Q4 2022 Akoustis Technologies Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the acoustic technologies fiscal 2022 fourth quarter Conference call. As a reminder, this conference call is being recorded.
At the conclusion of the company presentation, a Christmas management will take questions to ask a question. Please press star one on your telephone keypad to be placed in check here.
A replay of the call will be available on the Investor Relations section of the Christian website.
Thank you operator, and good morning to everyone on the call welcome to acoustic <unk> fourth quarter fiscal 2022 conference calls 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.
Central 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 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 and.
In addition, our presentation today 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 acoustics back up.
I'd now like to turn the call over to Jeff Shealy, founder and CEO of Augustus. Thank you, Tom and welcome everyone to our fiscal 2022 fourth quarter conference call.
I am pleased to report that acoustic delivered over 140% year over year revenue growth and more than 13% sequential revenue growth as we continue to ramp commercialization of our leading ball filter products.
We were able to accomplish this despite the ongoing challenges in the macro environment driven by Covid triggered lockdowns and.
And power outages in parts of Asia.
Well as the associated semiconductor chip shortages.
The silicon chip shortages continue to have a major impact on the number of Wi Fi access points that can be produced by our customers and has led to a significant production backlog across the Wi Fi landscape.
I'll discuss this in greater detail in a few minutes.
Nevertheless, we were able to post record quarterly revenue in June of $5 2 million and expect to continue revenue growth and sequential quarters with robust growth expected in calendar 2023.
From a product development standpoint, we had one of our most successful quarters to date, we managed to achieve 10 out of the 11 stated milestones that we'd laid out at the end of the March quarter, I would like to congratulate the acoustics team for working with a great sense of urgency and focus given the difficulties.
In the broader market.
During the June quarter, five new customers enter production of finished products, which incorporate acoustics ex BOL filters, bringing the total number of customers ramping production to 13.
We expect to see this number continue to grow throughout calendar 2022 including two new expected Wi Fi six E design wins in the current September quarter.
Our growing customer activity in Wi Fi five G mobile five G infrastructure and other markets is being offset by the previously discussed headwinds in our back end supply chain.
As such we expect revenue growth in the current first fiscal quarter, ending September 30th 2022 of more than 5%.
With continued topline growth expected in the December quarter and throughout calendar 2023.
Before discussing each of our target market segments in greater detail I'm going to speak about the recent passage of the chips and science backed a 2022 commonly referred to the chips Act and how acoustic hopes to benefit from the act.
The chips Act legislation was introduced in authored impart by Senate majority leader Chuck Schumer, it's always to boost U S competitiveness with China by allocating tens of billions of dollars to increase domestic semiconductor manufacturing and science research.
Some of you may recall Senator Schumer gave a speech at the acoustic fab in upstate New York in June 2021 shortly after he introduced legislation to provide $52 billion in funding to implement semiconductor related manufacturing and R&D programs in the United States more recently in August 20.
22 acoustic had the opportunity to provide an extended tour of our New York Fab facility to Senator Schumer to share our commercial progress over the last year.
<unk> Senior management plans to work closely with the local regional and state government of New York, along with Senator Schumer's office to support implementation of the chips Act, which we expect will present, a significant opportunity for the revitalization of upstate New York semiconductor presence.
And in particular, the greater Rochester area, where acoustic RF filter chip manufacturing facility is located.
The chipset includes capital for U S semiconductor chip manufacturers.
As well as billions more in tax credits to encourage investment in domestic U S semiconductor chip manufacturing.
It also provides billions of dollars to fund scientific research and to spur innovation and development of other U S technology.
Over the past five years.
This has probably manufactured its innovative RF filter chip products in the USA.
We believe we are an ideal candidate for chips funding and that we fit perfectly as part of Senator Schumer's blueprint to make New York, the global innovation and semiconductor hub.
We plan to properly apply for funding under the chips Act to add multiple new eight inch silicon wafer manufacturing lines at our New York site. In addition, given the supply chain delays energy shortages and constraints associated with our Asia packaging partners, we hope to leverage chips Act funding to <unk>.
