Akoustis Technologies Inc. Q3 2023 Earnings Call
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Ladies and gentlemen, and welcome to death caustic technologists, they felt plenty 23rd quarter Conference call. As a reminder, this conference call is being recorded.
At the conclusion of the company's presentation, our cortex management will take questions.
That's a question. Please press the star one Oh, yeah keep pads to be placed into the queue.
A replay of the call will be available on the Investor Relations section of the corporate website.
Thank you operator, and good morning to everyone on the call welcome to accuse just third quarter fiscal 2023 conference call. We are joined today by our founder and CEO , Jeff Shealy, CFO , Tim bowler and EVP of business development David equally.
Before we begin please note that today's presentation includes forward looking statements about our business outlook.
Statements other than statements of historical facts included in this conference call.
As expectations regarding our strategies and operations, including the timing and prospects of product development and customer orders and design wins possible collaborative or partnering relationships.
Nation matters unexpected financial and operating results.
Forward looking statements.
Such forward looking statements are predictions based on the company's expectations as of today.
Subject to numerous risks and uncertainties.
The company and our management team assume no obligation 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.
Please refer to our latest forms 10-K, and Form 10-Q filed with the SEC to get a better understanding of those risks and uncertainties.
In addition.
<unk> today, we will also refer to certain non-GAAP financial measures. A reconciliation of these measures. The most directly comparable GAAP measure is presented in our earnings call highlight release available in the investors section of acoustic Dot com.
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 third quarter conference call.
While the broader economic environment remains challenging acoustic drove unit and top line growth once again to achieve another quarter of record revenue of $7 4 million, which was within the 20% to 40% growth range, we guided to on our last call we.
We are experiencing interest across our growing product portfolio in all our end markets.
Wi Fi in five G mobile remain the primary revenue and unit drivers in the March quarter, and we expect this to continue throughout the calendar 2023 as we add new customers and new design wins across both markets.
In terms of specific trends during the March quarter.
Just had two greater than 10% customers ex BOL related sales drove the top five customers and seven out of the top 10 customers.
Our top 10 customers made up 59% of revenue our top 25 customers made up 75% of revenue.
In terms of regional sales.
Three out of five and five out of our top 10 customers where Asia based.
Further we added a five G mobile customer into our top five customer ranking.
And finally, our top two customers in Q3 increased their sequential revenue with acoustics by 335% and 79% respectively moving on during our last call. We highlighted several macro challenges that led to broad weakness in our saw filter business across multi.
People markets, including automotive Iot medical devices, particularly in China and Europe .
During the March quarter, we experienced some recovery across each of these markets, although Ford visibility in China remains challenging.
Despite persistent economic challenges, we expect to continue top line growth in the June quarter, driven by ex BOL unit growth continued improvement in our saw filter business and favorable seasonal trends in our wafer service business we.
We expect to ship additional filters to our first tier one five G mobile customer and we have entered the U S carrier market in Wifi as highlighted in a recent announcement.
We expect further growth from our consumer and enterprise class Wi Fi customers, including H P. A ruble.
And finally, we continue to execute on our contract business with DARPA as we were involved in multiple projects that are redefining the capabilities of export technology.
Furthermore, we continue to expect incremental sequential revenue growth each quarter throughout the calendar year as we execute across multiple markets and our growing product portfolio, which includes acoustics export solutions saw filter crystal timing products and wafer services.
For the June quarter, our current backlog supports sequential revenue growth in a range of 10% to 20%.
We remain focused on driving revenue and unit growth across all our target end markets with a particular emphasis on five G mobile and infrastructure Wi Fi six eight and seven and a P Iot and automotive applications.
As indicated in January we began shipping high volume export filter solutions. So our first five G mobile customer in the March quarter.
I would now like to take a moment to discuss recent developments involving the chips and Science Act of 2022.
Chips Act was signed into law on August nine 2022, and it's designed to boost U S competitiveness innovation and National security.
<unk> aims to infuse investments in domestic semiconductor manufacturing capacity as well as jumpstart R&D and commercialization of leading edge nano technologies and create new regional high Tech hubs.
Domestic manufacturing program is being implemented by the department of Commerce or D O C.
