Q1 2023 Akoustis Technologies Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to the acoustic technologies fiscal 2021st quarter Conference call.
As a reminder, this conference call is being recorded.
The conclusion of the accompanying presentation or Christmas management will take questions to ask a question. Please press star one on your telephone keypad to be placed into the queue.
A replay of this call will be available on the Investor Relations section of the <unk>.
Chris just website.
Okay.
Thank you operator, and good morning to everyone on the call welcome to acoustic <unk> first quarter fiscal 2023 conference call. We are joined today by our founder and CEO , Jeff Shealy, CFO , Ken Boller, and EVP of business development, Dave 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.
Product development and customer orders, our expectations regarding achieving design wins from current and future customers the possibility of entering into collaborative or partnering relationships potential impacts of the COVID-19 pandemic litigation matters guidance regarding expected revenue product order.
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.
In addition, our presentation today, we will also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the investors section of our kids to stock up.
I would now like to turn the call over to Jeff Shealy, founder and CEO of acoustics.
Thank you Tom and welcome everyone to our fiscal 'twenty 'twenty three first quarter conference call.
I am pleased to report that acoustic delivered over 195% year over year revenue growth and more than 6% sequential revenue growth as we continue to ramp commercialization of our leading RF filter products.
This was in line with the revenue guidance that we gave at the end of the June quarter of up more than 5% sequentially.
We were able to accomplish this despite the ongoing challenges in the macro environment driven by Covid triggered lockdowns.
Our outages and part of Asia, and semiconductor chip shortages.
The silicon chip shortages continued to have a major impact on the number of Wi Fi access points that can be produced by our customers and has created production backlog across the Wi Fi landscape.
Nevertheless, we were able to post record quarterly revenue in September a $5 6 million.
Looking ahead, we expect to continue revenue growth in the current quarter with 5% to 10% sequential growth and further expect growth throughout calendar 2023.
From a product development standpoint, we achieved the majority of our stated milestones for the quarter, including multiple targets.
Five gene mobile and Wi Fi as well as renewed activity in our five gene network infrastructure and other market segment.
During the September quarter to new customers enter production with finished products incorporating our CHRISTUS X ball filters, bringing the total number of customers ramping production to 15.
We expect to see this number continue to grow during the December quarter, including at least four new expected Wi Fi design wins.
Given the current headwinds, we have decided to protect our cash reserves by reducing spending where possible and by delaying new capital expenditures.
Before discussing each of our target market segment in greater detail I would like to give a brief update regarding the recent passage of the chips and Science Act of 2022 commonly referred to the chipset and how acoustic hopes to benefit from the act.
The chips Act legislation was introduced an author and part by Senate majority leader Chuck Schumer.
Its goal was 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 United States.
This past September Senator Schumer once again visit at our Fab facility in Canada go in New York.
And was pleased with the growth in manufacturing capacity and new jobs that we have delivered over the past year.
Our crews to 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 opportunities in upstate New York.
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 is located.
Over the past five years acoustic says probably manufacturer gets innovative RF filter chip products in the USA. We believe we are an ideal candidate for chips funding and we fit perfectly as part of Senator Schumer is blueprint to make New York, the global innovation and semiconductor hub.
We plan to apply for funding under the chips Act when the submission window opens in early calendar 'twenty 'twenty three 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 Pac.
<unk> partners, we hope to secure chips Act funding to build an advanced packaging center to Richard our packaging supply chain to reduce product costs and support shorter time to market.
Such funding would position acoustics to manufacture and deliver billions of export filter chips annually.
And position us to service, both tier one and tier two mobile companies for five G smartphones as well as other multibillion dollar end markets, including five G networks high frequency Wi Fi devices and other wireless markets.
The outstanding performance of acoustic export filters has in fact attracted the interest of many of the largest wireless companies in the world.
Ames that everyone would recognize.
But the reality is.
The capital cost to build out capacity to service. These billion dollar wireless companies is substantial.
We believe that chipset funding would allow us to make that enormous leap and build a world class state of the art fab.
