Q4 2020 Akoustis Technologies Inc Earnings Call
A reminder, this call is being recorded at the conclusion of the company presentation, because this management well take questions.
Ask a question. Please press star one on your telephone keypad to be placed into the Q.
Replay of the call will be available on the Investor Relations section of the acoustics website.
Now I'll turn the floor over to Mr., Tom depending.
As president of Investor Relations for Christensen Technologies. Please go ahead Sir.
Thank you operator, and good morning, everyone on the call.
Welcome to acoustic fourth quarter and full year fiscal 2020 business update conference call.
We're joined today by our founder and CEO Joe <unk>.
Interim CFO, Kim Boren and eat repeat business development they likely.
Before we begin please note today's presentation includes forward looking statements about our business outlook.
All statements other than statements of historical facts included during this conference call, including statements regarding our strategies operations cost blended objectives, including the timing and prospect in product development and customer orders.
Expectations regarding achieving design wins from current and future customers.
The possibility of entering into collaborative we're partnering relationships.
Potential impacts of the cobot 19 pandemic and guidance regarding expected revenue for the current fiscal quarter are forward looking statements.
Such forward looking statements or predictions based on the companys expectations as of today.
Subject to numerous risks and uncertainties.
Company and our management team assumes no obligations to update any forward looking statements made on todays call.
Our FCC filings much an important factors that could cause actual results could differ materially.
Please refer to our latest form 10-K, and form 10-Q filed with the FCC to get a better understanding of those risks and uncertainties.
In addition, a presentation today, we'll also refer to certain non-GAAP financial measures reconciliation of these measures for the most directly comparable GAAP measure.
Resulted in our earnings call highlight relief available only investors section of acoustic dotcom.
I would now like turn the call over to Jeff, Chile, founder and CEO because.
Thank you, Tom and welcome everyone to work 2024th fiscal quarter and for your business update call.
Last week, we announced the introduction of our new 6.5 gigahertz, why far Sixsix X ball filter, which when paired with our existing 5.5 gigahertz filter introduced in June creates the industry's first and only tandem ultra wide band BAW filters solution for why Fysixteen.
This morning, I'm happy to begin our call by announcing that we have already received our first order for our new tandem ball filter solution for white Fysixteen.
These two X ball filter solutions cover both unlicensed why Fivesixty band between 5.17, 0.1 gigahertz with superior coexistence performance compared to alternative filter technologies.
Why five six he is the next revolution and why for technology with two key bands.
Typically 665 megahertz of spectrum centered around 5.5, gigahertz and 1.2 gigahertz spectrum centered around 6.5 gigahertz.
This new spectrum was it a lot it by the FCC in late April of this year.
We have shipped early samples of our new 5.5 gigahertz filter to multiple s., so see and Oems and have already received positive feedback.
Or 6.5 gigahertz filter solution is expected to sample this quarter.
Interested or why Fysixteen filters has recently grown dramatically.
Our solution offers superior coexistence capability compare to any alternative why fysixteen filter solution, we have seen in the market without compromising adjacent channel integrity.
This will allow Oems to deliver C.P.E. devices that can utilize the entire spectrum offering increased bandwidth and improved performance.
Having the industry's only 5.5 and 6.5 gigahertz tend to them.
Paul based filter solution, we expect that why Fivesixty will become one of our primary revenue growth drivers moving forward.
Now moving on to <unk> accomplishments.
That's the June quarter marked the end of our fiscal year.
I'd like to take a moment to discuss the accomplishments acoustics has made over the past 12 months.
In June of 2019.
We were shipping only one commercial filter a 3.8 gigahertz ex ball filter for phase three defense systems.
At that time.
We had also completed development of our first 5.2 gigahertz warfarin filter for Tri mode.
Multiuser, Mimo, C.P. routers and other devices.
Since that time, we have locked the design of 12 additional ex ball filters.
Excluding our 5.6 gigahertz filter for why Fysixteen.
To ban in 77, and one band and 79 filter.
For Fiveg small cell base stations CB RF filter for Fiveg base stations in the U.S.
Five additional S band filters for civilian and defense market and our first drone filter.
Additionally, we introduced our first wafer level package or W. LP demonstrator, which has positioned us to qualified W. LP base X BAW filter solutions by the end of 2020.
All told this equates to roughly one new filter design completed every month over the past year, which now positions us to pursue design wins across all our primary target markets.
For those of you have been following acoustic for some time, you'll hopefully recall several years ago that I spoke about our plan to develop innovative RF filters.
For new and emerging markets versus mature applications.
I refer to this as skating, where the puck is going to put that into context. Our business thesis was always to be the first or early to our primary end markets with advanced micro BAW filter solutions that address applications in the high frequency spectrum.
From three gigahertz to approximately 70 gigahertz.
Such applications include worldwide Fiveg deployment.
Both in Fiveg network infrastructure as well as the Fiveg mobile segments.