R&D investments in nanotechnology, and the creation of regional high Tech hubs are being driven by the department of defense or D O D.
Of course. This is current activity related to chip's includes proposal activity with both D O C and D O T related to programs for domestic semiconductor manufacturing R&D and commercialization of leading edge nano technologies.
As of today, we have one D O D proposal, which was submitted during the March quarter with acoustics as the lead contractor.
Focused on electronic warfare or EW for defense applications the.
The proposed five year contract if awarded as an initial program budget of over $150 million.
Our proposal incorporates multiple partners, including over 10, industrial and government labs as well as numerous University partners focused on the goal of developing and manufacturing semiconductors into advanced RF modules at our 57 acre campus located in upstate New York.
One of the technologies, we seek to integrate into our New York campus include the breakthrough high frequency X bar research from our existing DARPA contract.
It is worth noting that the program is a competitive process and we expect the D O D to announce their award selections by mid summer.
Of course, this is active and expanding its domestic manufacturing footprint, including both semiconductors and advanced packaging at our New York campus under the D. O C chips for America program.
The application is a multi stage process, which is outlined clearly in the notice of funding opportunity or no foe consistent with the published process acoustic submitted its statement of interest or S. O Y in late March we are currently in the middle of the pre application process with full application submissions beginning by the end of this.
Quarter and.
In parallel we are working closely with the local regional and state government of New York for financial support to include in our application, which is due later this quarter we.
We expect the chips application to include multiple semiconductor partners, which intend to manufacture.
Semiconductor materials wafers and or packaging on our campus.
As far as magnitude of our D. O C application, we plan to propose a project contemplating spending up to approximately twice our current market cap.
Tablets, 200 millimeter silicon wafer manufacturing capability as well as a U S advanced packaging center.
As per the Novo <unk> chips award is expected to include a grant.
Fundable investment tax credit or ITC, and direct loans and loan guarantees.
The mix of these components will determine the attractiveness of the D. O C chips for America program for our company. We are aware of the targets in the Novo and are currently in discovery with a D O C to optimize various components to suit a small cap company like acoustic <unk>.
We believe the D O C. Once this program to be successful for all sizes of companies and they have been very attentive regarding our concerns and request.
We expect to have clarity by our next quarterly Investor call.
Beyond those two specific programs, we will continue to seek opportunities to leverage this chips Act program.
Next I would now like to discuss several compelling updates and our primary target markets beginning with five G mobile.
During the March quarter, we successfully ramped our first five G mobile filter product with a tier one RF component customer.
This customer has designed a multiplexer using our <unk> technology, which is on a reference design with a tier one chipset maker.
Our customers currently sampling its multiplexer with multiple tier one and tier two handset Oems and we currently expect multiple mobile handset design wins in the next three to six months.
In addition in the March quarter, we successfully delivered to one of our tier one RF module maker customers.
Second of two customer design ex BOL filters.
We delivered the first filter in the December quarter, and the customer has begun characterization and testing both ex BOL filters for down selection.
And finally, we delivered the second iteration of our first ex BOL filter sample to our second tier one five T mobile module customer for a module that is expected to ship in late calendar 2025.
Looking ahead, our expected milestones for the June quarter, and five T. Mobile include the successful completion of an onsite quality audit of our new York's fab by a tier one mobile device OEM.
Continued delivery of our high volume export shipments to our first tier one customer.
To secure a second ex BOL RF filter development order from our first five T mobile customer.
Or a product that is expected to ramp production in the second half of calendar 'twenty 'twenty four.
And finally.
To deliver two new Wi Fi 60.
Kevin ex BOL foundry filter products to our tier two five G RF module customer for access points and mobile application.
Next I would like to discuss our recent developments and Wi Fi market.
During the March quarter, we completed the development of our new for series 5.6, gigahertz, and 6.6 gigahertz Wi Fi 67 X ball filter solutions that enable broader use of the Uni one through four bands involved in high frequency Wi Fi architectures.
Furthermore, we ramped initial production volumes with a multibillion dollar U S based carrier in the cable market.
The customer is using our Wi Fi 60 X bar filter solutions to deliver last mile connectivity to both the home and business markets.
This is one of three carrier focused why five design wins, we announced during the December 2022 quarter and we expect the other two customers to begin shipping in the near term.
