Q4 2023 Enovix Corp Earnings Call

Speaker: Some financials and the outlook before closing, and then I look forward to your questions. Okay, we had a strong finish to 2023, and now we've laid the groundwork on how to scale up in 2024. First, we reported record revenue of $7.4 million in Q4, well above our expectations. Secondly, we are in the process of completing our factory acceptance testing, and a good amount of our Gen 2 equipment is now in Fab 2 in Malaysia, ready to produce the first batteries in April. It's very exciting to see that progress. Third, we made significant progress with our customers, both in smartphones and in EVs. Last quarter, we hosted the executive management teams from two of the top smartphone OEMs from China at our Fremont headquarters and had very good discussions on how to collaborate on making batteries for their phones. Additionally, we entered into a development agreement with a leading automaker to validate the advantages of the InnoXcel architecture for an EV battery.

<unk> outlook before closing and then look forward to your questions.

Okay. We had a we had a strong finish to 2023.

And now we have laid the groundwork on how to scale up in 2024.

First we.

We reported record revenue of $7 $4 million in Q4, well above our expectations.

Secondly, we are in the process of completing our factory acceptance testing.

And a good amount of our Gen. Two equipment is now in fab two in Malaysia ready to produce the first batteries in April and it's very exciting to see that progress.

Third we made a significant progress with our customers both in smartphones and in Evs.

Last quarter.

We hosted.

The executive management teams from two of the top smart smartphone Oems from China at our Fremont headquarters and very good discussions on how to collaborate on making batteries for their for their phones.

Additionally, we entered into a development agreement with a leading automaker do validate the advantages of the intermix cell architecture, but in EV battery.

Speaker: Now, this significantly increases the addressable market for NMX technology, and we have a strong pipeline of additional opportunities in this space. And last, we've gained significant confidence in reaching 1,000 cycles on a smartphone-class battery. And we look forward to sampling it next quarter. As I look back at our accomplishments last year, which were substantial, we began the year as a new management team operating at an expensive, low-yielding California factory with a product portfolio that was frankly not very well aligned to the key large customers and the end market that we wanted to go after.

Now this significantly increases the addressable market for analytics technology.

And we have a strong pipeline of additional opportunities in this space.

And last we have gained significant confidence in reaching the southern cycles on a smartphone plus badly and we look forward to sampling it next quarter.

As I look back at our accomplishments last year, which was substantial we began the year as a new management team in operating or in expensive.

Yielding California factory.

Portfolio that frankly was not very well aligned to the key large customers and end markets that we wanted to go after.

Speaker: And in contrast to that, we exited this year with a manufacturing base in Malaysia, ready to produce industry-leading batteries, a seasoned team in Korea that has shipped batteries for 20 years, which we acquired, and close alignment with our customers that led us to gain really in-depth knowledge and detailed product specifications that is helping us build category-leading products targeted at the largest portion of the market, which is the smartphone. Now, we are engaged effectively with the world's largest smartphone OEMs at various levels. These companies are eager to harness our architecture to keep up with the demand for more and more power-hungry applications in this AI megatrend. I'll show some data and touch upon this in a minute. But first, let's take a look at our goals. What we need to do this year is to position ourselves for the large influx in revenue through smartphone launches. It is very simple. What?

Now in contrast to that we exited this year with the manufacturing base in Malaysia ready to produce industry, leading batteries a seasoned team in Korea did I ship batteries over 20 years that we acquired.

And close alignment with our customers that led us to gain a really in depth knowledge and detailed part of specifications that is helping us build category leading products targeted at the largest portion of the market, which is the smartphones.

Now we are engaged actively with the world's largest smartphone Oems at various levels. These companies are eager to harness.

Our architecture to keep up with the demand for more and more.

Power hungry applications by this AI Mega trend I'll show, some data and touch upon this in a minute.

But first let's take a look at our goals.

What we need to do this year is to position ourselves, but the large inflection revenue smartphone launches is very simple.

Speaker: We need to demonstrate high-volume manufacturing on our Gen 2 equipment at our Fab 2 in Malaysia. Now, I know seeing is believing. So we're going to show you a video of the Fab 2, featuring Ajay, that we just made in the last couple of days that speaks to our progress. And, of course, Ajay will join us for Q&A from Malaysia. I think it's pretty early for him there, but he's online there, standing by.

First we need to demonstrate high volume manufacturing on our Gen. Two equipment in our fab two in Malaysia.

I know seeing is believing so we're going to show you a video of the fab fab to featuring Ajay and.

That we just made in the last the last couple of days.

That speaks to our progress and of course I Jay will join us for Q&A from Alicia I think it's pretty early for them there, but he is online they are standing by.

Speaker: So operator, go ahead and let's roll the video. I'm here in Fab 2, as you can see, in Malaysia. We are standing in a class 10K clean room, and right here, which I'm going to show you right now, is zone one, one of the lasers in zone one, which is the anode laser. Now I'm going to give you a closer look. As you can see, there are four laser sources here, two for cleaning and two for cutting.

Go ahead, and let's run the video.

I'm here in Peru, as you can see in Malaysia.

You are sending in their claims and Dod surplus Sanjay clean room.

And right here.

So you're right now.

One one of the lasers and growing one.

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We'll give you a closer look as you can see there are four laser sources here to for our community and through for the.

