.26%


914,758


*Less
than 1%.(1)Unless
indicated otherwise the address is: c/o AIXTRON SE, Kaiserstrasse 98, 52134 Herzogenrath, Germany.(2)Unless
indicated otherwise 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.(3)Applicable
percentage is based on 101,975,023 shares of common stock outstanding as of February 26, 2013 (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 B.V.
Dr. Jürgensen resigned from the Supervisory Board as of January 30, 2013(5)Includes
1,900 shares owned indirectly by Mr. Kuklies's wife and 1,700 shares owned by his daughter. Mr. Kuklies resigned from the Supervisory
Board as of January 30, 2013(6)Mr. Schindelhauer,
directly or indirectly, beneficially owns 766,500 shares through his ownership stake in SBG Beteiligung GmbH.(7)Information
as of January 30, 2013.


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 2012, Supervisory Board member Mr. Kim Schindelhauer reported he had sold through his
ownership stake in SBG Beteiligung GmbH a total of 133,500 shares of AIXTRON and Mr. Wolfgang Breme reported he had sold a total of 39,000 shares after exercising stock options from
AIXTRON's stock option program 2007.

Employee Options

Share Option Programs

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 American Depositary Shares ("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 2012, 185,496 stock options (2011: 609,661; 2010: 513,014 options) were exercised, resulting in delivery of in total 185,496 ordinary shares. Under the AIXTRON stock
option plan 2007, Tranche 2012, 31,000 new stock options were granted in fiscal year 2012 (2011 tranche: 14,000 grants; 2010 tranche: 779,950 grants under the stock option plan 2007
respectively). Half of those granted options (under the stock option plan 2007) 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. In accordance with the Act on the
Appropriateness of Management Board Remuneration (VorstAG Gesetz zur Angemessenheit der Vorstandsvergütung), the options under the 2012 Stock Option Plan can only be

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exercised,
at the earliest point in time, after a waiting period of four years. In addition to an absolute performance target, stock options issued to members of the Executive Board contain a relative
exercise
threshold with the TecDAX as a comparison parameter. The maximum term of the stock options is 10 years.

Dec 31,
2012

Exercise

Expired/
Forfeited

Allocation

Dec 31,
2011AIXTRON ordinary sharesstock options


3,611,098


185,496


86,570


31,000


3,852,164underlying shares


4,274,126


185,496


91,019


31,000


4,519,641AIXTRON ADSstock options


6,610


0


0


0


6,610underlying shares


6,610


0


0


0


6,610


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.

Item 7:    Major Shareholders and Related Party Transactions

A.    Major Shareholders

As of January 30, 2013, Dr. Holger Jürgensen, one of the Company's founders, directly or indirectly,
beneficially owned 7,650,000 or 7.50% of AIXTRON's ordinary shares through his ownership stake in Camma B.V. 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, 2012, the Bank of New York Mellon, N. Y. held 9,156,247 ordinary shares as of December 31, 2012, represented
by 9,156,247 ADSs, or 8.98% of AIXTRON's shares outstanding.

As
of December 31, 2012, the following investors had shareholdings in AIXTRON SE exceeding the 3% reporting threshold (shares held as of the reporting date, pursuant to
Section 26 (1) of the German Securities Trading Act/WpHG):

Allianz
Global Investors Europe GmbH, Frankfurt am Main, Germany, 5,220,959 shares or 5.12% of AIXTRON's shares outstanding

Baillie
Gifford & Co, Edinburgh, UK, 4,973,896 shares or 4.88% of AIXTRON's shares outstanding

Vanguard
International Growth Fund, Wayne, USA, 3,377,229 shares or 3.31% of AIXTRON's shares outstanding

Generation
Investment Management LLP, London, UK, 3,089,151 shares or 3.03% 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 3% or more of AIXTRON's outstanding
shares as of February 22, 2013.

As
of December 31, 2012, AIXTRON had 154 registered ADS holders, and an estimated 6,518 beneficial holders of ADSs. As of February 20, 2013, AIXTRON had 52,607 shareholders
registered in its share register of ordinary shares, and U.S. record holders held approximately 8,923,484 or 8.8% of AIXTRON's outstanding shares.

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 6.B. "Compensation" and Item 18 "Financial
StatementsNote 30. Identity of related parties". During 2012, there were no outstanding personal loans or guarantees to members of the Executive Board or the Supervisory Board.

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C.    Interests of Experts and Counsel

Not applicable.

Item 8:    Financial Information

A.    Consolidated Financial Statements and Other Financial Idnformation

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 € 206.5 million or 90.63% of the AIXTRON's total revenues
for the year ended December 31, 2012 (2011: € 584.6 million or 95.69%; 2010: € 752.7 million or 96.04%). Revenues from
AIXTRON's Asian-based customers accounted for € 177.5 million or 77.90% of the Company's total revenues for the year ended December 31, 2012 (2011:
€ 547.8 million or 89.66%; 2010: € 716.9 million or 91.46%).

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.

The
legal proceeding issued in 2008 between International Rectifier Corporation ("I.R."), of El Segundo, California, USA and AIXTRON SE was settled by agreement in January 2011. I.R.
withdrew its action and financial claims against AIXTRON in exchange for certain disclosures and witness statements provided by AIXTRON. At I.R's request the Court dismissed the action against
AIXTRON. No further liability exists.

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 loss in accordance with German generally accepted accounting principles (German GAAP), based on the German
Commercial Code HGB, of € -51.6 million for 2012 (2011: € 97.0 million profit; 2010:
€ 124.9 million profit).

AIXTRON's
Executive and Supervisory Boards will propose to the shareholders' meeting that the 2012 loss should be carried forward and consequently no dividend payment should be made for
2012. For the fiscal year 2011, the Company had distributed a dividend of € 25.4 million or € 0.25 per share
(€ 60.7 million or € 0.60 for 2010).

B.    Significant Changes

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

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."

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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)High

LowAnnual2008


10.39


4.762009


25.29


3.152010


28.87


18.992011


33.35


8.382012


14.45


8.71Quarterly2011First quarter


33.48


27.65Second quarter


31.40


22.70Third quarter


24.65


11.00Fourth quarter


11.90


8.382012First quarter


14.45


10.26Second quarter


14.01


10.61Third quarter


12.54


9.81Fourth quarter


10.40


8.71Monthly2012July


11.76


9.81August


12.54


10.81September


12.10


10.28October


10.40


9.79November


10.21


9.26December


9.57


8.712013January


11.01


9.17February (through February 15, 2013)


9.98


9.38


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Closing Price
per ADR(USD)High

LowAnnual2008


16.08


6.812009


38.24


3.882010


38.56


23.112011


44.88


11.262012


19.15


11.42Quarterly2011First quarter


44.50


36.89Second quarter


44.88


32.65Third quarter


35.32


14.52Fourth quarter


16.43


11.262012First quarter


19.15


13.56Second quarter


18.80


13.24Third quarter


15.89


11.99Fourth quarter


13.40


11.42Monthly2012July


14.52


11.99August


15.41


12.97September


15.89


13.00October


13.40


12.71November


13.17


11.91December


12.52


11.422013January


14.55


12.11February (through February 15, 2013)


13.85


12.86


On February 15, 2013, the closing price in Germany per ordinary share was € 9.58.

On
February 15, 2013, the closing price per ADS on NASDAQ Global Select Market was USD 12.81.

B.    Plan of Distribution

Not applicable

C.    Markets

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

D.    Selling Shareholders

Not applicable.

E.    Dilution

Not applicable

F.     Expenses of the Issue

Not applicable

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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 May 16, 2012 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 € 101,975,023 as per January 31, 2013. It is composed of
101,975,023 no-par value registered shares.

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 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.

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

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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.

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. 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 federal gazette
(Bundesanzeiger) at least one month before the last day on which the shareholders must deposit their shares for the meeting.

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 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:



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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.

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%, 15%, 20%, 25%, 30%, 50% or 75% voting rights thresholds in a company to notify the company and the Federal Supervisory Agency (Bundesanstalt für
Finanzdienstleistungsaufsicht) in writing within four trading 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. In addition, anyone who holds, directly or indirectly, financial
or other instruments that (i) grant an entitlement to acquire voting shares issued by a company whose home member state is the Federal Republic of Germany or (ii) which do not grant an
enforceable right to acquire such shares, but still make such acquisition (economically) possible must, without undue delay, notify the issuer and the Federal Supervisory Agency if the thresholds
mentioned above, with the exception of the 3% threshold, have been reached, exceeded or fallen below. In making the threshold calculations, positions in voting rights must be aggregated with positions
in such financial instruments.

Notices, Paying Agent and Depository

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

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.

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 2013 and states that the Company has been in full compliance with the Corporate Governance Code. It is posted 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 Compliance Code of Conduct applicable to the Company's Executive and Supervisory Boards, as well as all employees in all Company offices throughout the
world and holds them accountable to conduct that is required to be conscientious and in conformity
with the law. Amongst the topics addressed, this Code covers the following issues: responsibility and respect towards society 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, working in a professional manner, reliability and fairness in all business relationships, compliance with guidelines
on giving/taking unfair advantage, dealing with insider information and the treatment of Company property. In addition, due to particular specifications set by NASDAQ, AIXTRON SE has a separate
NASDAQ-Code of Conduct. The NASDAQ-Code of Conduct is

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applicable
to the Company's Executive Board, as well as all employees in all Company offices throughout the world and provides more details on certain ethical requirements of the behavior of AIXTRON's
employees described in the Compliance Code of Conduct. A copy of each of the Compliance Code of Conduct and NASDAQ-Code of Conduct is available on the AIXTRON website www.aixtron.com under
the section Investors / Corporate Governance / Code of Conduct.

In
2010, AIXTRON first issued a Compliance Manual which applies to all members of the Company's senior management. This manual, which was updated in 2012, is the basis for the principles
of the Compliance Code of Conduct and provides a detailed view on all important areas of compliance and requirements deriving therefrom, applicable to the Executive Board, the Supervisory Board and
the employees. It is regularly being updated to reflect legal changes. By signing each quarter, a representation letter, the senior managers thereby confirm that within their area of responsibility
all compliance requirements were respected. Furthermore, they declare that in case of an update of the Compliance Manual, they will take note of the updated version, follow and communicate its
contents within their area of responsibility.