We received our first Wi Fi seven design win during the March quarter, as we announced in our press release on May 3rd.
This customer is a tier one enterprise OEM and has ordered our recently announced 5.5 gigahertz and six five gigahertz ex BOL filters.
And finally in March we began a relationship with a new tier two RF module customer for Wi Fi access point market, there's customers that growing Asia based RF module maker that is rapidly becoming a dominant RF player in its region.
We have received an order from this new customer for the development of New Wi Fi seven X ball filters, but the access point market, which we expect to deliver in the second half of calendar 2023.
Looking ahead, our anticipated milestones for our Wi Fi business in the June quarter include.
Sampling next generation X BARF filters to tier one enterprise OEM.
For new Wifi seven platform.
Enabling full utilization of you need one through four and Uni five through eight bands.
We expect to receive two additional Wi Fi 67.
Seven design wins, and finally, we plan to sample, our new 5.6, gigahertz and $6 six gigahertz.
Why 567 ex BOL filters to multiple customers during the quarter.
I will now discuss our progress in our network infrastructure business.
During the March quarter, we continued export filter shipments to our five <unk> small cell infrastructure customer.
Well as the U S. P B R S market.
We continue to expect the small cell market to improve in the second half of calendar 2023 and into calendar 'twenty 'twenty four is.
Carriers throughout the U S Europe , and Middle East and Africa begin to deploy sub five gigahertz networks.
Due to the increased data demands.
We expect carriers to deploy small cells and greater numbers in five gene networks to expand capacity and improve service.
We continue to promote our five G infrastructure solutions I'm pleased to announce today have successfully secured reference design wins with a leading five G transceiver OEM.
Or multiple ex BOL filters.
This reference design is targeting tier two small cell Oems during the March quarter, we expect it to deliver initial samples of a new five G band 41 network infrastructure filter.
We completed the initial samples we continue to work on the design to improve but power handling and small signal RF response and plan to ship samples thereafter.
We are also expecting to receive a development order for a new five G. In 77 filter from a tier one European five G network infrastructure OEM.
Likely in the current June quarter.
Therefore, our milestones for the June quarter are we.
We expect to sample a new band 41 X ball filter for the U S small cell market.
We expect to receive an order for a new five G and 77 ex BOL filter for the massive mimo market.
And finally, I would like to provide an update on our defense and other businesses.
We made significant strides in our defense and other business segments in the March quarter.
With the introduction of our new X ball filter solution that addresses the challenging coexistence requirements of the C V to X spectrum for the automotive market.
We have been involved in the automotive market through our R. F M. I saw filter catalog components.
Introduction of our new export solution for C V to X should significantly expand our potential Tam and automotive.
Our new filter targets the automotive he Src 802 Dot 11 P.
High power systems.
<unk> and infotainment segments.
P V to X operates between 5.855 and $5 92, five gigahertz and allows for device to device and device to network connections or multiple applications aiming at providing safe and effective communication and vehicles.
Our new patented filter delivers low insertion loss pass band performance and enables high power handling capabilities that establish long range connectivity for C V to X applications.
We began sampling our new C V to X filter solution with tier one and tier two automotive industry leaders and expect it to update the investment community as we receive feedback in the coming months.
During the March quarter. We also finished qualification of one of two timing control resonator solutions.
For our first timing control customer.
We were expecting to qualify both ex BOL resonator products.
But the customer has asked for a relatively large bandwidth shift and one of the two resonators.
We expect this will be redesigned and qualified quickly.
And our defense contract business, we continue to progress on our existing multi year multimillion dollar contract with DARPA and further enhance our export P D K and scale, our export technology up to 18 gigahertz.
We achieved a critical milestone during the March quarter, and are making excellent progress towards scaling our technology to 18 gigahertz with an improved figure of merit.
The milestone achieved was enabled by our patented single Crystal ph, all electric nano materials, which are unique to acoustics and the ball filter industry and finally during the March quarter. We concluded the acquisition of G DSI, which closed on January 1st 2023.
The acquisition brings a new cash flow positive service business to acoustics.
With 250, plus customers significant technical expertise and backend services.