Speaker: And then the web goes through, as you can see, the rollers, the ones which come from the tool quarters, get loaded on this machine, and go through these lasers. And here we can show you a little bit closer look in terms of the lasers firing. This machine is operating at 1350 UPH or close to it.

Kathy.

And then the web go through as you can see the rollout.

The ones, where it's come from a full quarter.

The longest foreseen.

Through these lasers and here we can show you the mood of the closer look in terms of the liver firing.

This machine is operating at 13 fulfill your peers or close to it.

Speaker: And we are actually producing cells for SAT. The cells, you can see the electrodes getting patterned, you know, as you can see from here. When it finishes all the processes here, it goes through what is called an inline inspection system, which is really the camera which looks at 27 different critical parameters, critical to quality parameters, which then get logged SPC, and a closed loop correction system which triggers the lasers for positional tolerances.

And we are producing actually yourself for F N b.

The sales, but you can see we literally forgiving factor.

You can see from here.

When it finishes all the process here to go through what is called the inline inspection system, which is really the camera, which looks at the 27 different critical parameters critical to quality parameters, which then get logs SBC.

Closed loop correction system, which are I guess, you know triggering the lasers for positioning tolerably.

Speaker: And this is the... Anode, what we call ALSR, which is anode laser. Next, I will show you the other two, the cathode and separator lasers. Now I'm standing in front of the SLSR, which is a separator laser, and I can show you the rolls that get loaded here, as you can probably see in the film, and two laser sources, two Pico lasers, which are basically creating the pattern and cutting the separator. It goes through the same type of system, and we can do a little bit more close-up here in terms of how the patterning is being done. Again, this one is running at 1350 UPH in the middle of SAT, and the Inline inspection system is again very similar to one which I just showed you on the anode. It captures roughly 38 different parameters, out of which 25 are critical to quality, and the others are more for productivity, OE, speed, etc. That's all captured here in the line again, feedback loop back to the lasers, adjustments for position and tolerance, and you get pattern separators at the end.

And this is a.

What we call a L S hydrogen.

Later.

Next I will show you the.

The other two the cathode and the February Dudley now I'm standing in front of the SLS side, which is a separate or labor.

Well I can show you the rules that get loaded here as you can probably see on the field.

I am truly resources, who people either.

Which are basically creating the pattern and cutting the separated it goes through the same type of system.

And we can do a little bit more close up here in terms of how the patterning is being done again. This one is running at 13 50 U B S.

In the middle of F N b.

And.

The.

In line inspection system again is very similar to one which I just showed you on the on the animals.

Yeah. It feels roughly 38 different parameter out of which 25 are critical to quality and the others are more for productivity or your spirit et cetera.

All captured here in line again feedback loop back to the lasers adjustments proposes an indoor living thing and you'll get better and separate those are bad.

Speaker: Now I'm standing here in front of the stacker zone 2, this is the zone 2 room. There are 11 stackers in total, or 8 stackers for the HVM. And you can see the stacker in action here now, merging and then the 4 layers, as you can see, and it is stacking, creating 6 stacks at a time, punching, and marking on the fly, vision systems right there, making sure that the stack is accurate and properly positioned in the skew. So this is the output of this stacker. We have six beautiful-looking stacks which were created by this machine. Now we are standing in front of the final formation cabinets, which is also called Zone 4. And we're going to show you, now you can see I've changed into a class 100K gowning protocol, which is just a smock and not the bunny suit which I wore in class 10K.

Now I'm standing here in front of the Stacker Zorn crude as the zone boardroom.

They wouldn't be.

Kevin cycles, total or E cigarettes, with atria and you can see the stack are in action here now.

It is merging.

And then.

Before list as you can see.

And it is second creating success at a time when Jean Marc do you want to fly.

Vision systems right there.

Making sure that the stack is accurate.

And properly positioned in the SKU. So this is this is the output of this stack up you have six beautiful looking stacks.

Which were created.

By this machine.

Now we are standing in front of the final formation cabinets, which is also called going forward and we want to show you now you can see I've changed into a class 100, K mounting a protocol, which is just a smoke and are not nobody's food, which I wouldn't the clubs 10-K, and you can see now the Lauder automatic Lauder.

Speaker: And you can see now the loader, the automatic Loader, which is loading the trays directly into the final formation cabinets. And you can see how that is working. Okay, as you can see, we are standing here in the Zone 4 area. Again, I'm dressed in a gown for class 100K. And this is the final step. After the cells go through the final formation, they go through an OCV test.

Which is one of which is loading the players directly into the final formation cabinets and you can see how that is working okay. As you can see we are standing here in the zone for radio again, I'm Blessed for Downpour, plus 100 gig and this is the final step after the sales to go through the final formation.

They go through OCI retest and now the batteries are coming in this crazy.

Speaker: And now the batteries are coming in these trays and being fed to the sorter. It is fully done automatically. This will be a nearly lights-out operation where the trays are loaded all the way from the final formation OCV into the sorter. This is the sorter area, which is the final step of sorting and putting batteries in bins to be sold to the final customer. So that's this operation, as you can see. Thank you for watching. Keep following our journey to scale at enovix.com for updates as we post them. That was awesome

Being fed to the sort of fully done automatically this will be a.

Merely lifestyle operation rather trays are loaded from.

All the way from final formation of OCB into disorder. This is Saudi Arabia, which is the final step of sorting and.