And advanced packaging Center that makes New York State and our country proud.
I would now like to discuss each of our target markets segments in greater detail beginning with the Wi Fi segment.
As I mentioned earlier, the Wi Fi market continues to experience significant disruption from the supply chain issues as well as further COVID-19 lockdowns in China and this continues to impede our topline growth in the near term.
While 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 lower visibility in our near term Wi Fi related revenue. We are beginning to see signs that the supply chain challenges are being addressed through new capacity fewer shutdowns and the shift to newer Wi Fi technologies, particularly why 560 and Wi Fi seven.
On a more positive note, we had multiple significant product achievements during the September quarter.
We started sampling to exciting new Wi Fi six <unk> and Wi Fi seven compatible ex BOL filter solutions during the September quarter, including our next generation 5.5, and 6.5 gigahertz coexistence.
Filter solution that covers the Uni.
One through three and unit five through eight bands.
We have completed fabrication and plan to start sampling in the December quarter, our new 5.6, and 6.6 gigahertz coexistence filter solutions that cover the Uni one through four and Uni five through eight bands and the high frequency Wi Fi spectrum.
Each of these ex BOL filters offer significantly reduced form factor relative to our legacy products with a greater than four times reduction in size utilizing our new advanced chip scale packages.
The next generation 5.5, and $6 five gigahertz solution.
Offers enormous improvements and out of band rejection relative to our first generation products and has already attracted significant interest from Wi Fi ODM and Oems.
Our new 5.6, and 6.6 gigahertz solution can utilize all of the five gigahertz bands in Wi Fi 60, and Wi Fi seven to support the North American market, we expect design wins for both our new next Gen 556.5, gigahertz and our new five six.
6.6, gigahertz solutions and expect the new filters to be qualified and in production by the June quarter of 2023.
Our current generation products continued to have success, and we announced two new Wi Fi six key design wins in early September and the gaming market a new area for acoustic <unk>. One of the design wins is for specialized high speed low latency gaming router that is expected to enter production in mid calendar 'twenty 'twenty.
Three.
The second design win is with a leading mobile gaming platform and is also expected to go into production in mid 'twenty two 'twenty three.
Both devices use multi user multiple in multiple out architectures and are expected to ship with multiple X ball filters per device.
Recently, we announced three additional Wi Fi design wins in Wi Fi 60 for carrier class applications.
Two design wins are for a leading European carrier class Wi Fi OEM that will be using the acoustic 5.5 gigahertz and $6 five gigahertz standard X ball coexistence filter solutions as well as <unk>.
The five six and 6.6 gigahertz standard export coexistence filter solution that allows for greater usage of the Uni for band.
The first Wifi six router is expected to ramp production by the end of calendar 2022 in the second round or is expected to begin ramping by the end of March 'twenty 'twenty three quarter.
The third design win is for a global network communication solutions provider that will be using the acoustic <unk> 5.6, and 6.6 gigahertz standard Xbox coexistence solutions to sell our Wi Fi six extender to its carrier partner with a production ramp expected by August of calendar 'twenty two 'twenty three.
Yeah.
I'm also pleased that we received a development order from a fortune 100 Internet company for two new Diplexer products. During the September quarter. This is our second fortune 100.
Diplexer customer and the new Diplexer as we are developing are for Wi Fi seven applications, including virtual reality and augmented reality headsets as well as advanced wearable devices.
The new Diplex yours are expected to be completed and enter production in calendar 'twenty 'twenty four.
Additionally, we continue to advance the progress of our Wi Fi seven Diplexer, which we are currently developing for one of the largest P. C chipset makers in the world the.
The first design of this new Diplexer was shipped to this fortune 100 customer in December 2021 and we received positive feedback on the design.
The initial diplexer performed well and enable the customer to characterize it within their system architecture, providing valuable technical feedback for the next design iteration, which has already been produced in our New York manufacturing facility.
We remain on schedule for commercialization of this extremely exciting product and have received interest from other Oems for Diplexer triplex or and other multiplexer products.
