Q3 2022 Akoustis Technologies Inc Earnings Call
Good day, ladies and gentlemen, and welcome to all cause these technologies fiscal 2022 third quarter conference call.
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And now I'll turn the conference over to Tom It depends is director of Investor Relations.
Thank you and you may begin.
Thank you operator, and good morning to everyone on the call welcome to cause this third quarter fiscal 2022 conference call. We are joined today by our founder and CEO, Jeff Shealy, CFO, Ken Boller and EVP of business development, David likely.
Before we begin please note that today's presentation includes forward looking statements about our business outlook all statements other than statements of historical facts included in this conference call such as expectations regarding our strategies operations costs plans and objectives, including the timing and prospects.
Of product development and customer orders, our expectations regarding achieving design wins from current and future customers.
The possibility of entering into collaborative or partnering relationships.
Potential impacts of the COVID-19, pandemic litigation matters guidance regarding expected revenue product orders and milestones for the current and future fiscal quarters and expectations regarding the integration of acquired business operations are forward looking statements.
Such forward looking statements are predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties the.
The company and our management team assume no obligations to update any forward looking statements made on today's call.
Our SEC filings mention important factors that could cause actual results to differ materially.
Please refer to our latest Form 10-K, and Form 10-Q filed with the SEC to get a better understanding of those risks and uncertainties.
In addition, our presentation today, we will also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the investors section of acoustic Dot com.
I'd now like to turn the call over to Jeff Shealy, founder and CEO of acoustics.
Thank you Tom and welcome everyone to our fiscal 2022 third quarter conference call.
I am pleased to report that acoustic delivered greater than 25% sequential revenue growth and over 80% year over year revenue growth as we continue to commercialize our leading ball filter products.
We were able to accomplish this despite the ongoing headwinds in the macro environment, driven by COVID-19, and the associated semiconductor supply chain shortages.
In the March quarter, five new customers enter production, bringing the total number of customers ramping production to turn we expect to see this number continue to grow throughout calendar 'twenty 'twenty. Two we delivered record revenue of $4 6 million in the quarter and we remain.
I'm confident that we will see continued sequential revenue growth for the foreseeable future currently given our growing customer activity in Wi Fi five G mobile five G infrastructure and other markets. We expect revenue for our current fourth fiscal quarter ending June 30.
2022 will increase by more than 30% sequentially.
I would now like to discuss each of our target market segments in greater detail beginning with the Wi Fi segment.
We ramped production of export filters for three additional Wi Fi customers in the March quarter, bringing the total number of Wi Fi customers two eight.
Yeah.
We have over 15 announced design wins, including two new design wins secured in the March quarter, and we expect to add both additional customers and design wins as calendar 2022 progresses.
I am also pleased to announce that we fully qualified our 5.5 gigahertz and 6.5 gigahertz Wi Fi six E X ball filter products over the past few months and expect to qualify and released into production for additional Wi Fi 67 filters in the current.
June quarter.
Additionally, we continue to advance the progress of our Wi Fi seven Diplexer, which we are currently developing for one of the largest P. C chipset makers in the world.
The first is I know this new Diplexer was shipped to this fortune 100 customer in December and we received positive feedback on that design.
The initial diplexer performed well and enable the customer to characterize in their system, providing valuable technical feedback for the next design iteration, which was just released into our New York Fab facility.
We expect to ship the new iteration sample filter to the customer by the end of the current June quarter, we remain on schedule for commercialization of this extremely exciting product and have received interest from other Oems for Diplexer triplex or another multiplexer products.
We attribute our surge and recent design wins to the fact that we were an early entrant in Wi Fi six and Wi Fi six he.
And seven ball filter solutions to the market and today have one of the most extensive Wi Fi 60, and seven ball filter portfolios to address the enormous challenges of difficult dual band coexist wide bandwidth and high frequency operation within the five to seven gigahertz for.
Quincy spectrum.
To summarize our recent Wi Fi activity, we now have more than 12 commercialized ex BOL Wifi filters eight for Wi Fi six he.
And for for Wi Fi six.
As of today, we have announced a total of 15 design wins upfront 10 design wins at the end of last quarter.
Furthermore, we expect to see additional Wi Fi filter design win throughout the current calendar year.
Yeah.
