Q3 2023 Ideal Power Inc Earnings Call
Good morning, ladies and gentlemen.
Welcome to the ideal powers third quarter 2023 results call.
At this time all participants are in a listen only mode.
At the end of managements remarks, there will be a question and answer session investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen.
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I would now like to turn the conference over to Jeff Christensen. Please go ahead.
Thank you operator, and good morning, everyone. Thank.
Thank you for joining ideal powers third quarter 2023 conference call with me on the call are Dan Bernard President and Chief Executive Officer, and Ken Burns Chief Financial Officer ideal powers third quarter 2023 financial results press release is available on the company's website at ideal power Dot com before we begin I'd like.
To remind everyone that statements made on the call and webcast, including those regarding future financial results and industry perspectives are forward looking and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated.
Yes.
And we would also refer you to the company's website for more supporting industry information.
Now I'll turn the call over to Idaho, Power's, President and CEO, Dan Bernard Dan.
Thank you, Jeff Good morning, everyone and welcome to our third quarter 2023 financial results Conference call I'll update you on our progress since the start of the third quarter, including the successful completion of all of our 2023 milestones to date as well as our priorities for the balance of the year to commercialize our B Tran semiconductor technology.
Then Tim Burns, our CFO will take you through the numbers after which we'll take your questions.
The third quarter and all of 2023 showed continued excellent progress and continued execution against our published milestones focussed on our transition from a technology development company to a commercial company, we're stacking sequential quarters. Some of the most significant accomplishments in the company's history.
This quarter, we accomplished several key advances that underscored the technical and commercial progress of our B Tran commercialization roadmap, where it's at.
Thrilled about our momentum and recent success in six major areas.
First we successfully completed phase one and secured phase II of our development program with a top 10 global automaker.
Second we added the Sim cool IQ intelligent power module, our second commercial product to our commercial product offerings.
Third we completed shipments to all the large companies and our customer test and evaluation programs and recently added a global power conversion suppliers to the program.
Fourth in response to customer requests, we're providing volume quotes to large test and evaluation program participants.
And the program have expanded their plans for Retrans to include additional applications.
Fifth we delivered hundreds of tested and package B Tran devices diversified diversified technologies the complete our work under the Nazi solid state Circuit breaker program.
And sixth we began discussions with potential distributors for our simple and simple IQ power modules.
We're actively engaged with multiple customers in each of our key markets and I am pleased and excited about our progress and the feedback we're receiving from our growing customer engagements.
The introduction of our technology comes at a time when there are significant macro trends and the adoption of renewables electric vehicles key market segments. We expect to act as a driver of our revenue growth in the coming years.
The increased electrification of our society and the growing adoption of batteries for a wide range of applications is driving an increased need for more efficient semiconductors for bi directional power control.
Utilizing conventional technologies bi directional switches for high power applications are made using pairs of RGB teas in diodes.
The downside of conventional semiconductors are that you need for devices to make a bi directional switch, which doubles the conduction losses of the individual RGB piece.
B Tran enables bi directional switching in a single device and most importantly, <unk> five times lower conduction losses with translates to more useful energy for the end use application versus the conventional approach.
So that means more usable kilowatt hours out of an energy storage installation or a solar plus storage installation. It means greater range for electric vehicle. It can mean faster charging for charging solutions. It is all about dramatically reducing the losses from the semiconductors that are the core of many modern products.
Our <unk> is moving into commercialization at a great time, when renewables energy storage electric vehicles and electric vehicle charging are in the early stages of their adoption. These market segments still have the largest part of the growth curve ahead of them.
Bi directionality, and lower losses, or B Tran are well suited to renewables renewables, coupled with energy storage, making renewable energy at dispatch of a resource and improving the usable kilowatt hours from these systems.
Automotive modem manufacturers are finding with B Tran, there's a path to reduce power semiconductor costs. The second largest production cost in electric vehicles and simultaneously improving vehicle range to mitigate driver range anxiety.
We're participating in a large rapidly growing market for high power semiconductor devices at.
That market is projected to reach 11 billion by 2026 and will be driven for many years by the adoption of renewable energy energy storage electric vehicles, and EV charging infrastructure.