Built in advanced packaging center to reduce product costs and support shorter time to market for our products.
Such funding would position acoustic to manufacture and deliver billions of ex BOL filter chips annually and position us to service both tier one and tier two mobile companies for five G smartphone.
As well as other high volume end markets, including five G networks high frequency Wi Fi devices and other wireless market.
The outstanding performance of acoustics export filters has in fact attracted the interest of many of the largest wireless companies in the world names that everyone would recognize.
But the reality is the capital cost to build out capacity to service these billion dollar wireless companies.
Substantial we believe that chipset funding would allow us to make that enormous leap and build a world class state of the art Fabs and advanced packaging Center that both New York State and our country would be proud of.
I would now like to discuss each of our target market segments in greater detail beginning with the Wi Fi segment.
I previously discussed the Wi Fi market continues to experience significant disruption from the ongoing supply chain issues as well as Covid Lockdowns in China.
And this has negatively impacted our near term top line growth relative to earlier expectations.
An industry report by the del Oro Group noted that the lead time for receiving.
Wireless Lan access points has stretched to between six months and a year.
A significant change from the weeks to months lead time at the end of 2021.
I want to clarify that the impact on acoustics is not due to our ability to supply RF filter chips to our Wi Fi OEM customers, but rather the inability of our OEM customers to procure the complete bill of materials necessary to ramp production of the finished goods.
So, whereas we continue to gain design wins in Wi Fi or in customers simply are not able to procure several other components necessary to produce new access points routers and other Wi Fi devices.
While this has resulted in weakness and imperfect visibility in our near term Wi Fi related revenue.
We expect the supply chain issues to resolve over the next six to 12 months, which will improve both the clarity and the ramp of our future Wi Fi filter revenue.
On a more positive note in the June quarter, we were thrilled to add Aruba networks to our growing list of Wi Fi customers, bringing the total number of Wi Fi customers in production to nine Aruba is one of the leading enterprise class Wi Fi infrastructure providers in the world and they are using our <unk>.
Made ex BOL filter solution to deliver the highest performing Wi Fi six access point on the market today. Each Wifi 60 access point uses multiple acoustic ex BOL filters, providing multi user multiple in multiple out architectures for high <unk>.
Throughput and allows for the use of Uni one through four and you need five through eight performance unmatched by any other RF filter solution.
Now have over 15 announced Wi Fi design win and we expect to add both additional customers in production as well as new design wins throughout the balance of calendar 2022.
<unk> the two expected new why 560 design wins I previously mentioned.
Recently, we completed significant and frankly very exciting performance improvements to our five five gigahertz and $6 five gigahertz Wi Fi 60, Wi Fi seven filter solution.
These enhanced filters to use our new chip scale packages.
And are currently shipping to multiple customers for testing.
The advantages of these new filters include a massive improvement and out of band rejection far superior to anything we have seen from our competitors.
We have received significant interest from customers for these new filter products and expect to see design wins and production ramps using these new filter products in the near term.
I am also pleased to announce that we fully qualified for Wi Fi six Wi Fi seven X ball filter products during the June quarter inline with the milestones we set at the end of March.
We expect to release into production. These for Wi Fi six Wi Fi seven filters in the current September quarter.
Additionally, we continue to advance the progress on our Wi Fi seven Diplexer, which we are currently developing for one of the largest P. C chipset makers in the world.
The first design of this new Diplexer was shipped to this fortune 100 customer in December and we received positive feedback on the design.
The initial diplexer performed well.
And enable the customer to characterize the product in their system, providing valuable technical feedback for the next design iteration.
Which was produced in our New York manufacturing facility in the June quarter, and recently shipped to the customer in the past month.
We remain on schedule for commercialization of this extremely exciting product.
Have received interest from other Oems for Diplexer triplex or another multiplexer products.
This includes the new Fortune 100, Internet company customer that we announced on August 24th which has given US a development order for two new Wi Fi seven ex BOL RF filters for the E. R V our markets.
In Wearables and other mobile devices.