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, 2012, 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 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.

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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, 2012, 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 2012 were entered in
the ordinary course of business.

Employment contracts of current members of the Executive Board

The Company's employment contract with Paul 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 will resign from office effective as of
February 28, 2013.

The
Company's employment contract with Wolfgang Breme, effective as of April 1, 2005 and amended as of April 24, 2009 and December 5, 2012, provides for a base
salary of € 300,000 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. Wolfgang Breme receives half of his variable bonus in shares of the Company, which are
transferred to him after expiration of a three-year waiting period. 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, 2016.

The
Company's employment contract with Dr. 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.

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

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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 the purchase, ownership and disposition of AIXTRON's shares or ADSs and the procedures to follow to obtain a refund of German taxes withheld from dividends.

Taxation of the Company in Germany

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

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In
addition, German corporations are by virtue of their legal form subject to a municipal profit-related German Trade Tax. Trade Tax is calculated on the basis of the taxable Corporation
Tax income as shown in the annual statutory profit and loss accounts of the corporation which, however, is subject to certain particular Trade Tax add-backs and deductions. The effective
Trade Tax rate applicable depends on the municipality in which the corporation maintains a permanent establishment and ranges between approximately 7% and 17%.

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

Withholding Tax on Dividends

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 € 801 for individuals and
€ 1,602 for married couples. Further investment income related expenses will not be tax deductible.

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

Special Tax Rules for U.S. Shareholders

Under the 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% 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).

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Withholding Refund Procedure for U.S. Shareholders

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

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

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.

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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 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.

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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 therefrom, 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 at the lower tax rate applicable to long-term capital gains (i.e., gains from the sale
of capital assets held for more than one year). In order to qualify for the preferential rate of taxation, certain requirements must be met, including certain holding period requirements and the
absence of certain risk reduction transactions with respect to the shares or ADSs. Such dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders.
Subject to the discussion below under "Passive Foreign Investment Company Considerations", to the extent, if any, that the amount of any distribution AIXTRON makes exceeds its current and
accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a tax-free return of the U.S. Holder's adjusted tax basis in the shares
or ADSs and thereafter as capital gain. AIXTRON does not maintain calculations of its earnings and profits under U.S. federal income tax principles.

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

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

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

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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, 2012. AIXTRON's status in future years will depend on its assets and activities in those years. AIXTRON has no reason to believe that its assets or activities will change in a
manner that would cause the Company to be classified as a PFIC, but there can be no assurance that AIXTRON will not be considered a PFIC for any taxable year. If AIXTRON were a PFIC, U.S. Holders
generally would 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.

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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.

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.

Foreign Asset Reporting

Certain U.S. Holders who are individuals are required to report information relating to an interest in shares or ADSs, subject to
certain exceptions (including an exception for shares or ADSs held in accounts maintained by U.S. financial institutions). U.S. Holders are urged to consult their tax advisors regarding their
information reporting obligations, if any, with respect to their ownership and disposition of shares or ADSs.

Medicare Tax

For taxable years beginning after December 31, 2012, a U.S. Holder that is an individual or estate, or a trust that does not
fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) such U.S. Holder's "net investment income" (or undistributed "net investment
income" in the case of estates and trusts) for the relevant taxable year and (2) the excess of such U.S. Holder's modified adjusted gross income for the taxable year over a certain threshold
(which in the case of individuals will be between $125,000 and $250,000, depending on the individual's circumstances). A U.S. Holder's net investment income will generally include its gross dividend
income and its net gains from the disposition of the ADSs, unless such dividends or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business
that consists of certain passive or trading activities). If you are a U.S. Holder that is an
individual, estate or trust, you are urged to consult your tax advisor regarding the applicability of this tax to your income and gains in respect of your investment in the ADSs.

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.

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H.    Documents on Display

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

I.     Subsidiary Information

Not applicable.

Item 11:    Quantitative and Qualitative Disclosure about Market Risk

The global nature of AIXTRON's businesses exposes the Company to market risks resulting from changes in foreign currency exchange rate
and interest rates. Accordingly, changes in foreign currency exchange rates and interest rates may adversely affect its operating results and financial condition. AIXTRON 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 presentation 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.

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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 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

2012

2011

2010(EUR thousands)Revenues


(13,959
)

(48,844
)

(64,282
)Net Result


(8,767
)

(13,758
)

(16,205
)




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

2012

2011

2010(EUR thousands)Revenues


0


0


(87
)Net Result


3,910


8,075


5,940




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

2012

2011

2010(EUR thousands)Revenues


13,959


48,844


64,282Net Result


8,767


13,758


16,205




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

2012

2011

2010(EUR thousands)Revenues


0


0


87Net Result


(3,910
)

(8,075
)

(5,940
)


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 generally 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 generally 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 2012, the Company received € 2.3 million (2011: € 3.4 million; 2010:
€ 2.8 million) of 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 ("Bank of New York Mellon"), dated February 7, 2011.

As
provided for in the American Depositary Receipt included as Exhibit A to the amended and restated deposit agreement among AIXTRON, 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

63

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Table of Contents

relation
to the ownership of depositary receipts held in the Company's ADS Program, which amounts are payable to the Depositary.

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
2012, Bank of New York Mellon granted reimbursements in the amount of USD 150,000 to AIXTRON.

Indirect Payments made by the Depositary to AIXTRON

As part of its service to AIXTRON, Bank of New York Mellon has 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.

64

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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, 2012, 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, 2012.

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

65

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Table of Contents

Attestation Report of the 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, 2012, 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, 2012, 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, 2012 of the Company and our report dated February 28, 2013 expressed an unqualified opinion on those consolidated financial statements.

/s/ Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft

Deloitte & ToucheGmbH
WirtschaftsprüfungsgesellschaftDuesseldorf, Germany, February 28, 2013

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Table of Contents

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2012 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 2011 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, 2012 and 2011 by AIXTRON's independent principal accountant,
Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates are as follows:

Type of Fees

Dec 31,
2012

Dec 31,
2011Million EURAudit fees


0.73


0.75Audit-related fees


0.04


0.07Tax fees


0.23


0.16All other fees


0.00


0.00Total


0.99


0.98


In
the above table, "audit fees" are the aggregate fees for professional services in connection with the audit of the Company's Consolidated Financial Statements, reviews of interim
financial statements, as well as audits of statutory financial statements of AIXTRON and its subsidiaries. Also included in "Audit fees" are amounts for attestation services in relation to regulatory
filings and other compliance requirements. "Audit-related fees" are fees for accounting advice on actual or contemplated transactions, due diligence engagements related to acquisitions, attestation
regarding compliance with certain agreements and other agreed-upon procedures. "Tax fees" are fees for tax advice on actual or contemplated transactions, tax compliance and expatriate
employee tax services. "All Other Fees" are miscellaneous items. For more information, refer to Item 18 "Financial StatementsNote 33. Auditors' fees".

67

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Table of Contents

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 16, 2012, 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, 2012.

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 2012 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.

Item 16H:    Mine Safety Disclosure

Not Applicable.

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Table of Contents

PART III

Item 17:    Financial Statements

Not applicable.

Item 18:    Financial Statements

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

Item 19:    Exhibits

Exhibit
Number

Description of Exhibit1.1

Articles of Association (Satzung) as amended January 25, 2013.2.1

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).4.5

Contract between AIXTRON and Mr. Wolfgang Breme, effective April 1, 2013. (English translation)4.6

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).4.7

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 2011.12.1

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.


69

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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, 2013

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 statements of financial position of AIXTRON SE and subsidiaries (the "Company") as of December 31, 2012 and 2011, and the related
consolidated income statements, consolidated statements of other comprehensive income, consolidated statements of cash flow, and consolidated statements of changes in equity for each of the three
years in the period ended December 31, 2012. 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 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 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, 2012 and
2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, 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, 2012, 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, 2013 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft

Deloitte & ToucheGmbH
WirtschaftsprüfungsgesellschaftDuesseldorf, Germany, February 28, 2013

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Table of Contents

CONSOLIDATED INCOME STATEMENT

Notes

2012

2011

2010in EUR thousandsRevenues


3


227,832


610,960


783,775Cost of sales





227,402


379,529


372,018Gross profit





430


231,431


411,757Selling expenses





34,830


32,138


48,935General administration expenses





19,551


33,978


30,076Research and development costs


4


72,862


50,410


46,126Other operating income


5


3,121


2,394


6,659Other operating expenses


6


8,575


4,419


17,769Operating result





(132,267
)

112,880


275,510Finance Income





2,353


3,393


2,851Finance Expense





29


1,306


141Net Finance Income


8


2,324


2,087


2,710Result before taxes





(129,943
)

114,967


278,220Taxes on income/loss


9


15,493


35,431


85,724Profit or loss for the year





(145,436
)

79,536


192,496Thereof attributable to the owners of Aixtron SE





(145,436
)

79,536


192,496Basic earnings or loss per share (EUR)


21


(1.44
)

0.79


1.93Diluted earnings or loss per share (EUR)


21


(1.44
)

0.78


1.89


See
accompanying notes to consolidated financial statements.

F-1

---



Table of Contents

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

Note

2012

2011

2010in EUR thousandsProfit or loss for the year





(145,436
)

79,536


192,496Losses/gains from derivative financial instruments before taxes


20


9,226


(9,032
)

1,224Deferred taxes on derivative financial instruments


14


(2,788
)

2,934


(449
)Currency translation adjustment





1,512


6,930


1,454Other comprehensive income





7,950


832


2,229Total comprehensive income or loss for the year





(137,486
)

80,368


194,725Thereof attributable to the owners of Aixtron SE





(137,486
)

80,368


194,725


See
accompanying notes to consolidated financial statements.