Putting our batteries and bins to be sold to the final customer.

That's this operation as you can see thank you for watching keep following our journey to scale.

<unk> dot com or our bids as opposed to them.

Yeah.

That was awesome as you can see our confidence is very high I don't fab, two and we accomplished a great deal in a very short amount of time and I'm really proud of everything the team has done in addition to proving out manufacturing.

Speaker: As you can see, our confidence is very high around Fab 2, and we accomplished a great deal in a very short amount of time. And I'm really proud of everything the team has done.

Speaker: In addition to proving out manufacturing, this year, we will need to deliver samples of batteries tailored to the smartphone specification for fast charge and very high cycle life. I'm happy to report that our global R&D teams have made significant progress in recent months, and we're looking forward to sending our first samples of what we call EX-1M for mobile next quarter. By the end of the year, we'll have an enhanced version of this technology called EX-2M, which will also be ready to sample. Now, these two will be truly revolutionary products, and they will be the first smartphone batteries in the world that we are aware of that will have 100% active silicon anodes while also delivering a thousand full charge and discharge cycles along with the ability to really fast charge and increase energy density over the batteries that are shipping in the market today The need for high energy density is critically important to the smartphone industry.

This year, we will need to Delaware samples of batteries are around.

Tailored to the smartphone specification.

The fast charge and very high cycle life.

I'm happy to report that our global R&D teams have made significant progress in recent months and we're looking forward to sending our first samples in what we call E X one M for mobile next quarter by the end of the year will have an enhanced version of this technology called E X two M, which will also be ready to sample.

Now these two will be truly revolutionary products and they will be the first smartphone batteries in the world that we are aware of that will have a 100% active silicon anode, while also delivering.

A thousand full charge and discharge cycles, along with the ability to really fast charge and increased energy density or the batteries that are shipping in the market today.

The need for high energy density is critically important the smartphone industry, it's a huge $10 billion plus addressable market now too.

Speaker: It's a huge $10 billion plus addressable market. Now, to give you a greater appreciation for why smartphones need a higher energy density battery. Last quarter, we asked TDS Research, you know, it's a team I'm familiar with from my days at Qualcomm, to analyze the impact of the looming AI applications on smartphones. The results of the study are actually staggering.

Give you a greater appreciation for why these smartphones need a higher energy density batteries.

Last quarter.

We asked a tedious research it's a team I am familiar with from my days at Qualcomm.

Analyze the impact of the looming AI applications on smartphones and the results of the study are actually staggering.

Speaker: I want to show this to you on a slide here. What you see here is the left side, the global gen A.I. output forecast of the amount of video and image frames in billions. You can see in 23, 15, 24, 59 to 28, we expect it to be a staggering 2,500 and you know billions of frames generated, and these are going to be on mostly battery-operated devices on phones, PCs, laptops, and so on. And what you see in the middle is actually very interesting data. What we did here is actually profile battery consumption in terms of how much capacity is used per hour in milliamp hours for different applications.

I wanted to show this to you in the slide here.

One what did you see here on the left side.

The global Gen AI output.

Output forecast of the amount of video and image fans in billions you can see in 'twenty 315, $24 59 to 28, we expect it to be a staggering 2500 and billions of frames generated and these are.

I'm going to be on mostly battery operated devices and phones Pcs laptops and so on.

What you see in the middle is actually very interesting data.

We did here is actually profile how much.

Battery consumption.

In terms of how much capacity is used per hour and Minneapolis.

Speaker: On the left side, you see non-AI based conventional applications. On the right side, you see AI-based applications. So things like 4K video, when you go to 8K video, a lot of up sampling is done using AI applications. Things like YouTube that you're all familiar with on the left side.

Different applications on the left side you see.

<unk> conventional applications and the right side you see the air based applications. So things like Fort Gay video. When you go to 8-K with you a lot of op sampling is done using AI applications.

Things like Youtube that you're all familiar with on the left side, but on the right side things like chat GPT are lama to chat box.

Speaker: But on the right side, things like ChatGPT or Llama2Chatbot. It's staggering that ChatGPT actually consumes more battery than running YouTube on your phone. It's pretty amazing, and this is just the beginning. And this is very important because this is what we are hearing from all our customers, that they just need a much higher energy density battery. In fact, I just saw a couple of new phones launched by some of the Chinese OEMs. And actually, the flyers for the phone are actually all about the AI applications that run. You can also see something similar for the Samsung Galaxy Advertisement.

Staggering the chat GPT actually consumes more batteries and running Youtube on your phone.

It's pretty amazing and this is just the beginning and this is very important because.

This is what we are hearing from all of our customers that they just need a much higher energy density batteries. In fact, I just saw a couple of new phones launched by myself.

Some of the Chinese Oems and actually the Flyers for the phone is actually all about the AI applications that run you can also see something similar for Samsung Galaxy advertisements.

Speaker: The trends are clear. With our product roadmap and our customer relations, we are well positioned to enable the smartphone industry to really usher in a new era of mobile computing. In addition to that, we are now thrilled to have our first deal done in EVs. And with that, I'm going to turn over to Farhan, who will provide a recap of his financials and then the outlook. Thanks.

So the trends are clear.

Our product roadmap and our customer relations, we are well positioned to enable the smartphone industry.

