Q1 2023 Aehr Test Systems Earnings Call

Speaker 1: I.

Speaker 2: Hello and welcome to the AIR Test Systems fiscal 2023 first quarter financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. For today's presentation, there will be an opportunity to ask questions.

Speaker 2: To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded.

Speaker 2: I would now like to turn the conference over to Todd Curley of MKR Investor Relations. Please go ahead.

Speaker 3: Thank you, operator. Good afternoon and welcome to Airtest Systems first quarter fiscal 2023 financial results conference call. With me on today's call are Airtest President and Chief Executive Officer Gain Erikson and Chief Financial Officer Ken Spink.

Speaker 3: Before I turn the call over to Gain and Ken, I'd like to cover a few quick items.

Speaker 3: This afternoon, AirTest issued a press release announcing its first quarter financial results. That release is available on the company's website at air.com.

Speaker 3: This call is being broadcast live over the internet for all interested parties and the webcast will be archived on the investor relations page of the company's website.

Speaker 3: I'd like to remind everyone that on today's call, management will be making forward-looking statements that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

Speaker 3: These forward-looking statements, which may cause the results of different material from those in the forward-looking statements, are discussed in the company's most recent periodic and current report filed with the FCC.

Speaker 3: These forward-looking statements, including the guidance provided today, are only valid as of this date and air tests undertake small obligations to update the forward-looking statements.

Speaker 3: Now, I'd like to turn the call over to Gaine Erickson, President and Chief Executive Officer of Airtest. Gaine?

Speaker 3: Thanks, Todd. Good afternoon, everyone. Thank you, too, for joining us on the first quarter conference call.

Speaker 4: Let's start with a quick summary of the highlights of the quarter and momentum we're experiencing in the semiconductor wafer level test and burden market, and then Ken will go over the financials in detail. After that, we'll open up the slides to take your questions.

Speaker 4: We're off to a good start this year, finishing the quarter with revenue and net income ahead of consensus estimates and strong bookings of $19.1 million. Revenue for the quarter was $10.7 million, which is up 89% year over year, and we generated non-GAAP net income of $1.3 million. As we've noted before and discussed last quarter, over the last couple of years, our first quarter tends to be our seasonally softest quarter, as it was again this year, and we expect each consecutive quarter to ramp higher throughout the year. For more information, visit www.fema.gov

Speaker 4: So let me get right to it and talk about how we're doing it, getting into more accounts focused on silicon carbide for electric vehicles and other markets, since that's where a lot of the questions are coming in at. We're currently engaged or in discussions with almost all the existing and future silicon carbide suppliers now regarding our unique low-cost multi-wafer level test and burn solution that enables contact to and test of 100% of devices on every waveform.

Speaker 4: This allows our customers to burn in every device at a lower cost than they could in any other form due to our ability to contact thousands of devices on each of 18 wafers at a time with our FOX XP multi wafer test and burn in system and proprietary FOX full wafer contact wafer packs.

Speaker 4: All the major silicon carbide companies expect that electric vehicle traction inverters will move to multi-chip modules as this is where the electric vehicle manufacturers are driving the industry. As such, they've told us they must move to wafer level stress and burn-in to remove the inherent failures before they put these devices into multi-chip modules to meet the cost, yield, and reliability goals of those modules.

Speaker 4: AERS technology provides a total turnkey single vendor solution to meet these customers' critical test and stress requirements at a cost and test floor footprint significantly lower than any other alternative on the market.

Speaker 4: Our lead customer for silicon carbide wafer level burn-in continues to ramp up use of our FOX XP multi wafer systems and wafer packs, placing yet another significant order with us during the quarter.

Speaker 4: Similar to past orders, they purchase the systems without the necessary wafer pack full wafer contactors, and as such we expect significant orders from them for wafer packs to match these systems.

Speaker 4: This need for additional capacity is being driven by increased demand for silicon carbide customers for electric vehicles.

Speaker 4: This customer recently announced that they expect their growth rate to accelerate faster than previously forecasted, and they continue to forecast orders for a significant number of FOX systems and wafer pack contactors with us over the next several years.

Speaker 4: Beyond this lead customer, our previously announced benchmarks and evaluations with two additional major silicon carbide semiconductor suppliers continue to move forward with great progress this quarter.

Speaker 4: Following the end of the quarter, we announced an initial purchase order from one of these suppliers for our FOX NP multi-wafer test and burn-in system, multiple wafer pack contactors, and a FOX wafer pack aligner to be used for qualification of our wafer level burn-in solution for silicon carbide devices for electric vehicles and other markets.

Speaker 4: This new customer is one of the world's largest suppliers of silicon carbide devices serving several significant markets including the electric vehicle industry. We now have two of the top four silicon carbide market participants as customers.

Speaker 4: We've already shipped the system to this new customer's facility and we believe will achieve their specific performance and functionality evaluation criteria on their test floor during the next three to six months.

Speaker 4: This new customer indicated to us that Airtest is the only provider that has a product that is scalable to high volume production to meet the production capacity they need to address the increasing demand for silicon carbide devices.

Speaker 4: They have provided us with forecasts for our FOX XP systems for volume production of their silicon carbide devices at multiple facilities around the world, and we expect that they will purchase FOX XP production systems to be shipped before the end of our fiscal year ending May 31, 2023.

Speaker 4: The benchmark with the other potential customer, which candidly has been slow and steady over the last year, has also progressed significantly since last quarter's conference call.

Speaker 4: We completed a significant milestone using a new capability we publicly announced today, and I'll discuss later, where we tested a significant number of wafers for a correlation of an automotive device. And we believe that we will successfully complete their production correlation over the next few months, allowing them to also move forward with our FOX solution.

Speaker 4: With both of these major silicon carbide suppliers,

Speaker 4: I'm sorry, let me try. We expect both of these major silicon carbide suppliers to implement our Fox platform solution into their volume production manufacturing production flow as they look to capitalize on the fast-growing demand for silicon carbide devices and electric vehicles.

Speaker 4: Folks, demand is building for wafer level burn-in of silicon carbide devices and specifically for traction inverters and on-board and off-board chargers for electric vehicles. During the last few months, multiple additional silicon carbide suppliers have asked us to provide technical feasibility, quotations, and schedules for production, test, and burn-in of their wafers. While some of these companies want to do on-wafer validation of our solutions before they place orders for systems from us.

Speaker 4: Others are planning to move directly to purchasing our FOX systems and or wafer packs to accelerate their time to market.

Speaker 4: An example of this is just a few days ago we received orders for wafer packs on two designs from a brand new customer for silicon carbide MOSFETs targeted electric vehicles.

Speaker 4: This multi-billion dollar semiconductor company that is already making silicon carbide MOSFET wafers that we have in house by the way.