F-2

---



Table of Contents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note

31/12/2012

31/12/2011in EUR thousandsAssetsProperty, plant and equipment


11


97,552


96,176Goodwill


12


64,346


64,078Other intangible assets


12


4,218


6,205Other non-current assets


13


677


720Deferred tax assets


14


5,388


28,347Tax receivables


15


236


291Total non-current assets





172,417


195,817Inventories


16


125,986


184,553Trade receivablesless allowance kEUR 1,819(2011: kEUR 389)


17


37,291


78,630Current tax receivables


10


7,127


8,150Other current assets


17


7,660


14,894Other financial assets


18


109,756


122,323Cash and cash equivalents


19


99,734


172,892Total current assets





387,554


581,442Total assets





559,971


777,259Liabilities and shareholders' equityFully paid capitalNumber of shares: 100,896,098 (2011: 100,710,602)





100,896


100,711Additional paid-in capital





278,952


274,816Retained earnings





92,725


263,316Cumulated comprehensive income and expense recognised in equity





(2,553
)

(10,503
)Total shareholders' equity


20


470,020


628,340Other non-current payables





117


217Other non-current provisions


24


1,206


0Deferred tax liabilities


14


123


140Total non-current liabilities





1,446


357Trade payables


25


9,683


20,527Advance payments from customers





45,969


64,900Other current provisions


24


28,204


36,558Other current liabilities


25


3,783


20,076Current tax payables


10


770


6,404Deferred revenues





96


97Total current liabilities





88,505


148,562Total liabilities





89,951


148,919Total liabilities and shareholders' equity





559,971


777,259


See
accompanying notes to consolidated financial statements.

F-3

---



Table of Contents

CONSOLIDATED STATEMENT OF CASH FLOW

Note

2012

2011

2010in EUR thousandsCash inflow / outflow from operating activitiesProfit or loss for the year





(145,436
)

79,536


192,496Reconciliation between profit or loss and cash inflow/outflow from operating activitiesExpense from share-based payments





3,439


5,177


3,645Depreciation and amortization expense





16,641


12,258


13,101Net result from disposal of property, plant and equipment





149


49


(1
)Deferred income taxes





22,855


(8,739
)

(5,053
)Other non-cash expenses





0


0


(3,669
)Change inInventories





59,571


(16,390
)

(75,870
)Trade receivables





41,435


9,524


(37,718
)Other assets





14,943


(13,653
)

(263
)Trade payables





(10,871
)

(19,274
)

16,425Provisions and other liabilities





(28,743
)

(2,132
)

16,935Deferred revenues





0


57


0Non-current liabilities





(89
)

(813
)

(1,146
)Advance payments from customers





(19,131
)

(51,945
)

28,815Cash inflow /outflow from operating activities





(45,237
)

(6,345
)

147,697Cash inflow/outflow from investing activitiesCost related to acquisitions





(234
)

0


0Capital expenditures in property, plant and equipment





(15,768
)

(27,184
)

(48,645
)Capital expenditures in intangible assets





(715
)

(2,978
)

(3,245
)Proceeds from disposal of fixed assets





342


77


105Bank deposits with a maturity of more than 90 days


18


11,934


80,537


(113,602
)Cash inflow/outflow from investing activities





(4,441
)

50,452


(165,387
)Cash inflow/outflow from financing activitiesDividend paid to shareholders





(25,155
)

(60,708
)

(15,100
)Proceeds from issue of equity shares





883


3,179


3,502Cash inflow/outflow from financing activities





(24,272
)

(57,529
)

(11,598
)Effect of changes in exchange rates on cash and cash equivalents





792


4,196


214Net change in cash and cash equivalents





(73,158
)

(9,226
)

(29,074
)Cash and cash equivalents at the beginning of the period





172,892


182,118


211,192Cash and cash equivalents at the endof the period


19


99,734


172,892


182,118Interest paid





(28
)

(140
)

(261
)Interest received





2,091


2,675


1,772Income taxes paid





(7,440
)

(54,651
)

(90,344
)Income taxes received





7,199


211


86


See
accompanying notes to consolidated financial statements.

F-4

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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 SEBalance at January 1, 2010


99,588


260,413


(12,449
)

(1,115
)

67,092


413,529Dividends to shareholders (EUR 0.15 per share)














(15,100
)

(15,100
)Share based Payments





3,645











3,645Issue of shares for options


513


2,989











3,502Currency 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 andJanuary 1, 2011


100,101


267,070


(10,995
)

(340
)

244,488


600,324Dividends to shareholders (EUR 0.60 per share)














(60,708
)

(60,708
)Share based Payments





5,177











5,177Issue of shares for options


610


2,569











3,179Net Income for the year














79,536


79,536Other comprehensive income








6,930


(6,098
)




832Total comprehensive income for the year


0


0


6,930


(6,098
)

79,536


80,368Balance December 31, 2011 and January 1, 2012


100,711


274,816


(4,065
)

(6,438
)

263,316


628,340Dividends to shareholders (EUR 0.25 per share)














(25,155
)

(25,155
)Share based Payments





3,438











3,438Issue of shares for options


185


698











883Net Loss for the year














(145,436
)

(145,436
)Other comprehensive income








1,512


6,438





7,950Total comprehensive income (Loss) for the year


0


0


1,512


6,438


(145,436
)

(137,486
)Balance December 31, 2012


100,896


278,952


(2,553
)

0


92,725


470,020


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 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 27, 2013 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 also the 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 the 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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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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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
requirement or

F-10

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant Accounting Policies (Continued)

historical
trailing twelve month usage. When the estimated future demand is less than the inventory, 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 fair value less
cost to sell or value in use 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 fair 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 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 the price that would be received in an orderly transaction in the principal market for such equipment at the measurement
date under current market conditions.

F-12

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant Accounting Policies (Continued)

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.

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.

F-13

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.     Significant Accounting Policies (Continued)

(t)    Recently issued accounting standards

In the current year, the following new and revised standards have been adopted. Their adoption has not had any significant impact on the amounts reported in these
financial statements.

IFRS 13Fair Value Measurement

The company has applied IFRS 13 in advance of its effective date. The standard defines fair value; sets out
in a single IFRS a framework for measuring fair value; and requires disclosures about fair value measurements. The application of the new standard results in a change in the method of measuring the fair value of goodwill from a discounted cash flow
model based on internal projections to a valuation based on the company's quoted share price, which is observable data in an active market. The standard also requires certain disclosures associated with fair values.Amendments to IFRS 7Financial Instruments: Disclosures

The amendments increase the disclosure requirements for certain financial instruments.Amendments to IAS 12Income Taxes

This standard applies to deferred taxes on investment properties.At the date of authorisation of these financial statements, the following Standards and
Interpretations which have not been applied in these financial statements were in issue but not yet effectiveIFRS 1 (amended)

Government LoansIFRS 7 (amended)

DisclosuresOffsetting Financial Assets and Financial LiabilitiesAnnual Improvements to
IFRSs

(2009-2011) CycleIFRS 9

Financial InstrumentsIFRS 10

Consolidated Financial StatementsIFRS 10, IFRS 12 and
IAS 27 (amended)

Investment EntitiesIFRS 11

Joint ArrangementsIFRS 12

Disclosure of Interests in Other EntitiesIAS 1(amended)

Presentation of Items of Other Comprehensive IncomeIAS 19 (revised)

Employee BenefitsIAS 27 (revised)

Separate Financial StatementsIAS 28 (revised)

Investments in Associates and Joint VenturesIAS 32 (amended)

Offsetting Financial Assets and Financial LiabilitiesIFRIC 20

Stripping Costs in the Production Phase of a Surface MineThe company does not expect that the adoption of these standards will have a material impact on the
financial statements of the Group in future periods.


F-14

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.     Segment Reporting and Revenues

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, 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.

Revenues
are recognised as disclosed in Note 2(n).

The
company values the revenue deferred for installation services, using a market based approach, based on observed transactions for all such contracts involving multiple elements where
revenue has been recognised during the financial year. This is level 2 within the fair value hierarchy described in IFRS 13. The fair value of the installation services is taken as the
most frequently observed (modal value) percentage of the contract price payable upon completion of the installation service. For 2012 the modal value was observed in approximately 90% of all
such contracts.

For
contracts where revenue is recognised in two elements, the same method is also used to determine the fair value of products delivered, which is taken to be the most frequently
observed (modal value) percentage of the contract value payable upon delivery of the equipment to the customer. This is also level 2 in the fair value hierarchy.

Segment revenues and results

2012

2011

2010in EUR thousandsEquipment revenues


176,865


556,275


735,723Spares and service


50,967


54,685


48,052Revenue from external customers


227,832


610,960


783,775Inventories recognized as an expense


113,083


255,357


298,872Obsolescence expense


40,947


41,602


(5,880
)Personnel expense


81,076


76,494


69,964Depreciation


11,165


8,960


8,732Impairment


2,756


0


0Amortization


2,720


3,540


4,369Other expenses


104,566


112,439


121,621Net foreign exchange losses


6,841


2,082


17,246Other operating income


(3,055
)

(2,394
)

(6,659
)Segment profit/loss


(132,267
)

112,880


275,510Investment revenue


2,353


3,393


2,851Finance Costs


(29
)

(1,306
)

(141
)Profit/loss before tax


(129,943
)

114,967


278,220


The accounting policies of the reportable segment are identical to 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.

F-15

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.     Segment Reporting and Revenues (Continued)

Segment assets and liabilities

Dec 31, 2012

Dec 31, 2011in EUR thousandsSemi-conductor equipment segment assets


337,730


445,256Unallocated assets


222,241


332,003Total Group assets


559,971


777,259




Dec 31, 2012

Dec 31, 2011in EUR thousandsSemi-conductor equipment segment liabilities


89,057


142,375Unallocated liabilities


894


6,544Total Group liabilities


89,951


148,919


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.

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 reduced by k€ 43 during 2012 (decreased by k€ 87 in 2011).

