Q2 2021 Aehr Test Systems Earnings Call
Please standby.
The mother of the Aehr test systems second quarter fiscal 2021 financial results call. Today's conference is being recorded at the.
Some of it's turned the converts over to Mr., Jim Byers of MPR Investor Relations. Please go ahead Sir.
Thank you operator, good afternoon, and welcome to Aehr test systems.
Second quarter fiscal 2021 financial results conference call.
With me on today's call on Aehr Test Systems', President and Chief Executive Officer, Gayn, Erickson, Chief Financial Officer, Ken Space.
The board the trust before I turn the call over the gain a kind of like to cover a few quick items.
The California, and Aehr test issued a press release announcing its second quarter fiscal 2021 result.
That release is available on the company's website <unk> dot com.
This call is being broadcast live over the Internet for all interested parties on the webcast will be archived.
In Investor Relations section of the company's website.
I'd like to remind everyone that on todays call management will be making forward looking statements.
Today that are based on current information that's not what are subject to a number of risks and uncertainties. The could cause actual results to differ materially from those important things day much.
These factors that may cause results to differ materially from most of the forward looking statements or just kind of some of the company's most recent.
The Arctic and current reports filed with the EPS even see.
The forward looking statements, including guidance provided during today's call all the balance of the state.
The other jumped the gun undertakes no obligation to update the forward looking statements and the.
Well, that's sort of like to turn the call over to gain Erickson, President and CEO [laughter] test systems.
Thanks, Jim and good afternoon of those joined US on the comp guidance. So Paul on the line them all so let's move on.
On the over the balance.
Gain on the kind of the over the second quarter financial the bulk leg of the called the social shouldn't be much of the bonds and do catching on the challenge of true.
That's true in the quarter and probably the responded.
I tried and true what we're seeing now and why we think things are moving in the direction and then following their remarks, we'll open up the lunch for your questions.
We anticipate the is on last quarter's call of bookings and revenue for the first of all about the studio the negatively impacted due to several of customer specific production ramp the lives and push outs of forecasted orders due to play the nature of the maybe the blocks as well as the continued challenging book of business inside the crazy by the called the night cheap debt.
These customers continue to indicate they believe the of course shots are true and they will require additional system capacity of consumables in the cost of goods.
The continued to be optimistic about generated significant bookings and revenue increases in the second half of this fiscal year compared to the first though.
Based on the customer forecast and the initial all told we began to see already starting in the second.
At the beginning of third quarter on just last month, the and watching the so you get the line then I'll.
Hi, volume production test and burn in application or quit the mobile sensor applications.
The engagement with the new customer the suppliers of strangers true mobile a major mobile device manufacturer the game.
I'm like in the initial 4.3 million dollar order from the initial test cell consisting of the Fox XP production test in Dublin system set of data type players and the box out of maybe bad talk later on modem.
This initial test salvage expected shift during this fiscal third quarter and we expect follow on could possibly the orders from this customer in the fiscal year for additional test system capacity.
That carriers and I don't want the automotive solutions.
We're probably going to let the claims on application, which we on boarded Detroit unique technical capabilities and the cost effectiveness of association.
The critical to the top the kitchen operations, which will require one of the top 100% test volume and chase the body and validation of use the batches of.
Highly differentiated blocks solution the cheapest test requirements.
The cost of much low cost of test targets due to the significantly higher parallelism debt can be obtained on on Fox XP system from calls.
During the second quarter, we also the sheep the design win on the in the initial order of commodity customer from multiple carriers for test and burn of the next generation sensor modules from much more of the devices and troubled debt disorder expands the deployment of our test solutions to the additional devices with the large multinational cuts.
And we're excited to engage with them earlier on the design cycle is this part of it.
The cost of what we use our proprietary dog pods full production qualification test and burn in of these devices.
We expect this to challenge the volume production orders for additional lifestyles and had to participate of the getting the shipment of the incrementals on top of policy and not fiscal fourth quarter. However.
However, the best customer recently told us that the possibility of is likely to be delayed until the <unk>. The.
Fiscal year.
Instead, the push into the first or second quarter of our next fiscal year, but the cadence in June.
We continue to be optimistic about the mobile sensor market stage I continue to see increasing interest in our box system from died Pops, the production test and burn in of complex to the into the structures from multiple mobile applications.
Since the beginning of the corn from quarter, you do see multiple follow on orders and are seeing an increase in bookings for Josh local price chose April packs and by the techs consumables across multiple multiple market segments. The installed base of Pops wake boat and some day to day budgets on systems.
This reflects the customer capacity in consumable needs from our previously announced design wins from customers for the devices in silicon Photonics Silicon carbide double of sensors in flash memory.
We're forecasting additional capex and make the fact the orders during the second half of the fiscal 2021 from the installed base that is all the patients in this key market share.
As we've noted before airs proprietary test and burn in solutions include customized wafer packs of buybacks they need of not only the new systems waters, but also from each new design win for each new device on the chip production test.
As we increase the way, it's all based on Fox systems, with current and new customers, particularly with our clocks and P. and XP multi they put in some of the damage of test Embolden systems, we expect the consumables business book to change the growth in absolute value and as the percentage of our total sales over the long term we expect the.
The plane consumable sales kept on per up channel how can we get more of a total of Walt debt.
In Q4 of our prior fiscal year, we announced the new design wins of the new tier one customer for Fox and PIEPS system that we shipped in Q1.
This customer as a global leader of the communication tranches of Transceivers for data center of Telecom Digest, the structure and its forecast due to transition to our Fox XP. They put all the test and burn in systems. During this fiscal year to meet the volume production Board test.
In addition to the order. The in addition to the all the we expect to receive this fiscal year, we expect them to continue the place additional systems and that's on the orders over the next several years.
We also announced the they began the new relationship with the new customer that is the world's largest outsourced semiconductor assembly and test the qual.
During the first quarter, we began the initial marketing and sales campaign with this customer well Fox P family of products, including the wafer packs and die of possible production plus the part of the lot of those being the device or the full wafer simulated the body and modules.
This campaign is generally discussions with multiple potential new customers and continues to gain momentum with the customers, including the up another opportunity as late as the last few weeks.
They have asked us that we bought based on publicly yet as they see that moved into the Silicon Photonics Assembly packaging the test stage of the strategic initiative.
On to gain market share of that some critical type of plus the most people go public the but they see as a competitive advantage of being able to provide the total solution, including all wafer level test and building on the board Assembly of the.
I think the time, if the engine to come to the change of the modules.
We expect to make this partnership public in due course.
The continued to expand the device when we released the production of the Fox XP from Silicon carbide devices during the first quarter.
End of second quarter, we added a couple of the device design and the the new high voltage silicon carbide devices on the topics from system that out of the customer.
Using the Fox XP system wide volume production bone and into the mortality the school of Silicon carbide devices. The wafer level from a few key applications, including the electric and hybrid electric vehicles.