Speaker 4: They have not even gone public with their silicon carbide MOSFET introduction plans.

Speaker 4: The silicon carbide market for electric vehicles and its supporting infrastructure requirements are growing at a tremendous rate, with Canaccord Genuity estimating that wafer capacity will increase from 125,000 6-inch wafers in 2021 to over 4,000,000 6-inch equivalent wafers in 2030, just to meet the EV market alone.

Speaker 4: Add in the other applications for silicon carbide including solar power conversion, industrial and other electrification infrastructure and the market size doubles.

Speaker 4: This past month, Vernon Rogers, our EVP of Sales and Marketing, and I met face to face with multiple potential customers at their facilities in both the US and Europe and are very encouraged about our prospects for winning this capacity with these prospective customers.

Speaker 4: We also had very productive meetings around our participation in two important industry conferences in Europe .

Speaker 4: Bernan attended this year's International Conference on Silicon Carbide and Related Materials, known as ICE cream, in Davos, Switzerland, considered to be the most important technical conference series on silicon carbide and related materials. He and I also attended the EU Power Semiconductor Executive Summit in Munich, where I gave a presentation on air and the impact of wafer-level burn-in on reliability and stability of silicon carbide devices to a large audience of power semiconductor industry leaders

Speaker 4: as well as automotive and other users of silicon carbide power semiconductors from around the globe.

Speaker 4: From our many discussions and introductions of these events, two themes were very important. Number one, it's clear there's a continued momentum in silicon carbide. In fact, there seems to be an acceleration of the expected adoption rate as well as an increase in the expected growth in electric vehicles. Several silicon carbide and electric vehicle companies are now saying electric vehicles are more likely to account for 50% of all vehicles made in 2030.

Speaker 4: as opposed to the 30% number we've been stating. In fact, VW Group, the first or second largest automotive supplier in the world depending on the year, along with Toyota, said in a presentation that they expect electric vehicles to comprise 50% of all their vehicles sold by 2030.

Speaker 4: I guess I should say in 2030. The number two theme is there's an increasing consensus that not only do you need to do 100% burn in a silicon carbide devices that go into the automotive space.

Speaker 4: and other mission critical applications, but that burn-in of the dye must be done at wafer level before they're put into the modules for the traction inverters in particular for electric vehicles.

Speaker 4: In my presentation at the EU Summit, I noted that in addition to the obvious cost advantage of removing device failures before they're put into a module with many other devices, companies also want to stabilize the inherent early life drift of threshold voltages observed in silicon carbide MOSFETs and then select devices with matching threshold voltages to put into multichip modules.

Speaker 4: Higher than acceptable infant mortality rates of silicon carbide MOSFETs require 100% production stress and burn-in testing to achieve automotive and industrial quality levels.

Speaker 4: And the value and requirement for doing stabilization of the devices goes beyond just infant mortality to include critical parametric.

Speaker 4: parameters such as the threshold voltage.

Speaker 4: With the transition from discrete silicon carbide components to multiple silicon carbide dye modules or integrated power modules, the gate threshold voltage stability is critical to the module reliability, driven by the prerequisite to have matching and stable gate voltage threshold dye to dye. AERS technologies and capabilities enable gate threshold stability and reliability at the wafer level.

Speaker 4: Module manufacturers are requesting and in fact requiring devices with matching threshold voltage or total on resistance between the drain and source in a MOSFET. The major silicon carbide companies expect that most EV traction inverters will move to multi-chip modules and have told us they must move to wafer level stress and burn and to remove the inherent failures before they put the devices into multi-die modules to meet their cost, yield and reliability goals.

Speaker 4: Aire's unique low-cost multi-wafer level test and burn-in solution provides the test electronics and the device contactor technology that enables contact to 100% of devices on a single wafer and the handling and alignment equipment to provide a total turnkey single vendor solution to meet the needed critical test and stress requirements.

Speaker 4: We believe we will have multiple more customer wins in silicon carbide for our solutions this fiscal year.

Speaker 4: In addition to our progress with silicon carbide applications, we're seeing an increase in our wafer level burn-in business for silicon photonics devices used in data communications. We shipped multiple Fox NP systems this quarter to support the characterization and product qualification of new photonics-based devices. We've also received multiple orders for upgrades to existing systems that enable a higher number of devices and higher power per wafer.

Speaker 4: as well as multiple new designs for wafer packs from several companies. We expect these will be first ordered for engineering and new product introduction, and then they turn to volume production with higher quantity orders.

Speaker 4: As I've noted before, we expect to see a nice recovery in the silicon photonics market segment sometime over this and the next year, as we're being told by our customers. We're expecting customers to resume buying in the current fiscal year 2023 and fiscal 2024, and several customers addressing the silicon photonics market have forecasted additional FOX systems and wafer pack or die pack contact to capacity needs during that time.

Speaker 4: So let me spend a minute on our R&D investments. On our last earnings call, I mentioned several test system enhancements we plan to introduce that will extend the capabilities of our FOXP wafer level test and burning platform. Today, we formally announced two new advanced test and burning capabilities that enable silicon carbide and gallium nitride semiconductor manufacturers more flexibility to address a wider variety of stress and burning conditions for the engineering qualification and production needs. These include our FOX bipolar voltage channel module or BBCM.

Speaker 4: Enabling this test is essential in threshold voltage and gate oxide stabilization and screening, and the new BVCM extends our current capability even farther.

Speaker 4: The other enhancement is our very high voltage channel modular VHBCM that enables customers to perform high temperature reverse bias testing on wafers of up to 2,000 volts on MOSFETs and diodes and measure individual device leakage current. Aire's proprietary wafer pack contactor implements arcing mitigation technology to alleviate high voltage arcing on the wafer especially with fine pitch die-to-die geometries.

Speaker 4: The modularity of the FOXP system offers customers the ability to configure solutions to provide advanced test capabilities for their power electronic device wafers. These advanced capabilities are designed to enable manufacturers to ship product with higher reliability and parametric stability necessitated by an EV's traction inverters and onboard chargers.

Speaker 4: Feedback from current and potential new customers has been very positive, and we've already taken orders for both systems and WaferPack for these new options that we discuss with customers under non-disclosure agreements.

Speaker 4: This includes the new major silicon carbide customer announced last month and the brand new customer I just mentioned who ordered multiple wafer packs for a plan Fox P system purchased from us for their silicon carbide products. We expect these new enhancements to drive incremental bookings and revenue for our Fox NP systems for new product introduction and engineering qualification needs as well as our Fox XP multi wafer systems to be used for high volume production with these new features.