We expect industrial markets and in particular solid state circuit Breakers served by our simple power module to be the earliest source of our product sales and then right behind that in a matter of few months will be our Sim cool IQ intelligent power module that product applies to the renewables market, particularly renewables coupled with energy storage.
EV charging and other industrial markets. These.
These applications have a relatively short design cycle of about one year.
And behind that our next revenue will come from automotive manufacturers.
Generally it takes three to five years to get through the automakers process. A process. We started with a top 10 global automaker last year. So the industrial markets will drive our initial revenue ramp as we ramp the business up and continue and right behind that will be the automakers that we're engaged with that'll be buying and high volume to support their EV platforms.
We utilized an asset light business model and are leveraging the large investment that's already been made in the silicon wafer processing infrastructure.
Our core technology team with a testing labs here in Austin, and a small but growing outward facing business development team focused on commercializing our technology.
But in terms of fabrication of wafers and packaging all of that is outsourced leveraging the existing huge industry investment in silicon wafer processing and packaging.
As we continued to execute on our aggressive retract commercialization roadmap our near term priorities are.
Initial sales of our <unk> power module.
Complete phase II of our development program with a top 10 global automaker in the first quarter of 2024.
Continue providing sales quotes to large test and evaluation program participants.
Continued shipments to test and evaluation program participants. This is an embedded process and our sales and marketing and a source of input for our next generation products.
Continuing multiple wafer runs with our first high volume wafer foundry to support our Sim cool and some cool.
Product builds automotive certification testing and test and evaluation partners.
And qualify our second high volume wafer foundry, including completion of a wafer run at their production facility.
Full flow engineering run with this wafer fab is progressing well and is expected to be completed early in the second quarter of 2024.
We're confident we will have ample capacity to ship devices for the expected demand over the next few years.
And I'll discuss the highlights of some of those third quarter accomplishments and our priorities along with other key developments.
Simple power modules are in fabrication at both of our packaging partners.
The design cycles for industrial applications, such as solid state circuit breakers vary, but they typically take about a year.
Revenue for <unk> is expected to begin ramping in the second half of 2024 as initial customers complete their evaluation of the Sim cool product and the result in solid state circuit breaker product designs.
Moving on we entered into a development agreement late last year with a global top 10 automotive OEM.
We're partnering with this automaker's advanced technology development team to develop a custom b Tran power module in collaboration with an innovative packaging company also selected by the automaker.
This customer B Tran based module is targeted for use in electric vehicle drivetrain and burgers and the automakers next generation electric vehicle platform.
This represents our second engagement with the world's leading automotive manufacturers is another top 10 global automaker is already in our test and evaluation program.
We're thrilled with the success of phase, one and the advancement into phase III of our development program with this automaker.
The B Tran devices delivered to the automaker in phase one outperformed the device performance specifications provided to them at the beginning of the program.
The successful completion of phase one was customer validation of the performance of <unk> and its potential impact on improving EV range in cost we.
We leveraged our success with this customer to attract and engage a tier one auto supplier and expect it will also lead to engagement with other automobile Oems and tier one suppliers.
This program is on an accelerated timeline to get the custom module production ready by 2025 Thats. The customer stated goal for the program we successfully.
We completed all phase one deliverables of this multi year development program, including completing a wafer run shipment of devices and passports to both the automaker and the packaging company, they selected and providing technical support and testing on B Tran is performance and drive circuitry.
Phase II built on the completion of all phase one deliverables and.
In phase II, we are continuing to collaborate with the automaker and the automakers packaging company supplying b Tran devices for integration into the custom power module design and finalizing the test plan for phase III.
Phase III will be extensive testing of the custom module incorporating <unk> devices to meet automotive certification standards, enabling <unk> to be the core of the powertrain and Burger for the automakers next generation electric vehicles.
Three of the five deliverables in phase two of the program have already been completed in the fourth deliverable should be completed in the next couple of weeks well ahead of schedule.
We're already discussing the scope of phase III with the top 10 automaker and expect this to start testing for automotive qualification in advance of completing phase III.
Turning to our test and evaluation program Vtsiom customer shipments to program participants included multiple package B Tran devices and device driver and a power test board housed in our safety enclosure to facilitate and accelerate the evaluation process.