They are forecasting the additional book you can possibly spar Fox XP system from wafer packs during this fiscal year and true years into the future.
The those you're not familiar with the silicon carbide is the very impressive the true for Highpower on particularly high voltage devices or applications, such as the move the electric and hybrid electric vehicles powered trains and electric vehicle charging infrastructure.
Outside the <unk>, most if not every easy on H. you'd be automotive company is moving to silicon carbide of those power drive of charging systems. The.
The challenge the Silicon carbide. It is known to have high interest mortality rates. The walk killed the allied below the board interest and fees pick ups can be completely removed to provide extremely reliable device. Its flow. These mission critical applications.
Aries able to the by the complete solution, but one of the key reliability of screening test of an entire weighted at the time well.
While testing the monitory every device book value is through the by the process to provide critical information how much the boxes.
This is enormously valuable capability of the allows our customers to screen devices that would otherwise fail. After the packaged into multi day modules, where the yield in part the chem actually the mohamad tones as Paul said.
The critical capability that only absolution can divide the the market today is the ability to test the other portion of the bar on all day parts simple insertion, while providing the 100% trace the ability of hostile results of evolution of the device and the including the exactly what time doing the test in government type of the device fails.
This is a critical feature of the list customer to provide confidence to their customers that are in the.
On the moving all over the like all of you as part of June shipments.
This customer has made public presentations in the industry conferences clogging of the cost and quality assurance of damages of our Fox solution. The page of traditional package of modular over the past.
The systems are not only able to test the other per cent the devices. The four six inches as long as the ability of test 12 inch wafers, but we can test and burn in 18 wafers out of the tone on the <unk> simple pops up some system.
We continue to see the total available opportunity the silicon carbide, and silicon photonics wafer level and Cingulated dye test markets to be approximately $250 million of moving capacity, including the consumables based on until the wafer starts yields and test times.
The silicon carbide silicon that the device market is going to the tremendous rate the unit growth of high power devices. The expect the goal of the 50% of changes from 22 to 2025 per year old research.
Turning to our packaged part of business, but the talked about before the pad. We have started the seaport cats for the need of demand per package part burn in applications, particularly from customers seeking high voltage capability the tuck in a move towards higher voltages and the other market requirements of the devices of automobiles.
We expect to see bookings resumed the the certain <unk> current aehr customers. This fiscal year and also expect to generate additional walk of choose the planned and the adoption of the new packaged part burn in part of that of the very high voltage test took the though.
The being relatively conservative the that forecasted the package part burn in the segment still seems to be heavily impacted by cover the bikes and delays in customer evaluations.
Still we do see the need the all boats its capabilities and the like the love on packaged parts of the high growth off the gym.
The next day orders from several new customers, including the share of wanting to true love the customers. The packaged part burn in systems. This fits the of <unk>.
As we look to the second half of the 50 and be on the remain actively engaged in discussions with the large and growing group of potential new true on the chip to customers that are considering the <unk> as products to support several high market growth off the gym.
The not only include Silicon photonics utilities carved out of production book, but also application to the automotive memory in general and microcontroller applications. The breadth of opportunity for our products makes us more and more excited about the broad based adoption the victim of the book.
We continue to the C specific forecasts from existing customers. The addition of capacity and the expected additional booking and shipping the love them of four systems and consumables.
These customers on key growth segments of the have started to already penetrated because of the joking photronics utility from car the.
And they have already purchased initial systems from us and the introduction of sampling the customers.
They have told us explicitly that the plan for and will require additional capacity utilizing the Fox XP systems to test the <unk> the 18th of weight because of the time or guy actually of up to 10 24 devices on each of the nine blades per system.
The customer is how the offsets to the anticipate and secure of specific capacity to meet their needs and the indicated they expect the place orders for this the possibility of this fiscal year.
Well it certainly excited about the strong level of interest at the same time Colgate My team. The later, then pops, how the bucket of customers and hindered our ability to forecast the timing of these orders.
The teaching me to engage in the ongoing discussions with the large number of potential new customers all of.
All of these discussions have clearly been flow by travel related restrictions due to the top of mind to pandemic and related the cautions taken by several moved the picture customers worldwide, including policies for the limited on site engineers.
Yes, absolutely has delayed the valuations and initial orders for air systems of the console products in the first six months of the scripts.
Yeah. The mid fiscal years guidance has been almost entirely based on current customer for jobs, we're taking a more conservative approach to our fiscal year forecast at this time and the volume of revenue guidance for fiscal 2021 to be between 20 million and $25 million, while continuing interest.
So the GAAP profitable for the per se.
For the fiscal year of second half revenue range of six to the $21 million lets me revenue range with debt to significantly increase volume on the second Hall <unk> compared the first stop revenue up on the $4 million.
As we look into the second half of fiscal plumbing on we remain optimistic about the growth opportunities from system. Some of the children books within the installed base of customers as well as the ability to expand the number of customers using my family of Fox from solutions.
We have additional potential customer engagements that could provide upside to our revenue for the fits the year as well.
The limit we maintain our confidence in the long term demand on core products. The attractiveness of the key markets that we sort of and I believe that we will come out of this worldwide pandemic stronger than moving and the more production per customers more applications and the higher value products.
Our key customers are serving some of the highest growth markets, including data centers by GE and the infrastructure sensors and technology for smartphones and tablets electric and hybrid electric vehicles, and then the in data storage and computing day to competing data centers mobile devices from Hollywood applications that are keeping the world connected.
As a result, we believe our products will be in high demand this year of them for years the part of.
So with that let me turn it over the weekend before we open the lines of questions.
Thank you Jane and good afternoon, everyone.
The gain noted our revenue and bookings for the first half of the fiscal year were negatively impacted by several customer specific production ramp delays and push outs of forecasted orders and the continued challenging global business environment created by the COVID-19 pandemic. However.
However, these customers continue to indicate they believe the push outs are temporary the.
Based on these customer forecast and the initial order flow we've started to see since the beginning of the third quarter we.
We expect significant bookings and revenue increases in the second half of this fiscal year.
At the same time as we've discussed on previous sort of calls we have taken significant actions to control spending and maintain our cash position as the result of customer orders or push outs and delays on production ramps.
Our fourth quarter of the prior fiscal year, we completed the restructuring that resulted in permanent savings of approximately 120000 per year and also required mandatory vacation days to reduce costs.
Starting on our current fiscal year, we implemented additional temporary cost reduction initiatives across the company.
These measures include a 30% pay reductions for our executive staff the took effect starting the last quarter.
The total of all cost reductions resulted in savings of over $550000 in the second quarter.
With our recent booking an improved forecast for the second half of the year, the temporary pay reductions or non officers were eliminated starting in the current fiscal third quarter the pay reductions for our executive staff remains in place.
It is also important to note that even with these cost controls our operational capacity of bandwidth have not been negatively impacted on our main focus continues to be growing our revenue base within the large market opportunities the game mentioned earlier.