Speaker 4: We're also quoting and will accept orders for our new fully automated FOX wafer pack aligner, which is configured to fully integrate with our FOX XP multi-wafer systems to enable hands-free operation and includes full integration with our wafer packs. As capacity and volume forecast increase, eliminating all manual interface for automated handling can become critical. We expect to see our new aligner with this full automation capability to begin shipments by about the end of our fiscal year. Alright, let me try and wrap this thing up.

Speaker 4: While the timing for volume production decisions, initial production orders, as well as follow-on orders from customers is never certain, there is no doubt as to the way the silicon carbide market is developing.

Speaker 4: As many of you know, Onsemi, one of the top silicon carbide suppliers in the world, announced in August it will increase its silicon carbide production capacity by five times and almost quadruple the number of its employees by the end of this year at its new silicon carbide facility in New Hampshire. And last month, Wolfspeed, another top supplier, announced a new manufacturing facility in North Carolina, a 1.3 billion dollar factory with a tenfold increase in wafer capacity.

Speaker 4: NST, who last year was the largest silicon carbide supplier in the world, just announced it will build an integrated silicon carbide substrate manufacturing facility in Catania, Italy right next to its existing device manufacturing facility with production expected to start in 2023. The decision is being made today in response to the explosive demand in silicon carbide.

Speaker 4: We are very encouraged by the continued positive momentum and expanding growth opportunities we are seeing with current and prospective customers. As such, we are confident with our previously provided forecast for total annual revenue of at least $60 to $70 million this fiscal year, which would represent growth of at least 18 to 38% growth year over year and clearly emphasize our belief that revenue will grow substantially through the fiscal year to achieve these levels.

Speaker 4: This includes our belief that we'll receive production system orders from several silicon carbide customers beyond our initial lead customer and begin shipping systems to meet their production capacity by the end of our current fiscal year that ends May 31st, 2023. We also continue to expect bookings to grow faster than revenues this year, particularly to address the ramp in demand for silicon carbide and electric vehicles.

Speaker 4: So lastly, I just want to quickly announce a couple of changes in our organization. I'm very excited to announce today the appointment of Nick Spork as Vice President of our Contactor Business. In this role, Nick will be leading the effort to manage and grow our wafer pack contactor and die pack carrier consumables business, which has become more and more strategic and has grown into a significantly larger part of our overall business.

Speaker 4: Over time, we expect consumables to not only grow in total revenue for air, but as a total percentage of our business, approaching 50% of our business on an annual basis.

Speaker 4: Nick has an excellent background to lead this effort with broad experience in the semiconductor electronics industries, leading people, engineering teams and organizations in multiple areas covering product development, product design, manufacturing applications.

Speaker 4: Nick started out as a product test engineering manager at LSI and Logic, which is now part of Broadcom. He then worked at Formfactor for 17 years in various roles, but mainly as VP of design engineering. After leaving Formfactor, he was VP of design and applications at Translarity, VP of business development for ISC, which is a Korean sockets and probe card company, and most recently he had his own company making various components for the probe card and test industry. We're extremely pleased to add someone of his caliber and experience to our executive team.

Speaker 4: in the face of a global semiconductor crisis. He's also been leading the effort to grow our consumables business through strengthening and collaborating with our supply chain partners. Dave will continue as a part-time employee through the end of the year as we transition our component sourcing leadership to our new chief operating officer, Adil Engineer, and our WaferPack and DIPAC technologies and business VP, Nixport. And with that, let me turn it over to Ken before we open it up for questions.

Speaker 4: Thank you, Gain. And good afternoon, everyone. We're off to a solid start to fiscal 2023 after a record Q4 in fiscal 2022.

Speaker 5: During our first quarter, we recognized strong revenues, increased backlog, and improved cash flow. As Gaines noted, revenue for the first quarter was up 89% year-over-year.

Speaker 5: Both our top and bottom line results came in ahead of analyst estimates for Q1.

Speaker 5: Bookings in the first quarter were 19.1 million, and we ended the quarter with a healthy backlog of 19.5 million.

Speaker 5: Included in our bookings were announced orders of 16.8 million from our lead silicon carbide customer for additional systems, wafer packs, and a high volume production wafer pack aligner.

Speaker 5: Looking at our financial results, net sales in the first quarter were $10.7 million, which is down 47% sequentially from our record sales of $20.3 million in the fourth quarter and up 89% from $5.6 million in the first quarter last year.

Speaker 5: The first quarter sales were consistent with our expectations, and we are forecasting significant growth in the upcoming quarters.

Speaker 5: The sequential decrease in net sales from Q4 includes a decrease in wafer-packed, die-packed revenues of $8.7 million.

Speaker 5: These consumable revenues accounted for only 5% of revenues in Q-123, compared to 45% of revenues in Q-422.

Speaker 5: Customers often buy systems and then wafer packs later, after they've completed their wafer pack designs.

Speaker 5: While our lead customer has ordered several systems recently, we have yet to receive all the wafer pack orders to match up with these systems.

Speaker 5: We expect to receive these wafer pack orders later this year.

Speaker 5: This change in product mix had a direct impact on our gross margin in Q123, as our consumables business delivers higher gross margins.

Speaker 5: Gross profit in the first quarter was $4.5 million, or 42% of sales, down from gross profit of $10.5 million, or 52% of sales in the preceding fourth quarter, and up from gross profit of $2.3 million, or 40% of sales in the first quarter of the previous year.

Speaker 5: Direct materials accounted for an increase in cost of sales of 3.5 percentage points from Q422.

Speaker 5: Also contributing to the decrease in gross margin from the preceding fourth quarter was an increase in unabsorbed overhead cost to cost of sales related to lower revenue levels compared to Q4, accounting for a 3.3 percentage point impact on gross margin. Lastly, an increase in other cost of goods sold, including increased inventory reserves, freight, warranty, and tariff costs accounted for a 2.7 percentage point impact on gross margin from the prior fourth quarter.

Speaker 5: During this challenging supply chain environment, we have maintained the ability to meet customer commitments.

Speaker 5: As our FOXP platform contains a high concentration of common parts across the platform, it allows flexibility among various customers' configurations.

Speaker 5: Also, the use of contract manufacturers provides ability to scale easily and quickly without increasing our fixed costs.

Speaker 5: We expect our gross margins to improve as we move through the remainder of the year as we recognize more consumable revenue, and our absorption of our manufacturing overhead improves as revenue increases throughout the year.

Speaker 5: non-GAAP net income for the first quarter was $1.3 million, or $0.05 per diluted share. This compares to non-GAAP net income of $6.5 million, or $0.23 per diluted share in the preceding fourth quarter, and a non-GAAP net loss of $414,000, or $0.02 per diluted share in the first quarter of fiscal 2022.

Speaker 5: non-GAAP net income excludes the impact of stock-based compensation.