Both the P C chipset company and the Internet company expect to enter production with our developing diplexer products in calendar 'twenty 'twenty four.
We attribute our surge and recent design wins to the fact that we were an early entrant in Wi Fi 667 ball filter solutions and today have one of the most extensive Wi Fi 60 portfolios and are expanding to include seven BARF filters to address.
The enormous challenges of difficult dual band coexist wide bandwidth and high frequency operation within the five to seven gigahertz frequency spectrum.
Near term macro supply chain issues remain we are executing on design wins, new production ramps and.
New product development at a higher pace than ever before and we expect to see the outlook improve quickly once the supply chain issues improve.
To summarize our recent Wi Fi activity, we now have 12 commercialized ex BOL Wi Fi filters eight.
Eight for Wi Fi 60, and for for Wi Fi six.
As of today, we have announced a total of 15 design wins, including the two we announced last week.
We are currently in production with nine customers in Wifi six and.
And why 560.
Lastly.
We are advancing the development of our export multiplexer products.
Led by our Diplexer efforts, which have resulted in two development orders from two Fortune 100 company.
Moving on to five T mobile.
We continued our momentum in five T mobile during the June quarter getting closer to our goal of entering production in the five T mobile market by late calendar 2022 early calendar 'twenty two 'twenty three with the first of three tier one customers with whom we are currently engaged.
We shipped a second design to our tier one customer in the June quarter, using our new advanced wafer level packaging.
We've recently completed a quality audit with this customer and received a volume order for the first design.
We remain focused on entering production with this customer on the targeted timeline.
We also successfully developed and delivered one new engineering sample to our third tier one customer.
In RF front end module maker.
We initiated the next phase of this development with new engineering samples expected by the end of calendar 2022.
These new ex BOL filters incorporate the customer's designs and we are targeting production ramp in late calendar 'twenty 'twenty four early 2025.
During the June quarter, we also iterate it a redesigned filter for our tier two five G mobile customer and ship first samples to this customer and our new W. L. P.
We continue to target a production ramp with this customer in mid calendar 'twenty 'twenty three for this first filter.
And have just received a purchase order for the development of two additional X BARF filters targeting Wi Fi 60 application.
As we mentioned on our last quarterly update call. We have brought the production of our W. L. P. In house within our New York Fab.
We continue to work towards that design lock of multiple new advanced packages with full W. L. P process qualification is expected to complete later this calendar year, we believe bringing the W. L. P process in house enhances substantially our ability to control the quality cost and customization.
Of our advanced packages.
To summarize our five T mobile activity, we have multiple customer funded ex BOL filters in design with four customer engagements, including three tier one customers.
We shipped samples of our second design ex BOL mobile filter to our tier one RF component company.
Our advanced wafer level packages.
We also successfully developed and delivered one new engineering sample to our third tier one customer.
And the RF front end module maker.
And we reiterated a redesigned filter for our tier two five G mobile customer and shipped first samples to this customer.
In our new wafer level package.
Our customer engagements also included our second tier one RF front end module maker that is using our X ball resonators to develop multiple filters for five G handset.
We shipped multiple five G mobile ex ball filter samples to our customers during the June quarter, including multiple wafer samples utilizing our new advanced wafer level packaging.
And finally, we are currently migrating the manufacturing supply chain of W. L. P into our New York Fab, which we expect to have design locked and available for qualified production later this calendar year.
And now I would like to discuss our network infrastructure business highlight.
I am pleased to announce we officially began ramping production with three citizens broadband radio service or C. B R. S infrastructure companies in the June quarter one.
One of which is already experiencing higher than expected in customer demand.
We expect these three customers to continue to ramp in the current September quarter and beyond and believe we may see revenue upside in this segment given the current demand picture is increasing during.
During the June quarter, we successfully completed the next iteration of our three seven gigahertz to 3.98 gigahertz ex BOL infrastructure RF filter.
For the U S. Five G market in C band.
We are currently sampling this new filter with multiple Oems.
And expect to see greater small cell adoption beginning in the second half of calendar 2023.
When we will be well positioned.