Further we have qualified and released into production for Wi Fi filters, including Wifi, six and Wi Fi six and seven and lastly, we are advancing the development of our ex BOL multiplexer products led by our first Diplexer, which will allow.
How us to enter the PC market, another very substantial market opportunity in both unit volume and revenue.
Moving on to <unk> mobile.
We continued our momentum in five T mobile during the March quarter, adding another new multibillion dollar tier one RF front end module maker customer, bringing the total number of five gene mobile customers in development to five including three tier one companies are new tier one mobile customer.
<unk> is currently designing multiple five G filters and plans to use our ex ball technology to deliver multiple best in class five gene mobile modules and challenging bands above two gigahertz for using cutting edge five G smartphones and other devices.
We received an initial development order from this new tier one customer early in the March quarter for a challenging five G mobile band with stringent coexistence specifications.
We shipped our second X ball filter designed to our tier one five G mobile RF component customer in the March quarter and received a follow on order to optimize the first design for an expected production ramp beginning at the end of the current calendar year.
We also received a follow on order from our first tier two five G mobile RF module customer to reiterate the original filter design and to deliver resonator models for two new additional filters.
The redesign was driven by changes to the customer's filter specification and was not driven by our <unk> technology.
We remain on track to deliver completed filters using our wafer level package or W. O P. By the end of the current quarter and are pleased with our expanding relationship with this customer.
And finally, we continue to progress with the tier one five T mobile customer we engage with at the end of calendar 'twenty 'twenty. One after shipping initial resonators in December the customer has characterized and design new X ball filters that are expected to be released into our New York Fab.
In the current June quarter.
As we mentioned on our last quarterly update call. We are bringing the production of our W. L. P. In house within our New York Fab, We continue to work towards a design lock of multiple new advanced packages with full W. L. P process qualification expected to follow.
This calendar year.
We believe bringing the W. A L. P process in house enhances substantially our ability to control the quality cost and customization of our advanced packages.
To summarize our five G mobile activity, we added a new tier one five G mobile customer during the March quarter, bringing the total number of mobile customers to five including three tier one customers.
Further we have multiple customer funded ex BOL filters in design.
And our current customer engagements include a new tier one mobile RF front end module and filter OEM for whom we expect to make multiple filters.
Tier one RF component company that we are developing two X ball filters for.
A second tier one RF front end module maker that is using our ex boss resonators to develop multiple filters for five G handsets.
A tier two RF front end module maker, which has signed a foundry agreement with us for development of one X ball filter.
And a second tier two front end module maker that we're currently developing one filter for with the expectation of additional filters for <unk> five T mobile if the first filter is accepted.
We shipped multiple five G mobile ex BOL filter samples to our customers during the March quarter.
And finally, we are currently migrating the manufacturing supply chain of W. A L. P into our New York Fab, which we expect to have design locked and available for qualified production in the second half of calendar 2022.
And now I would like to discuss our network infrastructure business highlights.
I'm pleased to announce that we officially began ramping production of two citizens broadband radio service infrastructure companies in the March quarter. We expect these two customers to continue to ramp in the current June quarter and beyond I'm also pleased to announce that we have recently received another C. B R. S design win.
From a third network infrastructure, OEM, which will begin to ramp in the June quarter as well.
Given the success and momentum we are experiencing in Wi Fi and five G. Mobile we shifted our engineering resources in the March quarter.
As such our new C band 3.8, gigahertz five G filter for the U S infrastructure market is now expected to sample in the current quarter and we remain actively pursuing our next generation massive mimo materials and we'll update you as this effort progresses.
To summarize our five G network infrastructure activity.
We have four completed five gene network infrastructure ex ball filters three for five G small cell base stations and one for C. B R S too.
To date, we have announced three design wins in small cell with our tier one customer and one design win from a second customer.
Additionally, we have received four design wins for C. B R. S from three leading network infrastructure Oems.
Moving on in our defense contract business, we continued to progress during Q2 on our existing R&D contract with DARPA to further enhance our ex BOL P D K and.
In addition, we are finalizing a multiyear multimillion dollar contract with DARPA to extend the operating range of our ex BOL filters up to 18 gigahertz youth.
Using novel materials and device manufacturing and expect to have positive news on this front to share with you soon.
These new materials may have implications.
Our current two to seven gigahertz frequency range that we're focused on today, given higher power handling capability and high Q values associated with these new materials.
In our other market segment, we recently announced entering the RF timing and frequency market with our leading X ball resonators.