We attributed our surge and recent design wins to the fact that we were an early entrant and Wi Fi 660, and Wi Fi seven ball filter solutions and today have one of the most extensive high frequency Wi Fi portfolios that address the enormous challenges of difficult dual band coexist wideband.
Operation within the five to seven gigahertz frequency spectrum.
While near term macro supply chain issues remain we are executing on design wins, new product ramps and new product development at a higher pace than ever before and we expect to see the outlook improve quickly once the broader supply chain issues improve.
To summarize our recent Wi Fi activity.
With the addition of the new 5.56, 0.5 gigahertz and 5.666 gigahertz solutions, we will have 16 commercialized export Wi Fi filters 12 for Wi Fi six he and why five seven and four for Wi Fi six.
As of today, we have announced a total of 20 design wins, including the three we recently announced.
We are currently in production with 10 customers.
In Wifi, six and Wi Fi 60.
And lastly, we are advancing the development of our ex BOL multiplexer products.
Led by our Diplexer efforts, which have resulted in two development orders from two different fortune 100 companies.
Moving on to five T mobile.
We continued our momentum in five G mobile during the September quarter getting closer to our goal of securing our first design win.
And the five Jim mobile market by the end of the current quarter and entering production in the first half of 'twenty 'twenty three with the first of three tier one customers.
With whom we are currently engaged we shipped a second design to this tier one customer in the June quarter, using our new advanced wafer level packaging.
We recently completed a quality audit with this customer and received a volume order for the first design during the September quarter.
And we remain focused on entering production with this customer.
During the September quarter, we received our first purchase order from our second tier one RF module maker that we engaged with in the December quarter of 2021.
The new filter was designed using resonate or models that were delivered to this customer earlier in the year with our P D K and <unk>.
We'll target challenging five G transmit and receive coexistence requirements.
We now expect our production ramp with this new filter in calendar 2025.
We also successfully developed and delivered one new engineering sample to our third tier one mobile customer.
And the RF front end module maker, we initiated the next phase of this development with.
With new engineering sample is expected to be delivered in the first quarter.
Calendar year 2023.
These new export filters incorporate the customer's designs and we are targeting production ramp in late calendar 2024.
Or early calendar 2025.
During the June quarter, we also iterating.
A redesigned filter for our tier two five G mobile customer and shipped first samples to this customer and our new wafer level packaging.
We continue to target a production ramp with this customer in mid calendar 2023 for the first filter and during the September quarter, We received a purchase order for the development of two additional export filters that target why 560 applications.
As we have discussed previously we are bringing the production of our W. A L. P. S. In house within our New York Fab, We continue to work towards the design lock of multiple new advanced packages with full W. L. P process qualification expected to complete.
Later this calendar year.
I am pleased to announce that we have completed the process flow for our new W. L. P products and have a design locked.
The first package for our tier one RF component company.
During the September quarter, we shipped our second filter designed to this tier one RF component customer and our new wafer level packages.
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 G mobile activity, we have multiple customer funded ex BOL filters in design with four customer engagements, including three tier one customers.
We received our first purchase order from a tier one RF module maker customer that we engage with last December .
Reiterated our first RF filter design for a tier two foundry customer and received a purchase order for two additional filters.
We've received a volume order from a tier one RF component company.
Foreign expected production ramp in the first half of calendar 2023.
And finally, we have completed the process flow for our new W. L. P and chip scale package products and have design locked the first W. L. P for our tier one RF component.
Company customer.
And now I would like to discuss our network infrastructure business highlights.
We continue to ramp production with three citizens broadband radio service or C. B R. S infrastructure companies in the September quarter, one of which is experiencing higher than expected in customer demand.
We expect these three customers to continue to ramp in the current December quarter.
Beyond <unk>.
And believe we May see revenue upside in this segment given the current demand picture is improving.
We announced a new design win for our three five gigahertz five G network infrastructure filter in the September quarter with a new customer.
This is the fourth design win we have received for this filter and it is expected to be one of the first to enter production.
Our customer is targeting both small cell and.
Mimo applications with our export filter.