The trans shipments to date. The program participants include a top 10 global automaker global tier one automotive supplier leader.
<unk>, a leading provider in the solar industry to Forbes Global 500 power management companies and a global provider of backup power and energy managed solutions and several others with additional kits to follow for current and new program participants.
These shipments and subsequent customer evaluations have already led to requests from some of the multibillion dollar companies and our test and evaluation program for multi year high volume quotations for use in their own internal product planning.
The conversion of a single opportunity that potentially have a significant impact on the trajectory of our pending revenue ramp.
As previously announced this quarter, we added a European based global power conversion in energy storage supplier with over $500 million in annual sales to the <unk> test and evaluation program roster.
The company will evaluate <unk> initially for use in its static switches and data center systems solar and burgers and energy storage products.
Our focus on improving energy efficiency in these products to reduce operating costs for their customers.
This global supplier presents multiple opportunities for us as they address three of our target markets UBS systems for data centers renewable energy and energy storage.
Shifting to our second product, we added the Sim cool IQ to our product commercial product offerings is built on the multi die packaging design of <unk> core and adds an intelligent driver optimized for bi directional operation.
This product targets renewables, particularly renewables, such as solar and wind coupled with energy storage Standalone energy storage PFS data centers.
EV charging and other industrial end markets.
Similar to the solid state circuit breaker markets. These markets typically have design cycles closer to year revenue.
Revenue for the intelligent power module will start next year and ramp up as OEM product designs are completed.
Let's turn to the supply chain that insurers will support our sales ramp beginning in the second half of 2024.
Earlier this year, we qualified and Asian wafer fabrication supplier with high volume capability.
Test results from the first full flow engineering, Ron what this wafer fabricator demonstrated the manufacturer ability of <unk> with high yield without the need for significant capital investment and excellent device performance clearing the last and by far the biggest technical risk for B Tran development and commercialization.
This successful fabrication run was accomplished in the wafer foundries existing silicon wafer fabrication line without the need for any special equipment, our capital investment to produce high quality wafers fabricated on both sides.
This was a pivotal accomplishment.
A prerequisite for commercialization.
Wafer and device testing results displayed high yield minimal die to die variability and outperformed our expectations.
We conducted switching pass on discrete packaged devices and demonstrated the robust nature of our device design.
Our discrete package devices, which are ready to 50 amps were successfully tested up to 150 amps or three times the rating shown on our data sheet.
As a result of this testing 100 amp rating of our multi die Sim cool power module was increased to 160 <unk>.
The results exceeded our expectations and validated the strength of our device design and the full process flow for B Tran that we developed over several years working with development fabrication partners.
As you might imagine engineers at our targeted customers are excited to see that our technology performs well beyond its advertised specifications.
We have multiple wafer runs ongoing with this high volume wafer foundry. These runs will provide ample devices for additional 2023 deliveries under our test and evaluation program.
<unk> production and to support our development program with a top 10 global automaker.
Pleased with both the performance and overall quality of wafer fabrication and the technical capability of the wafer foundries manufacturing team.
This wafer foundry is also already certified the automobile standards, making it a qualified supplier for the automotive programs and reflecting the high standards capabilities and quality of their wafer fabrication.
Also as I mentioned last quarter, we're working with a second high volume wafer foundry in Europe found.
Foundry completed a feasibility study and engineering short loops for key process steps and started a qualification runs.
Just on the successful short loops and the wafer foundries experience and expertise in manufacturing bipolar devices, such as <unk>, we're confident that we'll be able to complete qualification of this foundry in the second quarter of next year.
With these two wafer foundry partners onboard will have dual sourcing for wafer fabrication and different parts of the world with no exposure to China.
This dual sourcing will provide us with sufficient capacity for the large customers we're engaging.
Both wafer foundries have world class experience facilities and capabilities and are eager to be engaged in a new high performance technology, such as <unk> <unk>.
For all our dual sourcing strategy will allow us to proactively secure not only the necessary production capacity, but also the ability to source components and services from partners and disparate geographies as part of our strategy to mitigate supply chain risk.