Two really usher in a new era of mobile computing. In addition to that we are now to have a fast deal done in evs and with that I'm going to turn over to Fernando who will provide a recap of our financials and then the outlook.

Thanks, a lot.

Speaker: So all the relevant financials are in our quarterly report, so I won't go into the details. But I'll just do a quick recap of the results and outlook. For Q4, we delivered revenue of $7.4 million, well ahead of our expectations. We ended the quarter with about $307 million in cash and equivalents.

So all the relevant financials or in our quarterly report so I won't go into the deep into the details.

But I'll just do a quick recap of the results and outlook.

For Q4.

Delivered revenue of $7 $4 million well ahead of our expectation.

We ended the quarter with about $307 million of cash and equivalents.

Speaker: Q4 CAPEX was about $29 million. About $27 million was used in operations. And about $10 million of cash was used in the acquisition of RoutJet, net of the cash that we acquired as part of RoutJet.

Q4, Capex was about $29 million.

About 27 million was used in operation.

And about $10 million of cash was used in acquisition of <unk>.

Net of the cash that we acquired as part of project.

Yeah.

Speaker: As a reminder, we are accelerating the depreciation of Fab 1 equipment to post our decision to Stop Manufacturing in Fab 1, and as we decide to convert it for product development purposes. Our Q4 results included $18.5 million of accelerated depreciation, $6.2 million of this was in COGS, $12.2 million of this was in R&D, and $0.1 million was in SG&A. In Q1, we expect a similar amount of accelerated depreciation, but most of it will be for R&D expenses. Now, turning to our guidance. For the first quarter of 24, we are expecting revenue in the range of three and a half to four and a half million dollars. Now there is some impact, a meaningful impact, on our Q1 guidance because of the water in the Middle East, which is causing a longer time for the ships to go from Korea to Europe. We expect for Q1 an adjusted EBITDA loss of $24 million to $31 million and expect non-GAAP EPS between $0.29 and $0.35. I would like to note that a non-GAAP EPS loss does include the impact of the accelerated depreciation that I talked about, which is about 10 cents.

As a reminder, we are accelerating the depreciation of fab when equipment will start decision to stop.

Stopped manufacturing in a sub one.

And as we decided to convert it for product development purposes.

Q4 results included $18 $5 million of accelerated depreciation.

$6 2 million.

Wasn't cogs $12 $2 million of this was in R&D and <unk> 1 million was in SG&A.

In Q1, we expect a similar amount of accelerated depreciation, but most of it will be in R&D expenses.

Now turning to our guidance for.

For the first quarter of 'twenty four we are expecting revenue in the range of three and a half to four and a half million dollars.

There's some impact a meaningful impact to our Q1 guidance.

Because of the water in middle East, which is causing a longer time for.

For the ships to go from Korea to Europe.

We expect 41 and <unk>.

Adjusted EBITDA loss of 24 million to $31 million.

Speaker: And with that, I'll now turn to Rodgers and others, and I'll see you next time. Okay, thank you Farhan. In closing, I'm super excited by all the work we've done in 23. And we set, you know, set the framework for our business to scale in the years ahead, and we have significant proof points to deliver in 24.

Expect non-GAAP EPS between <unk> 29 cents loss and 35 cents loss.

I would like to note that our non-GAAP EPS loss does include the impact of the accelerated depreciation that I talked to them, which is about 10 cents.

And with Doctor on Lockdown to Raj.

Speaker: And I'm super excited about, as you can tell by all the stuff we have going on in our manufacturing fabs and executing on these key milestones. So with that, I'll open up for questions. We will now begin the Q&A session. Please note that this call is being recorded.

Okay. Thank you for your hand in clothing I'm Super excited by all the work we've done in 'twenty three and we set set the framework for our business to scale in the years forward and we have significant proof points to Delaware in 'twenty four and then I'm Super excited by as you can.

Speaker: Before we go to live questions, we are going to read the two most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is, will management address the current and future status of government contacts for brothels? Is there still a near-term eight-digit revenue opportunity, or has management totally abandoned this? Yeah, so it's a very good question. You know, as we did last quarter, we continue to deliver batteries to the army contract that we have, which these are break flow enabled, safe batteries that the army will use in vests and so on. And we expect to continue to do that through this year. As we do that, these batteries are put through different kinds of tests by the army and a lot of qualification processes, and so on.

Bye bye all the stuff, we have going on in our manufacturing Fabs and executing these key milestones.

So with that I'll open up for questions.

We will now begin the sort of old fashioned please.

This call is being recorded.

We got a lot of questions, we're going to read that Cmos only about a question, it's a little bit.

Shareholders are how does this fall and all that.

My first question is well management address the current and future status of bottleneck contacts for batteries is that still a near term or does it.

Robin your opportunity or his name is not totally.

Yeah, So very good question.

Speaker: Once that's done, we do expect that they will end up in higher volume production, and we will have a good business opportunity there. Also, with the acquisition of this company, they have very good batteries that are actually being sold to the Korean military, and we see opportunities to actually market those batteries to the US army also. So, yes, we do expect to continue to do that. The second question is, what is happening with the former production space in Fab One now that the Gen One line has been shut down? Yeah, thank you for that question.

As a as we did last our last quarter, we continue to Delaware batteries to the.

Army contract that we have with these are breakthrough enables SaaS batteries that the army will use and that's and so on.

And we expect to continue to do that through this year as we do that these batteries are put into a different kind of tests by the by the army.