In the European and Asian network infrastructure markets.
We are currently expecting this customer to begin ramping in the current quarter.
We recently completed the first iteration of our three seven gigahertz to 3.98 gigahertz ex BOL infrastructure RF filter for the U S five market.
We are currently sampling this new C band filter with multiple Oems and expect to see greater small cell adoption beginning in the second half of 2023.
When we will be well positioned.
To summarize our five G network infrastructure activity.
We have four completed five gene 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 <unk>.
C band filter for the U S. Five G market.
To date, we have announced five design wins in five <unk> small cell.
And Additionally, we have received four design wins for C. B R. S from three leading network infrastructure Oems.
And now I would like to discuss the highlights from our other business segment during the September quarter.
And our defense contract business, we continue to progress on our existing R&D contract with DARPA to further enhance our export P. D K.
In addition, we recently began executing on a multi year 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.
These new materials may have positive implications and our current two to seven gigahertz frequency range that we are focused on today, given higher power handling capability and higher Q values.
Our acquisition of the RF semi brand continues to bear fruit as the new product line has added to our growing portfolio of filter and timing control products and we are beginning to leverage the R. F M I sales channel with our <unk>.
<unk> portfolio of high frequency filters.
Or if in my experience a significant design win during the September quarter being selected by a leading IC supplier as a reference.
To be used in a secure wireless battery management system for electric vehicles.
Also in our other market segment, we recently announced entering the RF timing and frequency market.
With our leading ex BOL resonators, we.
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.
During the September quarter, we started the qualification of our first two timing control products for our first customer who is expected to start production ramp in the first half of 2020 three.
I am pleased to announce that our work with this first customer has led to an order from a new second timing control customer, which has placed a development order and we'll start evaluating our resonators for use in their products.
The timing RF market represents a significant opportunity for acoustic and both unit volume and revenue are.
Our primary customers developing products that could be disruptive in the timing RF components market looking to displace older analog technologies with ultra low jitter and phase noise devices.
We are extremely excited that our leading X ball resonators can be part of this groundbreaking opportunity.
To summarize our other markets segment activity, we have seven completed ex BOL filter solutions for the civilian and defense markets.
Further our ultra high frequency ex BOL resonators are now being used to develop disruptive digital timing and control products for the broader communications industry.
In addition, we continued to refine and improve our ex ball PDK driven by the direct to phase two contract with DARPA, we started executing on our new multiyear multimillion dollar contract with DARPA to scale, our export technology up to 18 gigahertz.
And finally in addition to the numerous customers acquired through the orphan eye product line acquisition, we have a total of three X ball customer engagements two of which have already placed purchase orders.
With us or provided in our revenue.
And now I would like to hand, the call over to Ken to go through our financial highlights.
Thank you Jeff for the first quarter ended September 30th 2022, the company reported revenue of $5 6 million, which is an increase of more than 6% over the prior quarter ending June 30, F. 2022 and representing an increase of over 195% year over year.
On a GAAP basis operating loss was $18 million for the September quarter, mainly driven by revenue of $5 6 million offset by labor costs of $9 9 million depreciation of $2 5 million and other operational costs totaling $11 2 million as a result, GAAP net loss per share was 33.
<unk>.
On a non-GAAP basis operating loss was $15 6 million and non-GAAP net loss per share was 28 cents. A reconciliation of these amounts to a court to the corresponding GAAP measures is available in the press release issued this morning available on the investors section of our corporate website.
Capex for Q4 was $4 8 million a decline from $5 9 million in the prior quarter, reflecting the ongoing capacity expansion and equipment redundancy project in the company's New York Fab.
Cash used in operating activities was $15 million up from $11 9 million in the prior quarter, mainly due to a year end expenses and certain expense items outside the normal course of operations.
The company exited the June quarter was $60 7 million of cash and cash equivalents versus $80 5 million at the end of the previous quarter, primarily resulting from cash needed to fund operations and Capex spend.