And alignment with our strategy to leverage the chips act to create new jobs and Richard core packaging technology from Asia, We have begun integrating G. D S I into our systems and corporate structure and look forward to both leveraging they're significant.
<unk> of backend workflow and provide the resources necessary to grow the business.
Advanced semiconductor packaging demands increase in the United States as the chips Act drives re shoring of production back to America.
For the June 2023 quarter, our expected milestones in our defense and other business segment includes.
The completion.
And qualification.
The second X ball resonator for our timing control customer.
Additionally, we plan to broaden the sampling of our new C V to X filter solution for the automotive market and finally, we expect to secure 1 million dollar plus new development order from a tier one defense customer for the development of a switch filter module.
Using our X ball filter technology.
And now I would like to hand, the call over to Ken to go through our financial highlights. Thank.
Thank you Jeff.
For the third quarter ended March 31, 2023, the company reported revenue of $7 4 million, which is an increase of more than 25% over the prior quarter ended December 31st 2022.
It represents an increase of 160% year over year.
On a GAAP basis operating loss was $17 3 million for the March quarter, mainly driven by revenue of 7.4 million offset by labor costs of $11 3 million depreciation and amortization of $3 1 million.
Other operational costs totaling $10 3 million.
As a result, GAAP net loss per share was 23 cents.
On a non-GAAP basis operating loss was $13 2 million and non-GAAP net loss per share was 20 cents.
A reconciliation of these amounts to the corresponding GAAP measures is available in the press release issued this morning available on the investors section of our corporate website.
<unk> spending for Q3 was $2 2 million a decline from $3 2 million in the prior quarter as he placed into service the last of our ordered equipment and near completion of the company's New York Fab expansion.
Cash used in operating activities was $9 9 million, which represents the second quarter in a row of double digit improvement as operating cash spending.
Another 12% from $11 2 million in the prior quarter. The company exited the March quarter with $52 7 million of cash and cash equivalents versus $46 6 million at the end of the previous quarter, primarily resulting from net proceeds of 32 million from our secondary offering in January offset by cash used.
To fund our recent G D S acquisition of $13 9 million in operations and Capex spending.
In the current June quarter, we expect multiple new Wi Fi sexy and network infrastructure customers to ramp production and therefore, we expect to see record revenue and continued operating cash flow improvement with revenue up between 10, and 20% sequentially from the March quarter.
Based upon our growing backlog of design wins, we anticipate that robust topline growth will continue into our next fiscal year and beyond.
I will now turn the call back over to Jeff for his closing comments.
Thank you Ken.
Before I wrap up the call I would like to provide a brief update on pending litigation matters.
With respect to the lawsuit corvo.
Filled against acoustic and Delaware back in 2020 one.
<unk> false advertising unfair competition and patent infringement a lot has happened since the lawsuit began.
And what's called a claim construction order.
What ruled on the interpretation of some key terms in one of the corvo patents as well as the acoustic pattern, which corvo claims acoustic improperly marked on its product data sheets.
The company believes the claim construction order was favorable to acoustics and will ultimately support acoustic <unk> position of non infringement.
And that its marking of product data sheets was correct.
While our crucis does not believe that corvus assertion of its patents has any merit. It has developed and delivered to customers and core Roes lawyers filter samples with designs, which we believe demonstrate that acoustic products.
Past and present do not infringe the patents asserted by corvo.
As an added precaution acoustic has begun implementing these design updates into new and existing product designs as an appropriate.
Measure to mitigate the potential impact of any adverse ruling in the corvo law suit.
You may be aware that in February 2023.
Corvo filed a second amended complaint, which introduced new allegations against the company, including misappropriation of trade secrets with respect to these new allegations and the other non patent portions of the complaint.
Upon the information made available to it the company believes it has meritorious defenses and plans to defend itself vigorously.
As disclosed today in our quarterly report on April 'twenty, 'twenty twenty-three acoustic filed its own patent infringement lawsuit against Corvo in Federal Court in the Eastern District of Texas.
This is represented by a highly regarded patent litigation firm Mckool Smith as.
As with all litigation.
Company needs to be mindful of any comments. It makes regarding this lawsuit, particularly at this early stage.