Tri band wife, I routers, and both why Fysixteen, why Fysixteen automotive defense and drones.
As of today and excluding our two new why Fysixteen filters introduced over the last three months.
We have 14 high frequency BAW filters that are designed locked in commercially available.
And of those 14 sticks are the only commercial BAW filters available anywhere in the world today that cover a specific frequency endorsed filter application.
For being in Fiveg network infrastructure, one in defense and one addressing the drone market.
In previous conference calls.
Spoke about our plan to make significant capital investments in on New York Fab, two increased manufacturing capacity by 500% to have the capability to produce hundreds of millions of X BAW filters per year.
To that end over the past year, we spent approximately 10 million on manufacturing capex, whereby we added multiple advance pieces of equipment, enabling the design and manufacture of our RF filters.
We expect to continue making investments over the next 12 months and remain on track to grow our filter unit capacity to hundreds of millions of units by this time next year.
Well, our product development and capital investments. We're currently ramping our first fiveg small cell and why five six.
Multi user Mimo C.P. design wins.
In the second half of calendar 2020, we expect to wrap it at least two additional design wins in Fiveg small cell network infrastructure and one or two additional design wins for why five six CP.
Overall.
Fiscal 2020 was a transformational year for Coustas as we made great strides in transitioning from an R&D focused company to a commercial manufacturer of high performance RF filter products.
Before I talk about each of our market segments I would like to spend a moment discussing the impact that cope with 19 pandemic has had on our business and touch on what we expect over the coming months.
As a result of the pandemic acoustics continues with several precautionary steps, including selective remote work authorization and worksite isolation from outside visitors over.
Overall, we have experienced incredible flexibility from our in house manufacturing model in the current environment as it allows us to continue to develop and ship our products with minimal delays.
To this day acoustics has continued to operate with all key personnel, that's an essential business in both New York and North Carolina during the pandemic and we continue to accelerate product development, along our strategic roadmap.
We greatly appreciate our employees and value their flexibility in disappoints think safe during this challenging time.
Looking ahead it is difficult to know the impact of the pandemic, particularly on our customers regarding their respective supply chains and product launches.
And now I would like to move on to our business performance by market segment.
We've organized todays call to give you both a progress report indoor target milestones on each of our four main filter market segments.
Those being Fiveg network infrastructure, both why five six and why Fivesixty defense and finally Fiveg mobile handsets.
In addition, Ted will provide an overview of our financial results along with Ford revenue guidance, and finally, I will highlight our expectations and milestones beyond the September quarter.
Beginning with Fiveg network infrastructure wide band with Highpower handling capability low insertion loss and high out of ban rejection are critical product performance features.
Such high performance delivered in a small form factor solution as well as our existing RF filter portfolio above three gigahertz, where fiveg is being deployed worldwide ideally positioned to coustas to be an early leader in high performance BAW filters for expanding Fiveg network.
As of today, we have to tier one customers and we have recently engaged with more than four additional Oems with respect to our high frequency ex ball filter solutions for Fiveg network infrastructure.
Our first network infrastructure customers focused on global Fiveg infrastructure across multiple sub six gigahertz frequency bands in the second is focused on multiple new radio bands for Fiveg small so the point that globally, including an initial focus on the Asian market.
With respect to our first tier one Fiveg network customer we were chosen to develop micro acoustic X BAW filters, given our ability to provide an ultra small form factor solution, while satisfying challenging RF specifications, including demanding high power handling performance.
One of our important milestones for the June quarter was to deliver a lock design to our customers under an existing purchase order.
I'm pleased to report that we delivered high power RF filter solutions in June against a mutually agreed upon specification.
As a result, the customer a proof payment under the purchase order.
However, as a customer has been designing their system in parallel with our development. They also updated their filter specifications. This resulted in the need for an additional design spend through our fab and we expect to deliver final package filter products to the customer by November.
In parallel we are currently negotiating a commercial agreement with the same customer and we believe that we remain on track for product launch next year.
Moving onto our second network infrastructure customer, we announced our first volume commercial order for Fiveg small cell filter applications.
At the beginning of the March quarter.
We began to ship against this order at the end of the March quarter and continue to ship against this volume PEO in the June quarter and expect to complete this initial order in the September quarter.
This led to our first Fiveg network infrastructure design win which we announced.
In early April.
Our customers expect it to enter production with this first design in the current quarter and we expect volumes to ramp over the next 12 to 24 months.
Additionally, in the June quarter, we received a second design win for another band and 77 small cell filter solution, which we expect to ramp into production in the second half of the current calendar year in support of the accelerated deployment of Fiveg network.
In the Asian markets.
In late July the FCC began the auction of the priority access license portion of the citizens broadband radio service or C. B R. S spectrum for the U.S. market.