To summarize our five G network infrastructure activity.
We have four completed five G network infrastructure ex BOL filters three for five <unk> small cell base stations and one for C. B R. S.
We are currently sampling our new three seven to 3.98 gigahertz C band filter for the U S. Five G market.
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.
From three leading network infrastructure Oems.
And now I would like to discuss the highlights from our other business segments during the June quarter.
And our defense contract business, we continue to progress on our existing R&D contract with DARPA.
Further enhance our ex BOL PDK.
In addition, we recently finalized a multiyear multimillion dollar contract with DARPA.
To extend the operating range of our ex BOL RF filters up to 18 gigahertz using novel materials and device manufacturing as we announced in June these.
These new materials may have positive implications in our current two to seven gigahertz frequency range that we were focused on today, given higher power handling capability and higher Q values.
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 the customer's finished devices.
The timing RF market represents a significant opportunity for acoustics, and both unit volume and revenue.
Our primary customer is developing products that could be disruptive and 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 we have a new development in this area that I will be discussing shortly as part of our upcoming milestones.
To summarize.
Our other market segment activity, we have seven completed ex BOL filter solutions for civilian and defense market.
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 PDK driven by the direct to phase two contract with DARPA.
We signed a new multiyear multimillion dollar contract with DARPA in June to scale, our export technology to 18 gigahertz.
And finally in addition to the numerous customers acquired through the R. F. M. My acquisition, we have a total of three X ball customer engagement two of which have already placed purchase orders for us.
Or provided in our <unk> revenue.
And now I would like to hand, the call over to Ken to go through our financial highlights.
Thank you Jeff for.
For the fourth quarter ended June 30th 2022, the company reported revenue of $5 2 million, which is an increase of 13% over the prior quarter ended March 31, 2022, and an increase of 140% year over year.
On a GAAP basis operating loss was $17 7 million for the June quarter, mainly driven by revenue of $5 2 million offset by labor costs of $9 1 million depreciation of $2 4 million and other operational costs totaling $11 4 million.
As a result, GAAP net loss per share was 29 cents.
On a non-GAAP basis operating loss was $14 9 million and non-GAAP net loss per share was 26 cents.
Reconciliation of these amounts to the corresponding GAAP measures is available in the press release issued this morning is available on the investors section of our corporate website.
Capex spend for Q4 was $5 9 million a decline from 9 million in the prior quarter, reflecting the continued capacity expansion and equipment redundancy project and the company is New York Fab.
Cash used in operating activities was $11 9 million up from $9 7 million in the prior quarter, mainly due to certain items outside of the normal course of operations.
We expect to see our operating expenses decline in the second half of the year as a cost benefit from greater fab utilization.
The company exited the June quarter, with 85 million in cash and cash equivalents versus $55 9 million at the end of the previous quarter, primarily as a result of the issuance of $43 6 million in convertible notes.
During the June quarter and prior to the closing on the convertible notes the company raised $2 million in cash through additional at the market equity financing at an average price of approximately $3.88 per share.
In the current September quarter, we expect multiple new Wi Fi six eight and network infrastructure customers to ramp production.
And therefore, we expect to see record revenue up more than 5% sequentially from the June quarter and based upon our growing backlog of design wins, we anticipate the topline growth will continue into our next fiscal year and beyond.
I will now turn the call back over to Jeff to discuss our first fiscal 'twenty 'twenty three quarter performance and future milestone.
Thank you Ken.
The ongoing semiconductor chip shortages and supply chain delays that are impacting the broader industry continued to impact our customers.
While our design win momentum continues to grow driven by Wi Fi six Wi Fi six Wi Fi seven five G mobile five G infrastructure and our other markets.
Our ability to grow revenue is being negatively impacted in the near term given the broader market disruption.
Despite the near term supply chain impacts it's important to point out that revenue was up over 140% year over year in the June quarter.
And we are currently expecting at least 200% growth year over year in the September quarter.
We are beginning to experience greater than expected demand in C. B R. S.
We are targeting entry into the five G mobile smartphone market by the end of the current calendar year or early calendar 2023, which should help accelerate revenue growth once again.