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

2012

2011

2010in EUR thousandsAsia


177,490


547,782


716,872Europe


21,352


26,322


31,066Americas


28,990


36,856


35,837Total


227,832


610,960


783,775


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

2012

2011

2010in EUR thousandsGermany


10,105


10,929


21,314USA


28,868


35,871


35,837Korea


29,759


57,744


125,489China


71,611


314,900


193,768Taiwan


47,147


157,446


376,899


Revenues from all foreign countries outside of Germany were k€ 217,727, k€ 600,031 and
k€ 762,461 for the years ended December 31, 2012, 2011 and 2010 respectively.

F-16

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.     Segment Reporting and Revenues (Continued)

Sales
to one customer amounted to 11% of Group revenues in 2012. In 2011 and in 2010 there were no customers who accounted for more than 10% of Group revenues.

Non-current assetsDec 31, 2012

Dec 31, 2011in EUR thousandsAsia


5,352


1,604Europe excluding Germany


14,459


14,873Germany


144,745


96,109USA


2,237


54,594Total Group non current assets


166,793


167,180


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€ 72,862, k€ 50,410 and k€ 46,126 for the years ended December 31, 2012, 2011 and 2010 respectively.

After
deducting project funding received and not repayable, net expenses for research and development were k€ 70,201, k€ 49,003
and k€ 42,588 for the years ended December 31, 2012, 2011 and 2010 respectively.

5.     Other operating income

2012

2011

2010in EUR thousandsResearch and development funding


2,661


1,407


3,538Income from resolved contract obligations








1,800Income from the reversal of provisions and the write-off of debts


78


92


741Gain from the disposal of fixed assets





17


4Compensation payments


11


2


154Foreign exchange gains


136


367


248Other


235


509


1743,121


2,394


6,659


The total amount of exchange gains and losses (see also note 6) recognised in profit or loss was a loss of
k€ (6,841), (2011 loss k€ (2,082); 2010 loss k€ (17,246)).

2012

2011

2010Foreign exchange gains


136


367


248Foreign exchange losses (see note 6)


(6,977
)

(2,449
)

(17,494
)Net foreign exchange gains (losses)


(6,841
)

(2,082
)

(17,246
)Gains (losses) arising on financial instruments at FVTPL


(6,774
)

(1,320
)

(20,877
)Other foreign exchange gains (losses)


(67
)

(762
)

3,631Net foreign exchange gains (losses)


(6,841
)

(2,082
)

(17,246
)


F-17

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6.     Other operating expenses

2012

2011

2010in EUR thousandsForeign exchange losses


6,977


2,449


17,494Losses from the disposal of fixed assets


149


66


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


1,449


101


270Customs penalty





1,334Other





469


28,575


4,419


17,769


7.     Personnel expense

2012

2011

2010in EUR thousandsPayroll


67,179


63,315


58,534Social insurance contributions


8,732


6,777


5,767Decrease/Increase in defined benefit plan obligations





(17
)

866Expense for defined contribution plans


1,712


1,355


1,152Stock option expense


3,453


5,064


3,64581,076


76,494


69,964


8.     Net finance income

2012

2011

2010in EUR thousandsInterest income from financial assetsOn financial assets measured at amortised cost


2,274


3,309


2,590Other financial assets


79


84


2612,353


3,393


2,851Interest expense from financial liabilitiesOn financial liabilities not at fair value through profit or loss


(29
)

(546
)

(141
)On financial liabilities at fair value through profit or loss





(760
)(29
)

(1,306
)

(141
)Net finance income


2,324


2,087


2,710


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

F-18

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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:

2012

2011

2010in EUR thousandsCurrent tax expense (+)/current tax income (-)for current year


(4,508
)

40,686


90,294adjustment for prior years


(204
)

552


483Total current tax expense/income


(4,712
)

41,238


90,777Deferred tax expense (+)/deferred tax income (-)from temporary differences


22,868


(5,802
)

(4,980
)Income/expense from changes in local tax rate


(56
)

(5
)

26from reversals and write-downs


(2,607
)




(99
)Total deferred tax expense/income


20,205


(5,807
)

(5,053
)Taxes on income/loss


15,493


35,431


85,724


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

2012

2011

2010in EUR thousandsIncome/loss before income taxesGermany


(101,617
)

56,554


225,802Outside Germany


(28,326
)

58,413


52,418Total


(129,943
)

114,967


278,220Income tax expenseGermany


21,143


18,867


62,798Outside Germany


(5,650
)

16,564


22,926Total


15,493


35,431


85,724


The Company's effective tax rate is different from the German statutory tax rate of 30.54% (2011: 30.21%; 2010: 30.21%) 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:

2012

2011

2010in EUR thousandsNet result before taxes


(129,943
)

114,967


278,220Income tax expense/benefit (German tax rate)


(39,685
)

34,732


84,050Effect from differences to foreign tax rates


1,250


(1,574
)

(1,074
)Non-deductible expenses


1,343


2,236


2,491Non-consideration of tax claims from loss carryforwards


55,062Reversal of Allowance/write-off against deferred tax assets


(2,607
)

587


(133
)Effect from changes in local tax rate


(56
)

(5
)

26Effect of the use of loss carryforwards


(1,482
)

(1,369
)Effect of permanent differences


152


(71
)

(113
)Other


1,516


895


477Taxes on income/loss


15,493


35,431


85,724Effective tax rate


(11.9
)%

30.8
%

30.8
%


F-19

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.   Current tax receivable and payable

As of December 31, 2012 the current tax receivable and payable, arising because the amount of tax paid in the current or in prior periods was either too high or too low, are
k€ 7,127 (2011: k€ 8,150) and k€ 770 (2011: k€ 6,404) respectively.

11.   Property, plant and equipment

Land and buildings

Technical equipment and machinery

Other plant, factory and office equipment

Assets under construction

Totalin EUR thousandsCostBalance at January 1, 2011


39,301


46,512


14,348


29,486


129,647Acquisitions


1,787


5,239


3,185


16,973


27,184Disposals


3


2,327


244


7


2,581Transfers


102


1,330


20


(1,509
)

(57
)Effect of movements in exchange rates


76


504


120


12


712Balance at December 31, 2011


41,263


51,258


17,429


44,955


154,905Balance at January 1, 2012


41,263


51,258


17,429


44,955


154,905Acquisitions


2,252


7,479


1,156


4,881


15,768Disposals


119


6,182


44


2,639


8,984Transfers


21,403


18,584


1,838


(41,825
)

0Effect of movements in exchange rates


40


(202
)

(20
)

3


(179
)Balance at December 31, 2012


64,839


70,937


20,359


5,375


161,510Depreciation and impairment lossesBalance at January 1, 2011


9,659


34,045


8,033


0


51,737Depreciation charge for the year


1,997


5,023


1,939





8,959Disposals





2,304


165





2,469Transfers














0Effect of movements in exchange rates


38


399


65





502Balance at December 31, 2011


11,694


37,163


9,872


0


58,729Balance at January 1, 2012


11,694


37,163


9,872


0


58,729Depreciation charge for the year


2,239


6,436


2,489





11,164Impairment





253





2,503


2,756Disposals


117


5,848


24


2,503


8,492Transfers


(50
)

48


2





0Effect of movements in exchange rates


20


(207
)

(12
)




(199
)Balance at December 31, 2012


13,786


37,845


12,327


0


63,958Carrying amountsAt January 1, 2011


29,642


12,467


6,315


29,486


77,910At December 31, 2011


29,569


14,095


7,557


44,955


96,176At January 1, 2012


29,569


14,095


7,557


44,955


96,176At December 31, 2012


51,053


33,092


8,032


5,375


97,552


Depreciation

Depreciation expense amounted to k€ 11,164 for 2012 and was k€ 8,959 and
k€ 8,732 for 2011 and 2010 respectively.

F-20

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.   Property, plant and equipment (Continued)

Impairments

In 2012 impairment charges of k€ 2,756 were made in respect of specific test equipment for discontinued
products. They are reported within the line item research and development costs in the Income Statement. During 2011 and 2010 no impairment charges were necessary.

Assets under construction

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

12.   Intangible assets

Goodwill

Other
intangible
assets

Totalin EUR thousandsCostBalance at January 1, 2011


79,118


34,171


113,289Acquisitions


234


2,744


2,978Disposals





14


14Transfers





57


57Effect of movements in exchange rates


2,109


590


2,699Balance at December 31, 2011


81,461


37,548


119,009Balance at January 1, 2012


81,461


37,548


119,009Acquisitions





715


715Disposals








0Transfers








0Effect of movements in exchange rates


368


(295
)

73Balance at December 31, 2012


81,829


37,968


119,797Amortisation and impairment lossesBalance at January 1, 2011


16,917


27,194


44,111Amortisation charge for the year





3,540


3,540Disposals





14


14Effect of movements in exchange rates


466


623


1,089Balance at December 31, 2011


17,383


31,343


48,726Balance at January 1, 2012


17,383


31,343


48,726Amortisation charge for the year





2,720


2,720Disposals








0Effect of movements in exchange rates


100


(313
)

(213
)Balance at December 31, 2012


17,483


33,750


51,233Carrying amountsAt January 1, 2011


62,201


6,977


69,178At December 31, 2011


64,078


6,205


70,283At January 1, 2012


64,078


6,205


70,283At December 31, 2012


64,346


4,218


68,564


F-21

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   Intangible assets (Continued)

Amortisation and impairment expenses for other intangible assets

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

2012

2011

2010Amortisation

Impairment

Amortisation

Impairment

Amortisation

Impairmentin EUR thousandsCost of sales


202


0


1,000


0


1,296


0Selling expenses


5


0


255


0


1,301


0General administration expenses


1,915


0


1,670


0


1,119


0Research and development costs


598


0


615


0


653


02,720


0


3,540


0


4,369


0


In
2012, 2011 and 2010, 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 thousands2013


1,5142014


1,0662015


5692016


4032017


153


The
actual amortisation can differ from the expected amortization.

Impairment of goodwill

At the end of 2012 the Group assessed the recoverable amount of goodwill and determined that no impairment loss had to be recognized
(2011: k€ 0; 2010 k€ 0).