CBR S band operate between 3.55, and 3.7 gigahertz and will provide cellular carriers new in additional sub six gigahertz spectrum and can be an a key enabler for making fiveg deployments possible by providing last mile data service and improving coverage of individual unlicensed network.
Yes.
The good news for Coustas is that this utilization of the Crs bands within the Fiveg network will likely require a significant amount of high frequency filters to deal with a multitude of coexistence issues.
To our knowledge acoustics continues to be only supplier, providing BAW filters for this application and we're receiving positive feedback on the performance and size of RCB RF filter solution.
Given the current lack of micro filter solutions that can target this high frequency spectrum.
CB Earth represents another new first to market Greenfield RF BAW filter opportunity for Coustas.
Well the FCC auction ended up being.
Over eight year late it now finally paves the way for local regional and national carriers to begin deploying CBR S. base stations and networks opening a new market outside of Asia per sub six gigahertz fiveg deployment.
As we announced in March of this year.
We have a design locked.
Our first Seabear s. ex BAW filter and have sample that <unk> eight CBS equipment makers up from the three customers, we announced last quarter.
While the timing of design wins and customer ramps is difficult to predict we do expect that CBS will deliver significant revenue growth in calendar 2021.
In conclusion, the number of opportunities we are seeing in Fiveg network infrastructure has expanded significantly over the past year and we expect many carriers to continue deploying sub six gigahertz networks in calendar 2020, and beyond we believe that the Fiveg network infrastructure filtering need.
Play right into our sweet spot and that our current fiveg infrastructure customers will deliver acoustics significant revenue growth opportunity moving forward.
I would now like to discuss our opportunities in our growing why five business.
Acoustics was the first company to commercially offer a tandem 5.2 and 5.6 gigahertz.
Why five ball micro coax distance filter solution for the current Tri band why five six CP market.
Which we expect will grow into a high volume market and deliver significant revenue growth for coustas.
We announced our first as I went for our co existence.
Solution for Tri band, why five multiuser Mimo CP devices with a tier one customer during the June quarter, marking our entry into our second high volume commercial market after Fiveg network infrastructure.
We began to ramp at the very end of the June quarter with this customer and we continue to ramp in the current quarter.
We're now shipping production why five six filters and tracking multiple active engagements with Oems audience, So see makers distributors and channel partners.
Our team has done an excellent job filling our sales funnel and we're now in the advanced stages of the sales cycle with several customers, where we expect additional design wins over the coming months.
Some of you May know the FCC announced in late April the approval of 5.9 to 7.1 gigahertz for White Fysixteen and license use which is the largest spectrum additions since the FCC allocated unlicensed spectrum for why fight and 1989.
This next generation or why five is expected to use the existing 5.1 to 5.8 gigahertz unlicensed bands, which we refer to as the five five band.
Along with new allocated 5.9 to 7.1 gigahertz bands, which we refer to as the 6.5 bad to deliver higher data rates.
In anticipation of the next generation Y., five standard, which promises to deliver higher data rates, we invested in the development of the industry's first tandem ultra wide band five five and 6.5 gigahertz BAW based coexistence filter solution covering the two why fysixteen bands within.
5.1 to 7.1 gigahertz unlicensed spectrum.
The engineering challenge and delivering these new filters include high frequency operation Ultra wide bandwidth.
And high adjacent band rejection, leveraging key performance features of our ex boss filter technology.
We have been active in developing wide bandwidth gays electric materials device models RF filter designs and have filed key patents surrounding our approach to why Fivesixty RF filters.
In early June we announce delivery of the first samples of our new 5.5 gigahertz X BAW filter the industry's first high performance micro filter for the emerging why 560 unlicensed bands that covers 665 megahertz of spectrum between 5.1 and 5.8 gigahertz.
And as we announced last week, we have introduced the world's first tandem ultra wide band micro filter ball based solution for why Fivesixty coexistence.
That covers the full 1.2 gigahertz of spectrum from 5.9 to 7.1 gigahertz.
Our press release this morning.
We announced we have received our first order from a tier one enterprise OEM for both tandem why 560 filters and we are driving as quickly as we can't to deliver qualify Hubble production ready 5.5, and 6.5 gigahertz why fysixteen filters body end of calendar.
2020.
We expect commercial production in revenue growth to start by mid calendar 2021.
In our discussions with Oems audience, and net so see vendors while developing these two filters interest in demand has been growing dramatically.
Some Oems are choosing to develop custom solutions for why Fysixteen.
As a result during the June quarter, we announce a development agreement in purchase order for custom why 560 filters from a tier one OEM for multiple filters into five.
And six gigahertz spectrum.
Whereas activity in Wi Fi six remains strong the interest and demand for why Fysixteen filter solutions is intense as many Oems I know d. and have quickly shifted new product design to address why fysixteen.
And as of today acoustics is the only company in the World that has a ball based tandem 5.5, and 6.5 gigahertz micro filter solution for why Fivesixty, which covers the entire 5.1 to 7.1 gigahertz unlicensed why five spectrum.