We are working with a leading maker of timing RF components to develop ultra high frequency ex ball resonators for use in this customer's finished devices.
The timing RF market represents a significant new opportunity for acoustics in both unit volume and revenue.
Our primary customer is developing products.
That could be disruptive in the timing RF components market looking to displace older analog technologies with ultra low jitter and phase noise devices. We are extremely excited that our leading X ball resonators can be a part of this groundbreaking opportunity.
And finally, as we announced this morning, we have completed the acquisition of the remaining 49% of our F M I, which will enhance our sales channels supply chain and addressable Tam.
We welcome the entire RF and my staff to acoustic <unk> and look forward to continued success as a team to grow our business and the RF acoustic filter market.
To summarize our other market segment activity.
We have seven completed X bar filter solutions for the civilian and defense markets.
Further our ultra high frequency ex BOL resonators are now being used to deliver disruptive digital timing and control products to the broader communications industry.
In addition, we continue to refine and improve our export P. D K driven by the direct a phase two contract with DARPA and we expect to sign a new multi year multimillion dollar contract with DARPA to scale, our export technology up to 18 gigahertz.
Further we successfully completed the acquisition of the remaining 49% of our F. M I.
And finally in addition to the numerous customers acquired through the R. F. M. I acquisition, we have a total of three ex BOL customer engagements two of which have already placed purchase orders with us or provided in our <unk> revenue.
I would now like to hand, the call over to Ken to go through our financial highlights.
Thank you Jeff for.
For the third quarter ended March 31, 2022, the company reported revenue of $4 6 million, which is an increase of 25% over the prior quarter ended December 31, 2021 and in line with our revenue guidance.
On a GAAP basis operating loss was $14 8 million for the March quarter, mainly driven by revenue of $4 6 million offset by cost of revenue of $5 4 million and operating expenses of $14 million <unk>.
Included in operating expenses, where labor costs are $7 2 million depreciation and amortization of $1 5 million and other operational costs totaling $5 4 million.
As a result, GAAP net loss per share was 27 cents.
On a non-GAAP basis operating loss was $12 3 million and non-GAAP net loss per share was 22 cents rec.
A reconciliation of these amounts to the corresponding GAAP measures is available in the press release issued this morning available on the investors section of our corporate website.
Capex spend for Q3 was 9 million compared to $7 1 million in the prior quarter, mostly related to the continued capacity expansion and equipment redundancy and the company's New York Fab.
I would like to highlight that we expect capex to decline significantly in the second half of the year as a front end loaded cost involved with bringing the wafer level packaging in house tapers off.
Cash used in operating activities is beginning to trend down and was $9 7 million in Q3 down from $10 8 million in the prior quarter.
We also expect to see our operating expenses decline in the second half of the year as our cost benefit from greater fab utilization.
The company exited the March quarter was $55 9 million in cash and cash equivalents versus 67.5 at the end of the previous quarter.
During the March quarter, the company raised $6 8 million in cash through additional at the market equity financing and average price of approximately $6 three per share.
In the June quarter, we expect multiple new Wi Fi six C and network infrastructure customers to ramp production and therefore, we expect to see record revenue up more than 30% sequentially from the March quarter and based upon our growing backlog of design wins, we anticipate that the topline growth will continue into our next fiscal year and beyond.
And.
I will now turn the call back over to Jeff to discuss our fourth fiscal quarter performance and future milestones.
Thank you Ken.
I am pleased to report.
But our view of the June quarter remains positive despite the ongoing semiconductor supply shortages and supply chain issues that are impacting the broader industry. Our momentum continues to grow driven by Wifi six why 565 G mobile five G infrastructure and our other market.
<unk> segment.
By the end of the current quarter, we expect to ramp production from 10 customers to more than 11 customers with additional customer design wins expected across all our markets.
As calendar 2022 progresses.
In the June quarter, we expect to generate revenue from each of our business segments, including five G Mobile Wi Fi five G network infrastructure and our other market segment.
We continue to strive towards executing on our targeted milestones and we will continue to keep you informed of our progress.
Our anticipated June 2022 milestones include and our Wi Fi segment first we expect to announce three additional Wi Fi six he design wins.
Further we expect to deliver our second diplexer iteration to our fortune 100, P C chipset customer and receive feedback.