We're not aware of any competing inherently bi directional technologies and our technology is heavily protected through patents and trade secrets looking.
Looking at our expanding B Tran patent estate, we have 77 issued B Tran patents with 33 of those issued outside of the United States.
Our current geographic coverage for our patents includes North America, China, Japan.
South Korea, India, and Europe with pending coverage in Taiwan, all representing high priority patent covered geographies.
As part of our product development and introductions, we're expanding our patent efforts to include improvements in the architecture itself and what we believe to be high value patents on our driver from packaging designs as both a unique to the bi directional in nature of our technology.
As a result of our continued innovation our list of pending B Tran patents is now at 36.
In addition, we treat our double sided wafer fabrication process is it trade secrets. So even studying our patents somebody wouldn't have the knowhow to be able to fabricate. The device. There is an enormous amount of learning that's gone into the fabrication process flow to make high quality high performing double sided devices for commercial sale.
In summary market interest is strong and we remain focused on executing on our <unk> commercialization commercialization roadmap. We're thrilled that we are successfully executing to plan having already met all of our milestones for the first nine months of the year and remain on track to meet the key milestones and objectives I outlined for the remainder of the year we.
Retrans and displace conventional power semiconductor solutions and many applications within the electric vehicle renewable energy energy storage solid state circuit breaker and motor drive markets now I'd like to hand, the call over to our Chief Financial Officer, Tim Burns to review, our third quarter financial results Tim.
Thank you Dan I will review the third quarter 2023 financial results.
We recorded minimal development revenue for the third quarter.
Development revenue in the fourth quarter as expected from the phase two work under our development agreement with a top 10 global automaker.
Operating expenses were $2 8 million in the third quarter of 2023 compared to $1 $8 million in the third quarter of 2022 drew.
Driven primarily by higher research and development expenses.
We completed our work with our development foundry partners in the third quarter and.
Inserted several wafer runs with our qualified high volume production foundry.
We also started out qualification run with a second high volume production foundry.
Operating expenses were also impacted by higher personnel costs as we added head count over the last year.
And reflected higher stock based compensation expense on performance stock units and new hire agreements.
We continue to expect some quarter to quarter variability in operating expenses.
Our research and development spending due to the timing of semiconductor fabrication runs and other development activities in hiring.
As well as the potential impact of future government funding.
We expect to keep general and administrative expenses relatively flat in the fourth quarter, excluding the impact of stock based compensation expense. Despite the impact of inflation on the cost of services.
Sales and marketing spending is expected to continue to increase modestly in coming quarters due to hiring costs associated with the commercialization efforts, including new product launches.
Net loss for the third quarter of 2023 was $2 7 million compared to $1 $7 million in the third quarter of 2022.
Third quarter 2023, cash burn was $1 9 million on.
On the lower end of our guidance of one 9% to $2 $1 million as we continue to manage expenses prudently and aggressively.
Cash burn in the first nine months of 2023 was $5 6 million compared to $4 $7 million in the same period in 2022.
We expect fourth quarter 2023 cash burn of approximately $2 two to $2 4 million and full year 2023 cash burn of seven 8% to $8 million.
Cash and cash equivalents totaled $10 8 million at September 32023.
We have no debt and a clean capital structure.
Our business model as Dan mentioned is very asset light.
We have a core technical team that works from a technology and a small front end team for business development.
Even if we're wildly successful you will still have a small team of tens of people because we're outsourcing the manufacturing and the packaging really leveraging the existing industry investment in silicon.
Our cash burn was $6 $8 million in 2022 and will be $788 million in 2023, we'll probably have a similar increase next year, we'll provide more definitive guidance on our year end call.
Given our planned cash burn, which remains modest we have ample liquidity on our balance sheet to fund operations through 2024.
We will potentially see several potential sources of funds, including product sales development agreements other.
Other commercial agreements with upfront payments and government funded programs, where we see opportunities to collaborate with some of our partners.
We are also exploring potential strategic relationships with our well capitalized partners.
As a public company, we also have access to the capital markets if necessary.
To date, our balance sheet has not been a significant topic for discussion with partners as they recognize the commercial potential of our technology.