In addition, we strongly believe there will be a need for ball micro filter solutions for why 560 in mobile handsets and we are already well into development for filters and modules to satisfy what should be a very sizable opportunity.
In summary, we believe the next evolution into why Fivesixty will drive significant unit and revenue growth for acoustic beginning in the first half of calendar 2021.
Finally in the handset market, we successfully delivered to Fiveg filters to our first customer in the December quarter.
The customers currently evaluating our filters for use in future Fiveg platforms.
In the June quarter, we continued our engagement with this customer for evaluation in future mobile RF modules. The dialogue remains active and engineering engagement continues today.
The mobile handset market is our largest potential BAW filter market opportunity by both unit volume and revenue. It is worth noting that our ex BAW filters have already been evaluated by several select top tier one and tier two mobile handset Oems, but as I have stated previously many.
Times acoustics does not intend to enter the tier one handset market without a partner at least for the foreseeable future.
However, we believe with the ongoing 500% capacity expansion of our New York Fab that we will have the wherewithal to enter the handset market servicing a tier two handset OEM without a partner.
Young customer driven activity previously described we have dedicated engineering resources focused on dramatic package size reduction specifically the development of advanced WLP and W. Ell CSP solutions to address the next generation of Fiveg mobile products.
Working with a 100% North American supply chain acoustics has been developing a W.L.C.S.P. process.
With the capacity needed to support the high volumes associated with the mobile device market.
W.L.C.S.P. technology development has been steadily progressing through calendar 2020 with pre production parts expected to be available in early calendar 2021.
We are also actively developing flip chip wafer level DDI solutions.
Flip chip provides a low cost WLP technology supporting improve performance and smaller footprint integration. We expect this solution to be fully qualified by the end of the current year.
Now I'd like to turn the call over to Ken to go through select financial highlights.
Thank you Jeff.
For the fourth quarter ended June Thirtyth, the company reported revenue of $365000, which was flat as compared to the previous quarter, but represented a greater than 350% increase in our core filter product revenue.
On a GAAP basis operating loss was 8.2 million for the June quarter, mainly driven by labor costs of 4.7 million depreciation of point Ninemillion and other operational costs totaling 2.6 million as a result, GAAP net loss per share was 28 cents.
On a non-GAAP basis operating loss was 6.6 million and non-GAAP net loss per share was 19 cents.
Capex spend for Q4 was 3.4 million compared to 2.2 million in the prior quarter, mostly related to the targeted 500% capacity expansion in the company's New York Fab.
Cashews and operating activities in Q4 was 4.9 million compared to 4.4 million in Q3.
The increase a point 5 million is primarily due to the point Sixmillion increase in other current assets.
The company exited the June quarter, with 44.4 million of cash cash equivalents versus 39.7 million at the end of Q3.
The increase in cash resulted from mindful management of our balance sheet utilizing the at the market financing instruments during the ongoing pandemic.
As a result, we added 10.8 million net of cash the balance sheet. After all fees at an average fair price of $8.02.
Last quarter, we did not provide guidance given industry supply chain challenges related to the pandemic uncertainty and timing of customer production ramps relate to cover 19 contribute to lower visibility to guide revenue.
Despite such ongoing challenges, we are fully booked with backlog in house to support revenue growth of at least 50% sequentially in the September quarter.
Driven by the commencement of production in the five Fiveg small cell market and the continued ramp of our ultra high frequency 5.2 at a 5.6 gigahertz why filters.
I'll now turn the call back over to Jeff to discuss our forward outlook.
Thank you Ken.
Overall, we expect to see revenue from all our target end market segments in the September quarter.
Our company continues to strive to achieve our targeted milestones across each of our market segments.
Here are a new target milestones beginning with Fiveg network infrastructure.
Consistent with our earlier discussion related to our first tier one infrastructure customer we expect to deliver a design locked ex BAW filter by November which is a reset from last quarter given the customer specification change in early summer.
For our second tier one infrastructure customer we announced in early April that we received our first design win for a band and 77 filter for small cell base stations and we received a second design win in the June quarter.
We are currently shipping against the first design win and expect initial shipments for the second design win late in September quarter.
Now moving on to our why five business.
As Ken indicated we're excited to announce the continued ramp in the September quarter with increasing shipments of our 5.2 and 5.6 gigahertz why filters for our first consumer why five six C.P. product, which we expect will be available both online and in retail stores by the end of.
The calendar year. This is clearly a major milestone for coustas.
In addition, we remain in active discussions with multiple other potential customers four or five gigahertz tandem why five six solution for Tri band multi user Mimo C.P.E. applications and we expect at least two additional design wins in Wi Fi six during the second half of the current calendar year.
Additionally, in the June quarter, we hit our target by delivering the first wife, I Sixsix micro filter solution with our 5.5 gigahertz ex BAW filter.