Speaker 5: In the first quarter of fiscal 2022, non-GAAP net income also excluded the impact of forgiveness of $1.7 million from the Paycheck Protection Program that we received in fiscal 2020.

Speaker 5: Operating expenses in the first quarter were $4 million, a decrease of $625,000 or 13%,

Speaker 5: from $4.6 million in the preceding fourth quarter and up 749,000 or 23% from $3.3 million in the first quarter last year.

Speaker 5: The decrease from the preceding fourth quarter is primarily due to higher incentive payments and stock compensation in Q4 related to bonus objectives resulting from our record revenue and bookings last fiscal year.

Speaker 5: The increase from prior year Q1 is primarily due to increased headcount.

Speaker 5: higher incentive payments, stock compensation.

Speaker 5: and an increase in shareholder relations costs.

Speaker 5: We continue to invest in R&D to exa-exa-exance-cance.

Speaker 5: enhance our existing market-leading products and introduce new products to maintain our competitive advantages and expand our applications in addressable markets. These new products include the recently introduced new advanced testing capabilities on our FOXP systems for silicon carbide and gallium nitride technologies and our fully automated and integrated aligner.

Speaker 5: Turning to the balance sheet for the first quarter, we finished the quarter with a strong balance sheet. Our cash and cash equivalents were 36.1 million at August 31st, up 4.7 million from 31.5 million at the end of the preceding quarter, and up 29.6 million from 6.5 million at the end of the first quarter of fiscal 2022.

Speaker 5: The significant increase year over year includes the $24 million we raised in our ATM offering in Q2-22.

Speaker 5: Working capital August 31st was $49.4 million.

Speaker 5: Inventories at the end of the first quarter were 17.2 million, an increase of 2.2 million from the preceding quarter end, and 7.1 million from Q1 last year. As we've noted before, we have been ordering long lead components for systems and wafer packs to ensure adequate supply to meet customer lead times and to support our expected growth in fiscal 2023.

Speaker 5: Now turning to our outlook for the 2023 fiscal year, which ends on May 31, 2023, we are confident in the company's growth trajectory and our unique capabilities and product offerings to meet customer demands.

Speaker 5: As such, we are reiterating our previously provided guidance for further year total revenue of at least $60 million to $70 million, representing growth of at least 18 to 38% year-over-year, with a strong profit margin similar to last year.

Speaker 5: We continue to expect bookings to grow faster than revenues in fiscal 2023 as the rampant demand for silicon carbide in electric vehicles increases.

Speaker 5: The company continues to make investments to support its future growth.

Speaker 5: This includes investments in headcount and operations.

Speaker 5: The company plans to make improvements to its corporate facilities to allow for increased production. In addition, the company has invested in expanding its foreign operations, including its Philippines repair center.

Speaker 5: This repair center places resources close to our Asia customers in a lower cost region to support repairs, installations and upgrades.

Speaker 5: This also provides for lower freight costs and faster response times as the Asia market accounted for 90% of revenues in fiscal 2022.

Speaker 5: Lastly, looking at the investor relations calendar, our annual shareholders meetings will be held at our corporate headquarters on Tuesday, October 18th.

Speaker 5: We will also be participating in several investor conferences in the next few months.

Speaker 5: On October 25th, we'll be presenting at the LD Micro Main Conference taking place in Los Angeles. On November 17th, we'll be participating in the Craig Hallam Alpha Select Conference taking place in New York. And on December 13th, we'll be participating in the CEO Summit Conference which is also taking place in New York. We hope to see some of you in person at these events.

Speaker 5: This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.

Speaker 2: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker 2: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Speaker 2: The first question today comes from Christian Schwab with Craig Hallam Capital Group. Please go ahead.

Speaker 4: Hey, good evening guys. Congrats on a great start to the year.

Speaker 4: Thanks, Christian. Could you give us a number? You talked about being engaged in discussions with almost all existing and future silicon carbide suppliers as you see it today. How many potential customers is that?

Speaker 4: That's a good question. I actually don't have that in front of me. I'm looking, I'm kind of mentally imagining the list that Vernon has and it's a pretty long list. I'm kind of guessing here, but a dozen or more, kind of range, I'd say.

Speaker 6: Okay great. Is the several new customers ramped?

Speaker 6: throughout the course of this year. Is this the type of ramp that you expect to accelerate strongly this year and be greater next year? Can it ramp to the level that your largest customer ramped once they started making production type of orders on a kind of a... I mean a couple questions in there. I mean the traditional model is people usually take like one system and they...

Speaker 4: it's kind of go, go, go. So now, the other customer has, you know, our lead customer has been making some really significant investments, they to some extent, led the industry in this wafer level burn in push, and it's certainly being felt in the industry, everybody's quite aware of it. And, you know, they took a pretty long time to absorb the first one and then started ramping pretty hard. My guess is, is that it's, you know, softer during the first six or 12 months and then it gets stronger thereafter.

Speaker 4: We'll see, it depends on the customer. Even, it's kind of interesting, I mean, even with test times, I've had been engaged with customers and they'll tell me their test time is such and such over and over and over again. And then they go to place the order and then they tell me their real test times and they're longer than they were. Why is that? Is it just they're trying to be coy or not tell you everything? So right now when things happen, we're definitely trying to ferret out long lead and forecast for multiple customers.

Speaker 4: as we just stated, to just make sure we have plenty of material that is being purchased. But I think they will start a little slower and then gradually pick up. And if you look at the amount of capacity that everybody is talking about to hit in 2025, calendar wise, most people are just really focused on second half 23 and end of 24 is where just a lot of capacity is coming online. And so it may be less to do with the timing of us as the timing of that.

Speaker 4: seemingly what most people think is the obvious, which is if you come look at our facility and you say, well, how many tools can you build on the floor here? But in reality, that's in some ways the easiest thing. The testers basically bolt in to water and power and they test themselves. And we have a pretty good sized facility here with enough test bays to build significantly. Ken alluded to that we're actually going to be doing some investments, probably a couple few million dollars into the facility.

Speaker 4: over the next couple years, putting in additional power, water drops and some other enhancements to support our wafer pack business as well. But that would allow us to have maybe 10 plus drops, meaning we could be building 10 systems at a time on two-week spreads. I mean that's a lot of capacity, more than the whole industry would take right now. If we were building 20 systems a month for example.

Speaker 4: The next one is the subcontractors that are building all those sub-assemblies that come to us. And then I have to go down the list of them. But basically, we have multiple chamber suppliers, multiple blade suppliers, multiple printed circuit board suppliers. And generally speaking, even as grandiose as we are excited, we don't really press that. And the key here is we've been able to do this without really being impacted by everybody's whining about supply chain. We've been able to do this without really being impacted by everybody's whining about supply chain.