And we expect a development order from a fortune 100 Internet company for two Diplex yours for designed into next generation a R V. Our headsets and other consumer devices.
For the five T mobile segment, we expect to receive our first purchase order for our <unk> mobile filter from a tier one customer announced in December .
In addition, we expect to iterate the original filter design for our first tier two RF front end module customer and receive a purchase order for two additional X ball filters for development and lastly, we are currently supporting our new tier one mobile customer to develop initial samples.
Of their first X ball filter.
Next in our five G network infrastructure segment, we plan to ramp production with three C. B R S infrastructure customers.
And we expect to deliver a $3 seven to $3 nine eight gigahertz C band five G filter for the U S market and expect to sample with multiple tier one customers for both small cell and D. A S. A a S base station equipment.
And finally in our other market segment, we expect to receive a purchase order for the development of new ex BOL multi chip module for a multibillion dollar tier one defense customer.
And we expect to finalize a new multi year multi million dollar <unk>.
<unk> with DARPA.
In conclusion, we believe the market opportunity for our patented high frequency ex BOL filters is substantial.
We now have 58 issued patents and 100 patents pending as we continue to build our substantial IP moat around our technology. We continue to work diligently to achieve each of our stated objectives and we will continue to provide updates on our execution against these objectives going forward.
Finally, I would like to thank our employees for their hard work passion and dedication, particularly during the ongoing pandemic as our team has kept the momentum going on our R&D, which has led to the multiple design wins across the Wi Fi five G network infrastructure and defer.
Hence markets.
We have also experienced exceptional momentum in the five gene mobile market driven by our leadership in filters that operate above three gigahertz, and our new and expanding wafer level packaging capabilities. I also wish to thank our shareholders, who continue to support the company and with that I would like to own.
On the call for questions from the investment community. Operator. Please go ahead with the first question.
Thank you very much.
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One moment, please while we poll for questions.
We have our first question from the lineup Cody Acree with benchmark. Please go ahead.
Yeah, guys. Thanks for taking my question and congratulations on the progress.
Guys, I guess, Jeff or Dave can you just talk real quickly about China with the Lockdowns.
Hi area.
Are you seeing that impact any of your engagements.
Hey, good morning, Cody Jeff here.
Let me, let I'll, let Dave start and I'll follow up with some comments and good morning, Cody good to hear from you.
The we're.
We're not really seeing too much impact from the supply side. What we are seeing is just delays of <unk>.
Exporting and importing into the country.
It's mainly you'll go through reports that may be.
Upon the receipt of materials. So we have some of our OS that somebody else is located in China, and then some of the customers as well. So that's that's impacting but that's maybe a one two week delay that we're counting for right now so other than that we're not seeing anything significant.
Yeah, and Kodiak, Jeff here, just from a from the China side from my perspective, I give a lot of credit to our operations team as you probably are well aware.
We use our own SaaS overseas.
And our team has.
Spend many many evenings.
Managing we had really one of the strongest quarters I'm out of the supply chain.
And I credit our operations team for that we we we have a healthy backlog and we successfully shipped against the internal objectives that we had for the quarter.
And so I think what what has what this pandemic has done has forced a lot of handholding online on call.
We we feel we've got the right team to manage that and they did an excellent job last quarter.
Excellent. Thank you for that Jeff.
Jeff.
Dave a lot of detail and thank you for that on the prepared remarks, but maybe if you just go back and just summarize your customer your 10 customers going to 11 here in the June quarter.
And how that is.
In your revenue.
If you can just talk about where that X ball revenue came from.
During the quarter, where the bulk of that coming from and then into the June quarter. What are your expectations and then maybe how does that parse through the rest of the year.
Okay.
From a customer base I'll, let Dave talk to that and then I'll certainly follow up more strategically so to.
To the question Cody, we've got as we highlighted 10 production customers right now and the majority of those are in the Wi Fi sector. So approximately eight of them are in Wi Fi and two are in the five G. C. B R. S sector and yeah. So as you can see a larger percentages and Wi Fi and we have a split between.
You know what.
I categorize with enterprise and retail or consumer and also you know that.
The carrier market its a good split and it's also a split that we have you know regionally from North America to to Europe , and then also in and Asia. Most of the productions being done over in Asia, but at least from a design win and and OEM. It's split between those regions and as Jeff highlighted we had a very.
<unk> last quarter.
Shipping against ER to these customers.