To complement the 5.5 gigahertz filter solution, we announced last week. The introduction of the industry's first 6.5 gigahertz ball based filter solution addressing why fivesixty coexistence challenges.
With that announcement acoustic now has the first and only tandem ball based 5.5 and 6.5 gigahertz why five sixsix solution.
We expect to sample this tandem solution to multiple other Oems audience, and so see vendors in the September quarter, and moving forward with the goal of entering production with one or more customers in the first half of calendar 2021.
Moving now to our defense business, we see follow on demand for our existing radar filter. In addition, we're currently bidding a new program, which requires multiple new X ball RF filters.
Furthermore, we expect to announce a significant contract award from a major defense agency in the September quarter.
We developed and shipped our first drone filter to our customer and April five months ahead of schedule, our customers evaluating the filter and we expect to transition into production in calendar 2021.
And finally in the Fiveg mobile market, we continue to March toward entry into our largest market by unit volume and revenue after delays related to the cobot 19 pandemic, we had been working with our current customer over the past several months to integrate our export technology.
And we expect to receive feedback this quarter regarding the performance of our filters.
In parallel we continue to refine our new WLP W. Ell, CSP and flip chip packaging filter solutions as well as work towards a partnership that could help us entered the tier one handset market.
In conclusion, we are working diligently to achieve each of our stated objectives and we will continue to update you on our execution against these objectives each quarter going forward.
The team at acoustics has done a tremendous job over the past year and I'm pleased to reiterate that we have 14 design locked X ball RF filters as of today, not including our recently announced breakthrough 5.5, and 6.5 gigahertz why five six he coexistence filters a seven fold.
The increase in the past 12 months.
This growing product catalog puts us in a great position to ramp revenue in the second half of calendar 2020, and beyond and we look forward to expanding our growing filter portfolio and discussing our progress during future updates.
As we discussed in our previous conference call to support our current engagements in emerging sales opportunities. We continue investing to increase manufacturing capacity by 500% to produce hundreds of millions of X BAW filters per year.
We continue to add key hires across our sales design and manufacturing teams. One example is the recent announcement of Collin Hunt as our new head of worldwide sales during the June quarter.
Beyond our current expansion project the company is positioned to scale.
As our current New York wafer fab can ultimately produce up to 5 billion export filters per year when fully equipped by working with a tier one partner or through longer term organic growth.
I would like to thank those who have joined us on the call today, we continue to build our company on for solid pillars, including strong management technical staff strong intellectual property, which currently includes 33 issued and license patents and 71 patents pending.
Large and growing markets with limited historical competition in the high band and Ultra high band spectrum, and our qualified wafer manufacturing operation, which is expanding to address high growth opportunities in our target end markets.
We're successfully penetrating the why five market with our first design win with the world's first tandem 5.2, and 5.6 gigahertz Ultra high band.
Paul filter solution.
And we expect you can acquire the product within the next three months.
Additionally.
Our fiveg engagements with global leaders in both network infrastructure and mobile handset markets have led to two design wins in small cell base stations, providing acoustics with technology validation from a tier one OEM and strong growth opportunities in high performance coexistence ball RF filters.
Finally, I am forever grateful to our employees for their hard work passion and dedication during this ongoing pandemic as our team has kept the momentum going on our R&D, which has led to our first for design wins and a development agreement for Wi Fi Sixsix with a tier one enterprise OEM.
I also wish to thank our shareholders, who continue to support the company and with that I would like to open the call.
For questions from the investment community.
Operator. Please go ahead with the first question.
Thank you as a reminder, need to gentlemen, if you'd like to ask a question. Please press star one on your telephone keypad.
Confirmation total indicate your line is in the question Keith.
He passed starts you if you'd like to remove your question from the Kim for participants using speaker Clinton it may be necessary to pick up your handset before pressing the starkey.
Our first question comes in line I've, Rick Schafer with Oppenheimer. Please proceed with your question.
Hi, Thanks, you guys for taking my question.
Just I'll just start with a coated question to beginning I know you talked about.
Great. The team's done in terms of on your side on the production side I'm curious on the design win cadence side, you know what impact you guys have seen from co, but just from not being able to maybe directly interface with customers. Obviously you guys.
<unk> strong guidance for the for the September quarter, but I mean, what could it have been or what it would impact you guys see I guess would your design pipeline.
Hey, Rick Good morning, Jeff here I'll, let Dave start with that I'll wrap up with some comments on.
Good morning remained stable.
Yeah, we've seen some impact and it's been primarily a delay I think that yeah, one to two months and some of the programs and a lot of it is is the back and forth.
Before the Oh, Oems, who work with the audience.
More closely and they could actually be onsite now they can't be onsite. So you have delays of shipping back and forth when they're doing a their design validations and locking down designs. So we've seen that yeah, well, but on the why buy side and also on the Fiveg network infrastructure to Fiveg less impacted because.