In the current December quarter, we expect multiple new Wi Fi six E and network infrastructure customers to ramp production and therefore, we expect to see record revenue with revenue up between five and 10% sequentially from the September quarter and based upon our growing backlog of design wins, we anticipate that robust topline growth will continue into our next fiscal.
Year and beyond.
I would also add that I expect our cash operating burn in the December quarter to reduced by more than 25% from the current quarter, resulting from our spending reduction efforts and normalization.
I will now turn the call back over to Jeff to discuss our second fiscal 'twenty 'twenty three quarter performance and future milestones.
Yeah.
Thank you Ken the ongoing semiconductor chip supply shortages and supply chain delays that are impacting the broader industry continued to impact our customers.
While our design win momentum in customer activity continues to grow driven by Wi Fi six Wi Fi six Wi Fi seven five D mobile five D infrastructure in other markets our ability to grow revenue continues to be impeded in the near term.
Given the broader market disruptions.
Despite the near term supply chain impacts, we were able to deliver revenue growth of over 195% year over year in the September quarter, and we are currently expecting between 55 and 70% growth year over year in the December quarter.
We are expanding our market share in C. B R. S and now five G infrastructure experiencing strong demand for our new Wi Fi six <unk> and Wi Fi seven products and are targeting production ramp in the five G mobile smartphone market in the first half of calendar 2023.
Which should result in accelerated revenue growth.
By the end of the current quarter, we expect to ramp production to more than 17 customers.
With additional customer design wins expected across all our markets to finish calendar 2022.
In the December 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 segments.
We continue to strive towards executing our target milestones and we'll continue to keep you informed of our progress.
Our anticipated December 2022 milestones include.
And our Wi Fi segment first we expect to ship samples of our next generation Wifi six <unk> Wi Fi seven filter solutions to multiple customers.
Further we expect to secure at least three new Wi Fi 60 design wins during the quarter and we expect to secure a tier one S. O C chipset Wi Fi seven reference design win.
For our mobile five G segment, we expect to receive a volume production order from our tier one RF component company customer, while securing our first mobile design win.
In addition, we expect to complete our W. L P and C. S P technology qualifications.
And released our new packages into production and.
And we expect to deliver the first sample to the tier one five G. RF front end customer announced in September .
Next in our five gene network infrastructure segment, we expect to receive a development order for a new five G massive mimo infrastructure.
Receive filter solution.
We expect to sample six gigahertz X ball filter to.
To a tier one OEM targeting a new radio unlicensed five G. Six gigahertz I M T application and we expect to scale, our five G and 77 ex BOL filter for our recently announced design win.
And then finally in our other market segment, we expect to receive a purchase order for the development of a new ex BOL multi chip module for a multibillion dollar tier one defense customer.
Further we expect to complete the qualification of two resonators for the timing market for our first customer.
And finally, we expect to demonstrate it.
10, gigahertz ex BOL resonator targeting expand applications and continue both development projects with DARPA.
In conclusion, we believe the market opportunity for our patented high frequency ex BOL filters is significant.
As of October 28, we have 73 issued patents and 123 patents pending as we continue to build a 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 five G 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.
Wafer level packaging capabilities.
I also wish to thank our shareholders, who continue to support the company and with that I would like to open up 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 you May press star two if you'd like to remove your question from Mccann.
Our first question comes from the line of <unk> with Roth Capital. Please proceed with your question.
Good morning, Jeff Dave Ken Congrats on all the progress here in the outlook it sounds exciting.
So on the smartphone wins, the mobile wins, Jeff what dictates the timing of various customer production starts is it your product availability or is it their program.
So what's what's the what are the factors across the three before rather.
Yeah.
Hey, good morning <unk>.
Jeff I appreciate your opening comments.
Dave start and then I'll give some comments on that morning.
With respect to the tier one RF component. It was a combination of both the availability of the W. L. P. You know, which we've addressed.
As we highlighted in the remarks that is released or will be released by the end of this quarter. So the timing aligns well with their release into production.
And we talked about that being the first half of 2023 would be with respect to the other tier ones, it's mainly going to be driven by their product roadmap and are starting.