D. C Bureau, Margaret is just really starting to pick up in North America. So we're going to continue to track that as well.
And I expect as you know.
We have it.
Early remarks that we're going to continue with these design wins and transition these customers to production and it's just a it's a mix on timing and also some of the customers are being impacted by the semiconductor shortage. So we're going to continue to layer in new customers to offset some of the.
Ups and downs that we may see.
So cody from from.
Piggyback that a little bit just segment wise.
If you look at if you look at the five G infrastructure, we actually had a healthy quarter as we mentioned in the comments.
And the C B R S.
I believe the volumes were up approximately five X in terms of volumes and in.
In the <unk> infrastructure segment.
For us just at a high level, our 2022 it's really about growing our revenues. We've got design wins that we've been we we had been announcing and are expanding and our growth. In 2022 is really focused from a revenue basis I'm going to draw from.
Wi Fi and are really the storyline for the second half of 2022 is.
We've been working very diligently on our wafer level package as well as.
These miniature form factors that are.
That enable us to get into the mobile market.
We said we've got a currently five customers in the mobile segment and where.
We're really pushing hard.
To home in on our first design win in the second half. So that's that's sort of how the how the story kind of builds and but that's that's how we're pushing that and again.
With regard to kind of support for that what we've been putting in is capacity we've been wrapping that up in the New York Fab in order to support the programs that we have as well as some of the initial.
Mobile work that we're doing.
So they there are some additional color.
I appreciate that guys. Both of you. If you can just talk maybe just a little bit about your current momentum.
Just your revenue base is obviously skewed right now towards Wifi.
And.
Uh huh.
What I'm I guess I'm looking for is some efforts some explanation.
The maturity of your projects.
And how that.
I expect you would be talking about them being more in the nascency.
Most of your relationships.
That.
When can we think about those moving into more mature volumes.
Okay.
So from the way I look at it is you know really into two branches number one you've got to have the right products and you got to have the right machinery or operations in order to support that we've been putting that in place.
I'm very pleased that we have a chip fab that can produce the designs and but.
You also have to have the right product base. So in they are what we're supporting now in Wi Fi I think we said in the prepared comments, we've got 12 12 commercialized.
Filters.
For Wi Fi six feet as well as a four for Wi Fi six.
From a momentum standpoint, I think it was part of your question. We've W. L. P. As really begin to allow us to.
Get shipments to these mobile customers.
We've had a successful demonstrations of of of our chips in.
In RF modules and that's what's given us the confidence on the on the mobile front. So I'd say the momentum is high on the on the mobile side, we're certainly enjoying the benefit of there being more RF module companies out there then RF filter companies to supply those modules.
So we certainly benefit from that but we're now in a position on the W. L. P and again, if you look back from impact of the pandemic. We went from a supply chain that was outsourced.
And had a very long.
Cycle time to one that's in source that we can support out of New York and that's what.
It gives us the momentum as well as the confidence for the mobile market.
So those are my comments at least momentum wise.
Okay. Thank you.
That's it for me Thank you guys.
Thanks, Good X coding thank you.
Thank you we have next question from the line of harsh Kumar from Piper Sandler. Please go ahead.
Yeah, Hey, guys congratulations push the ball at some pretty tremendous growth plumbing I Wonder Jeff asked about the 30% sequential about 30% or more sequential growth trade that you highlighted for the June quarter.
Interesting New York's a mention that you expect most of your revenue item of.
Business lines to contribute to that growth number I was curious.
Know, how you'd think about that number in terms of the different areas that that is coming from infrastructure and mobile slash life's mobile and then I and then also my second question in Alaska right now when do you think duplexes for P. CS are become meaningful for you.
Is it in the June quarter or was it that'd be later on.
Okay. So let's tackle both of those I think I'm Gonna go in reverse order they touch on the duplexer timing that program. So on the the Diplexer development that we're doing for the chipset P. C chipset Oems.
It really this is a.
We've gotten the first iteration that we ship to them and they were able to characterize provide us feedback.
And their design and we're Iterating the second design expected to ship that in the end of this quarter and then really what we're moving into as a development phase with them.
And that development phase, it's going to take about 15 months, you know where they're going to start characterizing their systems.
Start doing.
Theyre MPI lunch and that also go into a a preproduction mode and then by the end of next year, we expect the product to be in production ramp and relatively high volume.