At September 30, we had $5 million 945347 shares outstanding up slightly from the end of June.
And 1 million 4200, 48 warrants outstanding unchanged from the end of June.
Including 842697 stock options restricted stock units and performance stock units outstanding we had $7 million 828292 diluted shares outstanding at September 30.
At this time I'd like to open up the call for questions operator.
Operator.
Thank you at this time, we're conducting the question and answer session investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen.
Sell side analysts may ask questions on the phone line for analysts to ask questions on the phone line. Please press star one to enter the queue. We ask that while posing your question. Please pickup your handset listing on a speaker phone to provide optimum sound quality. Please hold just a moment, while we poll for questions.
Your first question is coming from David Williams with the benchmark company. Please pose your question your line is live.
Good morning, Tim and Dan.
Just congrats on the progress here, you've made tremendous strides and continue to put forth a lot of really nice progress and so I guess my my first question is just around the testing evaluation program participants and you've talked about from the high volume quotes and expanding their plans for B Tran just any additional commentary there that helped maybe give.
US a little more color on what that could mean in and maybe the magnitude of what they're what they're talking about.
Yes, so we have some very large companies in that program. So these are multibillion dollar companies, we've already started getting requests.
For multi year high volume quotes.
And while they initially had one of these companies had initial interest.
Interest in the specific application they really expanded to start thinking about different ways. They could use the technology different applications in their product portfolio. They could take advantage of the benefits of <unk>. So it is truly become some some pretty good commercial discussions are not only the initial opportunity that they were looking at but also expanding in other areas.
Great.
Just kind of think about from the from a design perspective.
What are you finding it maybe are there challenges or hurdles and can this be a socket for socket replacement against other competing technologies or is there a pretty heavy lift in terms of the design. This required in order for B Tran versus maybe just a standardized MOSFET or RGB T or other technology.
Well for any new semiconductor.
It brings some significant change in performance Youre going to want to do a redesign of your OEM product to get to get all the benefits out of it. So for example.
As you got half the losses Youre thermal management system is going to look very different so the plug and play really would leave an awful lot of advantages on the table and what were finding really is it's really more distant education.
Getting them up to speed on the technology getting them to understand how it operates so that they can think about how to extract the full value the performance potential for their OEM products.
Okay very good and then maybe just lastly for me on the if you kind of think about your your bill of material content in the circuit breaker.
Or maybe even the auto inverter can you can you give us a kind of a size of what do you think that could be once we go into the market just kind of curious what your total bom could potential could potentially be there. Thanks.
What we understand from going through the Navy project and working with some of the folks that are actually doing circuit break sulphate circuit breaker designs. The semiconductor portion of it it's about 30% of the Bom cost of the circuit breaker. So it's fairly substantial.
For some perspective, there is the market itself to solid state switching market is over $9 billion.
Annual market, so it's a very large market.
Great. Thanks, so much guys.
Thanks.
Your next question is coming from Jeff Gramm with Alliance Global Partners. Please pose your question your line is live.
Good morning, guys.
I'm curious too if you guys could touch on your ability to handle additional companies in the test and evaluation program. It sounds like there's a lot of applications a lot of demand.
Obviously, it takes some internal resources to manage that so just kind of wondering how full year played is right now and then how you guys are thinking about.
I guess properly resourcing that team to handle the inbounds that you might have.
Yes.
It is a it is a balancing act part of what we're doing is we're kind of prioritizing the companies to come into that program.
You can spend as much time on four guys working out of the garage as you do with a multibillion dollar company bring them into new technology. So we're really prioritizing first where there's opportunities for higher volume.
It drives us to create a lot of really good material technical material for those customers that we can reuse. So it's part of why we focused on getting a couple of in each segment and as we work with them and develop the materials they need for training for support for Boeing Circuit analysis, and so forth, which creates a lot of material that we.
Can use over and over again, and we will add a couple of people to that upfront team as we go here in fact, we're looking for a couple of people right now.
As more and more people come into the program, but getting through those first couple of customers in each of those segments really helps us create a lot of material that will get a lot of reuse out of.
Great. Thanks, Thanks for that detail and my follow ups.
Regarding the phase two kind of timeline and milestones you mentioned.