However, our investors should rest assured that the company took this step deliberately after careful due diligence and consideration of potential risks and benefits to the company.
And now I would like to finish by stating that notwithstanding a persistent challenging macro environment for the broader semiconductor industry. We are positioned to continue to deliver sequential topline revenue and unit growth for this foreseeable future.
The March quarter, we introduced new products, including our 5.6, and 6.6 gigahertz Wi Fi 60, and seven filters as well as our new C V to X filter all of which are currently sampling.
And for the first time, we began shipping into the U S cable carrier market as well as to the five G mobile market.
During the June quarter, we expect to experience further topline growth as we expand the number of customers in production across each of our major markets.
In conclusion, we believe the market opportunity for our patented high frequency ex BOL filters is substantial as.
As of April 28th we have 89 issued patents and 124 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.
I would once again 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've also experienced exceptional momentum in the five T mobile market driven by our industry, leading X ball filters that operate above three gigahertz, and our new and expanding wafer level packaging capabilities.
I also wish to thank our shareholders, who continue to support the company and with that I would like to open the call for questions from the investment community. Operator. Please go ahead with the first question.
Thank you well now because that's a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You'll make practice tied to if you would like to try and move your questions from the queue.
For participants using speaker equipment, it may be necessary to pick up you had call it.
Passing de stocking one moment, please while the poll for questions.
And our first question comes from Anthony Stoss, with Craig Hallum capital grille.
Morning, guys solid execution, just wanted to follow up on the series of comments you made about <unk> mobile.
Nice to see that customers get out of the gate here in the March quarter.
Two parts do you expect that customer would be up sequentially in revs for the June quarter, then maybe just kind of a broad picture.
All your opportunities in mobile what you expect kind of the ramp to look like and then.
I wanted to throw in one for Dave.
Prior conference calls you guys have talked about being breakeven or profitable in the first half of calendar 'twenty 'twenty four do you still expect that to happen.
Yeah.
Good morning, I appreciate your time.
Hi, Thomas.
Let's jump into them.
Terms of Sochi.
Saatchi mobile customer.
We do expect that customer to be up.
It during the June quarter sequentially.
Our current expectation and we would we would say are.
We have seen.
Some slowing of the original ramp that we expected but in terms of.
Yeah.
Customer will be up sequentially quarter over quarter as our full expectation and a continued ramp in the second half as well.
And in terms of our prior comments in terms of.
Annual usage of.
This particular solution, we think that.
We still we still see healthy volumes for this particular product both.
On a reference design as well as our directly marketed.
To the tier one market.
So in terms of overall ramps.
And activity with customers.
We've we have this first customer with the reference design ramps that we've previously communicated also have seen.
And activity.
With our marketing directly to the tier one markets and if you look at.
We noted in the script.
We have.
We fully expect in the June quarter to complete a successful audit from one of those tier one mobile.
Smartphone players and.
Beyond that we've stated.
We expect a.
Second customer would be in the 2025.
Time frame.
So with that I'll hand, it over to Dave.
Sure.
Just in terms of customer funnel activity, that's driving us to profitability.
Yeah, Good morning, Tony.
I think just a couple of other comments with regards to what Jeff said is that with this one tier one RF component supply.
The reference design.
We continue to see.
And.
Certainly picking up the second half of this year, we identified a another design activity that we've got ongoing that should be in the second half.
Our first half of next year.
That's going to be and OEM and then you can expect that there's some or other designs right behind that as well.
The antennas.
Are you working with this tier one are a component supplier to create these hybrid designs is a combination of their passive technology.
Oh geez.
It's a very healthy positive relationship with this customer and as far as.
Yeah ramping for profitability and Ken can add some more color yeah. We've got a good design activity and visibility on programs with <unk> T. Mobile is probably the largest growth sector.
And then the Wi Fi activity you know that.
We have ongoing both with our Wi Fi six even 157 continue to feed the funnel. There we do have a sunset program. So we've got to deal with as they go into production and you get programs to replace but yeah. Wifi is still very healthy and robust in the infrastructure sector is going to continue.
I expect that there'll be a uptick next year as we look at releasing more products, we've been focusing a lot on Wifi that we're shifting some of the design resources to the infrastructure market as well.
And then finally as just.
The other segments that we service.