Starting with the designs that they're working on and it's a multiple iterations that we've highlighted in the calls design efforts with them. So it's the timing of that and then it sort of get to when they would release with their end customers.
I'll add to that the W. A L P S.
They've said.
Qualification timing.
Just wanted to note for everybody that we're currently shipping in volume W. L. P.
To this customer.
And so they're getting the final version of the product so.
And then in terms of other things that contribute to the timing is the qualification of their customer as well. So theres a few things that go into it.
But not only our customers qualification, but also there is their customer qualification so.
As we said in the prepared comments.
We're looking forward to.
It was a pretty significant milestone this quarter in the mobile.
With the milestone of.
First design win in mobile.
Okay. No that's very helpful color guys and then.
Separately on the wireless infrastructure C. B R. S I'm seeing the accelerating demand, perhaps upside versus what you had expected can you talk about the drivers there versus you know macro you would think macro would cause spending to be a little bit more conservative, but it sounds like you guys are seeing momentum there.
Appreciate any color there.
I'll, let Dave start yes.
Yeah.
As we've highlighted in the prepared remarks, we've got you know three.
Three customers that are ramping two of them are.
And medium volume low volume type customers one of them is.
Wrapping significant volume and part of that is driven by the designs are one of the.
Units that were in the.
I guess the central office.
As more of a higher count Mimo and then the one that's as long as the lower telling my book. So you've got multiple filters that are in each of the designs and also you know this customer or this customer is aligned with a service provider that they're making some investments in the sea bureaus rollout.
So we expect this demand to continue to be robust with this one customer were watching other service providers and the investments they've got into CVR of spectrum and working with several different Oems as well.
So we expect continuous activity.
She barrels rollout and we're also looking at.
The additional Saatchi spectrum.
<unk> has released as well.
So these are you know I think right in our sweet spot from a frequency and a performance and particularly with these higher mimo architectures.
So we're looking to you'll see how infrastructure continues to grow in the next two years.
I expect it to be pretty robust comparatively to what we've seen in the Wifi as well soon.
Jeff here.
I think as you know, but for maybe for the broader audiences.
So.
It was really a fast track to get higher.
Higher data rates deployed into the marketplace.
So we expected that.
That market to continue to.
Gross.
And as Dave.
Briefly touched on.
The license C band spectrum, we've got product that's there.
Available into the market.
For that band and we expect that to.
Heavily adopted.
It's a licensed bands so.
Just some additional color on that okay helpful guys. Thanks, Congrats again.
Thank you Susan.
Thank you. Our next question comes from the line of harsh Kumar with Piper Sandler. Please proceed with your question.
Yeah, Hey, guys first of all congratulations on all the strong activity that's going on.
And in the wireless space, particularly attic question around that you mentioned change year, one customers one of them being a fortune 100 customers.
Just a question is are these customers telling you to get the W. L. P facility and the packaging inside your own umbrella, where she is letting you outsources all day on it so that the move that you bet that you're making to us packaging facility.
Okay.
Hey, Jeff.
Jeff I appreciate your opening comments, Dave will start just on exactly what the customers telling us.
Given.
Yes.
So harsh we've got two initiatives from Apache.
Investing in one chip scale packaging and then the other one is W. P packaging. The W. E solution is primarily being utilized right now or.
The end customers that are integrating it into their module. So this is more of the RF.
Our front end module manufacturer tier ones that we've engaged with and then also the RF components.
As well chip scale packaging is being utilized in our discrete and multiplexer the lives.
So the two customers that we come in at tier ones that are doing why five seven.
Utilizing a chip scale packaging approach.
We have both of those initiatives that we worked on.
Floyd on the chip scale packaging actually have a product in production.
It's been able for us to reduce the form factor increase performance and also do these more complex multiplexer designs.
It didn't really world class performance.
And in our Hearts, just some a couple of comments on the broader significance of a chip scale package and W. O P.
These represent significant cost savings to our company.
Cost of goods or the bill of materials, if you will.
We're able to with these with.
With these <unk>.
Both of these were able to shrink.