Dan I think you said three to five another one you think is pretty close.
Can you shed a little bit more light on what kind of the remaining hurdles are to get through phase. Two is it is it too simple to think of those kind of letting it linearly in terms of three or five in four or five or some of these may be shorter or longer.
Milestones to get through.
I think we've got pretty clear line of sight to get through the milestones here.
One we've got coming up here in a couple of weeks, we've got really all of the material that is just about ready to send off to them as part of what we want to provide for that milestone.
Some of them are things like we had to submit R. R.
Our auto certification testing plan, it's a rather detailed plan of all the things that we're going to have done it a third party to meet automotive qualification now we have to wait to get feedback. The initial feedback is it looks pretty thorough but there might be some comments that might drive some model changes so for us, it's really been pretty straightforward with the things that we need to deliver we don't see any hurdles.
They are in terms of getting through the last couple of them.
Great to hear I'll turn it back thank you.
Your next question is coming from Brian Dobson with Chardan capital markets. Please pose your question. Your line is open.
Okay. Thanks, very much do you think you could give us a little bit of color on what youre hearing from key industrial contacts as far as adoption rates and timetables. There you had mentioned that industrial would leave the first wave of adoption.
Yes, so for us the most immediate opportunity is solid state circuit breakers, that's because of the timing of the launch.
Of our Sim cool product and the interest in that product did garner because of our program with the Navy. So as we look at that opportunity I would say that is furthest along in that could we should hear in the near term have initial sales and then again ramping in the second half of 2024.
Behind that is that <unk> IQ product intelligent power module, that's really targeting more renewables energy storage GPS applications et cetera.
Those conversations I would say just probably a few months behind just as the product is the Sim cool.
Product just because of the timing of the launch of that product.
But we expect similar traction as we get a little bit further along with the companies in our test evaluation program that are focused in those areas.
Yes, thanks for that color and as you expand beyond industrial and into automotive do you anticipate that the margin on your product will remain roughly the same or will vary by segment volume.
Have you contemplated that going forward.
And we think it could vary significantly customer to customer opportunity to opportunity, but what we've looked at in terms of our business model is really at scale getting to about 50% gross margins from product sales.
And then as we look out and you talk about automotive those automotive companies may very well want a second source we would be.
Potentially interested in outsourcing the manufacturing in terms of licensing to a another large semiconductor company.
So that they can secure second source, it's much larger than us and if we have those opportunities that licensing revenue and obviously be pretty much 100% gross margin. So we could be incrementally better than 50% as we add more and more licensing to the mix.
Excellent thanks very much.
I will now turn this call back to Jeff Christianson to read questions submitted through the webcast. Thank you.
Thank you Kelly.
Our first question for the team is.
You recently had a press.
Release that B Trans Alpha outperformed the specs.
That you previously provided how would you compare.
<unk>, two competitors, including silicon and Silicon carbide solutions.
Yes, if you look at for example, a bidirectional switch was made today.
Just on silicon devices IDB decent diodes.
If you look for really high performance <unk> and diodes, Matt.
<unk> system May have two five to three volts of drop.
We're five times better than that we are less than actually we actually have depending on.
How we configure the device itself, we can be less than half of our bolt.
Big impact if you look at Silicon carbide Silicon carbide the advantage Silicon carbide brings is the ability to go to higher temperature.
And faster switching which we're finding is important in some applications, but if you look at the vast majority of.
High power semiconductor applications.
Carpet is still just a small percentage of it and part of it is because of the cost of the technology. It just isn't there isn't enough performance improvement the justifies costs. So we're finding that we don't see much yet in the way of new solutions for bidirectional switching. So we think we've got something that is really game changing in terms of the level.
A performance that it can bring without having to incur some of the high cost of some of the more exotic materials that people have been pursuing for quite some time now.
Thank you.
And we have several questions in the queue here.
If you have a question click on the ask a question button and we'll be happy to address it.
Yeah.
Based on recent articles in E power Electronics weekly it appears that.
Likely that <unk> has.
Distinct advantages.
With a high demand to it how how are you positioning the company to make sure you can manage that demand in the expectations in <unk>.