No sign of ours of mine.
Acquisitions everything started to see a rebound for margin line and then the GSI is very healthy in that respect.
Okay.
Danny I will Oh add to that though we are in the past and said.
Operating cash flow breakeven, where they care about the June quarter.
And I still have that modeled as such.
Cash used in operating activities continues to improve with another 12% reduction.
And the spend of $9 $9 million this quarter on top of a 25% reduction that happened in Q2, I will expect that to continue to improve with our operating cash flow burn rates going down each quarter, and then breakeven I still expect to occur in the next 12 months.
Approximately $15 million to $18 million of revenue per quarter, depending on our mix.
Got it and then if I could throw one more at Dave.
Just on the auto opportunity.
No it takes.
<unk> is a long time to break into the auto sector.
What do you think the revenue ramp or timing of that might look like for you guys.
Yeah. That's a good question Toni the you know the good.
News is that we've got.
Visibility within the automotive market through the yard for my acquisition, they're already an approved supplier.
To several tier one tier two.
Suppliers and sub component suppliers in the automotive market.
And so we're going to continue to leverage that relationship that they have a piece of suppliers, but it typically takes about two years plus with new designs new programs to really see substantial ramp you'll get some volume in the next one to two years of being in the hundreds of thousands maybe low millions, but really to get to the higher.
It's gonna be to yourselves. So we're working that channel right now.
<unk> really focused on the C V to X, but we also have traction with the TCU telematics control units you know that.
You know, we're looking at <unk> and Wi Fi and then also with the GPS sector.
We're.
Promoting the salt technology in the ball technology. So I expect that for the next one to two years automotive will be still a smaller segment.
Then the Wi Fi in the five T mobiles, but it will be one of our growth sectors that we see probably two years old.
Great. Thanks, guys I appreciate it.
Thanks, Tony Thanks, Tony.
Our next question comes from Sasha does leave us with Brooke and T M.
Hi, Jeff Dave Ken Congrats on the progress here, so I'm on some of the customers here, the and Wi Fi market. The the cable service providers. You said you had three programs one starting or all three of those programs similar sizes or as any one of those particularly bigger.
Good morning <unk>.
So the this is Dave.
So the program that we have announced is and a PR and also coming into the in the script today as you know the.
Highest volume program, it's pretty substantial.
Gateway unit.
The four by four Mimo.
And then the other two programs there more of those tenders.
So it's not as high volume you're still seeing the E architecture, that's a massive my emersion multiuser mimo.
But there also are a smaller percentage so in some respects.
For less.
Less percentage of the bigger programs, but the other two.
Traction that we're getting in the carrier market and we're also starting to work on next generation Wifi Sevens, where we're dealing directly with the carriers and then working those program design wins through to the Oems is working really well and of course as favorite and one of the things that we've been able to do is become a leader.
In developing a portfolio of different products. So.
Others that are approaching the Wifi market, maybe approach it with two or four filters, we have greater than 12 filters targeting Wi Fi market.
Supporting Tri band.
Quad band and upcoming that's been designed so.
The carrier market is one of our focus areas as well as you know the enterprise, which we have a strong position already.
Okay. It sounds good day and then my other question is on the manufacturing side, the New York Fab It sounds like you're at the back end of these equipment orders.
When does that install complete and then where are you at that point have all the equipment needed to bring up to 500 million unit capacity you're planning.
Hey, <unk>, it's Jeff I appreciate your initial comments as well.
So in terms of I wouldn't I wouldn't characterize that expansion.
Aspect of that is.
As in the wind down phase in terms of ordering receiving as well as installation where there is a.
There has been some straggler pieces of equipment that have come in to complete the redundancy, but in terms of the.
The factory being tool.
For the 500 million filters were essentially complete as we've characterized and and we'll manage that.
Company meets internally, we meet monthly.
Between sales and operations and make sure that we're forecasting our capacity and making sure that our.
Oh, Yeah, we're ready from the manufacturing front.
Clearly, where we're monitoring our cycle times.
As well as our yields are very carefully in the factory to.
Make sure all of those pieces are together too.
Optimize our manufacturing cost.
Okay, alright, thanks, everybody.
Thank you Suzanne.