The
carrying value of goodwill was k€ 64,346 (2011 k€ 64,078; 2010 k€ 62,201).

The
addition in 2011 of k€ 234 is the final contractual payment to the former owners of Nanoinstruments Ltd and was paid in 2012.

As
at the end of 2012 the cash generating unit, to which the goodwill has been allocated, is the Aixtron Group operational segment.

The
recoverable amount of the cash-generating unit is determined through a fair value less cost to sell calculation. IFRS 13, which is mandatory from January 1,
2013, and which AIXTRON has adopted during 2012 defines fair value and sets out a framework for measuring fair value. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. As Aixtron has only one cash generating unit (CGU), market capitalisation of Aixtron, adjusted for a
control premium, has been used to determine the fair value less cost to sell of the cash generating unit. This is level 2 in the hierarchy of fair value measures set out in IFRS 13.

Market
capitalisation was not available at December 31, 2012, but as at December 28, 2012 the market capitalisation of Aixtron was
€ 896.0 million, based on a share price of € 8.879 and issued shares (excluding Treasury Shares) of 100,896,098.

In
an orderly selling process costs are incurred. Aixtron has used 1.5% to account for the costs to sell.

F-22

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   Intangible assets (Continued)

A
control premium of 20% has been applied to adjust the market capitalization to the fair value. Market capitalisation was also adjusted for net cash and tax assets prior to comparing it
to the carrying amount of the CGU. The analysis shows that the fair value less costs to sell of the CGU Aixtron exceeds its carrying amount and that Goodwill is not impaired.

Impairment Test

Sensitivity AnalysisEuro millionsMarket capitalisation as of December 28, 2012


896.0


477.3Costs to sell in percentage


1.50
%

1.50
%Costs to sell


(13.4
)

(7.2
)Market capitalisation less cost to sell


882.6


470.1Control premium in percentage


20.00
%

0.00
%Control premium


179.2


0.0Market capitalisation and control premium less cost to sell


1,061.8


470.1Net cash


(209.5
)

(209.5
)Tax assets


(11.9
)

(11.9
)Fair value less costs to sell of CGU


840.4


248.7Carrying amount of the CGU


248.7


248.7Surplus of fair value less cost to sell over carrying amount


591.7


0.0Surplus of fair value less cost to sell over carrying amount as a percentage


238
%

0
%


The
fair value less costs to sell, which is the recoverable amount, exceeds the carrying amount of the CGU by 238%.

A
sensitivity analysis of the impairment test, in which the control premium is reduced to zero, shows that the carrying amount of the CGU would equal the recoverable amount should the
market capitalisation of AIXTRON fall by 47% to Euro 477.3 million.

At
the end of 2011, the recoverable amount of the cash generating unit was determined through a fair value less cost to sell calculation which used cash flow projections based on
financial budgets and forecasts approved by the Executive Board covering the period up to 2013.



F-23

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.   Intangible assets (Continued)





13.   Other non-current assets

Other
non-current assets totalling k€ 677 (2011: k€ 720) include mainly rent deposits for buildings.

14.   Deferred tax assets and liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following items:

Assets

Liabilities

Net2012

2011

2012

2011

2012

2011in EUR thousandsProperty, plant and equipment


53


19





(9
)

53


10Trade receivables


0


7,160





0


0


7,160Inventories


1,690


13,629





0


1,690


13,629Employee benefits


191


43





16


191


59Currency translation


12








0


12


0Provisions and other liabilities


(638
)

(2,955
)




0


(638
)

(2,955
)Customer Advances





1,578





0


0


1,578Intangible assets





5,576





0


0


5,576Other


(16
)

42


(123
)

(147
)

(139
)

(105
)Tax losses


4,096


1,688





0


4,096


1,688Derivative financial instruments





1,567





0


0


1,567Deferred tax assets (+) liabilities (-)


5,388


28,347


(123
)

(140
)

5,265


28,207


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€ 151 (2011:
k€ 142). Forecast transactions are expected to give rise to taxable profits in 2013 where the deferred tax assets have been recognised.

Deferred
taxes for tax losses in the amount of k€ 90,897 (2011: k€ 16,141) and on deductible temporary differences in the amount
of k€ 20,984 (2011: k€ 886) were not recognised. Tax losses in the amount of k€ 53,302 can be used indefinitely
(2011: k€ 0), k€ 7,302 expire by 2017 (2011: k€ 1,341, by 2016) and k€ 30,293 expire
after 2017 (2011: k€ 14,800 after 2016).

F-24

---



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,
2012

Recognised
in income
statement

Directly
recognised
in Other
Comprehensive
Income

Balance at
December 31,
2012in EUR thousandsProperty, plant and equipment


10


43


0


53Trade receivables


7,160


(7,160
)

0


0Inventories


13,629


(11,932
)

(7
)

1,690Employee benefits


59


138


(6
)

191Currency translation


0


(118
)

130


12Provisions and other liabilities


(2,955
)

2,325


(8
)

(638
)Customer Advances


1,578


(1,578
)

0


0Intangible assets


5,576


(5,576
)

0


0Other


(105
)

(26
)

(8
)

(139
)Tax losses


1,688


2,458


(50
)

4,096Derivative financial instruments


1,567


1,221


(2,788
)

028,207


(20,205
)

(2,737
)

5,265




Balance at
January 1,
2011

Recognised
in income
statement

Directly
recognised
in Other
Comprehensive
Income

Balance at
December 31,
2011in EUR thousandsProperty, plant and equipment


(95
)

105


0


10Trade receivables


7,086


74


0


7,160Inventories


6,962


6,663


4


13,629Employee benefits


43


11


4


58Deferred revenues


14


(14
)




0Currency adjustment


0


75


(75
)

0Provisions and other liabilities


(2,033
)

(929
)

7


(2,955
)Customer advances


0


1,578


0


1,578Intangible assets


5,576


0


0


5,576Other


156


(267
)

7


(104
)Derivative financial instruments


(695
)

(673
)

2,935


1,567Tax losses carried forward


2,455


(816
)

49


1,68819,469


5,807


2,931


28,207


15.   Long term receivable from current tax

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

F-25

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.   Inventories

2012

2011in EUR thousandsRaw materials and supplies


49,272


80,654Work in process


64,984


94,468Finished goods and services completed


1,790


2,277Inventories at customers' locations


9,940


7,154125,986


184,553




2012

2011in EUR thousandsWrite-down of inventories during the year


40,947


41,602Inventories measured at net realisable value


8,135


0Inventories recognised as an expense during the period


113,083


255,357Reversals of write-downs recognised during the year


0


0Carrying amount of inventories pledged as security for liabilities


0


0


17.   Trade receivables and other current assets

2012

2011in EUR thousandsTrade receivables


39,110


79,019Allowances for doubtful accounts


(1,819
)

(389
)Trade receivablesnet


37,291


78,630Prepaid expenses


955


796Reimbursement of research and development costs


1,553


251Advance payments to suppliers


897


5,016VAT recoverable


2,572


3,468Other assets


1,683


2,598Derivatives that are designated and effective as hedging instruments carried at fair value


0


2,765Total other current assets


7,660


14,89444,951


93,524


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:

2012

2011in EUR thousandsAllowance at January 1


389


382Translation adjustments


(7
)

8Impairment losses recognised


1,593


69Used


(29
)

(22
)Impairment losses reversed


(127
)

(48
)Allowance at December 31


1,819


389


F-26

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.   Trade receivables and other current assets (Continued)

Ageing
of past due but not impaired receivables

2012

2011in EUR thousands1-90 days past due


1,971


3,041More than 90 days past due


1,246


1,561


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

At
the balance sheet date one customer accounted for 26% of the company's net trade receivables, no other customer accounted for more than 10% of trade receivables. In 2011 two customers
accounted for 26% and 23% respectively of the company's net trade receivables, no other single customer accounted for more than 10% of trade receivables. In determining concentrations of credit risk
the company defines counterparties as having similar characteristics if they are connected entities.

Included
in the Company's trade receivable balance are debtors with a carrying amount of k€ 3,217 (2011: k€ 4,602) 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.

18.   Other financial assets

Other financial assets of k€ 109,756 (2011: k€ 122,323) are fixed deposits with banks with a maturity of more than three months
at inception of the contracts.

An
analysis of the maturities at December 31, 2012 and 2011 is as follows:

2012

2011in EUR thousandsMaturity up to 180 days


94,756


112,323Maturity 181 days to 365 days


15,000


10,000109,756


122,323


19.   Cash and cash equivalents

2012

2011in EUR thousandsCash-in-hand


9


17Bank balances


99,725


172,875Cash and Cash equivalents


99,734


172,892


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 (2011: k€ 0) at December 31, 2012.

F-27

---





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Table of Contents

20.   Shareholders' Equity

Fully paid capital

2012

2011January 1


101,789,527


101,179,866Exercise of employee stock options


185,496


609,661Issued and fully paid capital at December 31, including Treasury Shares


101,975,023


101,789,527Less: Treasury Shares


(1,078,925
)

(1,078,925
)Issued and fully paid capital at December 31, under IFRS


100,896,098


100,710,602


The
share capital of the company consists of no-par value shares and was fully paid-up during 2012 and 2011. Each share represents a portion of the share capital
in the amount of € 1.00.

Authorised share capital

Authorised share capital, including issued capital, amounted to € 203,579,052 (2011: 184,107,297)

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.

The
Company regards its shareholders' equity as capital for the purpose of managing capital. Changes in Shareholders' equity are shown in the Consolidated Statement of Changes in Equity.
The Company considers its capital resources to be adequate.