So that's that's our focus with that customer. We're now just starting to take this design and the technology to export technology, which has significant benefit in these type of applications for mobile consumer applications, where a coexist requirements for Wi Fi <unk> and Wi Fi seven.
For asynchronous operation is becoming very important.
Benefits that you see with the export technology on.
Asian, and and coexist capabilities, so as we announced in the Q4 or as we comment in the Q4, we expect to get another order from a consumer mobile application. So we're excited about the potential with the Diplexer and also the technology.
[noise] itself, well with Tri Flexors, and essentially Quadplex yours and beyond so we're going to continue to engage with the market and share our capabilities and technology.
Okay Harsha back to your first point in terms of sequential growth I think we indicated that growth would come from all the segments.
I'll I'll tackle those and.
And in the following order firsthand the Wi Fi segment, what I would characterize is we mentioned the ongoing.
Play.
Plans for not only additional design wins, but we already have enough design wins and just I want our.
Investors don't appreciate we're just now ramping and and Wi Fi six feet and just started that ramp so.
We're going to continue ramping in the Wi Fi segment.
Both Wi Fi six where we've announced.
Additional sockets and Wi Fi six Oh, we've got design wins that are just starting production in Wi Fi <unk>.
Element, that's going on in Wi Fi seven and if you look at it at a very high level in that Wi Fi segment, where that's going is integration.
It's a big part of the product roadmap and that's.
But that certainly is a we would consider that greater things.
Oh, two or more filters are in a in.
In a module in.
So that's again with the that's just continued growth.
Across multiple design wins in Wi Fi segment. If you go to the five T. Mobile segment. We've announced addition of the C. D. O S. Just as a point of strength for us and we'll see growth quarter over quarter for that.
I expect that to be in the single digits quarter over quarter and then.
Dave touched on what what kind of activity, we have thought in the mobile segment earlier.
But I can say that we've got we've got active customers that are that are have roadmap that have.
Insertion point and so we're driving hard supplying those designs and again I emphasize.
Those designs are coming with the W. O P process, which we now can produce in house and so we're supporting those and we'll see growth in that segment as well and then in the other market segment.
That's where we've been winding down.
The DARPA PDK men a program that we have and we were pretty light on the details of all of the new multimillion dollar a DARPA program.
However, we had no revenue in the March quarter from the DARPA and the new DARPA program and so that program will be starting as well and we're really excited about that program for for some of the technology that we see that's going on.
Come from that will be a further enhancements and in the end products that will be producing so we're pretty excited about that but it is a crops.
Other market all while all our of our four market segments that we discussed.
Thanks, guys and congratulations.
Okay. Thank you harsh.
Thank you we have next question from the line up Rick Schafer with Oppenheimer. Please.
Thanks, guys and I'll Echo harshest congratulations.
Nice progress it seems like on all fronts.
I think my question My first one any way is really on mobile and congrats on the latest Oh.
But you're talking about in the release and everything I guess I'm curious.
If you could give us any sense of.
Revenue timing their latest P O and then.
Bigger picture, just sort of if you could level set us and maybe describe.
Your mobile.
Mobile revenue funnel looks like now.
Across the five customers excuse me Rick Yeah, No worries Rick Thanks for your kind comments, they will start with what the customer perspective, there good morning, Rick.
Let me paint a little picture of that Oh, it looks out maybe over the next two years and I think to Echo what Jeff has commented the W. L. P. Enablement has really allowed us to accelerate some of these engagements are prior.
Prior to really Havent W. L. P. In house, Yeah. It was more of an R&D relationship and we've been engaged with.
Many of these customers over the last five years and really turning the corner. So that we can start looking at a pre production and production ramps programs. So the one that's the most exciting for US as you know the tier one component manufacturer, which we comment.
We've got two designs with them in both designs have been successful and yeah. We are we look to them to be our first customer in volume production target.
Target is by the end of this year and really that's to align with our W. L. P qualification as well.
And that customers already are.
Favorable response on their designs you know with their channel so that yeah that that will lead into production through 2023 with one if not two.
So that's what we're in discussions with right now with respect to the other four are there different levels of engagements.
Engagements.
One we just announced in March as early.
As you can imagine that's going to take some time.
The transition, but our hope is.
If things go well with them through the development and that we will see production ramp in 2024.
So that is a little bit further out and then in between that is the other engagements that were targeting so our tier two RF front end.