Speaker 4: outside of one thing, and that's the last one, and that is the semiconductor components. Semiconductor components, we have a really, really good handle on. We know exactly how many that go in the system, we're forecasting, and we're buying semiconductor components right now, 12 and 18 months out, and have been for 18 months. And because of the, quite frankly, massive leverage of semiconductor components to our revenue, we're able to afford to buy a lot of semiconductors ahead of time.

Speaker 4: So we're just not really being caught. Now having said that, we still have our onesie twosies along the way in hiccups, and the guys are working their butts off to just make sure it looks like it's easy. But for the most part, we've just not been impacted. It allows us to keep both our lead times down and our capacity up. But could we go ship $100, $200, $300 million with a FOX XP system in a year? Absolutely.

Speaker 6: Great. And then just one last question, and I'll let others chime in. In your guidance of $60 to $70 million, can you give us just kind of your rough expectation of what you think your lead customer will be of that?

Speaker 4: Well, not as much as it was last year as a percentage, so thatís a good sign. And some of the upside within that range and some of the upside beyond that range includes them and just not always having all the perfect visibility. We have to obviously we know a lot weíre not sharing, but theyíre going through all kinds of different manufacturing plan scenarios where theyíre going to be putting systems, more facilities. And even with our current install-based customer, we donít have perfect visibility.

Speaker 4: So partly we just buy enough material because we can anticipate the amount of market share that we're going to have. But we definitely have within that number several new customers, and not just engineering, but first production systems being installed. And part of the front end of that too is how many will we get installed in time? Will we have any kind of rev-rec things with respect to being right on the edge with their acceptance? That creates some of the sort of uncertainty.

Speaker 4: Guys, if we didn't have to do quarters or years, you know, you hear it from CEOs all the time, my life would be a lot easier. The reality is if I just look, you know, in the next year or I look out through next December and you look at what that ramp looks like, I'm way more focused on that, but I get it. We've got street expectations to meet and we want to make our shareholders happy too. I just think, you know, exactly timing everything within a quarter sometimes is harder. And that's where you see that kind of wiggle room of the 60 to, at least 60 to 70 million and then make statements like can we...

Speaker 4: That's the one thing we do discuss as a board pretty hard to make sure. I apologize for that, but I will tell you I'm very confident and I'll go ahead and it's not a big stretch out there. We definitely believe that we'll grow next year over this year.

Speaker 4: do discuss to the board pretty hard to make sure I apologize for that but I will tell you I'm very confident and and you know I'll go ahead and it's not a big stretch out there we definitely believe that we'll grow next year over this year. Let me leave it at that.

Speaker 6: Great. All right, no other questions. Thanks, James.

Speaker 4: Great. All right. No other questions. Thanks, James. Okay. Nice try though, Christian. It's all good.

Speaker 2: The next question comes from Bradford Ferguson of Halter Ferguson Financial Group.

Speaker 7: I'm curious, is your lead customer successfully making their own substrate? Wolfspeed has come out and said on a go-forward basis, as of some certain date, they're not going to be selling substrate or extra substrate to other suppliers of silicon carbide devices.

Speaker 7: I'm curious.

Speaker 7: if this is a risk for air test systems.

Speaker 4: So obviously we have insight under non-disclosures and given the fact that I said I'm talking to all the major suppliers you can imply I'm talking to every one of the big guys including the ones you mentioned and then some under non-disclosures. And that gives me in many ways way more visibility than others but primarily related to the devices. They're exactly what they know non-public related to their substrates. I don't have as much visibility and I wouldn't really share.

Speaker 4: on ramping their own and obviously on semiconductors, another one along those lines. And of course Infineon's got some work going on too. It's my belief that all of them will be successful. I don't, I'm not hearing anyone that can genuinely say, there's certainly people that are saying it's not as easy as it looks. It's, you know, take some time, but there's a lot of money being put in. I mean, you know, Wolfspeed spent 30 years working on this stuff and you know, they

Speaker 4: their competitors are spending more money to make bulls in this year than maybe Wolfspeed spent in their whole career or so. I don't know if that's fair, but it feels like that. So, you know, there's a lot of energy to go try and solve this problem and my belief is they'll find it, they'll figure it out.

Speaker 7: One name I haven't heard you mention is Infineon. Are there any large silicon carbide makers who aren't doing wafer level burn-in or doing that in mass as the others intend to do?

Speaker 4: Let me do it differently. There's most of the vendors, most of the companies today have either little or zero wafer level burn-in with the exception of our lead customer. I actually happen to know by quantity how many wafers of capacity and it is a very small fraction comparatively. Keep in mind, one of my systems can test 18 wafers at a time. We've publicly talked about our competitors. I choose really not to do it in this form because then they can read about it and it's not because it's...

Speaker 4: But the people that are out there test one wafer at a time with a prober. And it just doesn't scale. I mean, in the same footprint of – I actually use this analogy. I apologize if I did it on this group before. But our tester and the surrounding area that it takes to actually service it is about the size of like a small Prius car. And it sits in a parking lot. Like imagine that space. That's what our system is. And in that stall I'm looking at our parking lot, in that room – I mean, it's smaller than that. But in that room you can test –

Speaker 4: looking at like a 10 hour burn in time, you have 10,000 wafers of capacity, that's a 10,000 car parking lot by my competitor. Now we're 18 times smaller. We're not zero footprint, but in the cost of a manufacturing floor of a wafer fab, that's enormous. And so if you're a player playing in a market that's going to need 10,000 wafers of capacity of testers.

Speaker 4: and you want to have 20% market share and you need 2,000 wafers of capacity, where are you going to put that? There's no test floor in the world that has 2,000 wafers that can support 2,000 wafers of wafer probers for silicon carbide. There's no way.

Speaker 4: So, we have this, you know, obviously a very big opportunity.

Speaker 8: Can I ask one more? Sure.

Speaker 7: You mentioned a brand new player that's an experienced chip maker.

Speaker 7: Are there chip makers that are going to enter this market in size as like the current announced plans of the top three players?

Speaker 4: Are other people going in? Yeah, we're talking to now several. I had to go double check that because we've been talking to these guys for not very long, by the way. I don't even think it's been four months.

Speaker 4: that we went from zero to first order in four months with these guys. I had to go double check to make sure they haven't publicly said anything when I wrote that, but they haven't. And there's another customer we've been working with that has never said anything public either, but I did notice they showed up at one of the trade shows recently. I'm still not going to talk anymore about it, but we know they have massive plans.