The size of the package by at least four times and that has a significant impact on cost savings.
And of course the W. P.
That Didnt house actually eliminates.
The cost of doing it through a third party and can be and is being rolled right into the wafer fab so significant.
Significant cost savings roadmap is really the broader application as well and that's consistent with what you would expect from a.
Oh tier tier one company that's.
That's cost sensitivities.
Great guys. Thank you for that color and then one when we I guess, so obviously when you talk about you know five G wireless handset type customers analysts like us to get really excited you mentioned that you'll have some revenue starting 2023 can you talk about maybe Dan probably a proper question for you maybe talk about how they should.
Scale and you know what are you expecting in terms of the ramp with these kind of large customers that you are now you know able to bring home.
Okay, Dave will start with that so the you know the.
Tier one component is the one that we've highlighted that we expect to be in production first half of next year. So as Jeff commented earlier than it was in her prepared remarks, we've already started receiving volume orders.
And there'll be further announcements will have this quarter to shore up everything.
The expected volume pick up.
Towards the second.
Second quarter of next next year, and then continue to ramp and.
Further announcements, we'll make we'll give you more color as to what we are.
As.
You know and highlight some of the volume, but it'll be substantial compared to what we see in respect to Wifi access points.
Five G infrastructure.
And yeah.
The advantages as you know you've got a fairly small die W. P solutions that goes into the same customers applications. So a lot of the value add that we provide is going to improve the margin and also the revenue will be a nice step function comparatively.
Yeah and harsh.
One more on that the current orders that were receiving are comparable to the orders.
Current orders, we're receiving in mobile are comparable.
Two the quantities of orders that were receiving in production.
Wifi, So we expect that.
Those that order size.
Certainly step up.
By an order of magnitude.
We're in production. So we're excited about the volume, we're seeing and clearly we've been preparing to be able to support even higher volume. So a.
Pretty exciting market opportunity for us.
Exciting stuff guys. Thank you so much.
Thanks.
Thank you. Our next question comes from the line of Anthony Stoss with Craig Hallum Capital Group. Please proceed with your question.
Hey, guys my congrats as well on the nice progress Jeff maybe for you. So if you're going to enter calendar 2023 was roughly 17 customers that you're shipping to you can you give us a guess how many total customers you think you'll be shipping to by the end of 2023, and then as a follow up I'd love to hear as much details you can provide now that you've been shipping to.
A bunch of customers give us the nature of kind of follow up after the use your parts or are they coming back for more design wins any color would be appreciated there.
Okay, Tony again I appreciate your.
Sure.
Let me start with I'm going to answer in reverse and get.
Yeah, David and Ken involved here, but in terms of follow up.
The particularly in the Wi Fi.
These are these programs.
Come up every.
Two quarters for example, and they'll run for that could run for two to four quarters.
In terms of.
Those customers are.
If its a successful product.
Theres certainly a tail to it but typically what we're seeing is two.
Things, we started Wi Fi six have been moving to Wi Fi six that.
That would be a pretty obvious trend.
But what we're doing in Wi Fi <unk>, we mentioned.
Customer.
We have production with some custom chipset.
They actually have a new platform.
There are that can be reusing, our current chipsets for that platform or developing new chipsets.
I think the thing that I, particularly look at is.
If the customers coming to us to solve a new technical problem and really engaging on a new platform that we know we've taken care of them on the initial production of their first products. So we're seeing repeat activity repeat engineering.
And that's.
That's the type of supplier that we want to be as we want to be a strategic for.
For these new Wi Fi six Wi Fi seven platforms and really be the go to supplier for filters and Wi Fi.
If you look at.
If you look at the in the mobile market, we want to do the same work, whereas the.
The world's only merchant supplier.
Filters for for mobile, we don't compete with our customers there.
So I think we're good strategic partner Derrick Wood.
We would expect in the mobile market.
Once we have the traction there then that will lead to follow on programs with existing customers as well as <unk>.
Be a proof of concept for new customers to give them the confidence to engage with us in terms of what the number of customers rollout I'm in for Paul.