And there are a lot of qualification process and so on once that's done we do expect that they will and.

Speaker: So Fab 1, we are not doing high volume manufacturing at Fab 1, but we are using it right now to make samples like EX-1M and EX-2M and so on to give them to our smartphone customers to sample, to validate the technology before our Fab 2 is ready. And, you know, as I mentioned, we expect to produce cells from Fab 2 in Malaysia in the April timeframe. So we are actually using the current Fab in Fremont for that.

And up in higher volume production and we will have a.

A good business opportunity there.

So with the acquisition of this company that they have a very good batteries that are actually being sold to the Korean military and we see opportunities to actually market those matter. It's due to the U S. Army also so yes, we do expect to continue to do that.

Speaker: Also, with this new EV opportunity, we have, you know, which we expected that we would need a clean room and a dry room and a facility to make those cells here, which we are going to do here in Fremont. So it continues to be a good R&D facility for us. Now, we will go to the queue.

Yeah.

That's a good question.

What is happening with Afirma production full pop one wanted to touch on one line.

Aaron.

Yeah. Thank you for that question. So I had one so we are not doing a high volume manufacturing type one, but we are using it right now to make a samples to give a like <unk>, one and <unk> and so on do give it to our smartphone customers to sample to.

Colin Rusch: Questions will be answered in the order they are received. Please ask one question and one follow-up question at most. We will now pause for a moment to assemble the queue. Our next question comes from Colin Rusch with Oppenheimer. Please unmute your audio and ask your question.

Speaker: Thanks so much, guys. You know, as you've gotten deeper into the customer conversations and testing on the smartphone side, can you talk about the number of SKUs you're expecting to have to make in the next 18 months to 24 months to serve those customers? Yeah, thank you for the question, Colin. So what's happening right now, and I'll give you a little bit of color by taking that opportunity of that question.

Laterally at the technology.

Before our fab two is ready as I mentioned, we expect to produce cells from fab two and in Malaysia in April timeframe. So we are actually using the current fab in <unk>.

In the framework for that.

Also with this new EV opportunity we have.

Which we expected that we will need the clean room and the dry room in the facility to make those cells here, which we're going to do here in Fremont. So it continues to be a good R&D facility for us.

Speaker: So what's happening right now is that we've got very detailed specifications from multiple customers. I mean, these are 20, 30 page documents on how the battery is tested, different temperatures, different size requirements, fast charge requirements, safety requirements, and so on from multiple smartphone OEMs. So we are now building samples, and we will be sampling them soon to these customers with the requirements that they've given. And what we do is we test the batteries against those requirements so that when we give them the cells, we're pretty confident that they will pass. It's something that I've always done in my past. It's to make sure we understand the customer's testing requirements, test them, and then give them to them. And then what we expect to happen is, after they pass the technology qualification, we expect to get different dimensions and capacities. So 5,000 amperes or 6,000 amperes, based on what smartphone it's going into. And each customer is a slightly different size. Like if it's going to be a flip phone, it's one size.

We will now go to the P&L questions. While they are somewhat what are they are still with us.

One question and one follow up question at launch we will now pause a moment to assemble the queue.

Our next question comes from Colin Rusch with Oppenheimer.

That's your question. Thanks.

Thanks, So much guys as you've gotten deeper into the customer conversations and testing on the smartphone side can you talk about the number of Skus, you're expecting to have to make in the next 18 months to 24 months.

Serve those customers.

Yeah. Thank.

Thank you for the question Colin So what's happening right now I'll give you a little bit of color are taking that opportunity of that question. So what's happening right. Now is that we've got a very detailed specifications from multiple customers. I mean, these are 20 to 30 page documents on how the batteries tested different temperatures different size requirements SaaS charges required.

<unk> safety requirements and so on.

Speaker: If it's going to be a candy bar phone, it's going to be a slightly different size. And then we will make those particular form factor batteries from our Malaysia fab. Get them those samples.

There are multiple smartphone Oems. So we're now building our samples and sampling and we will be sampling them soon.

Do these customers with requirements that does given and what we do is we test the batteries to those requirements. So that when we give them the south we're pretty confident that they will pass it's something that I've always done in my past is to make sure we understand the customers testing requirements test them and then give it to them.

Speaker: They go through the rest of the qualification process and then get to high volume production next year. It's hard to tell exactly how many different shapes we'll need to do because we are sampling to multiple customers, and based on how quickly those evaluations on their side go, it'll, you know, drive that, I'd say. Probably, you know, in the single digits is what I think it should be, you know, shouldn't be too many because I do think that a lot of customers will try to use a similar kind of cell phone because the phone form factor is kind of very similar between customers. That's super helpful.

And then what we expect to happen is after the past technology qualification, we expect to get a different.

Dimensions, and the capacities. So 5000 amperes are 6000 mpls based on what smartphone is going into and each customer has a slightly different size like if its going to flip phone. It's one side, we've got a candy bar foreign it is going to be slightly different size.

And then and then we will make those particular form factor batteries from what about extra fab get them those samples that they go through the rest of the qualification and then when you get to high volume production next year.

Speaker: And then given the opportunity for mobility, you know, there's certainly a lot going on in terms of vehicle design, you know, pack design, and given the safety profile that you guys have and the potential for fast charging, can you talk a little bit about your expected pack size and, you know, how that might look for some of these vehicles as they look to optimize both space and the energy density in the vehicles? You know, are we talking about 60 kilowatt hours per vehicle? Or are we talking something more like 80 or 90?