That would be there.
The design will go into production next year as well targeting the.
China is China mobile market.
So its its various levels of degrees from ramping to production end of this year to other programs that we expect to be in production in 2024, but it's all you know that is our next step function in revenue growth you know.
Once we see Wi Fi continuing to grow and then the five G infrastructure. The mobile will start layering on top of that and Rick and Jeff.
Jeff here I, just I was going to add a little more color.
Around that just to give.
That'd be appreciated what what we see from our side.
Until they really late in the March quarter.
That'd be all P, which is that.
Enablement technology that allows very miniature designs that can be integrated in RF modules I would just characterize that as a pain point for us.
To get parts to customers.
As we were building out supply chain in house and are beginning to qualification for it.
So where we've moved from a struggling with that.
That technology to actually are now delivering a whole wafers with a complete W. L. P integration into the into the AR technology module.
So where are that that.
We've gotten very positive feedback from our customers.
In terms of just to reiterate a couple of things Dave said.
We're really focused on our second half design win.
Design win for US would also include.
A fair amount of preproduction units and those are we expect would be a second second half 2022 going into production as Dave said.
In 2023 with one to two customers is kind of what our business plan looks like also would like to characterize what type of engagements that we're having.
That could be one or one to two engineering weekly.
Meetings with these customers.
Meeting separately what procurement.
Separate meetings with quality.
A lot of quality documents are coming through coming across.
For us too.
Satisfy their their quality requirements as well as our management on really building bridges, and and a strategic engagement with them for us as a supplier. So that's just a little more color to what they added.
No. Thanks for all that color and I know I guess my second question is just.
Around capacity.
You saw on the release, you're talking about 500 million I think by the end of the year and obviously a lot of that I would assume is for mobile and opening the doors there to ramp that business I guess, I'm curious where capacity.
Citi is so kind of how far you have to go to get to that 500 by the end.
This calendar year I believe it's calendar year comment.
And Jeff I was curious if maybe we could get your perspective on sort of what the latest you're hearing.
On the chip that is or I guess whenever it's being called now.
Because again I'd just be curious.
I guess, how long sort of once it's approved.
I guess really my question is what's the strategy there around ordering tools given long lead times do you start throwing orders in now.
Oh, it's out past a year lead time. So do you order ahead of any kind of chips Act money or are you treating that has found money if and when it comes or just sort of what's your strategies around that would be would be helpful too. Thanks.
Okay. So so Rick I want to be Oh, let's tackle your first your second question first if you don't mind.
So it just in terms of the latest on the chips Act.
I think the.
I think it's pretty well documented that the house versus Senate.
Voted and successfully on their bill.
Voted separately on a on a similar.
But had.
Some differences in it so what what the process is is that both houses of Congress are are gathering a committee.
Which is.
It's made up of approximately 80 members.
Thereabouts.
And that committee will then sort through the differences.
We expect we expect those differences to be hashed out as early as later this month and then then it.
It would be sent to the President's desk.
For signature, which I think all indications that we've seen is that will happen.
So a pretty pretty optimistic about about that.
About that bill are being signed into law in terms of our strategy kind of goes back to your first question, which was you know we we've said all along that we were going to invest in capacity that could get us a better than cash flow breakeven and the investments that we've made this isn't about ordering.
Equipment now in anticipation, we've always said that are we weren't we weren't going to put the mobile market requirements on the backs of our investors.
However, we have made the investments to get to 500 million filter chips are the <unk>.
End of this year just to characterize that for you.
We actually model out the factory for 18 months and react accordingly, and so what what I would characterize it as from an equipment standpoint, what you see in our Capex.
Flex the equipment that we've already had the foresight to order to get to the $500 million. So we're not ordering equipment at this stage to get to the 500 million that's more about the labor the labor aspect to actually run the run the wafers, so where we're very comfortable with the investment we made as you know.
Lead times on some of this equipment can be pretty challenging.
We didn't we didn't want to we didn't want to jeopardize and initial capacity to get to 500 million.
And in this type of time frame.
Where it's pretty challenging so we we've we had the foresight to order that those equipments. Some of the final installs will be happening happening around middle of the year.
So where we're not in the ordering phase of that where in the receiving and installing a phase of that but predominantly the limitation on our filters for us it will be labor and we'll add that.
As a as warranted.