Dave and Ken into that conversation.
Hi, Tony a couple of comments ill make there.
You know the by the end of.
Calendar year 'twenty three.
Should add more than 25 customers.
And production.
As you can see we are typically adding about two per quarter and if you look at the dollar content per.
<unk> system and also the shifts of what.
We're seeing Wi Fi six and to Wifi succeed Wi Fi service the dollar content per system, particularly with architectures that are doing a tri band to quad band.
It's increasing from maybe $2 50 up to $7 to $10.
So the overall revenue per program and should continue to shift upwards as well so for Wi Fi side, it's a pretty exciting time for us and as Jeff highlighted as you know we've got a.
A lot of stickiness with our customers.
You know HP Aruba is one that we publicly announced and you.
You know as Jeff highlighted there is plan for reuse of those products into other programs.
You know I spent two weeks over in Asia recently and visited with over 16, Odm's and Oems in a very positive reception on the product portfolio, we're leading the industry.
Probably separately right now so you know this is a timing customers their end of life programs with new ones coming on.
Also the transition to the use of more complex architectures.
It should be pretty good as well as what Jeff mentioned on the mobile side.
Perfect. Thanks, guys really nice to see things come together for you.
Thanks, Tony.
Thank you our next question Greg.
She felt with Oppenheimer and company. Please proceed with your question.
Hi, Good morning. This is the way Mark on the line for Rick Congrats on all the activity in Wi Fi and mobile and five G. Infrastructure. My first question is on Wi Fi announcements it looks like all three design wins are on a floor by floor M. You Mimo can you remind us from a unit and ASP perspective, what does that mean for excuses.
And do you see a path towards high orders, a transmit and receive in time does such as ebay.
Okay.
Thanks for your comments, Tom good to talk to you they will touch on your question on Wifi.
Yes.
So yeah, you're correct.
Four mimo.
There has been platforms that are two by two mimo on Wi Fi six and then there's mixes of two by four.
They're there as well.
What I see on the horizon is more percentage of the system shipping that are Tri band architecture, with Wi Fi Susie and Wifi seventh so that'll be above previous you know may have been 20, 25% of the systems shipping whereby five six.
We're trying to end architecture, not yours, you know north.
North potentially 70% or Tri band architecture. So the.
For filter content for US is increasing and then we're seeing a mix of dry van and flatbed architecture. Most of these are still sticking to a four by four architecture, but the dollar content is still going up there are some out there that are or by age.
So it just depends on what the end application is.
But either way, we're seeing either number of systems, increasing or decreasing.
The dollar content.
Great. Thank you as for my second question. It's in regards to the U S. Chips Act are there any updates you can share on how much and when you can expect to see funding and do you see any potential strings attached that could limit your ability to sell to Chinese Angela.
Handset vendors.
Okay.
In the U S. A chipset in terms of timing of that.
I don't want to comment on.
Yes.
I think the.
Oh, that's that's pretty closely held right now in terms of.
But what we what we might be looking for would be an.
An increase in capacity another tenex.
To be able to.
Two.
Really have tier one type capacity.
For that for that end market.
Terms of the timing of that.
We expect that and there's been some announcements that have come out around the election, but we expect the program to be stood up in AR applications to be open sometime.
Sometime in Q1, perhaps middle of Q1 in the February timeframe.
These.
These sorts of announcements.
We'll take our.
Typically three months in order to receive feedback from the government on the application and then the funding the contracting vehicle.
It could be an additional three months on that so you're looking at somewhere in the middle of summer time frame for actual receipts.
<unk> funding will have to look at the rules and in terms of.
If there is.
How they how they roll the program out to whether you can actually get started sooner than that but that's that's the timing and will be a more vocal going forward I think it's safe to say that.
The magnitude of our proposal could be.
A multiple of what our current market cap is I think that that's a let.
It would be safe to say.
Great. Thank you.
Thank you.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Healey for any final comments.
Well I can take the opportunity to 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 and with that I'd like to wish everyone. A happy Monday, Thank you for joining us.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.