Our next question comes from Robert <unk> with Piper Sandler.
Hey, guys. Thanks, Thanks for taking the question Robert Iguana on for harsh Kumar here.
I want to discuss the potential timing of the potential award from.
From the D O D and maybe how will that award be split between acoustics as well as your partners and then Ive follow.
Hey, Robert Good morning.
I appreciate you being on the call today in.
In terms of the timing if you take a look at.
Some of the language we had in the script.
What you'll see is.
That.
That particular proposal was submitted in the.
Hey.
March quarter, and so that.
And that was consistent with the timing of the.
The announcement in terms of the request for proposals.
In terms of when we expect that.
That proposal to be.
Yeah.
Approved and received feedback from the end customer.
I think we indicated in the script in the July timeframe is when we would expect that.
[noise] once once that goes through that selection process.
As a follow on administrative whats your selected and make it through that gate, there's a follow on.
Our proposal for really the in projects that has to be.
Submitted and so I think you're really looking at stuff and award.
Ah I fully.
Contract award sometime around the end of the year would be our.
Expectations. So it will take a little time to finish that and we would be expecting.
To start that Hudson, probably Q1 of next year.
In terms of as we also outlined you asked about the split.
Mentioned theres multiple partners, but we are.
Principal contractor.
And.
We mentioned, there's a there's 10 industrial and government labs there's.
Multiple technology partners, but as the as the lead.
Hum if you will.
Program.
Cigna.
Significant.
A portion of those.
Those proceeds go.
Go to the Hum established.
Establishment in operation I would also add that you know.
The way that program is structured those multiple partners are actually transferring tech to our campus for manufacturing.
I I think has the end effect of ultimately the manufacturing being done on a pan of Daiwa.
Chip fab so it's.
It's not just we're not just an administrator of the program.
I think there is a good strategy behind it there's oh, we mentioned it's focused in the electronic warfare, and we're bringing to bear.
Corporate technologies.
To make that.
Not only that program successful, but also fit our long term strategic goals.
Integration of.
Key solutions for them in this case the department of defense.
Yeah.
Thanks for the color there and just a more of a macro oriented question last week I think we saw a couple of the AR five G names.
Cite certain weaknesses are.
And the macro market.
Can you talk maybe how the current weakness in the broader market may impact your outlook.
Going forward for that business. Thanks.
Yeah.
Good morning, Robert This is Dave with reject with respect to the <unk> mobile.
A lot of the macro.
Economic comments he made are really impacting.
Tier one component suppliers that are focused on their market segments.
It really hasn't impacted us too much and that we are relatively new to that market segment, particularly with the tier ones are a component supplier that we use.
Aligned with the.
The reference design that we're engaged with is focusing on the China mobile market. So the I think Jeff mentioned earlier in.
In the Q&A.
No it hasn't ramped to earlier expectations.
Due to the dynamics that are going on in the China mobile market as it works through the.
Inventory levels and demand starts to pick back up which we are seeing we're keeping our finger on the pulse with the market and also.
You know with.
Our our tier one.
Provider or a player.
With respect to other segments.
You know a macro side you know the Wi Fi market had a pretty good surge you know with the with respect to Covid.
Number of system should there's been some slowdown.
So we're seeing some transition from Wi Fi 60 designs that are being put on the shelf to focus on why five seven so there's some dynamics that we're working through.
But we've got a significant amount of number agents with active customers and with our customers. You know that we will work through this and continue to see sequential growth in this segment.
Continue to pick up next year.
And then finally, just on the base station side small cell markets.
Still robust, but as you know as I think historical perspective that has not been at the level. It is.
It's a required.
Or that you would expect but we do see some demand in Asian markets and also in your core markets and picking up in the U S markets as well.
Thanks, guys.
Thank you Robert.
We are closing our question and answer session now I would like to turn the floor back over to Jack Seeley last closing comments. Please go ahead.
I wanted to take the opportunity to thank everyone for your time today and participation and we look forward to speaking to you during our next update call to discuss that.
Jim quarters execution against the milestones, we shared as well as our future expectations, we communicated.
Have a great day, thank you again.
This concludes today's conference call you May now disconnect. Your line. Thank her for her.
Participation and have a great day.
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