It's hard to tell exactly how many how many different shapes will need to do because we are sampling to multiple customers and based on how quickly those are those.

Evaluations on the air side go.

It'll it'll it'll.

Drive that I'd say.

Probably.

In the single digits is what I think it.

Speaker: Yeah, a good question, Colin. But so what? Just to be clear, what we're doing now is working with what we talked about is one OEM that's interested, and there are others we're talking to about proving out the value proposition, right, proving out that we can control swelling, proving out that we can charge fast, exactly what kind of cells there would be, how many there would be, what kind of EVs there would be. It's too early to tell. We will continue to update you on milestones as we get closer to them. At this point, we're just proving out the technology. Yeah, the only thing I would add is that they... Yeah, they will have our architecture, our unique architecture. What's common is that all of these, so we are working with automated makers have our unique architecture and will have fast charge as the unique differentiator. Thanks so much, guys. Our next question comes from Bill Peterson with J.P. Morgan. Please unmute your audio and ask your question.

It shouldn't be too many because I do think that a lot of customers tied to use a similar kind of sell because the phone form factor is kind of very similar between customers.

That's super helpful and then given the ups.

And in mobility, you know Theres certainly a lot going on in terms of vehicle design pack design and given the safety profile that you guys have and the potential for fast charge can you talk a little bit about your expected pack sizes and how that might look for some of these vehicles as they look to optimize those space.

And the energy density and the vehicles. You know are we talking about 60 kilowatt hours per vehicle or are we talking something more like 80 or 90.

Yeah. Good question, Collin, but so what what just to be clear what we're doing now is working with what we talked about is one OEM. That's interested and there are others, who were talking to on proving out the value proposition proving out that we can control swelling proving out that we can charge fast exactly what kind of sales that would be how many they would be what kind of.

Bill Peterson: Yeah, thanks for taking the question. Maybe, maybe just to piggyback off that last question. It sounds like you said the key focus area will be fast charging. But can you just shed some light on some of the key milestones and timelines for this? What is the commitment, the contribution, and commitments from Inovix in terms of sampling testing? And, I guess, is there further appetite for Inovix as well as resources as well to actually ink any additional agreements? Or should we just think of this, this single agreement for now?

Even if there would be it's too early to tell we will continue to update you on the milestones as we get there at this point.

We're just rolling out the technology.

Yeah, the only thing I would add.

Yes, they will have all the architecture of our unique architecture, what's comment is that all of these.

So is that we are working with auto makers are with.

Our unique architecture, and we'll have fast charge.

As the unique differentiator.

Thanks, so much guys.

Our next question comes from Peter I Sound like J P. Morgan.

Speaker: Yeah, um, you know, I, we hope to get samples out this year. That's our goal. We are working with the, you know, other OEMs too, but I can't really comment much further than that. It's kind of at an early stage, and we'll keep you updated as we make progress. Okay, second question. So when we think about EX1 to EX1M and EX2, I guess what are the key changes you're making on the material side? I mean, are the formulations and manufacturing processes fixed for EX1M and EX2? And I guess if not, the formulations for EX2, if they haven't been fixed, what are the issues or performance gaps you're looking to address before locking in the materials choices in the process? Just trying to get a sense for how mature they are at this stage.

Meet your audio and ask your question.

Yes, thanks for taking the question, maybe maybe just to piggyback off that last question.

It sounds like you said the key focus area will be fast charging.

But can you just shed some light on some of the key milestones and timelines for this what are the contributions and commitments from <unk> in terms of sampling testing and I guess is there further appetite for genomics as well as the resources as well as to actually inked any additional agreements or just should we just think of this.

Walgreens for now.

Yeah.

We hope to get samples out this year, that's our goal and we are working with.

Other Oems to but I can't really comment much further than that it's kind of early stage and we will keep you updated as we make progress.

Yeah.

Yeah.

Okay second question. So when we think about <unk> and <unk> I guess, what are the key changes you're making on the materials side.

Speaker: Yeah, good question. So basically, if I look at the EX1M, it's built on top of what we have done in EX1, which is adapted the technology to meet the requirements of the smartphone market. And when I say the requirements of the smartphone market, there are a few key requirements. One is clearly safety.

Other formulations in process manufacturing process fix for <unk>.

<unk>.

And I guess, if not I guess the formulations reacts to if they haven't been fixed what are the issues or performance gaps are looking to address before locking in the materials choices in process, just trying to get a sense for how mature. These are at this stage.

Yeah. Good question.

Speaker: People really, really care about safety in phones. As you know, we have spent a lot of time on that. And that's one area we address. The second area is cycle life. Our previous EX1 batteries ran up to 500 cycles.

So basically if.

If I if I.

Look at the X one of them.

Built on top of what we have done in the next one which is adapt that technology to meet the requirements of the smartphone market and when I say the requirements of the smartphone market that in a few key requirements. One is clearly safety people really really care about <unk> safety in phones. As you know we have the we have spent a lot of.