By the end of the current quarter, we expect to ramp production from 12 customers to more than 14 customers.
With additional customer design wins expected across all our market segments.
Calendar 2022 progresses.
In the September 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 our targeted milestones and we will continue to keep you informed of our progress.
Our anticipated September 2022 milestones include.
Oh Wi Fi segment first we expect to ship samples of our next generation Wi Fi 60, Wi Fi seven filter solutions to multiple customers.
Further we expect to secure at least two additional Wi Fi 60 design win during the quarter and.
We expect a development order from a fortune 100 Internet company for two Diplex yours for design into next generation a R V. Our headsets.
And other consumer devices, a milestone we have already achieved and announced in late August .
Four or five G. Mobile segment, we expect to receive our first purchase order for a five T mobile filter from a tier one customer announced in December 2021.
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.
Milestone, we have already achieved and announced in late August .
And.
We expect to receive a volume order from our first tier one mobile customer for the five D X ball filter that is expected to go into pre production in late 2022 early 'twenty two 'twenty three.
Next.
In our five gene network infrastructure segment, we expect to secure a development order for our new high frequency <unk> massive mimo infrastructure receive filter.
We expect to deliver.
A 3.7 to $3 98 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 we expect to scale our C. B R. S production capability, given stronger than expected demand from one of our customers and.
And finally in our other market segment, we expect to receive a purchase order for the development of our new X ball multi chip module from a multibillion dollar tier one defense customer we expect to start qualification for two resonators for the timing market from our first customer and we expect to receive.
An order from a second resonator customer for the timing control market.
In conclusion, we believe the market opportunity for our patented high frequency ex ball filters is substantial we now have 67 issued patents and 117 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, which accounts for multiple design wins across the Wi Fi <unk> network infrastructure and defense markets.
We have also experienced exceptional momentum in the five G 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.
With that I would like to open the call for questions from the investment community.
Operator. Please go ahead with the first question.
Thank you as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Anthony Stoss with Craig Hallum Capital Group. Please proceed with your question.
Hey, guys, let me start with you Jeff.
The wafer level packaging side, how important is it or maybe I should rephrase that.
Customer side.
What percentage of your design wins, you think going forward, we will have wafer level packaging and then also.
Youre talking about 500 million units production by the end of this year and we're rapidly approaching 2023 can you give us a glimpse as to where you think you need to be by the end of 2023, and then I had a follow up after that for Ken.
Okay Tony.
Thank you.
Couple of things you touched on there.
But let's start with how we got T. W. O P.
Absolutely critical it's critical for <unk>.
Several aspects I think really a broader statement W.
W. R E for US is is.
Is the packaging approach.
It allows our chips to drive into the mobile market, which as we've said before that.
Largest.
<unk>.
For our technology.
Really critical there.
We have been just the extra work on that we have been as we said in the script, we've been bringing that technology in house.
Now shipping W. L P with.
Ah in its final form to the mobile customers.
So that's that's extremely critical.
So in terms of percentage of customers.
For engagements, we've described them all well theyre all in W. P.
So it was.
As a percentage of 100% in the mobile market.
So the other significance of.
I hope that we can also talk about chip scale package and WL tea. Both of those are on a cost saving a roadmap to help us rich.
To reduce the cost of goods offer that filters that where we're currently shipping.
So that's extremely important for the cost structure of our products.
And so we were very clear we think in the script, we're producing that in house.
As we speak.
In terms of.
They are 5 billion.
Yes, we look out.
One to two years in terms of.
In terms of forecast in end demand.
We we have said that in calendar 2022.
We're ramping the Wi Fi, we gave a lot of elaborate E mails.
<unk> design wins and Wi Fi, we've got nine.
Programs currently ramping and Wi Fi what we've also said in 'twenty 'twenty. Two is also about a first design win into mobile.
So this is why we still believe we're on track for that.
Calendar year to secure a design with a customer.
Customer engagements and robust and we've tried to keep investors updated on that so that's the mobile market.
Assuming that.
Yes.