The main OEM said, we've been working with had been in the Asian market, Yeah, which has been up and running recently, but there were some delays yeah earlier in the year as well.
And Rick This is Jeff. So you have just piggybacking, what Dave said.
Supply chain clearly were disrupted earlier in the year.
Right.
We've we've been engaging with customers a in a remote engagement so that adds that dynamic to it.
What I am happy to reiterate is that with with the flexibility of our in house manufacturing.
We've not been disrupted in terms of being able to produce the chips I hope that's evidenced by.
Some of the R&D activities that we brought forth to the market.
Thanks, and then maybe I'll follow up on that just in terms year, you mention capacity expansion a couple times in your prepared remarks.
I know you said you'd be at the hundreds of millions a target by roughly this time next year, maybe you talk about what the Capex is going to be due to you know required to get you guys. There.
Oh, yes, so let me, let a can jump in here.
Morning, Rick I'm actually stayed in the past see where we're on the the goal to to get five that capacity expansion.
And on that goal, we had about $7 million to $9 million additional capex spend a yet to all to purchase over the next nine months to enable us to achieve that stated goal of the 5% capacity expansion of our New York Fat.
And and Rick let me add to that because I think it's an important point a part of what we've been doing what this capacity expansion is to bring in a higher throughput equipment, a with with higher throughput equipment often times.
The the quality of a if it's a if it's a producing materials the quality of those materials or improve.
Improve with a manufacturing equipment.
Line accuracy improves and we actually also see a these investments manifesting themselves into improved performance, particularly in the quality factor of our technology. So I just wanted to take you back Kens comment what's that.
Great. Thanks, Thanks, a lot you guys.
Thank you.
Thank you, ladies and gentlemen in the interest of time, we ask that everyone limit themselves to one question and one follow up each our next question comes in light of Anthony Stoss with Craig Hallum Capital. Please proceed with your question.
Well you guys, Jeff I just wanted to follow up on your comment on the Fiveg infrastructure side I'm not sure heard you correctly that you have or you do expect potentially two to three more additional customers coming online is that mainly for small sellers of the combination of small cell in mimo and it also I didn't know if I missed this I think you said several but can you maybe.
Further quantify the number of why Fivesix E customers, you might be sampling to by the end of the year.
Thanks.
Hi, good morning, Tony.
Oh, good to talk to you.
I'll, let David jump in on.
On the Fiveg infrastructure here.
Yeah. So the most of the work that we're doing right now.
As in the small cell, primarily fiveg small cell and we've got a more than five customers that were engage with right now and it's primarily the and suddenly seven and then 79 bands.
Yeah, Yeah, well you know obviously, we'll update next quarters to traction on those stated design when gold, but yeah, we'll continue to increase that funnel, yeah, there's opportunities extending and other frequencies.
What we're working on right now as you see fight you get deployed in other regions. Besides the Asian markets.
And then with regards to the White Fivesixty, Yeah, we there's a flurry of activity going on right now there's a lot of activity and obviously North America.
And yeah, that's pulling out a lot of the OTM yeah over in Asia as well. So the good thing is is that the Ah I guess, the groundwork validation that we did with white fightstick, yeah with the Oems and audience is enabling us to have very smooth communications with.
Yes over in Asia as well.
I would say that yeah, our target is to really engage with all of the SNC vendors. The main topped five.
Sampling those you know in the in the coming quarter. Then also with the majority of the Oems were seeing a lot of energy and retail being the first market, but the enterprise.
Sectors and the carriers are trying to come in with products in the Q2 Mark timeframe. So there's a there's activity in all three areas.
Yeah, Dave Tony Let me Oh go ahead go ahead John [noise].
Just gonna say their particular frequency band that you're seeing most interested in dave or or jobs.
They deserve ultimately you know more extreme difficulty for your competitors to catch up as a result.
You mean with Fiveg structure.
No more of these Dixie side.
Well the 16 side, it's really too filters.
And it's it's yes, we stated covering the full five five dance. So 665 megahertz and then you have.
The 6.5 data, which 1100 90 megahertz difficulty is you only have a transition gap 100 megahertz between those two dance.
So what we've seen and why the interest level. So I wouldn't coustas right now is that all the other technology out there clips about 160 megahertz.
That first what they call unique five Dan.
And ER and our technology at least what yeah, we're going to he's definitely not clip that band. So right now anybody that is utilizing any other technology is not going to be able to use a life first hundred 60 megahertz channel for the first 80 megahertz channel that is something that every service provider wants.
Yeah, I agree that MISO and carrier watts.
So this is something that we're in a very good position. Once we get you know these these ah solutions into the customer San Antonio Jeff Here. In addition, so Dave talked about the five five and six five <unk> will probably call that Oh kind of the standard bands that that Dave mentioned.
There's also some custom.
Solutions that are that go into those where a customer then takes a those two bands and they partition those differently.