Now turning to the financial results net sales on the second quarter were 1.7 million down 16% from 2.2 million and the per student first quarter and down 76% from 6.9 million in the second quarter of the previous year.
The sequential decrease from the preceding Q1 reflects a decrease of 484000 and wafer level burn in revenues, partially offset by an increase on customer service revenues of 155000.
The reduction of wafer level burn in revenues was primarily due to the decrease in the system revenues of five or 630000, which was partially offset by an increase in wafer packed AIPAC revenues of 146000.
The decrease from Q2 last year includes the decrease of 5.1 million and wafer level burn in revenues. This was primarily due to a decrease on system revenues of 2.8 million and the decrease in the wafer pack the AIPAC revenues of 2.3 million.
Customer service revenues were flat compared to prior year.
There were no packaged parts system revenues in Q2, 21 or Q2 20.
Non-GAAP net loss for the second quarter was $1.7 million or seven cents per diluted share. This compares the non-GAAP net loss of 2 million or nine cents per diluted share in the preceding first quarter, which excludes the impact of stock based compensation expense and the 2.4 million adjustment related to the closure of our Japan subsidiary and non-GAAP.
Net income of 446, 456000, or two cents per diluted share in the second quarter of the previous year.
On the GAAP basis net loss for the second quarter was 2 million or eight cents per diluted share compared to GAAP net income of 107000 or zero cents per diluted share in the preceding quarter. The GAAP net income of 251000 or one cents per diluted share in the second quarter of the previous year.
Gross profit in the second quarter was 377000 or 22% of sales up 150000 compared to gross profit of 227000 or 11% of sales.
On the preceding first quarter and down from gross profit of 3.2 million of 47% of sales in the second quarter of the previous year.
The increase in the gross margin from the preceding quarter is primarily due to a decrease in the unabsorbed overhead costs the cost of sales due to an increase in manufactured parts of inventory and the change in product mix wafer pack types of consumable revenues accounted for 46% of revenues in the second comport quarter compared to 31% in the per.
<unk> first quarter.
The decrease in gross margin percentage from the second quarter last year is primarily due to an increase of unabsorbed overhead cost the cost of goods sold.
Due to lower revenue levels, and an increase on warranty costs as a percentage of sales.
Operating expenses on the second quarter were 2.3 million down 93000.
[noise] or 4% from 2.4 million of the preceding first quarter of down 631000.
Or 21% from 3 million in the second quarter of last year. The decrease in the operating expenses from the per student first quarters, primarily due to the decrease in R&D expenses of 80000, the decrease from the second quarter last year of <unk>.
The decrease in EPS DNA of $656000, primarily due to cost reduction initiatives implemented in fiscal 2021.
That's true and it was 1.5 million on the second quarter flat from the preceding first quarter and down 656000 from $2.2 million in the prior year second of course.
R&D expenses were 820000 in the first quarter.
Down from 900000 of the person from first quarter and up from 795000, and the part of your second quarter.
Turning to the balance sheet for the second quarter, our cash on cash equivalents were 3.4 million.
At November Thirtyth down 2.9 million compared to 6.3 million at the end of the preceding quarter.
Accounts receivable at quarter end was the 1.4 million.
313000 from 1.1 billion at the preceding quarter end.
Relating to the timing of revenue in the second quarter compared to Q1.
Inventories at November Thirtyth were 9.1 million up 955000 from 8.1 million at the preceding quarter end the.
The increase in inventories of includes an increase on labor and overhead of $371000 related to an increase of manufactured parts of inventory.
Property and equipment was 683000 compared to 622000 of the preceding quarter end.
Customer deposits from deferred revenue short term and long term. We are 75000, a decrease of 331000 compared to 406000 at the preceding quarter and related primarily to the decrease in backlog from prior quarter.
Our current and long term debt of 1.7 million is related the funds received during the fourth quarter of the last fiscal year under the paycheck protection program or PPV.
The company applied for forgiveness of the PPP loan on November six 2020, and the small business administration has 90 days to review the application.
[noise] review and the proved the application.
Bookings on the second quarter totaled 1.6 million of did not reflect any system orders backlog of November Thirtyth was 1.1 million down 147000, compared to 1.2 million at the end of the preceding first quarter.
Since the start of our current debt.
Fiscal third quarter of the company has received a 4.3 million order from the new customer for a Fox XP test cell and also additional weight per packed I've got consumable orders of improving our overall backlog.
Now turning to our outlook for fiscal 2021.
As Dean mentioned covered the related impacts continue to affect our customers customers.
Creating delays and some anticipated orders and overall caution with our customers of the resulted in delays of some of arc customer production ramp.
With that in mind, we are taking a more conservative approach.
[noise] to our forecast for the second half the fiscal year as such we are revising our revenue guidance for fiscal 21.
Down the between 20 million of 25 million.
While continuing to expect to be profitable on a GAAP basis for the fiscal year, which include the impact of the net gain on the dissolution of share test systems, Japan, and the anticipated loan forgiveness of the PPP loans.
This new revenue range still reflects the significant ramp in the back half of the fiscal year compared to the first half.
This concludes our prepared remarks, we are now ready to take your questions. Operator. Please go ahead.
Thank you if you'd like to ask the question of the signal by pressing star one on your telephone keypad, if you're using the speaker phone. Please make sure. Your mute function is turned off tillerson Oaktree try equipment again press star one to ask the question.
And we'll take our first question on day from Christian Schwab with Craig Hallum.
[noise] Hi, guys are kind of on behalf of Christian Thanks for letting up that's the two questions. Our first question.
I got the first question so.
So on the multiple of and you call. It doesn't preclude create more of a dozen tier one or two to potential customers are engaged with the out.
Out of the silicon photographer carbide as well the other customers you know in the next couple of quarters of fiscal year and into next year should we expect you know a majority of order from your customer the or how many of you the customer pipeline from gets back to the turned the orders.
Okay. That's a good question and kind of tease out how we are looking at our forecast and I know there is you know the.
The had lots of feedback with respect to people on how we look at our forecast from what we do the <unk>, primarily what we we discussed this forecast the rather news.
And less about exactly what the bookings are and I'll be the book income before you had the minutes because of the book ship get revenue.
Right right or wrong, you started off the year, we tried to be clear in communicating that when we set the expectation for the year. We had were basically communicating the majority of the forecast the only with the installed base of customers customers that were already one debt.
We're already communicated to us that they intend to buy more.
[noise] arguably believe it could be a conservative stance at that time, because the alternative was just sort of looking into the it's called the getting the and what's going to happen et cetera, how did the <unk>. How do you anticipate so you know we quite frankly, just listen to what our customers are telling us. The generally speaking when you look at forecasts you Act.
The forecast not only get the customer specific they tell you that you anticipate winning new deals or the customer will ramp or something then that T. The goes a bit of the challenge the do you.