And satisfy the these big customers.
Yes, it's a good question.
Part of why we're actually in the process now of qualifying a second wafer fabricator it some.
Getting a wafer fabrication process tested validated and ready to scale up it takes quite a bit of time. It can take as long as a year easily to get through that process, which is why.
Once we got the first one done we Didnt just say okay. We're good for now we said, what we really need to get a second one going here, which is why we pursued the <unk>.
Arrangement with a fab in Europe, So we want to make sure that as we come into 2024.
We have plenty of capacity. So we're not trying to ramp one facility rapidly, but can actually spread that out between the two facilities. It gives us the ability to manage the supply chain a little bit better.
It keeps the fab from being in a sort of a crisis situation, where they are trying to ramp faster than they're comfortable with the new product and allows us to make sure. We've got a good steady flow of wafers. We can use for a variety of applications. The nice thing about our technology and what we're doing is whether the wafers.
Going to be used in an application like <unk>.
Electric vehicles are solid state circuit breakers or solar energy storage. The dyes that are getting made are all exactly the same.
So we actually have the ability to scale this pretty free.
Pretty conservatively, because we don't have to forecast where the guys are going to go we don't have to forecast, which mix are we're going to need based on the applications in which one ramps first so we think we've got a pretty robust way to ramp. This up now once we get the second wafer fabricator through qualification.
Thank you.
To clarify the company.
The company did state that if you.
Comment on at the company did state that they expect.
Revenue commercial product revenue.
In the back half of 2023 and also if you could talk about the ramp and the timing of that ramp.
Any more color on that and the industry's markets.
There will be how the markets will rollout.
As you expect.
Yes, so first in terms of revenue.
So we will have obviously development revenue from the phase two of the program with the top 10 automaker here in the fourth quarter in terms of the Sim cool fabrication that's in fabrication now.
And it's looking like we may have devices available.
<unk> to year end for commercial sales, we will have to see the exact timing on.
On those sales.
That product will be the first to ramp again, we've said given the design cycles and evaluation cycles with some of these companies. We're looking at really modest volume for the first several months and then really ramping in the second half of 2024.
So we do expect sales in the near term, but again it will be modest in the first half and really start ramping in the second half and then the same cool IQ product is roughly it's several months, let's say just to be conservative, saying about six months behind in terms of expectations for that product in terms of initial sales and also the.
The sales ramp so if you look at that that's probably more of a first half 2025.
Ramp for the Sim cool Iq products.
Thank you.
How many <unk> devices have been shipped to the evaluation partners.
Any comment about any more comment about pricing margins.
And how do we think about that.
So several hundred.
<unk>.
Tested B Tran devices had been shipped to potential customers.
We're not going to go down and provide a specific quantity shipped each each quarter each.
Each year, but it's several hundred devices and we have wafer runs going now to produce many many hundreds of devices.
Here for really to support things like the same who will build.
And also phase II development agreement in terms of pricing. So we're not going to go out there and put the pricing B Tran is X because that's just going to kill us from negotiating standpoint, each opportunity is different the size of each opportunity is different the importance of each opportunity is different and all those things will be considered when our pricing the product if you're looking at <unk> or <unk>.
I mean, it's tens of dollars if youre looking at a.
IGT power module that would compete with a Sim coolers Simcoe Iq.
It can be talking to you $300. So we will be market competitive in terms of pricing, but we're not going to do.
Disclose in our pricing because that would hurt us in negotiations with companies.
When we are at the point, where we have commercial agreement for large volume so.
But from our perspective, two to $300 module price and again bear Nair tens of dollars soon.
If you look at it that way and the margins, we said at volume 50%.
Target for gross margins absent the benefit of licensing and licensing will be incremental to.
So that 50% target.
Thank you.
It looks like all the questions. We have Dan do you have any closing remarks.
Just want to thank everybody for joining our call today, we made great progress on our path to commercialize our technology and our our talented team is on track for a very successful 2023, and 2024 and we look forward to some commercial announcements in advance of our next update call and we will continue to actively share our story with the investment community.
Operator, you may end the call.
Certainly thank you. This does conclude today's conference all parties may disconnect at this time have a great day.
Okay.