So I think I covered your question if you have any follow up.
No that was great. Thanks, a lot yeah.
Okay. Thank you.
Yeah.
Thank you we have next question from the lineup Sujit de Silva with Roth Capital. Please go ahead hi.
Jeff I can to Dave I'll Echo everybody's congratulations as well great progress here.
Jeff in your prepared remarks, you talked about shifting resources between segments to address new opportunities, perhaps it was around a.
Wireless infrastructure could you clarify or elaborate on what what that was in reference to.
Yeah, I mean, we we have fun.
We have let me just maybe back up and and help you appreciate a little bit about our engineering. So we have a we've got a product engineering and advanced engineering and.
The goal of the product engineering is.
It's being focused on.
Low risk.
Hi predicted high predictability.
Schedules to get to market, where we do have flexibility, though is in the advanced.
Advanced engineering team.
Two two.
To go after.
Opportunities as they come in I think Dave mentioned.
Some of the opportunities I think that the strength of the company being able to.
Rapidly respond.
We actually from a business process, we will look at opportunities as they come into the company parade or those are for opportunities and have the flexibility to shift the beauty of what we're doing is where we don't have to we're not shifting technologies per se the technologies that we're using.
With the exception of the W. P.
Have.
A relatively mature technologies I'm pretty comfortable so we have the flexibility in our fab to run products from different markets.
That's a we've got a very good supporting evidence that we can run.
Dozens of different products in the fab just because it follows a very similar process flow.
So I think specifically, we certainly have moved resources from the <unk> infrastructure.
<unk> market, we've moved those onto.
Into the mobile market as well as some of the advanced chips are that we've been very vocal about in Wi Fi where we're integrating.
More than one filter into a module and and we do so really with.
With the customer.
Customer support and commitment so we've got agreements in place as well as our orders in place to actually produce those as well as line of sight to programs.
Anything you want to add to that yeah. So to get a couple of comments that I'd like to make is you know early investments in the <unk> infrastructure was primarily China market that return on investment is not really panned out as well as we had hoped and a lot of that is due to the way that China has been rolling out their spectrum.
The infrastructure market is a little bit slow to adopt new standards and yeah.
They are the deployments in Europe and also in the U S is going to take a little bit of time.
So what we have been looking at is where it's really growth opportunities.
And one of the things that is clear at least with our engagements with the Wifi market as were now recognized as one of the leading ball.
Filter suppliers and the industry is starting to shift pretty significantly away from traditional type filters to.
More of these high performance filters, so we see the activity and what we established was 60 and upcoming seven that's the way to continue to leverage that and we didn't want to continue to have a portfolio of products that we will be the primary source that they go to they'd be in the end customer comes to us to have these.
So with that and the activity level on mobile we've had to put some design resources. There. So that's the main.
The reason for some of the shifts.
Okay. Thanks, Jeff Yeah, that's very helpful color, there and maybe just on this question may not be fair, but just to ask it.
On the mobile customers that are coming out versus the Wifi customers. You have now is there a way to kind of take the average run rate of the two over as they mature over time and say you know what kind of multiplier of mobile customer may have a customer option you may have for you versus the typical Wifi customer.
Yeah, so the multiple multiples.
Significant and it really depends on if you're talking to a tier one or if youre talking to tier two.
So with respect to the tier ones, depending on the platform that they're going after that multiplier can be pretty significant with respect to an.
An OEM that we are we get in the Wi Fi market.
So that multiplier can be you know five to 10 times with respect to what we're seeing right now in run rates on Wi Fi side.
So that yeah, that's something that as we've talked about that revenue will start layering on a in a.
Calendar year, 2023, and then going into 2024.
And to do that I'll, just add to that that.
The preproduction.
Great production levels for the mobile market are more in line with what the production levels are in Wi Fi market.
That's another colorful way of saying what they said.
That's a helpful visual thanks, Jeff Thanks, guys Okay.
Thank you Susie Thanks Richard.
Thank you ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the call back to Jeff Shealy, founder and CEO for closing remarks over to you Sir.
Okay, well I'd like to thank everyone for your time today, we look forward to speaking with you during our next update call to discuss.
The June quarter as execution against our milestones and future expectations.
Like to wish everybody a good day and goodbye. Thank you.
Thank you very much ladies and gentlemen that concludes todays conference call.
You disconnect your lines at this time, thank you for your participation.
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