In our latest if the world guidance, we again the truck now are correct specific customers, including the deal that we just want again and what are they specifically telling US you know this is what we and the board of beside of the best for the communicate our guidance because of you know we have clear line of sight.
Two of those deals. It also helps to explain the night and my caught my prepared comments. It says Oh and then we have other deals. So you get I just wanted to make sure people understand the most of what we are talking about when we guided I have you know customer age has told me they need this configuration of the this price by the this month.
And that's how we book up our forecast on the downside of course, the Dot. If you know if you know the customer lose something you can be on the.
Specific income on the steps and Miss is we've just tried to do our best at the one that out in that range could you walk through the trip it because the huge I guess the could of them. It's clear the field what they tell like the like debt in the middle of the <unk>. Okay. So you know as.
And you said, okay. There's some downside of upside and we're just we're trying to be as as appropriate as the candidates environment to give people some guidance.
While we continue to be still remains the business to ensure that the of pocketable by the way in that range. You could also trip the profitable at the low end. So we must be pretty pop of the high on the left their way of thinking about it on so they're still dynamic range within the forecast that you specifically asked about.
Customers and you know the you've kind of the tier one and two to interest for the folks that have not less than one couple of few calls.
The was describing tier ones as customers that were significantly large enough to do maybe six the $10 million of year on any color on.
Average or a good year, whereas maybe a tier two might be when the 3 million that's not how much we love of those customers, but just sort of the buying power, which is the combination of their size of the markets. They serve the et cetera, and we have the number of both of those but as customers that are already qualified.
The new opportunities so.
Back to your question in terms of do we anticipate in our forecast for the current customers. Absolutely include you have several of the biggest clip of install base of customers as well as some of the smaller buys and then in the case of the tier one that the amounts that we on the late may at the end of the wash it's the year.
You know every day shift from buying the first you know npis system to production. We are the we see them be the tier one customer I mean, the physically of very large companies and how they significant for cash there. That's the so that's an example of where the yeah. They bought small to the game what we consider them.
True on they were already a customer, but they don't they bought a small amount and the about the by you know.
Part of the significant test cell phone. So on we had that in silicon photonics for certain we have many more customers. We have both I think five or six customers that are already qualified for silicon Photonics and then the.
Hey, well over twice that many companies would do each with the on the silicon photonics in the Photonics states the.
Good day in our revenue forecast, primarily there's no revenue in the range that we shared with you relative to new customers coming in the <unk>.
One of the challenges that right now is the reality is the one month into the quarter and while we do have inventory. The as you know only so much time and so even the large orders the not can be of the necessarily the ship. It all before the end of May and so you know I think as we anticipated. This year, we can see the the booking for example.
The continued to be strong of the ramp is made of mostly just shifted which where the I pulled us to have you know of believable strong backlog going into next year.
Related to just new customers going forward on again, we're not talking the try not to forecast of all the bookings and things like that but for certain we do have over this next 18 months and certainly in the next year and anticipate that we will win a number of new customers.
Several segments, including Silicon photonics, including Silicon carbide as well as some new application spaces that we haven't spent a lot of time that I'm talking about the kind of the lead to the memory and like the control of stakes or some other thing there's actually a lot of the activity and the law.
Lot of discussion in the market.
Around wafer level burn in right now, but I think one of the themes that and I really kind of on say lifetime matching that's the one of the challenges right. Now is there's a lot of folks that are you know the semiconductor industry I want to make sure people understand it is actually doing really well right now which seems to be a big disconnect.
With respect to you know why is the air having a couple of the worst quarters in the in recent memory.
The extent of the.
This is kind of the straight away, if you will where everyone going as fast as they can.
The the microns of the world many semiconductor companies, they're basically buying the exactly what they're doing and they're just going south there's actually not a lot of kind of new development. There's not a lot of new process turns people are kind of just sticking to the knitting and doing exactly what they're doing and so in that scenario like arts the Wi.
Yeah. The just when you introduce new silicon Photonics Silicon carbide applications from.
Of those customers of kind of pulled back slowed down those ramps to their customers and as a result, you know the bulk of our businesses and involve the needs and Peoria. This new product introduction sticks on I'll, just say one more thing here last quarter I mentioned that it was absolutely debt on that you know price.
Hi are too bad and everybody was just completely holding their breath. They give the you know we couldn't fly in the theater them. They were just sort of things of just sort of moving a lot of really but over the life of two or three months.
The customers of realized the not going to wait for the pandemic to the older and the conversations are you know here's the order it's coming how are you going to install it you know the we could maybe later in the call on the into the actual tactic the logistics of.
That's flying and people and the sitting inquiring team then they do the installations in the the how to manage through all that but we need to do that because they're going to be a dollar a bunch of systems in the second half.
No the Grady repaired the.
The I'll grab yourself the card and the second question here on a follow up on on your new customer order the sport learned our order per customers, they're gonna large mobile money back for the so I know, we've kind of been surprised or maybe the quite on the lack of fall through a previously here. So I'm just wondering if you could add from cars on comments on.
On your conviction that this the cuts are will current the more meaningful revenue of the future I'm just kind of your best expectations that customer to the next.
Sure and I, let me.
Add to your comment about I use the word disappointing follow through I'm not sure you use that word but I'll use it.
The best folks that are kind of new to us or lock in the of the story on.
We had a very large mobile manufacturer the it turned out that the emission the customer on our new Fox family of wafer level and single or the Guy module products and then they were of course spine by most of those on it is unclear whether how they deploy the tool in terms of which.
Hi, how are you not vacations, how long the test time wise and then as it turned out what percentage of the devices were actually test it.
What we have made clear is that we've seen on that market space in this case Jordan.
Turning to what is called sampling, which means they do not test 100% of ever since the device using the tool instead do it the quality the liabilities camp the on which I won't go into a lot of the detail, but the wait until the day days of the only doing the 5% gold emphasis on sampling the only by 5% of one.
'cause simple that you could see there's a huge dynamic range there.
And the the initial orders from all these customers on the application speed did not know whether they are going to be the captain of high volume production and and in fact, they the sacking the there's the lower than expected in the fourth while they buy you know $10 million to $15 million that they didn't buy 50 of them right now so.
Typically in the its application and the activity really careful about what things and stateside and then we're going to try and stay the same things I've said before and specifically in the the loose we have been told and are clear that this is actually a production during the day to day hundred percent test guidance. So.
The good news is of the doesn't have the 105 per cent multiplier times it.
On the test time, and the volume of percentages I don't want to get into I would never rule on technically there's some even.
And certainly the exactly what applications that will go into other there are some of us that oded each of the programs and no more than Weve ever talk about all I would say at this point is that we have been told all of the volume behind it on we absolutely believe it and the on the Outguesses happened.
The one of the customers that's off of the most of secure.
Allocation of capital of the and slots et cetera for additional capacity the ship. So I'm I My voice may not sound. It I'm actually really excited about this one I will maintain a extra amount of conservative best and believe it as I see it but so far so good.