Speaker 4: on the order of some of the current top fours. Keep in mind, and this is always, I've done this math before, it's always interesting. If you just go through the simple math of these forecasts that say there was 125,000 wafers starts to do silicon carbide last year, and there's four million, I think as I remember, is like 25 times. Another way of thinking about it is that all of the silicon carbide that was built last year, right, is not even,

Speaker 4: you know, what 2% or 2, what is that meant? I'm sorry, divide by 25, yeah, 4% of the overall market.

Speaker 4: You get that? So all of the suppliers today don't even dent the market in eight years.

Speaker 4: So, they all have to grow substantially. People need to grow a lot to just sustain a small percentage market share.

Speaker 4: So they're going to need a lot more players. I mean, I sat in meetings where leaders like ST Microelectronics, who is the number one at a conference last May in San Diego, he stood up and said, listen, I just want to be very clear. We have no plans to build enough capacity to maintain a 50% market share like we did last year.

Speaker 4: They just don't. They're not going to spend that much. So by definition, they're going to lose market share from being number one at 50%, but they're still planning to grow a huge amount, but they're not going to grow 25x. So the world actually needs a lot more players.

Speaker 9: Okay, thank you very much.

Speaker 10: You're welcome.

Speaker 2: The next question comes from Gregory Ratliff with NOBIS Partners. Please go ahead.

Speaker 8: Congratulations on the company and the opportunity.

Speaker 8: One thought I have is to carry on with that final question.

Speaker 8: And if you were to look at the maybe the weaknesses in the structure of the company currently or the competitive threats down the road.

Speaker 8: Could you give us a bit of your thinking?

Speaker 8: regarding what you need to do to continue to be a champion or to be a champion with the tough competition they had.

Speaker 4: That's okay. So, you know, I'm not I'm not foolish to think that as the market is obviously large and growing There won't be people trying to figure out how to get into it We are in a particularly unique scenario where the way we do our testing is is truly unique

Speaker 4: Perhaps you could say it could be in a negative connotation. If you look at every wafer tester in the world, I've been in this industry for 35 years, I built them for most of that. The way you build an ATE system to test semiconductors is all the same. Every one of the companies, all 20 of them in the last 20 years have done it the same way. You build a tester box that sits on one of the three main wafer prober companies, probers, and you build a tester box that sits on one of the three main wafer probers.

Speaker 4: It docks to one of 20 ProCard suppliers and the three different industries, the tester, the prober, and the ProCard supplier have effectively have multiple people competing for the same capability and then people buy those tools, integrate it themselves and put them on their floor. And that is a very successful business. It's, you know, combined, it's, you know, a big chunk of the $13 billion Semiconductor automated test business last year. The problem with that is that those test times are all designed around seconds of test time.

Speaker 4: And so that test cell might be an average somewhere between $1 and $2 million to test the wafer. If you just look at the capital depreciation, testing one or two or four or eight devices at a time, it's extremely expensive to do it, but the test times are so low it's okay. Now you take that exact same test time, and by the way, that's how you test silicon carbide at wafer level today. The final test of a silicon carbide device takes about two and a half seconds.

Speaker 4: most of the testers that are in production today are between one and eight devices at a time. It's really cheap and easy to do that. When you go to burn them in, they now take 12 hours.

Speaker 4: Well, how are you going to do that with a tester that can only test eight at a time? You just can't do that. We built a machine aimed at a completely different market, which is the idea that we're going to take package part burn-in level costs and parallelism and implement that at wafer level. And we made investments over the last decade to do that, quite frankly, looking at macroeconomic trends of heterogeneous integration of semiconductors, of automotive devices going in this direction, of multi-died-up modules going in this direction.

Speaker 4: Do not kid yourself, we did not think silicon carbide eight years ago was gonna be this great hot market or that the world would actually be contemplating that we're all gonna be driving electric vehicles in 20 years, okay? But what we did do is anticipate the market trends that were headed in this direction, and quite frankly, we're sitting out in front of this when the silicon carbide hit us sideways. And we just have, call it what it is, we called the shot that it was headed in this direction and we were ready and prepared to take advantage of the wave.

Speaker 4: and it's really exciting. It is not that easy to do what we do, and we have an entire list of patents to defend it, and we will defend that with any company that tries to build a tester like ours or any customer that tries to use a tester built by someone else that looks like ours.

Speaker 4: In the meantime, we have a long head start and our goal is to get engaged with as many of these customers as we can. Also, we're working directly with some of the automotive suppliers now who now would look to qualify the tool and then they could qualify it backwards into multiple vendors so that once we're qualified, I don't think anyone's going to want to switch anyhow.

Speaker 4: I know I'm pretty being specific about our strategy, but that's how it's playing out right now. So having said that, we're also running like hell. We're absolutely making sure that we do not limit anyone in capacity of testers. We have the shortest lead times of any tester company I've heard of. I mean, I took an order two weeks ago and shipped at the end of the week. I'll take an order, I'm not gonna talk about what my next orders are, but I'm gonna be announcing some orders, they're gonna ship within a quarter, okay? We have that ability and we can tell the customer we can meet their capacity demands that they're imagining.

Speaker 4: of high voltage, high gates, all the different threshold voltages and stuff that you do for qualification and then move that into high volume production either in the same configuration or in cost optimized configuration that we don't really get to on these calls, but we have some tricks up our sleeve to actually do characterization with higher cost performing systems and then go to a production volume one that hits a price point that is very novel. And so we're trying to hit it on all phase technically, commercially, capacity to be able to address it and then we have IP patent.

Speaker 11: these days. You found it. I wanted to just.

Speaker 11: Blow some smoke for a quick second. As you know, as a retail advisor, I've been following air for four or five years. I lived through the downtime and you were so brutally honest when things weren't great. And I just wanted to thank you and commend the fact that you guys have kept your eye on the ball and obviously you're starting to see some of the things you played in the Warm Love Space.

Speaker 11: and successes and that's a rare attribute.

Speaker 11: in this environment that we're in. So nice work, sir. All right, I really appreciate that.

Speaker 11: Real quickly it does seem

Speaker 11: On the outset that you're having shorter lead time just about well a customer wanted to see and then they got it and they

Speaker 11: on the outset that you're having shorter lead time. Just about how well a customer wanted to see it and then they got it and they messed around for a while.

Speaker 11: Having shorter lead time, just about how well a customer wanted to see it and then they got it and they messed around for a while. investors could imagin oft

Speaker 11: the mass adoption or that your system really does work that well but what's what's changed now are there more in the in the workforce that suddenly sounds like the self-lead time is a little quicker unless I'm misinterpreting

Speaker 4: Yeah, I think I got it. You broke up a little so I apologize. I think I got the gist of it. So let me kind of repeat it back a little bit. So this idea that it seems like things are going a little faster, maybe the sales cycle is a little shorter, etc. That's absolutely the case.