Our $500 million.
Capacity, that's why we put it in place for when.
When we talk about.
Yeah.
The 500 million capacity, that's really surprised as we said in the script over to an eight inch manufacturing platform, which again drives cost not only scale, but it also drives.
Our cost savings.
The cost structure of that yet so let me pause there and for your follow up.
Thanks, Jeff I appreciate it and then for Ken given the the component issues from the other suppliers into the Wifi food chain things getting pushed out can you now take a look at when do you think you'll be at breakeven and just refresh our memories with all the moving parts what revenue per quarter level, you need to be for breakeven.
Sure Thanks, Pat and good morning.
So yeah, we still hold to our model of operating cash flow breakeven.
The next 15 to 18 months and that that revenue projections for the quarter would be revenue of $15 million to $18 million in revenue per quarter, depending on mix.
Got it thanks, guys Thats all my questions I appreciate it.
Thank you.
Thank you. Our next question comes from the line as C. G to show that with Roth Capital. Please proceed with your question.
Hi, Jeff Hi, Ken So I'm I'm wondering in terms of the the the OEM constraints that are in wireless that are impacting our revenue can you highlight which components maybe at the lead times have stretched out Alan do you have a sense of that with the Oems and yeah. How quickly that can correct or whether this is maybe a structural challenge that segment has for the next few quarters.
Yes.
Good morning, <unk>, I mean, I'll, let me take the first part of that question.
C G.
I think the the maintenance pack rehab is with you since he's a what we see with the Oems as he has since he's we've got one customer that actually has a discontinued a yeah.
<unk> platform due to the availability of the.
<unk> chipset, and Oh, and also the cost of the chipsets, which have gone up as well.
So two of the leading chipset vendors are having week lead times up to 52 weeks.
So then you look at between Ah I guess existing platforms or new platforms come in they're trying to find new nodes that they can get capacity allocation.
So this is a dynamic landscape that we're looking at there's also impact.
Yeah around the Rowley.
Because what we're seeing in China that are you know.
Production with some of the Oems that operate in China.
And also the Covid situations, you know where to go to 100% locked out.
The impacts that can be we are weeks, yeah. We just work with our distributor network and the ODM, yeah to manage that on our side as well.
Thanks.
It certainly wasn't one additional piece was.
We have seen on top of the Src is where we also have seen a L ability of memory chips.
The past half have an impact on on architectures and that's something that.
<unk>.
Continues to linger, so we'll keep an eye on that as well.
I certainly agree with day, one on the SFC.
Okay, Great and then maybe a follow up for Jeff for Ken.
Can you can you help us quantify I understand that the magnitude of the impact youre seeing in terms of those push outs versus the revenue reported or any way you can qualitatively discuss that'd be helpful.
Okay.
Let me, let me talk since were talking program I'll actually pulling back and to talk about our impact and what we're seeing on the program.
So the impact of it.
Highlighted the you know the one program that we saw just continued.
So we have to what we can do to continue to do is increase the design win and then overlap those with.
Other programs that may be going into life slowly around the life quickly.
So the revenue has slowed down at least for the next two quarters as we layer in the new programs.
This quarter in the following quarter, but then picking up again, you know with not only the WAC price to see design wins that were in process with and executing but also you know the ramp into production and also the new Wi Fi seven programs that we expect with the new designs that we have coming out and a good example, I'll give you is Aruba, which we did.
Now they are really just starting to hit their stride and you know, it's one customer but were actually designed into our three programs and so those three programs service type.
[noise] tier mid tier and low tier.
And where a.
Wrapping up quickly with them and working with the ODM supply chain. So I think the next two quarters there'll be some slowdown, but as we talked about accelerating in 2023.
Alright.
Just one additional piece is just on the on the supply chain impact on the supply chain front.
I think what it tends.
Tends to happen is the.
The average lead time actually increases when you're when you're talking about.
Covid Lockdowns.
Lockdowns.
As well as rolling blackouts that.
And some of these facilities are.
So we are.
That's what we're observing is some of the lead time and these are these are very large Oems.