Speaker: Our target in EX1M is 1,000 cycles, which is basically doubling that, and that's a significant increase. And the third one is the ability to charge really, really fast. So if you think about a smartphone, when you have a smartphone, what a lot of customers do is, particularly with these AI applications, a whole day battery life is getting harder and harder. So when the battery life goes down, people like to be able to charge and get to 15%, 20%, 30% charge so they can go through the rest of the day. So that is a very important consideration. To do that safely and to do that in a way that it doesn't hurt the battery in the long term is a very key concern.

I'm on that and and that's one area. We address the second area is a cycling our previous E X one batteries ran up to 500 cycles.

Our target in that yes, one of them is thousand cycles, which is basically doubling that and that's a significant increase and the third one is the ability to charge really really fast. So if you. If you think about the smartphone when you have a smartphone but a lot of customers do is.

Particularly with this AI applications, a whole day battery life is getting harder and harder. So then the battery life goes down people like to be able to charge and get to you know, 15%, 20%, 30% charge. So they can go through the rest of the day. So that is a very important care about.

Speaker: And that's one thing that we feel good about now. And the third one is increasing energy density. So we have now looked at all the different phones out there in the market, and we believe that we can provide an advantage compared to that while keeping fast charge, while increasing the cycle life, and also different temperatures. I mean, that's the other thing you need to worry about in these markets is at what temperature you operate the battery at, what the top of the cycle charge looks like, and so on. So those are all the things that EX1M addresses.

To do that safely and to do that in a way that it doesn't hurt the battery longer term is a very key care about and Thats. One thing that we feel good about now.

And the third one is our increasing energy density. So we've now looked at all the different forms out shipping in the market and we believe that we can provide an advantage compared to that while keeping fast charge, while keeping our increasing the cycle.

Cycle life, and and also different temperatures I mean thats. The other thing I need to worry about in this market is at what temperature you operate therefore operate the battery at what type of the cycle looks like and so on.

So those are all the things that he X one of mattresses and again these are slightly different based on each customer some customers want more cycle life, and maybe little less eating some customers one more at the end of the cycle.

Speaker: And again, these are slightly different based on each customer. Some customers want more cycle life and maybe a little less ED. Some customers want more ED and a little less cycle life.

Speaker: So we are now in the middle of basically a target specification, which we have finalized now on EX1M. And those are the batteries that we expect to sample from our Malaysian factory in April. What EX2M does on top of that is actually continue to increase energy density.

So we are now in the middle of.

Basically.

To get specification, which we all finalized now on the excellent them and those are the batteries that we expect the sample from our Malaysia factory and in April.

<unk> on top of that is actually continued to increase energy density and <unk>.

Speaker: And you've seen us put out a slide before on where we expect to get there with that, while keeping the increases in cycle life, while keeping the increase in fast charge, while keeping all the safety parameters. Now, to be able to accomplish that, we have finalized a set of materials for EX1M, cathodes, anodes, electrolytes, separators, and so on. We have shortlisted what they will be for EX2M, and in short order, we'll decide which ones. Some very promising results, so we're pretty optimistic about being able to get there. Thanks, Rusch. Our next question comes from George DeAnarchis with Canaccord. Please unmute your audio and ask your question. Hey everyone.

You've seen us put out a slide before and where we expect to get there with that while keeping the increases and cycle life, while keeping the increase in fast charge, while keeping all the safety parameters now to be able to accomplish that.

Finalized a set of materials for the X one of 'em cathodes anodes electrolyte separators and so on.

We have shortlisted, what they will be for <unk> and in short order, we'll decide which ones are somebody promising. It is also they're pretty optimistic of being able to get there.

Thanks Raj.

Our next question comes from George Tong.

Okay.

Counterpart to kind of meet your audio and ask your question.

Speaker: Thanks so much for taking my question. I'd like to ask about your material supply chain. Earlier in the quarter, you announced an agreement with Group 14. And I'm curious, first of all, how diversified your silicon supply chain is, and how extensive are the choices by handset vendors or device vendors to make that decision, or is that purely a decision that Inovix will make in terms of which silicon they put into your batteries?

Hey, everyone. Thanks, so much for taking my question.

I'd like to ask about your material supply chain earlier in the quarter, you announced that an agreement with <unk> 14 in.

And I'm curious first of all how diversified.

Your your silicon supply chain is.

And.

How extensive are the choices by handset vendors or device vendors into making that decision or is that purely a decision that that <unk> will make in terms of which silicon. They put it you put into your batteries. Thank you.

Speaker: Thank you. Yeah, so you know, if you look at producing a battery that increases energy density, but also meets all these other requirements, and I and I can't emphasize enough of that, because ultimately a battery has to meet the requirements that are required by the end product, which our customers make cycle life, fast charge, swelling, at the end of life, and so on. It's a function of not just the anode, but it's a function of the silicon anode, a function of the cathode, and more importantly, the electrolyte, because, you know, in a battery, the electrolyte, when it interfaces, the cathode has a certain properties, a certain way it needs to behave, when it interfaces the anode, the other side, it has to behave a certain way, all at the same time, being able to pass lithium ions, and the separators play a big role as to how thick is the separator and how do they handle the stack pressure and so on.

Yeah.

So you know.

If you look at producing a badly that increases the energy density, but also meet all these other requirements and I and I can't emphasize enough of that.

Because ultimately a battery has to meet the requirements that are required by the end product, which our customers make cycle life fast charged swelling at the end of life and so on.