Speaker 4: And I think there's a few things going on there. This really is one where COVID being over helps. Okay. I mean, it's just things were so slow with current and new customers and people weren't traveling and it's just hard to sell and it's hard to communicate. And you know, you can only do so much over two. So that's definitely one of them. There's also this element that, you know, if you three years ago, right.

Speaker 4: We were selling these systems, people know the lead customers of this platform were Apple and Intel and ST Microelectronics and some of these because they were 10% customers for us. But they're still kind of, is it real? Does it really make sense? You know, it's kind of niche, these are weird, whatever it is, right? It's like, I'm not sure. Then all of a sudden, as people know that one of the big silicon carbide customers came along and bought this and quite frankly, bought one system and sat on it for more than a year. Of course, COVID was going on.

Speaker 4: So there's still sort of this is it real is it really going to work does you know that whole thing? Then all of a sudden they start ramping.

Speaker 4: Then all of a sudden, from what it feels like, and I've heard this directly,

Speaker 12: They...

Speaker 4: Companies that they're selling to are kind of coming back because they really have done a good job of marketing themselves as being quality differentiated, selling the modules, selling the quality of the modules. And quite frankly, they did presentations that talked about their way for level burning there we are.

Speaker 4: and I think it's come through. So then they're winning deals and those customers, their customers are turning around and talking to now their competitors and saying, oh, do you have wafer level burn-in?

Speaker 4: There's no doubt some of that's going on. Okay? And we're doing everything we can do to foster that environment. Okay? Because all we have to do is get somebody to say, I want to do wafer level burn-in. And right now, we win.

Speaker 4: We're dead because our You know value proposition, you know our solution our lead times our price points They're a slam dunk. And so right now it's like we're not taking advantage of this. We're not raising up We did not raise our prices guys

Speaker 4: because our value proposition, our solution, our lead times, our price points, they're a slam dunk. And so right now it's like we're not taking advantage of this. We're not raising our prices. We did not raise our prices guys. Okay, did not do it.

Speaker 4: We had some things where our costs went up. I mean, I had to pay $50,000 to ship a chamber in last Christmas. It was crazy, but I didn't pass that along to my customer. I'm not doing that game.

Speaker 4: And we make good money, we're going to make a lot of it, we're going to provide a value to our customers, and we're going to be there for them. And I think that we're in a good position because of that.

Speaker 11: That's great. I have one follow-up if I may. I'll act like an analyst here. Last quarter what were you projecting for potential revenues for...

Speaker 11: with the calendar fiscal 23. But now I think you're really said 60 odd million, maybe more. Has that number just in the last quarter increased dramatically, or was that?

Speaker 4: So we really only provide guidance annually and we only do it once a year although we have kind of fallen into the reiterate or in some cases we've upped it. So we provided that guidance and I get it. People said what does that mean at least 60 or 70? Is it 60? Is it 70? And we were not intentionally trying to be cute but that still feels about right. Alright that's good.

Speaker 4: We think we're in good shape for that. And it just really depends on some of the timing of these customers' ramps. So sometimes I don't feed anyone questions, but I'm going to feed you a question that is, were you able to ship everything your customers wanted last quarter? Yes. So why was it only 10 whatever? That's all they wanted. I mean, that's the reality of it. And you think you're going to grow, why? Because the customers want more and I can build more.

Speaker 4: You know, it's sort of like that. We're actually ahead of the game on this. And so now I get into why is it that there was, it seems softer than Q4, and I know some of those reasons. So very private about customers' ramps and their design wins and when they wanted wafer packs. And, you know, I got facility issues with people that are talking about bringing on new facilities. And some of that stuff is just hard to handicap and know what the answer is.

Speaker 4: And so and of course, I have to guess correctly with these guys. And some of this is, I'm pretty confident of winning these customers, but it'll feel good when they give us the first POs too, right? So it's a little bit hard to guide that way. But yeah, we did not change our guidance, if you will. I guess we said we're very confident of that number. And as our backlog builds up, and if the backlog and the customers ask for more than that, we'll guide up at that time or as it makes sense. But again, we're not trying to play that game.

Speaker 11: Nice work. I appreciate your efforts. Let's make sure I get to see you when you're in New York.

Speaker 4: Okay, awesome. It'll be good to go back. I love the travel, personally.

Speaker 11: Thank you so much. Thank you.

Speaker 2: The next question is from Larry Klebina with Klebina Capital. Please go ahead.

Speaker 13: Good afternoon, Jane. I just had a real quick question on the COVID-19 pandemic.

Speaker 13: This new version of your XP in terms of the higher voltages or the adjustable voltages

Speaker 13: If the testing that you did in the past for a particular large silicon carbide customer, I think it was in August of last year.

Speaker 13: Does that mean that this is the process that they're going to use, these higher voltages one? No, it's not.

Speaker 4: Let me try and answer it as clear as I can.

Speaker 4: The following is the higher voltage or this adjustable voltage the way you think most potential customers are going to go or they go? That way that'll be easier for me because I'm not trying to be coy here. Okay, but let me try So there are several ways not a 10 but there's primarily two main ways that you can stress these MOSFET devices to weed out infant mortality.

Speaker 4: A MOSFET is a transistor. A transistor, if you imagine a water valve like on your sink, is a great analogy. All you do is a transistor allows...

Speaker 4: electrical current or water to flow through it when you turn on the valve or in this case apply a voltage to the gate. That's it. You apply a voltage, water flows through it, you turn off the gate, the water stops flowing through it.

Speaker 4: If the device works properly when you turn it off, it doesn't drip. We call that leakage. If you put a big power pressure behind it, it's going to drip.

Speaker 4: It might leak a little and they actually specify how much it leaks, but if it leaks more than that, it's bad. Okay? Now there are two main stresses you can do to verify that. One of them is is a gate bias, a high voltage gate bias on the gate itself. Imagine the valve I'm describing. I want you to put your hand on the valve and I want you to turn it over as hard as you can. Try and break it on.

Speaker 4: Okay, sounds kind of odd, but that's exactly what we do. We basically overstress the gate and If the gate breaks it snaps off. We actually call that a glass rod snap in-house We love showing those to customers particularly when they take 24 or 48 hours to show up Okay That is a failure that shows up it is the primary failure in silicon carbide MOSFETs that everybody talks about and you Have to get rid of those Those show up in cars and you have what we call a walk home event

Speaker 4: which is you get out of your car and you walk home when it dies. Okay? So those need to be weeded out, and that's what we do primarily, okay? Because the gate oxide has defects in it in the manufacturing process that I'll get into it, but they're not going away, that if those flow through all the way to your end customer, that's bad. Okay? So we apply a high voltage gate bias onto the gate to overstress it to try and crack it off.