Income and expenses recognised in other comprehensive income

Currency
translation

Derivative
financial
instruments

Totalin EUR thousandsBalance 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
)Change in currency translation


6,930





6,930Change in unrealised gains/losses before taxes





(9,032
)

(9,032
)Deferred taxes





2,934


2,934Balance at December 31, 2011


(4,065
)

(6,438
)

(10,503
)Change in currency translation


1,512





1,512Change in unrealised gains/losses before taxes





9,226


9,226Deferred taxes





(2,788
)

(2,788
)Balance at December 31, 2012


(2,553
)

0


(2,553
)


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

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

F-28

---



Table of Contents

21.   Earnings/Loss per share

Basic earnings/loss per share

The calculation of the basic earnings/loss per share is based on the weighted-average number of common shares outstanding during the
reporting period.

Diluted earnings/loss per share

The calculation of the diluted earnings/loss 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.

2012

2011

2010Earnings/loss per shareNet profit/loss attributable to the shareholders of AIXTRON SE in k€


(145,436
)

79,536


192,496Weighted average number of common shares and ADS for the purpose of Earnings/Loss Per Share


100,805,804


100,530,006


99,871,834Basic earnings/loss per share (EUR)


(1.44
)

0.79


1.93Earnings/loss per share (diluted)Net profit/loss attributable to the shareholders of AIXTRON SE in k€


(145,436
)

79,536


192,496Weighted average number of common shares and ADS for the purpose of Earnings/Loss Per Share


100,805,804


100,530,006


99,871,834Dilutive effect of share options


0


1,304,711


1,874,632Weighted average number of common shares and ADS for the purpose of Earnings/Loss Per Share (diluted)


100,805,804


101,834,717


101,746,466Diluted earnings/loss per share (EUR)


(1.44
)

0.78


1.89


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

2012

2011

2010Share options


3,366,396


2,305,590


2,323,928


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 2012 the expense recognised for
defined contribution plans amounted to k€ 1,712 (2011: k€ 1,338, 2010: k€ 1,152). 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 countries 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.

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.

In
the three years ending 2012 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 insurance company,

F-29

---



Table of Contents

22.   Employee benefits (Continued)

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

Movements in the present value of defined benefit obligations

2012

2011

2010in EUR thousandsPresent value of defined benefit obligations at January 1


1,024


1,048


1,064Interest expense


54


51Actuarial gains and losses


388


(58
)Settlement





(17
)

(16
)Present value of defined benefit obligations at December 31


1,466


1,024


1,048


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

2012

2011

2010

2009

2008in EUR thousandsPresent value of defined benefit obligations


1,466


1,024


1,048


1,064


845Fair value of scheme assetsfunded


(1,466
)

(1,024
)

(1,031
)

0


0Defined benefit liabilityunfunded


0


0


17


1,064


845


Expense recognised in the consolidated income statement

2012

2011

2010in EUR thousandsInterest expense


0


0


54Actuarial gains and losses


0


(17
)

8120


(17
)

866


Development of plan assets

2012

2011

2010in EUR thousandsat January 1


1,024


1,031


0Contributions by the sponsoring companies


0


0


1,913Return from plan assets


54


51


0Actuarial gains and losses


388


(58
)

(882
)1,466


1,024


1,031


In the 2012 income statement, the income of k€ nil (income 2011 k€ 17, expenses 2010
k€ 866) is recognised in general administration expense.

The
following table shows the principal actuarial assumptions.

2012

2011Biometrical calculation assumptions


Heubeck
tables 2005G


Heubeck
tables 2005GInterest rate at December 31


3.30
%

5.20
%Expected salary increase


0.00
%

0.00
%Expected pension increase


1.00
%

1.00
%Expected rate of return on plan assets


3.30
%

5.20
%


F-30

---





Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 1,092,734 options for the purchase of
1,755,762 common shares were outstanding as of December 31, 2012.

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 367,684 options to purchase the same number of common stock were outstanding under this plan as of December 31, 2012.

AIXTRON stock option plan 2007

In May 2007, options were authorized to purchase 3,919,374 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 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,
plus 20%. A total of 2,150,680 options to purchase the same number of common stock were outstanding under this plan as of December 31, 2012.

AIXTRON stock option plan 2012

In May 2012, options were authorized to purchase shares of common stock. The granted options may be exercised after a waiting
period of not less than four years. The options expire 10 years after they have been granted. Under the terms of the 2012 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 30%. As of December 31, 2012 no options had been granted under this plan.

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, 2012. Upon exercise of options new shares are issued from the trust
(see note 20).

F-31

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23.   Share-based payment (Continued)

Summary of Stock Option Transactions

AIXTRON share options

2012

2011Number of
shares

Average
exercise price

Number of
shares

Average
exercise price(EUR)



(EUR)Balance at January 1


4,519,641


21.06


5,154,752


19.17Granted during the year


31,000


15.75


14,000


12.55Exercised during the year


185,496


4.79


609,661


5.21Forfeited during the year


91,019


23.29


39,450


16.10Outstanding at December 31


4,274,126


21.68


4,519,641


21.06Exercisable at December 31


937,426


23.24


1,468,398


25.78


Genus share options

2012

2011Number of
shares

Average
exercise price

Number of
shares

Average
exercise price(USD)



(USD)Balance at January 1


6,610


7.44


6,610


7.44Exercised during the yearExpired during the yearOutstanding at December 31


6,610


7.44


6,610


7.44Exercisable at December 31


6,610


7.44


6,610


7.44


AIXTRON Stock Options as of December 31, 2012

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


1.567.39


386,808


386,808


2.526.93


382,900


0


3.57.48


579,230


0


4.53.10


30,150


30,150


0.56.17


75,884


75,884


1.53.83


261,650


261,650


3.510.09


309,300


309,300


5.04.17


327,480


245,610


6.024.60


723,050


361,525


7.026.60


745,850


0


8.012.55


14,000


0


9.015.75


31,000


0


10.04,274,126


2,077,751


F-32

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23.   Share-based payment (Continued)

Genus Stock Options as of December 31, 2012

Average exercise price (USD)

Outstanding

Exercisable

Average
option life
(in Years)3.55


1,000


1,000


1.97.20


4,590


4,590


1.312.35


1,020


1,020


0.96,610


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
2012, the personnel expenses from share-based payments, all of which were equity settled share based payments, were k€ 3,453 (2011:
k€ 5,064; 2010: k€ 3,645).

As
of December 31, 2012 an amount of k€ 2,567 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 2016. The expected allocation of the expense is as follows: 2013: k€ 1,819, 2014: k€ 651, 2015
k€ 95, and 2016: k€ 2

AIXTRON share options granted

in 2012

in 2011

in 2010Fair value on grant date


4.66 €


3.22 €


8.87 €Price per share


12.74 €


9.95 €


23.54 €Exercise price


15.75 €


12.55 €


26.60 €Expected volatility


55.96%


59.03%


58.02%Option life


10,0 years


10,0 years


10,0 yearsExpected dividend payments


0.33 €


0.38 €


0.55 €Risk-free interest rate


1.47%


2.02%


2.62%




24.   Provisions

Development and breakdown of provisions

01.01.2012

Exchange
rate
differences

Usage

Reversal

Addition

31.12.2012

Current

Non-
currentin EUR thousandsPersonnel expenses


14,407


(56
)

11,466


2,015


7,374


8,244


8,244


0Warranties


3,579


(23
)

3,135


96


5,927


6,252


5,262


990Onerous contracts


416





19


399


4,671


4,669


4,669


0Commissions


6,538


(3
)

5,543





1,178


2,170


2,170


0Other


11,618


(92
)

9,047


148


5,744


8,075


7,859


216Total


36,558


(174
)

29,210


2,658


24,894


29,410


28,204


1,206




01.01.2011

Exchange
rate
differences

Usage

Reversal

Addition

31.12.2011

Current

Non-
currentin EUR thousandsPersonnel expenses


14,709


194


12,448


1,272


13,224


14,407


14,407


0Warranties


7,709


28


4,295


1,021


1,158


3,579


3,579


0Onerous contracts


752


8


269


75





416


416


0Commissions


9,608


(7
)

6,008


73


3,018


6,538


6,538


0Other


10,758


39


7,835


270


8,926


11,618


11,618


0Total


43,536


262


30,855


2,711


26,326


36,558


36,558


0


F-33

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

24.   Provisions (Continued)

Personnel expenses

These include mainly provisions for holiday pay, payroll and bonuses, which are financial liabilities.

Provisions for onerous contracts

These include provisions associated with contracts where the unavoidable costs of meeting the contract obligations exceed the economic
benefits expected to be received. These mainly relate to supply contracts for materials which are excess to the forecast future requirements.

Commissions

Commissions are recorded as financial liabilities.

Other provisions

Other provisions consist mainly of the estimated cost of services received.

For
provisions existing at both December 31, 2012 and December 31, 2011, the economic outflows resulting from the obligations that are provided for are expected to be
settled within one year of the respective balance sheet datefor current provisions and within two years of the respective balance sheet date, but more than one year, for non-current
provisions.

25.   Trade payables and other current liabilities

The liabilities consist of the following:

2012

2011in EUR thousandsTrade payables


9,683


20,527Liabilities from grants


1,740


1,466Payroll taxes and social security contributions


981


754VAT and similar taxes


739


85Derivatives that are designated and effective as hedging instruments carried at fair valueForward foreign currency contractsFinancial instruments carried at fair value through the profit or loss (FVTPL)Foreign currency options





17,354Other liabilities


323


4173,783


20,07613,466


40,603


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.

F-34

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

26.   Financial Instruments (Continued)

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.

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, 2012 the group had no borrowings (2011 nil). Financial liabilities, all due within one year, of k€ 13,466 (2011
k€ 40,603) consisting of trade payables and other liabilities and are shown in Note 25, together with an analysis of their maturity.

As
at December 31, 2012 the group had k€ 99,734 cash and cash equivalents (2011 k€ 172,892) and a further
k€ 109,756 of fixed deposits with banks (2011 k€ 122,323).

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.

For
receivables measured at fair value, the maximum amount of the exposure to credit risk is the amount of receivables measured at fair value as disclosed in note 26. There are no
credit derivatives or similar instruments which mitigate the maximum exposure to credit risk and there has been no change during the period or cumulatively in the fair value of such receivables that
is attributable to changes in the credit risk.

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.