No.
And et cetera.
These types of.
Stances so.
It's it's added some challenges on the supply chain and we.
Certainly complement our team for working through those but that didn't.
Have a tenancy.
Increasing lead times.
The overall impact.
Alright, Thanks, Jeff Okay got it thanks.
Excuse me.
Yeah.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question comes from line of Rick Schafer with Oppenheimer and company. Please proceed with your question.
Hello. Good morning. This is way Mark on the line for Eric. So you guys highlighted a 200% year over year increase in September and a growing backlog.
So I was wondering if you could talk about how big this backlog is what's the split between Wifi network infrastructure and mobile and do you have any visibility of how much this backlog extends into 2023.
Hey, good morning way.
Jeff here I'll I'll.
And it off to Dave for the breakdown the requested.
Anyway. So a majority of the backlog right now is in the Wi Fi side for the infrastructure.
Backlog out of.
15 months.
And that is part of our strategy of working with the distribution network and the Oems to make sure that we've got backlog that matches against the other.
Their materials that they are placing orders on.
Because of the long lead time on the other components. So we're competitive in the market, but we're working closely with the Oems and Oems to get backlog.
You know to match, obviously the demand they have in other materials side.
We are seeing an increase in some.
Some of the development customers that we have as well.
And the Wi Fi a non smartphone mobile customers, that's pretty healthy demand.
And we're working with them as we transition through the development phases to preproduction targeting a 2023 and the.
Lastly, as the infrastructure side is actually in the prepared remarks.
Getting pretty good demand visibility and it's actually increasing double percentage points quarter over quarter, you know what.
<unk> customers, particularly one so we expect that to continue to progress.
And accelerate in 2023 as well.
And let me just add to that.
Dave.
It's kind of a current picture of that as we move into the second half.
Fiscal year with what we stated in terms of the objectives and where we think we're tracking on the mobile front, we would expect a significant.
Increase in the backlog on the local front and that.
That would have the.
<unk>.
Outcome.
You know driving revenue growth so we're.
We're looking at the numbers of that.
Those programs.
And we're looking at and they certainly are.
The volume production is substantial.
Substantial in terms of Ah against a unit volumes that we're currently we currently have a backlog.
Great. Thanks as far as for my follow up it looks like in Capex do you guys spent 28 million last fiscal year. How do you guys think about Capex as you enter fiscal 'twenty four have you models factoring funding from the U S.
So let me I'll start with that and then hand, it off to Ken.
So.
First thing I wanted to preface is that.
Capex is something that as we said in our prepared comments.
We just wanted to make sure we can quantify that.
Chip that funding.
Is.
It could happen.
A material impact on any numbers, we can provide you so with that being said Oh okay.
Anyway, Yeah, Capex, we've been spending primarily on.
Commercialization of our New York Fat to half a billion filters, but if you remember also completing a redundancy project for which we expect to be roughly 90% through by the end of this calendar year.
As well as our wafer level packaging.
We have spoken about an update to our our ability to deliver a wafer level packaging, but also.
In a commercial sense as soon as I can.
<unk> volumes as well as rapid prototyping. So this is where we can develop our products quicker and come to market faster as well. So all that in mind, we did spend roughly $28 million last fiscal year I do expect that to come down greater than 25% and then in the next fiscal year, but as we know a lot of the spend is.
As of four expand some of our lead times are still out there up to 18 months in some cases, so it's an investment for.
For the future that we are we're making today.
Yes.
Lead times.
Put a punctuation on that the lead times of equipment continue.
To be a challenge and you can see all segments of the.
The globe bar.
Are pushing investment in semiconductors. So that's I think what we got ahead of a in the current expansion I think where.
We're thankful that we get.
That's something we got to watch going forward.
Yeah.
Great. Thank you.
Thanks Wayne.
Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back to Mr. Sherman for any final comments.
Okay. Thank you all for your time today, we look forward to speaking with you during our next update call to discuss the current quarter execution against our milestones and future expectations.
Thank you. This concludes today's conference you may now disconnect. Your lines. Thank you for your participation.