So that that's sort of activities ongoing to your other point I wanted to just take a moment and.
If you look at the five to six.
The the bandwidth of those products are roughly 160 megahertz in 365 megahertz as Dave mentioned.
When you get to Wi Fi Sixsix, the bandwidth is dramatically increasing.
To 665 megahertz in 11, 90, which you know to your to your question. A is it is it a challenging design for others to do.
Yes, there there's material science that has to be engineer to too.
To hit those significantly wider band with Dave mentioned transition gap is being another technical challenge.
For for those of you that hurt us a chat about a advantages that bar that's that is.
What we've always been saying talking about co existence. So.
So, whereas you have to bands that are sitting right next to are right adjacent to one another in this case, a the trend what they've called a transition gap of 100 megahertz Ah. That's that is like that's that's a definition of a coexist since challenge so in terms of.
Technology challenges a wider bad number one these are these are high frequency.
They are wide bandwidth and their true coexist sense, which is really fits into the sweet spot of Oh, They are bought technology.
Thank you. Our next question comes on line of harsh Kumar with Piper Sam. Please proceed with your question.
Hey, guys first of all congratulations and all the positive activity. Despite headwinds from co that just a quick question for you went this whole coated economy world.
Yeah, everybody working from home learning some home have you seen a I would guess you would've seen a pick up in interest on the particularly the CP guys. Lifesize eyes also you should've seen in my opinion.
Some level of kinda speed in essence pots acceptance up their products is that is that an accurate statement.
[noise] so.
Thanks, Tony Yeah, They will start all I'll jump in as well one of the harsh.
Yeah, we have the enterprise market, we have seen some impacts to the enterprise market you know that there's not as much deployments or there's been a little bit of a I guess a reduction in that market segment, you know because obviously people are working more remote all but the.
<unk>, Yeah home office type market is definitely picking up yeah, we've been seeing that in the forecast and the order activity at least you know with her one customer, but also have been tracking that with other programs as well. So we expect that trend to continue.
This yeah.
To go on and we expect to walk by 60.
Going to accelerate the utilization of that extra bandwidth is increasing up to the capacity significantly.
Over the current structure and plus opening up that six gigahertz spectrum is not crowded up there. So there's better utilization. So oh, yeah. We believe this trend continue.
And no harsh good morning, I. So from from just a color couple other points to share with you.
We have seen certainly a timing of new programs a in some cases.
I'm deference to existing programs running longer just to get the product to the market so timing disruption in supply chain in some cases.
Oh for establishing new programs.
And and also timing or release, a product I mean, a of new product certainly for our customers.
The other thing is we've.
And who you.
You know at least a touch base on.
A dynamic that's going on between Wi Fi six and why Fysixteen, which is.
There's.
We continue to see a program activity in Wi Fi six.
There is it there is a as we said in the prepared comments on.
A pretty distinct activity and design activity on why Fysixteen I. It is a there's a lot of demand for even a higher higher data rates solutions. So you've got existing designs going on in five to in five six I didn't know for why Fysixteen.
And then a new activity and very active activity with.
Why fysixteen developments.
And then you also have.
A few of the players that are also looking at both Oh, combining why Fysixteen Wi Fi Sixsix in in a single box. So its you know there's some dynamics that are going on.
That you know some that are market driven some that maybe coven driven but nonetheless, what we're focused on is making sure we have the right product.
For both why Fysixteen, why fivesixty to where we can address a market, which whichever way it accelerates near term.
Hey, Jeff. Thank you and then for my follow up I wanted to ask about the other side. So your soldiers are way smaller budget. The other guys that can give said 20, it's smaller than in many cases, particularly in the last five side.
You've talked about the handset market, but what does it mean for the other markets that are going to connect for example, the tablet market <unk> batch et cetera, and then on the handset side, you've got to basically a duopoly today with between core one broadcom and how do you have products compare I know into pass you have you mentioned that they compare favorably but.
Has there been a step up still as you kind of chug along on on your development I compare your product some better bottom and unquote.
Okay, Yeah. So.
Our something and that doesn't obviously had some more color I think I'll take the second part your question and that we believe yeah with the results that we've been publishing and the you know these solutions, we have been providing to some of these.
You know potential partners.
Technology competes very well about against incumbents again, a lot of our focus is and the frequency bands from three to five gigahertz for the cellular.
But also with all the work that we've been doing with the the white by spectrum unlicensed both at five and six figure.
He is going to play out as well as you know we looked at the white by 60 get adopted obviously the fixed market, but eventually transitioning to the mobile.
Client market. So this is a lot of work that we're doing and the resonator technology and also the material set to be able to what bandwidth.
There's not many copies of the mark that have that technology, that's available to a to compensate you mentioned.
And then as far as you know the yeah. The activity in the design you know again, you know our our focus is really yes, developing a small form factor the WLP.