F-35

---





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Table of Contents

26.   Financial Instruments (Continued)

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

Assets2012

2011

2012

2011in EUR thousandsUS Dollars


(43,342
)

(57,687
)

72,064


119,581GB Pounds


(2,168
)

(7,242
)

17,124


41,748


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 exchange rate risks through its worldwide activities.

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

USD Currency
EffectIncrease in value of Euro by 10% k€

2012

2011Profit or loss


1,266


5,389Other comprehensive income





9,189




USD Currency
EffectDecrease in value of Euro by 10% k€

2012

2011Profit or loss


1,266


3,716Other comprehensive income





17,869


The effect on profit or loss of changes in currency rates may differ 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 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 from time to time to cover receipts from highly probable forecast
sales denominated in US Dollars.

F-36

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Table of Contents

26.   Financial Instruments (Continued)

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

Foreign Currency

Contract Amount

Fair ValueAssets

Liabilities2012

2011

2012

2011

2012

2011

2012

2011kUSD

kUSD

k€

k€

k€

k€

k€

k€Cash flow hedgesOptons to Sell Euros buy US DollarsLess than 3 months





96,000





70,996











(3,066
)3 to 12 months





201,000





148,774











(6,240
)Hedges through the Profit or LossOptions to sell US Dollars buy EurosLess than 3 months





199,000





142,143





316





3 to 12 months





201,000





143,571





2,449





Opions to sell Euros buy US DollarsLess than 3 months





103,000





76,223











(936
)3 to 12 months























(7,112
)


Foreign currency cash flow hedges

As of 31st December 2012, the aggregate amount of unrealised gains on forward foreign exchange contracts deferred in the
hedging reserve relating to the exposure on anticipated future transactions is k€ nil (2011: k€ 6,438).

The
unrealised losses of k€ 6,438 (unrealised losses 31 December 2010: k€ 340) included in income and expenses recognised in
equity as of December 31, 2011 were fully reversed and recognised in the income statement at maturity date of the contracts in the financial year. The losses actually realised in 2012 were
k€ 8,531 (2011: gains k€ 6,874).

Foreign currency option contracts

The company has no option contracts as at December 31,2012.

The
company had entered into option contracts in 2011 to hedge the exchange rate risk on US Dollar sales proceeds in 2012. The contracts are classified as at fair value through the
profit and loss account.

Unrealised
losses of k€ nil (2011: k€ 5,461) on forward exchange contracts are recognised in Other Operating Expense in the Income Statement.

At
December 31, 2011 AIXTRON held a series of US dollar/ Euro put and call options with equal and opposite purchase and sales volumes and maturities. In view of the expectation
that the intrinsic value of these options will be offsetting, and to the extent that they represent hedges of highly probable future cash flows, they have been designated as cash flow hedges and
accounted for as such in accordance with IAS 39.

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 classed as at fair value through profit or loss and are designated as such upon initial recognition. At FVTPL includes
accrued receivables arising as the difference between the fair value of revenue (note 3) and the invoiced amounts. The fair value is level 2 in the fair value hierarchy.

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.

F-37

---



Table of Contents

26.   Financial Instruments (Continued)

FINANCIAL ASSETS 2012

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 valuein EUR thousandsCash and cash equivalents


99,734


0


0


0


0


99,734Fair value of derivative financial instruments


0


0


0


0


0


0Other financial assets


0


0


109,756


0


0


109,756Other non-current assets


0


677


0


0


0


677Trade receivables


0


29,683


0


7,608


0


37,291Total


99,734


30,360


109,756


7,608


0


247,458At amortized cost


99,734


30,360


109,756








239,850At fair value











7,608


0


7,608


FINANCIAL LIABILITIES 2012

Cash and
cash
equivalents
at amortised
cost

Loans and
receivables
at amortised
cost

Other
payables at
amortised
cost

At FVTPL
at fair value

Hedging
Derivatives
at fair value

Total
Carrying
amount and
fair valuein EUR thousandsFair value of derivative financial instruments


0


0


0


0


0


0Trade payables


0


0


9,683


0


0


9,683Advance payments from customers (not in scope of IFRS 7)


0


0


45,969


0


0


45,969Total


0


0


55,652


0


0


55,652At amortized cost


0


0


55,652








55,652At fair value











0


0


0


FINANCIAL ASSETS 2011

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 valuein EUR thousandsCash and cash equivalents


172,892


0


0


0


0


172,892Fair value of derivative financial instruments


0


0


0


2,765


0


2,765Other financial assets


0


0


122,323


0


0


122,323Other non-current assets


0


720


0


0


0


720Trade receivables


0


78,630


0


0


0


78,630Total


172,892


79,350


122,323


2,765


0


377,330At amortized cost


172,892


79,350


122,323








374,565At fair value











2,765


0


2,765


F-38

---



Table of Contents

26.   Financial Instruments (Continued)

FINANCIAL LIABILITIES 2011

Cash and
cash
equivalents
at amortised
cost

Loans and
receivables
at amortised
cost

Other
payables at
amortised
cost

At FVTPL
at fair value

Hedging
Derivatives
at fair value

Total
Carrying
amount and
fair valuein EUR thousandsFair value of derivative financial instruments


0


0


0


8,047


9,307


17,354Trade payables


0


0


20,527


0


0


20,527Advance payments from customers (not in the scope of IFRS 7)


0


0


64,900


0


0


64,900Total


0


0


85,427


8,047


9,307


102,781At amortized cost


0


0


85,427








85,427At fair value











8,047


9,307


17,354


Derivatives

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.. 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, measured at amortised cost, the fair value is taken to be the nominal
value. All other receivables/payables, measured at amortised cost, are discounted to determine the fair value.

27.   Operating leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

in EUR
thousandsNot later than one year


3,583Later than one year and not later than five years


6,077Later than five years


44010,100


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€ 4393, k€ 4,490 and k€ 3,959 for 2012, 2011 and 2010 respectively

28.   Capital commitments

As of December 31, 2012, the Company had entered into purchase commitments with suppliers in the amount of k€ 33,860 (2011:
k€ 69,029) for purchases within the next 12 months. Commitments for capital expenditures for fixed assets are k€ 437 (2011:
k€ 4,164) as of December 31, 2012.

F-39

---





Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

The
legal proceeding issued in 2008 between International Rectifier Corporation ("I.R."), of El Segundo, California, USA and AIXTRON SE was settled by agreement in
January 2011. I.R. withdrew its action and financial claims against Aixtron in exchange for certain disclosures and witness statements provided by AIXTRON. At I.R's request the Court dismissed
the action against AIXTRON. No further liability exists.

30.   Identity of related parties

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

Executive Board Remuneration

The Supervisory Board as a whole is responsible for establishing the structure of the remuneration system and for the total
remuneration for individual members of the Executive Board. It regularly discusses and reviews remuneration for appropriateness.

The
remuneration level of the Executive Board members of AIXTRON SE is aligned with the commercial and financial situation and future prospects of the Company 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
may include 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 scheme for the collective Executive Board (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 in total. The modified consolidated net income for the year is obtained from
the Company's Consolidated
Financial Statements (IFRS) certified by the auditor, less a consolidated loss carry forward figure and those amounts that are to be allocated to 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 may 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 General Shareholders' Meetings. 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 this report.

The
appropriateness of the above mentioned remuneration components, and the likelihood that they do not encourage Management to take unreasonable risks, are regularly reviewed by the
Supervisory Board.

F-40

---



Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30.   Identity of related parties (Continued)

If
the tenure of any Executive Board member ends prematurely as result of a revocation of the appointment, such 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 employment contract, however, not exceeding an amount equal to twice the annual
compensation (severance cap). Any payments beyond this severance pay shall be excluded.

If
the tenure of any Executive Board member ends prematurely and the employment contract is terminated by mutual agreement, the total amount of any payments agreed to be paid by the
Company to the Executive Board member as part of such an agreement may not exceed the amount of the severance pay which the Executive Board member would receive in the event of a revocation of the
appointment with due regard to the severance cap.

If
any Executive Board Member terminates the employment relationship after a change of control, such 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 employment contract, however, not exceeding the severance cap, i.e. an amount equal to twice the
annual compensation. Any payments beyond this severance pay shall be excluded. 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 registered share capital.

The
Executive Board members have no individual Company pension benefits, which would result in pension provisions being required to be made by AIXTRON, and receive no loans from
the Company.

In
accordance with Section 120(4) of the German Stock Corporation Act, the remuneration system was approved by the Annual General Meeting on May 18, 2010.

In
its meeting on December 5, 2012, the Supervisory Board decided to renew the contract of Wolfgang Breme, Chief Financial Officer and Executive Board member. The contract, which
would have expired on March 31, 2013, has been prolonged until March 31, 2016. In this context, a new compensation scheme for this and future management contracts was decided.

The
new compensation scheme envisages that variable bonuseswhich will be continued to be provided from an "accrued internal bonus" as defined abovewill be paid
half through a monetary element and half in shares. That part of the variable bonus payable in shares will be converted into whole numbers of shares of the Company and will be deferred until the third
bank working day following the ordinary General Meeting in the third fiscal year after having been granted to the Board members. The number of the shares to be granted for the part of the variable
bonus payable in shares will be determined in accordance with the closing price of the share of the Company on the third bank working day following the ordinary General Meeting which is presented with
the annual financial statements of the Company and the consolidated financial statements for the fiscal year for which the bonus is granted. The shares will be granted from treasury shares.

As
a result of this new compensation scheme, the Board members will not only participate in positive, but also in negative developments of the share price which may occur during the
extended waiting period of several years, and the orientation towards a sustainable growth of the Company is strengthened; therefore, the Supervisory Board has decided to incorporate corresponding
provisions on compensation into future management contracts (upon conclusion or renewal). The new provisions as described will apply to the Board member Wolfgang Breme as of the effective date of his
new management contract and half of his bonus will therefore be payable in shares as of April 1, 2013.