And you know it doesn't take a lot of $4.3 million of test cells to add on.
Two of its level of revenue so that is actually really encouraging.
The other specific thing I want to say on that because it may come from somewhere else on this new Pes net and I agree we need it to come up through the <unk> by ports I am actually really excited about the it's not just because of the potential of dollars of whichever you know our significant book.
But that the customer specific the understood and selected the our system based upon its capability or 100% validation of the device.
This part prudent had been tested the what is known in the industry of the package part burn interest we sell them.
So I believe one of the differences between the package part burn interest of the the traditional convection oven the.
Net new tradition, you have to use lots of shared resources I wouldn't go into it all it means the as you just do not have the trace ability and the validation of every single day Goodbye.
The box products have it much as you know 100, tying the resources.
So available to the devices, which allows us to 100% no but that part GAAP test it.
As well as thermally conductive cooling and heating gives us the ability to certainly no. It was actually the governor Didnt right.
Right now it is more expensive than package part how did the student applications were able to to wafer level or cingulated dye test. So many more in parallel so we can actually do it more cost effective while at the same time, giving them much better of data base.
They specifically call it spent more money to.
To ensure the this device will 100% Barnett and clarity and we have reason to understand why that was important to them and not a super encouraging to me because honestly, that's what we've been on touting for years and they get it and so that was just the encouraging and I think this is gonna lose true to the business.
And the other opportunities that are similar to it because of the level of clarity of the you know the value of this type of debt and test.
Okay.
That's great appreciate that and then last quick one then I'll turn the call or kind of but from over a little bit of of model of course, I guess, the as well on of metal implied second half guidance with the visibility you have the <unk> any color on Q3 versus Q4 would you expect Q group reported the kind of similar in size there.
Or more of a progressive improvement through the end of year, and Q4 sequentially better or any color there would be great. Thanks.
I mean, I would I would add to it I guess when they talk to that of the let me put it out there I think it's pretty fair to say that Q4 would still be bigger than Q3.
You know given the just the current situation on the backlog, albeit you dug deep in the put the press release out the the that lost whether through the $4.2 million from we've had the of the sense and by the way are we just had to put out press releases on the.
I am not sure if I, even said it in the lives of I think we guided it like you know.
Nine o'clock in the morning on the first the take it missed our quarter by you know less than 12, certainly less than 24 hours or something it was pretty pretty sad. So the but most of the sit then back on the certainly in backlog from day. One. So you know you do need the little bit of the running at the start to make sure you can ship things show we had the.
Outstanding significant of orders as we are expecting that this quarter, but I would say instead of the second the.
The Q4 would be revenue wise larger than Q3 book.
<unk> the I'm not sure it might actually be spread out of the group and then but I think revenue instead of to be larger in the quarter.
That sounds good I appreciate the call from expected.
Thanks to the chair.
As a reminder press star one if you have a question well hear from John Fick, the wording with dialectic capital.
Hey, Jack.
Hey, guys. Thanks for taking my question I appreciate it or.
So.
The little bit of a follow on from the questions. You just got asked in a slightly different way.
From my question.
Huh.
Hey on the bullet the bullet customer one with the 4.3 million dollar order and then the bullet customer too.
Are those different customers.
We're seeing the customer different I'm on you.
No I actually like I actually do.
All right I'm actually getting some feedback John I'm not sure. If that's you are actually as we've got her now okay on the.
We have not made that.
Claire although I think most people had interpreted the public debt you're going to get warm and close so I do want to make it clear here the and custom work is the same.
Right.
But the sometime in the different the application and the device is different.
That's a good thing for us and just because of the end customer is the space I can tell you you don't just when one application and the you get another one internally the groups can be different the applications are different et cetera. So this feels like a moving into us not it.
Certainly the with the sub on but even within the walk the kitchen of the good set of which one it and one of the reasons. They they became the excited about is 'cause there's cross pollinization going on in the customer to walk acknowledge and and you know they found us in this application the.
Okay look inquiries from the two bps so the.
That's that's the answer from.
Great Great. That's on the tend to try to and so.
Without having to give any timeline around it.
What do you think the total revenue potential is.
In these two products either one of them alone or two of them together.
Like over whatever period of time I don't share.
Well I'll tell you what the one of my <unk> I I'm Gonna leaves the my way out of this on a little bit but one thing is it just looking historically, sometimes it's good to just point to people whether its historically happened. So you can say to publicly out there we have been having a couple of million dollars the with the.
Hi packs in Q4.
I think each of the last three four years or so.
Alright, and normally what we get as the did a set of CGI pack somewhere around a fall.
And then that turns into production of on <unk>.
Yeah.
I kind of made it pretty specific but as we would've expected again this time, but they got pushed into the summer.
So that's one example, so that type of devices. Generally then you know maybe of a few million dollars a year of just the consumer that's the.
This new application on I guess, the just simply say there will be more on.
And you know a test cell is 4.3 million Bucks of 4 million bucks or so so they come in pretty good size chunks, we had ranges of what it is and we also know that all of the data is not in an hour of visibility of the is actually.
On still relatively limited moving we can see the capacity needs maybe of the next six or nine months or so, but you will see as of the device by the gets allocated to the point that in all the different devices. The up the growth rate is.
I'll tell you I'll share one thing and I kind of like I think this is okay. The say.
I have been told by the.
The customers you could think of even this going on in the past. This is how big it isn't the how great. It is going to be.
And then they have not bought that much and.
This isn't the customer that has certainly done that before.
That's kind of they told US last about how great. It is going to be but it's more obvious from the option probably gets kind of do so I don't know if that's the good thing, but it seems like when they tell us have day to day it isn't as big as it is maybe the fact that they have the set as much the killing maybe that's a good sign in the <unk>, but we know it's going to it's a it's a good day.
Ideal and there'll be more revenue.
Okay.
You know I have to believe that they need the plan their business and so they have to give you some level of visibility I mean, what are your lead times per day.
And yeah, the scope of those lead times like.
I I mean, either lead time shifts or or can you help of idea as opposed to revenue guidance through year end like where do you think your backlog as of year end.
Maybe that'll help us understand what do you think the scope is as we move on.
HM.
I think the what I will share with the given that majority of what we have done with our forecast is basically shifted from the time.
On I think it's fair to say that we believe I think if things play out as we expect we should have a pretty strong backlog going into next year and the that's kind of the leap day of describing it by the <unk> you know I think you know it it would be the.
[noise] fairly substantial backlog going into the year.
Which is very different than it was this year the moving into this year and certainly don't score.
So.
I.
You actually asked a different question I want to answer that and that is the good.
Given the lead times in stock on how much visibility do they do the dispute yeah, there's pros and cons on the bar, having the manufacturing capacity and infrastructure and supply chain to be able to ship significantly more than any of the revenue numbers, we talked about.