Can be used in the yeah, obviously, the fixed market, but very well suited for things like a you know laptops and and also the Oh, Yeah, I pass and so forth and you may see some of those start to deploy with white fivesixty yeah in the near term before maybe even got sent to the mobile quite side.
Yeah, it's exciting time for US you were going to come to focus on that yeah, and and just piling on those comments.
What a what I've always said harsh is that for it for a new entrant to come into the market you need disruption in the market.
Disruption in this case are a transition from a what historically, what's called high band, which has now kind of mid band frequencies.
To the ultra high band here, we're talking about filter solutions up to seven gigahertz I think that would be a supply into many just a few years back Ah Ah that someone would have a products in these particular frequency bands their challenges with Oh, you have to scale what technology.
You have to have very high quality factor or else. It's it won't be competitive I won't serve as a good coexistence technology on the other big point and I tried to make this a little bit what my comments earlier on the Wi Fi six transitioning to why Fysixteen <unk>. These significantly wider band whats that are required.
In these filters these require a material science development in order to achieve these a and then you have to have.
A process technology in our case its Rx bought technology, which allows you to take these a and engineered materials and produce season significantly wider bandwidth. So those that's the sort of disruption that we thrive on.
In terms of chip size, you asked about competitiveness, we haven't shipped size that is.
It is extremely competitive in the market Oh, it will fit and anything from a a defense application all the way into a handset so were not limited at all.
It also comment that when we're talking about chips is that ours are in chip is a is a silicon chip so that drives that that comes with it a cost point that is suitable for commercial markets.
Across the board and then piling on Dave's comments on the packaging, we have a technology, which we continue to miniaturized I think the numbers. We previously quoted a we go from you know roughly a 23 times production over a D.R. filter.
To a with a standard package that we're using a all the way down to 260 times smaller with a a wafer level package or chip scale package.
We've added some flip chip technology, which we mentioned we're targeting to qualify by the ended the year. So all in with the packaging approach a weekend, we can service a discrete market a with a very small form factor or we've got the a plethora package technologies that can be.
Integrated modules and it's a I would say that you know discussions on our end or have been ongoing for some time in and modules for mobile a and I would add to that.
Potential integration into a Wi Fi modules for full integrated solutions there so.
For that touches on what you want us to cover.
Thank you. Our next question comes online as he did show that with Roth Capital Partners. Please proceed with your question.
Morning, Jeff can Dave Congrats on the progress here the.
September quarter Guide I know that 50% sequentially can you talk about the relative strength across infrastructure versus wildfire, whether both the contributing equally startups and ramp progress.
So let me let me touch on that I don't want I don't want to break those down I think what we've said is Oh, we mentioned that the design wins that are that.
Step that we have we did mention that we started ramping in.
Our five to five six for Wi Fi six at the <unk> at the end of the of the June quarter. So that ramp has continued.
To it's just continued Oh, you know from June all the way to the current day I would say the ramp and they infrastructure.
This is really starting a this quarter.
So I wouldn't I would view it as we've had a steady ramp in Wi Fi throughout the quarter and ER and then believe we said we're ramping our first product in and small cell or anything you want to add to that.
Thank you covered it yet and the other thing I I want to emphasize is.
I think for Coustas, Unlike quarters past, where we had a drop in we had a drop in requirements or Tim to me guidance, we were specific and want to make sure you caught in the comments a that we're fully booked on our backlog to a that greater than 50%. So I just want to be clear on that.
No I appreciate that color jumped up with helpful and then on that.
My market, if I can understand correctly I know part of its enterprise, but some of its retail does getting some of the Asia OTI M included now potentially target more the Asia consumer retail market is that certain number of quarters behind the U.S. Europe retail markets or am I I understand that the bulk of the businesses, we're comfortable that kinda western markets with.
Next 12 months or so.
They will take that one [noise] Martin Suji, so that'd be the.
The activity on the why Fixie is is driven by the North American market. That's the only country right now that has authorized the spectrum you know up in the six gigahertz a your will probably come next but that will be you know a in the next nine months or so and then Asia more likely.
The next year. So you know the activity on why 60 is North America with Sidoti Evans involved as well a lot of the enterprise and retail guys have strong relationships and it's pretty well spread from what we've seen across multiple bodie, EMS and Taiwan and China.
The led by 60 as you can imagine some of the priorities on design for U.S. shipped into wife I see.
Six is not as critical but there has been a activity pick up in Europe and also in Asia that we've been going after unless you highlighted it is actually retail.
Customers or retail Oh, yes, indeed, as your market going after China.
The other regions around there. So yeah. The good thing is is that we still see a good amount of activity and white fivesixty, yeah, with obviously, the I've got to six or white by six will be I've been a 60 coming on.
Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back to Mr.. She any for any final comments.
Want to take the opportunity to thank everyone for their time. This morning, we look forward to speaking with you during our next update call to discuss current quarter execution as well as a progress on our milestones as well as future expectations.
Thank you very much.
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