Speaker 4: and that's a primary way of doing it. Another test is called the reverse bias, which is imagine putting really high pressure on that valve, water pressure, it's called voltage in this case, and it shouldn't leak through. Now the difference between that test, that's a good quality test or a reliability test, meaning you wanna do that during your process to validate that devices do not fail, and you'll do that over say a 2,000 hour. That's not necessarily a production test.

Speaker 4: The production test may only take a few seconds, but there are people that want to do qualification of that high voltage, and there's some people that have done it in production, and we now provide them with a solution to do that. Having said that, you can't do the same as the gate. You actually, if let's say the device is rated for 1200 volts.

Speaker 4: You don't apply 1800 volts to the device. It will kill it. It will weaken it and it will not be shippable.

Speaker 4: So you can only put 1200 volts on it. So it's not really a burn in stress condition. It's a functional test validation and you might want to do it for a few seconds, but it's not necessarily a production test.

Speaker 4: But you know what if you want to put my system in production with that you go for it It costs a little bit more. I'll be happy to do it and I'll shop. I'll sell you Fox XP's forever

Speaker 4: Our opinion, and we've been fairly open about it, is that you wanna do characterization, you wanna do that, and you wanna get that out of production as soon as you can, and you should go to this gait bias testing, and that's our story. And we now have the tools to give you whatever you wanna do. You can buy whatever you want. We'll be happy to sell it to you. It is more expensive to do reverse bias, but we're cheaper than anybody else by a long way.

Speaker 13: Do you think most of the systems will be like the original version going forward? I do. I do. I do.

Speaker 4: I think over time, that's really where the cost is going. And that's we've been talking with multiple people. By the way, the new BVCM, I know nobody cares about our language here, but the new bipolar voltage, it actually allows it to go a little higher voltage. We had some people that want to do that. Interestingly, as the devices mature, the voltage is actually going down. So we're kind of feel like, but there's some people that ask for it, particularly in the gallium nitride. And so we're like, sure, no problem. We also have a negative voltage. And there's some technical white papers out there that people are.

Speaker 13: automated XP. Do you have a name for the XP fully automated yet?

Speaker 4: No, because I'm leaking that we're taking orders, but we haven't even put it on the website yet. So I don't yet, but actually I do if you're under non-disclosure, but you have to qualify first as a silicon carbide buyer and you don't qualify. I'm kidding, for everybody who's watching, Larry always asks me about this thing. We'll be talking about that in a little bit here, Larry. But yeah, as Larry alludes to, we are selling as a turnkey solution with an integrated XP with the automated aligner attached to it.

Speaker 13: and we'll probably make those announcements with those first production orders that we get from customers. I know that that was originally targeting memory and there's a lot of memory activity out there. Yep. To be able to get to a record.

Speaker 13: standing for that wafer sorting. You talked about the need to sort wafers or devices for threshold voltage and silicon carbide so you can match them up later. Don't you have a similar need in flash?

Speaker 4: to sort those based on quality or available cells? Is that kind of the same thought? Yeah, I mean, I'm probably a little too familiar with that because you got it a little wrong, but generally, yes. The cycling test of a NAN flash memory and wafer level is a potentially critically...

Speaker 4: It's a good idea before you put it into enterprise-based solid-state devices. And there are people that are doing that today. And you are correct. Our Fox XP system, when we first were talking to it, we were engaged in talking with some of the memory suppliers, and our Fox XP system is capable of testing flash memory. So it's kind of funny that a MOSFET is a single transistor, and the tester is also capable of testing in full memory.

Speaker 4: As people know, one of the challenges we had at the time, we did not have automation. And candidly, we were pretty small, and we were on the drawing board with this solution, as opposed to now we are shipping it in volume. So that may give you some insight as to what our long-term intentions are. So just one more thing on that score.

Speaker 13: you can potentially get two birds with one stone. You get the infant mortality.

Speaker 13: screening as well as the sorting.

Speaker 13: And how are they doing that currently? What are they using?

Speaker 13: How are they doing that currently? What are they using? Are we talking about memory guys?

Speaker 4: Yeah? Memory guys use a memory AT system, primarily from Advantes, Teradine, or in-house built systems. So those are single wafer systems, aren't they? They are. Or there is a solution out there for people that use a multi-wafer prober. So they're basically like 12 probers kind of bolted together and on top of each other. They're very expensive.

Speaker 4: but with a custom in-house test system that does it, that architecturally is significantly more expensive than us.

Speaker 4: and it has a larger footprint.

Speaker 13: Yeah, so you're selling substantially smaller footprint because you can do 18 at a time. So it seems to me that while these guys are starting to plan out new fabs.

Speaker 13: and you mentioned in the last time that it would be a new fab deployment, you'd want to get to a record status as soon as possible. And then you might think that that would upset the people that sell those testers and maps because there's whole floors full of them, right?

Speaker 4: It would upset me if I were selling them testers, yes.

Speaker 13: And just one last thing, in the past you mentioned, even though you can do 18 at a time, the volume would be so massive you would still need

Speaker 13: How many potential XPs for a typical, say a flash fab?

Speaker 4: 75 to 100 per floor.

Speaker 13: Fully automated.

Speaker 14: Yes.

Speaker 4: if you're counting. Folks online, Larry, I do want to be also clear. We do not currently have revenue expectations for shipping into the memory guys this year. But if you are investing in us, you're always investing in us getting into memory someday. I just want to...

Speaker 4: balance the enthusiasm. And Larry knows darn well that it's one of my absolute pet peeves and one of my passions is to get this company into the memory business. So thank you Larry for teeing that up.

Speaker 13: But hey, great job and keep up the great work.

Speaker 13: Thanks Larry. We're counting on it. We're counting on it. Ha ha ha. We're counting on it.

Speaker 4: At this time, there are no more questions in the queue. I'm glad we were able to get to everybody. Thank you, operator. I'm glad we had a chance a couple of times ago. I think we cut off a little early. We're trying to get our canned statements in in the first 30 minutes and give people enough air to get their questions in. So I really appreciate all our shareholders that have been sticking with us. We're really excited about this.

Speaker 4: this new market opportunity this year and heading into the next years. And we'll look forward to seeing anyone that happens to be coming into town to visit. We do take those or at one of the shareholder meetings or the investor conferences. We're getting a lot more miles on us these days. So thank you very much for your time and we'll talk to you next time. Bye bye.

Speaker 4: opportunity this year and heading into the next years and we'll look forward to seeing anyone that happens to be coming into town to visit. We do take those or at one of the shareholder meetings or the investor conferences. We're getting a lot more miles on us these days. So thank you very much for your time and we'll talk to you next time. Bye bye.

Speaker 2: Thank you for attending today's presentation. You may now disconnect. You may disconnect.

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