And I mean, you know 10 times at least so the downside is that it as the customers come in and the particularly of this customer and the other large tier one customers they kind of they'll be guy the make sure you have the capabilities to serve the guide.
Okay. So they know darn well that if they give us a multi system order that we can ship that inside of the six months right. So you know they don't have to get us too much visibility on.
You know, they're not forecast to you know 40 systems with us and the <unk> that we're going to ship those inside of six months, but you know even at $4 million test kit the money that's the only one system to the.
And we have no share on ship the multiple of those per month with reason the lead times and articulate the lead times on the Street art in the you know 16, the movie 24 weeks or so kind of the pigment configuration, the backlog and stuff. So they don't have to get it that much visibility.
Okay.
And so that.
That was great by the way great Weaseling out of answering the question I applaud your debt was [laughter] that where the black belt.
Gotcha.
On the breadth so the on.
On the transceiver customer that sounds kind of like a of new thing what what what is the size of that opportunity maybe you could answer that one.
Okay. So let me answer it interesting thing so the first of all the.
It it feels like all of the news Silicon Photonics, guys had kind of the similar powder and matter of they start with one or two what we called blade. The just say one or two acres of capacity would be doing it. We now can do that with our new Fox MP systems.
And then when they go to production the buy X P system that is the benign the team the age of something more.
So I think a general rule the think about it that way.
In fact, each of our initial silicon carbide and so on started silicon photonics customers have all seen we've started off that way I think the except the initial lead customer because we didn't have the impeach systems to become the but the first excuse the purchase they would do all of the Quals and everything else you know to to build on.
Because of the time, even though the ship them on nine of the nature of the blade system. So.
So you know what it feels like it's Oh, you buy you know three quarter of the million or a million dollar flow test cell or something which is in the p. system with the couple of acres on and then the transition of nearby to a $40 million test cells. You book of production and then the duplicate that over time and the.
Actually the bat to skip to choose what do you think of the market size. So there's if you look at the silicon Photonics and yeah.
No I I the John I think you look from then on these before not everybody understands that you can create your taste numbers out with the what is the something to try to share. So.
The Silicon Photonics is the index your description of the integrated.
Device used for electrical to fiber optic the optical transmission.
So to the historically fiber optic transceivers to and from pay are a.
A very complex module made up of lots of different ice cream, and mechanical and electrical structures and lasers and things all integrated into the little package that is being used in the data centers. It is use the telecommunication floor across town.
If you of the news for under the wire the undersea fiber optic transceivers. They all the cost of the transceiver can be from three four or $500 or more up to $10000 for them.
Well the industry had been working for you know maybe a couple of decades companies like Intel.
Who said they sent the world hasn't gone test fiberoptic, because the cost of those transceivers his chest so expensive.
We're not gonna have of Fiberoptic communications hub in our house, if the trend see the is $900 per channel. Okay. And this is actually one of the big misses in the 1999 2000 hub around why you know Jvs you on the world's Gonna go fiber optic and then it went nowhere the reason.
On this basis too expensive.
And so the world wouldn't know the directions, and other kind of communications protocols and all but the need for fiber optic well. The end if you will of RF and microwave transmission through regular collections et cetera, because it was blamed on the steep.
So folks like Intel were saying I have an idea I'm going to integrate all that stuff into one silicon and take the cost of the manufacturing advantages that you see that silicon manufacturing and I'm going to make a wasteful that team of 500000 devices on it.
And I'm going to take the cost from hundreds ticking on thousands of dollars stand the tens of dollars and watch what they did.
Right and there have been several other income thing Cisco is kind of the day that had been making these investments and the big deal is it allows the world to go the much higher bandwidth at much lower cost I mean, like you know the the costs.
And when the Intel introduce the first products in there it was devastating to the industry because of a companies out there that we're selling the products for $2000 a piece <unk> thousand dollars, the peace and into all of the selling them for 400 Bucks.
And making huge margins on it and so there are a lot of companies that went away and so the industry analysts are said Wow, it's at the spin it enormously elastic market and that's the real pick that as much silicon photonics devices as they can they are going to shift from copper based communication protocols to call the orthopedics.
One day for the Cup. So there's this elasticity, where the chiefs of they make it the mobile from.
So up until recently the whole story is there's not even close to the left manufacturing capacity out there to meet the market needs.
On the Big players include Intel right on.
And people know that they happen to be just because they are a 10 per se customer of ours. Okay. A pay the demolished, but there are other players some of which we have mentioned them from the having that are in that space or the sort of the wild west of the everybody's getting into it.
The one thing that's interesting about the customer I'm going back to the customers that we won in may okay.
They are a large player in the transceiver business.
Right.
And they're getting into silicon photonic, so on like a lot of the players in the space that aren't actually making trend shooters and adjusted isn't the silicon photonics.
Okay. These guys are one of the biggest players in the transceivers and they're going to shift the business. The silicon photonics. So there's you know the ramp the it's different for them is seen as it works. The instead of selling she will aid to of customer they can sell C b and all of.
The differences of manufacturing cost of the reliability of the footprint, but so much smaller than the better product for them.
One of the thing just one like the background on the whole Silicon Photonics day, if that fiber optic communications is leisure is it noted that book protocols and speed and the speed of fiber optic communications more like 50 or.
Gigabit per something which is very fast by the way.
But they're going to 102 hundred and 408 hundred well it turns out copper is completely weighing on the speed. They can't yeah, the fastest well fiberoptic communication of non five up the communications that the 112 gigabit.
And as they go above that they're going to have to go to flow Tronics. She there's there's other reasons the silicon for people to go the photonics of the communication protocol and the good news is both spoke tronics devices need not just the burn in the 18 and stabilization the Aehr test the buy with our wafer level of solutions. So people that are going.
On to whole wafer silicon photonics are all looking at how do I do wafer level stabilization of these photonics devices and that's what we offer with the Fox XP and so that's why like now almost all of the players on the market are talking to us.
But.
The I mean, it's unbelievable how they have caught stalled in the last six months we.
We were trying to figure out how we were even going to be dealing with all of the dip the benchmarks and all last summer when we put the the marketing and the Cleveland some place in their facility last February.
And right now its just short of a lot of Jim calls and stuff, but it's nowhere near the activity that we think will come back as soon as we get through this pandemic stuff.
So that specific customer has the ability to ramp significantly and in fact, the bigger and then on the biggest customer in that space.
And we do believe that in time together.
Great.
You almost answered it in the last sentence and I appreciate it [laughter] the warm up a bigger than your biggest is would be great.
So I'll give it to somebody else my last comment is once again I would like to reiterate that I think your board should continue to see some turnover I appreciated. The there was some last year, but where should be refreshed you did miss the first six months and I think you guys should either add or.
Like the season board members by from stock or management like roll out of here risking our capital you're on the sport for 12 to 44 years reach in your pocket.
By share shows the you believe in the story also it shouldn't all just be Christmas present of.