On
February 18, 2013 Mr. Martin Goetzeler was appointed as new Executive Board member of AIXTRON SE; he will take up his office on March 1, 2013. His management
contract also contains provisions reflecting the new compensation scheme.

The
revised remuneration system will be submitted for approval to the General Meeting on May 23, 2013.

F-41

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30.   Identity of related parties (Continued)

Supervisory Board Remuneration

Supervisory Board remuneration is governed by § 17 of AIXTRON's Articles of Association.

Accordingly,
the annual fixed compensation for individual members of the Supervisory Board is € 25,000. The Chairman's compensation is three times this amount and
the Deputy Chairman's one and a half times the amount received by a regular member of the Supervisory Board.

The
members of the Supervisory Board also receive, in aggregate, a variable compensation of 1% of AIXTRON's balance sheet profit (Bilanzgewinn), less an amount corresponding to 4% of the
paid-in contributions to the share capital. The Chairman of the Supervisory Board receives 6/17 of the variable compensation, the Deputy Chairman 3/17, and
each other member of the Supervisory Board 2/17. The variable compensation is limited to the fourfold of the fixed compensation per Supervisory Board member. In addition, committee
members receive an attendance fee of € 2.000 for attending a committee meeting, with the Chairman of the committee receiving triple 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
Supervisory Board members receive no loans from the Company.

Other

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. Pursuant to the amended § 93, Section 2 AktG following the Act on the Appropriateness of Executive Board remuneration (VorstAG), as well as to the amended
recommendation in chapter 3.8. German Corporate Governance Code, the deductible for members of the Executive Board and members of the Supervisory Board is equal to a minimum of 10% of the
respective loss incurred. The deductible cannot exceed a factor of 1.5 of the respective annual fixed remuneration.

Individual Structure of Remuneration

Executive Board Remuneration

In fiscal year 2012, the cash remuneration of the Executive Board (including benefits in kind and allowances for pensions) totaled
€ 1,124,274 (2011: € 7,623,754; 2010: € 7,620,046). During the past fiscal year, the Executive Board was allocated 0 options
(2011: 0; 2010: 156,000). The breakdown among the individual members of the Executive Board for the years 2010 to 2012 is presented in the table below.

Executive Board member

Year

Fixed
Remuneration*

Variable
remuneration

Total cash
remuneration

Number of
options
granted

Value of
options at
grant date

Total
remuneration(Euros)

(Euros)

(Euros)



(Euros)

(Euros)Paul Hyland


2012


437,334





437,334








437,3342011


436,814


2,888,890


3,325,704








3,325,7042010


434,191


2,888,890


3,323,081


52,000


461,240


3,784,321(Until February 28, 2013)Wolfgang Breme


2012


309,413





309,413








309,4132011


309,413


1,805,555


2,114,968








2,114,9682010


308,968


1,805,555


2,114,523


52,000


461,240


2,575,763Dr. Bernd Schulte


2012


377,527





377,527








377,5272011


377,527


1,805,555


2,183,082








2,183,0822010


376,887


1,805,555


2,182,442


52,000


461,240


2,643,682Total


2012


1,124,274





1,124,274








1,124,2742011


1,123,754


6,500,000


7,623,754








7,623,7542010


1,120,046


6,500,000


7,620,046


156,000


1,383,720


9,003,766


*also
includes benefits in kind and allowances for pensions


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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30.   Identity of related parties (Continued)

As
of December 31, 2012, the AIXTRON Executive Board held a total of 914,758 options for the purchase of 923,516 shares of the Company (December 31, 2011:
962,516 shares; December 31, 2010: 962,516 shares). The number of shares underlying the options is set out below. The actual profits from exercising the stock options may differ
significantly from the figures shown in the table.

Executive Board member

Allocation
date

Outstanding

Exercisable

Value of
options at
grant date

Exercise
price

Maturity(number of
shares)

(number of
shares)

(Euros)

(Euros)Paul Hyland

Nov 2010


52,000





461,240


26.60

Nov 2020Nov 2009


52,000


26,000


448,240


24.60

Nov 2019Nov 2008


52,000


39,000


92,040


4.17

Nov 2018Dec 2007


52,000


52,000


225,680


10.09

Dec 2017May 2006


55,000


55,000


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





152,625


7.48

May 2017May 2001


5,000





106,500


26.93

May 2016May 2000


5,400


1,350


114,507


67.39

May 2015Wolfgang Breme

Nov 2010


52,000





461,240


26.60

Nov 2020Nov 2009


52,000


26,000


448,240


24.60

Nov 2019Nov 2008


13,000





23,010


4.17

Nov 2018Dec 2007


52,000


52,000


225,680


10.09

Dec 2017May 2006


55,000


55,000


84,150


3.83

Nov 2016Dr. Bernd Schulte

Nov 2010


52,000





461,240


26.60

Nov 2020Nov 2009


52,000


26,000


448,240


24.60

Nov 2019Nov 2008


52,000


39,000


92,040


4.17

Nov 2018Dec 2007


52,000


52,000


225,680


10.09

Dec 2017May 2006


55,000


55,000


84,150


3.83

Nov 2016May 2004


35,000


35,000


107,800


6.17

Nov 2014May 2003








48,950


3.10

Nov 2013May 2002


27,500





152,625


7.48

May 2017May 2001


5,000





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




923,516


579,486


Under
IFRS 2, the "Option value at grant date" is also used as the basis for recognizing options issued after November 7, 2002 under expenses on the Income Statement. For
stock options issued prior to November 7, 2002, the fair value was determined using the Black-Scholes model.

In
fiscal year 2012, Executive Board members exercised 39,000 options (2011: 0; 2010: 0); 0 options expired (2011: 0; 2010: 0).

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 Executive
Board annual pension allowance (a total of € 40,000 per person in each of the years; 2012, 2011 and 2010) is paid by AIXTRON and included in the fixed remuneration, and
is transferred by the Executive Board members into independent insurance contracts with a benevolent fund or similar plan.

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

30.   Identity of related parties (Continued)

Supervisory Board Remuneration

In fiscal year 2012, the remuneration of the Supervisory Board totaled € 302,500 (2011:
€ 1,024,933; 2010: € 801,000). For the years 2010 to 2012, Supervisory Board remuneration may be broken down as follows:

Supervisory Board member

Year

Fixed Remuneration

Variable remuneration

Attendance fees

Total remuneration(Euros)

(Euros)

(Euros)

(Euros)Kim Schindelhauer(1)(2)(3)(4)


2012


75,000





18,000


93,000(Chairman, Supervisory Board)


2011


75,000


257,333


16,000


348,3332010


54,000


216,000


7,500


277,500Dr. Holger Jürgensen(1)(2)(4)


2012


37,500





16,000


53,500(Deputy Chairman, Supervisory Board)


2011


37,500


128,667


16,000


182,1672010


27,000


108,000


9,000


144,000(Until January 30, 2013)Prof. Dr. Wolfgang Blättchen(1)


2012


25,000





24,000


49,000(Chairman, Audit Committee)


2011


25,000


85,778


24,000


134,7782010


18,000


72,000


13,500


103,500Prof. Dr. Petra Denk(2)(3)


2012


25,000





26,000


51,000(Chair, Technology Committee)


2011


15,548


53,347


23,322


92,2172010











(Since May 19, 2011)Karl-Hermann Kuklies


2012


25,000








25,0002011


25,000


85,778





110,7782010


18,000


72,000





90,000(Until January 30, 2013)Prof. Dr. Rüdiger von Rosen(3)


2012


25,000





6,000


31,000(Chairman, Nomination Committee)


2011


25,000


85,778





110,7782010


18,000


72,000





90,000Joachim Simmross(1)


2012











2011


9,452


32,431


4,000


45,8832010


18,000


72,000


6,000


96,000(Until May 19, 2011)Total


2012


212,500





90,000


302,5002011


212,500


729,112


83,322


1,024,9342010


153,000


612,000


36,000


801,000


(1)Member
of the Audit Committee(2)Member
of the Technology Committee(3)Member
of the Nomination Committee(4)Former
member of the Executive Board of AIXTRON AG


In
the years 2010 to 2012, there were no payments made to any Supervisory Board member for advisory services.

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Table of Contents

31.   Consolidated entities

AIXTRON S.E. controls the following subsidiaries:

Share of capital in %Country

2012

2011AIXTRON Inc

USA


100


100AIXTRON Ltd.

England & Wales


100


100AIXTRON Korea Co. Ltd.

South Korea


100


100AIXTRON Taiwan Co. Ltd.

Taiwan


100


100AIXTRON AB

Sweden


100


100AIXTRON KK

Japan


100


100AIXTRON China Ltd

P. R. China


100


100Nanoinstruments Ltd

England & Wales


100


100Genus trust *

USA


n.a.


n.a.


*The
shares held in the 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:

2012

2011in EUR thousandsfor audit


728


748for other confirmation services


36


70for tax advisory services


226


157for other services


0


7990


982


Included
in the total amount of fees are fees for the group auditor Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft, Duesseldorf, in the amount of
k€ 443 for audit (2011: k€ 462), k€ 36 for other confirmation services (2011:
k€ 70), k€ 89 for tax services (2011: k€ 91) and k€ nil for other services (2011:
k€ nil).

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Table of Contents

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

2012

2011Sales


90


73Research and Development


337


279Manufacturing and Service


440


401Administration


113


109Employees (§ 314 HGB)


980


862Executive board members


3


3Apprentices


15


13Total Employees


998


878


35.   Statement of compliance with the German Corporate Governance Code

In 2012, 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 at http://www.aixtron.com/en/investors/corporate_governance/principles.

36.   Supervisory Board and Executive Board

Composition of the Supervisory Board as of December 31, 2012



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Table of Contents

36.   Supervisory Board and Executive Board (Continued)

The
composition of the Company's Executive Board is:



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:

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.

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.

As
disclosed in note 3, during the years 2012 and 2011 the Company incurred expenses of k€ 40,947 and k€ 41,602
respectively, and in 2010 an income of k€ 5,880 arising mainly from changes to past assumptions concerning excess and obsolete inventories. 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-47

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