Gifts and pay to be a board member and have your four nice dinners of your shareholders with like the fee you risking from the capital alongside of Us and that of a message from the directly the debt.
So thank you Jeff.
And associated debt.
On the back half.
Thank you.
Next we'll hear from Tom to Philly with D.A. Davidson.
Yeah, Hi, I think shorten the time in the question here [laughter].
[laughter] debt the couple of quick ones. The first the when you look at the recent cost cutting you Doug has that impacted your ability to do trials with new customers or has the ability of gauge what was the customers at all.
[noise].
I would say no.
No I mean, we.
There's no way have we slowed down anything I did my pauses.
Things have slowed down the gives us from bandwidth that has allowed us to do cost cutting the people it's candidly the case.
And you know garden or myself or even one of my staff.
Yeah. It was working seven days a week anyhow, even though we all stepped up and true we're gonna take direct cash pay cuts on the you know till we get the profitability because it's the right thing to do on.
But I don't I don't believe that is the case I don't think the actually cutting on the bidding exiting the plate on sales that is the <unk>. The we are absolutely engaged him from R&D programs from partners that can give more color on that but you know the clear focus right now with everyone on the company.
Including the every single day of the Calc is you know the pending purchase orders and the ones that we have ensuring that we can install them and ship them as quickly as the cat and get paid the tariff.
Okay, Great and then.
Maybe just a quick question on the competitive threats from the fact that things of stalled a little bit here for a few quarters does that enable the new competitors. The catch up with you on have you seen any competitors will try to do what you're doing in the situation.
So at this point I would say the not at all we have not seen any new competitors. There we have not heard of anybody working on something that could be considered the multi day persist the for doing the kind of things that we're doing there's no conduction based multi.
Or singulated die on module systems like we do the dollar of know their customers.
On there just isn't when you're competing it's like we're competing with the package part burn of system.
It just seems interesting because keep in mind, we also sell those of the arguably not much and or none this year the.
There still is a there's some markets where package part is cheaper and people are going to make those trade offs. It's very interesting that we have examples like the silicon carbide.
There's even some automotive companies that are moving from package to wafer level. So we see the bulk side. So we do the cost of ownership.
Models and convince ourselves why.
Hi, the wafer level it makes more sense so.
I'm trying to point out of when we're competing we're competing like the goods package part.
And that is arguably an alternative but very differentiated in terms of the value proposition not only kicked the can do more parallel, but you get the yield advantage by somebody doing the the wafer level before it goes into a package or multi chip modules or something like that and so.
That's the primary still alternative to of snow real competitors on there.
That's that's good to hear the so we know that you're not let you lose the business is just the.
Purely being delayed.
Yeah, and Tom the newest got very specific we have not lost a deal.
Right, but we have not actually said Oh, we lost true so and so you know and you have said hey, what happened on.
Oh, you know in the entire last year, the but nothing about the slowdown of push out is the result of losses and the deal.
Okay, Great and then finally, just a clarification on the starting this quarter of very little of backlog and you say going into next year with the fairly significant backlog of meaningful backlog on when the new orders have to be you have quite a bit higher than the revenue of the revenue on the second half year is projected to grow quite nicely. So that's one of the.
Sure that I understood you correctly, you said you'd have the fairly significant backlog amounting to 2020 lets them out of Tom on the path to email and again, that's correct. The night the only the only caveat I. Just said is based upon what we are we understand the known up I believe that to the the case.
Sorry.
But the truth of any we have we have we have specific customer forecasts for the summer.
And you know they need to get us the orders before the so yeah.
Okay, great and the somewhere I bring that up because our fits the year starts to the first so anything on the summary of the next fiscal year. So that's on the.
But the thing.
It's kind of.
We'll take our last question from Larry covered up with more capital.
Hey, Larry the.
I agree there the two quick questions on timing, the or your on mobile phones or Lucas suburb.
When you talk about more systems. The Colm you talked about this fiscal year is the player or in other words of the Q fours or one more system. The you're sure others are more of those are more than one.
The stickler for.
Yeah.
Moving to make sure I understood. Okay, because you know one of the one of the <unk>.
Larry is able to understands or does it go welfare within the 50 of them one of the challenges of that hours in the test the business. The typical 80 odd day test equipment from the test suppliers like of Bob Test Teradyne of Cozy of for example, you know very true that I came from before.
Here the textures, just getting the wafer level test one day for at the time, so one test or because when they go.
Our solutions, we make single wafer solutions with the CP dual wafer solutions that the MP in up to 18 wafer sort of next week. So.
So when we talk about systems and system capacity, you're sort of how do I attribute of so Larry. The advance question. The is asking is how many X P. [laughter] kind of debt versus just how many what we called blades or testers within it all we have stated Larry is in and tried to clarify is that.
There's absolutely more blade of Christians or testers growth the capacity.
And more of dog Tox and more later on motors, and we will not give any clarity yet as to the do we think there'll be multiple XP isn't the fiscal year or not.
I haven't even on the yet.
Right. So you said, the so you're saying you're gonna of loaders, where the <unk>.
Origo later on the on the fruits of your share for this quarter.
The we will then are older you obviously of another XP the use of water on of the stock at least near the end of lease fair I'll tell you why not really on goal. Although this far they need at least another XP die pack and the.
Okay. So at least through the war on more system in Q4.
But you know when I see us as the.
The implied the news portal and maybe the more of the world, but there's at least one of the record.
Yes.
The current enough what can live on on your new or impede the silicon photonics customer that's going to buy the XP is there the unexpected in Q3 or Q4 of the the you know.
He said the.
Yeah, I I'm on.
I'm expecting the order before I shift from not only of the order yet how's that.
They looked at the movement.
What would be the kind of off on the system. If you got the order to the yeah I mean I.
The what we do have the ability to to ship things on delicate book short lead time, it generally speak to you.
You know inside of like eight weeks or 12 weeks of you know the pushing the so I you know that goes to one of the original questions I think from Tyler, which is the if in Q3 Q4, we'll do the same and I know I don't I think Q4 the larger.
And so on them.
You know.
We do have revenue.
Yeah, we do have revenue in Q3, which ends at the end of February, but we have not book yet.
And we definitely have the.
Revenue in Q4, we have not book debt.
Because you haven't started in Q3 is not over yet.
But not everything that we book in Q2, the ship in Q3 for sure.
Right.
The the CP customer for of beta of servers that still on track for at least getting off the ground before the fiscal year.
One of the from <unk>.
The.
Oh, we have okay, I I hadn't really gotten the part of this gets in the how much more cash so true chokes interesting there's sort of clarity. So we won a new customer what are you doing half a day for a data center of the related application that we continue to see.
It's the this extremely high volume applications.
We do continue the for cash that they will buy multiple systems.
Systems for production and have every reason to believe that they are absolutely using the tool today.
For the one of the production ramp et cetera, we're trying to figure out when the ramp is we know for certain of the ramp was delayed because of.
Ah Ah.
The quota buyers.
Okay.
Of probing, 100% [laughter] Ah, so and we have not seen the end of it yet so.
I don't know exactly when that is so you're.
The right now I actually don't have that you know dispose of here in the longer because I have not specific they've been pulled by them that they're going to take it then the therefore I put it on.
It doesn't mean it couldn't still happen and we have the ability of the ship, but there's just the I don't have the visibility with them if I do the some of the other customers on the.
On it I made up of Israel, Lexus and that's where the system you could either if we got on order in a reasonable period of time of the chip of quicker than sort of ex the weather for the week similar I actually have since the peak capacity test cells around it.
If I kind of understand to those the they come and visit I don't you know pictures of the products helped a lot. So the the product family of the Fox P is has to the different chambers, we call. It there's of simple way to do away from multi wafer and then in those chamber of still blades. The blades are interchangeable between all the customers.
And then in those blades all the channel by channel specific to applications, but there's only three flavors of everybody's made up at the same three.
So we just mix of matching configure the order so if someone needed a couple of CP systems I could ship them almost immediately.
The from the plates at all.
The two of the no two let Leslie I'll be quick because of the literally.
The shift a little bit to the small of the the or.
Memory potential that's all of their Oh of four years ago. When we were developing the that's the the.
So the valves or the ER this year than they were looking for somebody the Bourbon system on the on the aligned I think they one of the Tokyo electron we certainly are ready or the.
The people, who either be bugged or the old perfected.
No debt and everything I hear about the application where the disaster. They did they had a really good Goldberg system. The worked around the right pretty the the were too low anyway.
You get the.
Since the Theres, probably another one or two fabs are there to get the.
Of the more shortly.
Is.
You know, especially with all the opportunities on a full plate and the resources of the eliminated the.
The make sense of the joint venture you need or you have a proof of machine, though its proven the XP is the key technology.
Oh for the an application of the lead automation.
Which which as you know I don't know what does make sense of joint venture with some really the books automation like 5 billion worth of Cup.
The rest of the entire project.
Ah So you could get it off the Mark certainly the push expertise through your your facility you know whatever good ops manager that help you do that and so on.
In order to secure that opportunity would be a monster is a video of dramatically reduce the risk for the customer the.
If you present yourself from them there.
In order to believe that you'd get lands on the like the use of.
The view of the rest of your life of other consumables because of the some like the files and.
Buybacks or so on the.
Because of the Lily wafer stocks.
On the memory. So the museum view of teed up at the time of Salt the Larry.
You you clearly the mere homework, Gary I'm I, just want to acknowledge several data points and maybe trying to sort of the one question that was embedded so I want of knowledge, we do believe that some but not even close to the majority of.
Of the memory companies have implemented it away from other then and only in cash memory today not do that.
We believe that long term.
That it make sense for all flash memory and potentially be to go the wafer level burn in the.
And there are some specific reasons that this and the has taken some time DRAM along the them flash and moving pretty good idea like okay. The.
The people that implemented.
Wafer level burn in pursuit of squash did it in the <unk> I look at what we believe the compromise the way.
And we've gotten specific feedback that they would like the.
At the front end need more cost effective higher parallelism lower footprint more automation in the future.
And we do believe that long term debt as an opportunity in the as long as I'm of the food the will air will always be trying to get into that space on.
We have shared.
They agreed.
With people like I was vaguely repeated again part of the in your investment in US as the company is actually the stock or is in the water related to automation of.
In the.
Production cells of extending the XP and its capability. So the is more applicable on and more of.
Affective for massively high value of applications, such as the minimum right.
And we are spending that money the today show in this downturn.
In addition to the investments, we're making in wafer packs.
APAC high voltage packaged part of wafer level burn in systems were also engaged on automation and some other things that we think of particularly appealing to multiple markets, including the specifically the name of the dots right on.
On your you alluded to the risk associated with our sort of small company and certainly a big part of the risk profile for three four years ago was the XP was the but a.
The you know a glimmer in my online or on site and there was a sketch on the piece of paper and that was too far out of the patch for a child that is going to need you know up to 100 X.P.'s profile.
To go on record.
I believe that we are on a path to be able to reduce that risk.
And that gives us opportunities I will also tell people do not investing on the stock because you can click on them sell a whole bunch of men the systems of the next six months, but.
But we are engaged in working on the thing and very specifically.
Where the engagement from that area slowed to a halt doing.
During the cold.
Our non for us that every day.
The then the guys are absolutely just focused on getting what they were doing done and not doing that and there's no volume could be understand of any pull them talk of the really good in the two on the wafer level of side of things right now.
But I do believe the Reengage.
So.
But your comment about should we partner with somebody et cetera, I think that is on.
Well you know I understand it makes sense and I don't want to comment about potential partnerships or things like the implied.
Will acknowledge that could very well make sense to company.
Before they go off and try and spend hundreds of millions of dollars share test on wafer level burn in systems.
Yeah, the particularly the teams are just get your key technology or XP system out the door of this ER.
The lenders do the <unk>, but also.
The.
The the.
Because we were the business would do or the right where the sort of the so literally so for on.
Oh, the I believe that one of the critical weaknesses.
Of the way people have deployed the one of the headwinds of why people have not been able to do they come on the burn in across a wider segment of the flash as well. It's the on is the is the contract the.
Oh, the has proprietary technology with what we call the wafer pack that can address it.
So I think that's one of the differentiated things I actually think the test stores as well and the test cell on the automation, but for certain of the probe cards that are out there cannot address the do the on the high density high power flash memory coming out of.
And it's something the Waferpaks Kim.
Yeah, the seems like white white pick on the automation, that's really the of the key technology.
Just what you said of the two technology in the you know by.
Part of it is somebody who would dramatically reduce the risk.
To the customer.
Debt.
The dip.
With the on the road.
Just Michael the the hopefully.
The you guys are seriously considering some of the.
The other share the feedback and stay tuned Larry.
The.
Thank you.
Okay.
That will conclude todays question and answer session I would now like to turn the call over the management for any additional closing remarks.
Okay, what types of very much operator, thank you everybody.
We appreciate you listening on them and taking some really good question and give some good questions I absolutely want to acknowledge we understand that you know the first half was you know.
Certainly one of the.
You know.
Less exciting times, our heirs history, even the recent memory, but I I truly sit here at the edge and the <unk>.
So glad the 2020 is behind because it wasn't the wasn't just last six months of really all of 2020 that we would feel of it and you know starting up with the initial order and based on of the customers are telling us. It's not just called the then all the other things going on of the where they actually the more excited about 22.
2021, the so I'll leave it there and I appreciate it and there's always you know how the reach of speech I guess, if you on that follow on conversations et cetera. Thank you very much of we'll talk to the next quarter, but I.
That will conclude today's conference. Thank you for participation you may now disconnect.
[noise] Oh.
Uh huh.
And.
[noise].