It's a function of not just the anode, but it is a function of the silicon anode a function of the cathode and more importantly, the electrolyte because you know in a battery electric light when it interfaces that cat has a certain properties certain rate needs to be held but interest rates are down.

The other side it has to be of a certain way all at the same time being able to pass lithium ions and this operator's make big big role, that's the whole tequila separator and how do you handle the stacked pressure and so on so the recipe of choosing the right capital right downloads right separators and putting them together is really the intellectual property that we have an innovation and experience we have here so.

Speaker: So the recipe of choosing the right cathodes, the right anodes, the right separators and putting them together is really the intellectual property that we have at InnovaX and the experience that we have here. So, as I said, there are multiple choices on anodes, multiple choices on cathodes, multiple choices on electrolytes, and that is the intellectual property that we have. We are constantly looking for new materials. We were very excited by the results we got from the Group 14 material, and that team has been super supportive.

We like I said, there's multiple choices on anodes multiple choices and cathodes multiple choices and electrolytes and that is the.

Electric property that we have we are constantly looking for new materials. We were very excited by the results. We got from the group 14 material and that team has been super supportive.

Speaker: We're also talking to other people; you know, supply diversity is also important. And ultimately, what we're going to do is to find the right recipe for the right end applications based on customer feedback. So that's kind of the best way to answer that question. Thank you.

We're also talking to other people.

Diversity is also important.

Ultimately, what we're going to do is to find the right recipe, but the right end applications.

Based on the customer feedback so that's the best way to answer that question.

Speaker: And just as a follow-up, I'd like to ask about your timelines here on the FAT and SAT testing, your confidence level in terms of getting out samples for the agility line in the second quarter. You know, I know that on a recent podcast, you discussed a little bit of a push out in some of the timelines there. Can you just kind of reiterate that and give us confidence that you can get those samples out in the second quarter? Thank you. Yeah, I'll answer at a high level. And Ajay, feel free to add. I know he's in Malaysia.

Thank you and just as a follow up I'd like to ask about your timelines here on the S E T and S E T testing.

Your confidence level in terms of getting out the samples for the agility line in the second quarter I know that on a recent podcast you discussed.

A little bit of a push out in some of the timelines here can you just kind of reiterate that and gives us confidence that you can get those samples out in the second quarter. Thank you.

Yeah, I'll I'll I'll answer a little bit of high level and I just feel free to add I know he is in Malaysia, I'm not sure how good the lynas, but basically we feel very confident that we're going to get samples out in.

Speaker: I'm not sure how good the line is, but basically, we feel very confident that we're going to get samples out in the April time frame to our customers. And we did announce some delays on FAT for one of the zones. And again, you have to remember, these are very, very complicated things we are doing. These are tens of machines all working in tandem together.

The April timeframe to our customers and.

We did we.

We did announce some delays on the <unk> of one of the zones and again you got to remember.

These are very very complicated things. We are doing these are tens of machines all working in tandem together, one thing what Ajay and myself and the leadership team. We've done is we're not going to cut corners, right, we're not going to cut corners in the requirements of <unk> in the record months of equity how much material, we need to run what they need to come up with.

Speaker: One thing both Ajay and myself and the leadership team we've done is we're not going to cut corners. We're not going to cut corners on the requirements of FAT, on the requirements of SAT, how much material we need to run, what yield they need to come up with before we take acceptance of any of these machines for our customers from our suppliers. So that has caused some amount of back and forth with our suppliers, but we feel good now that it's within reach. And we feel good about the machines we've received. We do expect all of them to work together. And some of them have already been shipped. They're in Malaysia now.

Before we take acceptance of any of these missions for our customers from our suppliers. So that has caused some amount of.

Back and forth with our suppliers, but we feel good about that.

It's a it's a it's within reach and we feel good about the machines. We have received we.

We do expect all of them too.

I'll work together and some of them have been shipped that in Malaysia somewhat and therefore, they are shipping, but we're holding the date for.

Speaker: Some are on their way to shipping, but we're holding the date for getting the samples to customers, although some of the zones have pushed a little bit. Yeah, just to add to that, yeah, feeling fairly confident. I don't know if you guys can hear me okay or not.

Getting the samples to customers, although some of the zones have pushed a little bit.

Hey, guys.

To add to that.

I don't know if you guys can hear me okay.

Speaker: But I'm here, you know, calling in from SAP too, and feeling pretty confident about how the machines are behaving. And I think we shared some of the data as well, early data on FAT during the podcast. So yeah, I'm feeling confident that Q2 will definitely get samples out from the agility line here in Malaysia. Our next question comes from Jed Dorsheimer with William Blair. Please unmute your audio and ask your question.

Again problems.

Feeling pretty confident about.

How the machines were behaving.

Sure.

Early data on a great day.

But in the podcast so yeah, feeling really good about Q.

Definitely got samples out.

From there you're gonna do lag.

Here in Boise.

Our next question comes from John Doerr, Cymer with William Blair. Please on mute your audio and ask your question.

Speaker: Hi, thanks for taking my question here, guys. Raj, you've talked about some of the performance trade-offs between EX1, EX1M, and EX2. I was wondering, how should we think about the value creation in terms of some of those trade-offs? And what I'm really trying to get to is ASP differences between the different products.

Hi, Thanks for taking my question here guys.

Raj.

You've talked about some of the performance tradeoffs between <unk>, one and then I was wondering how should we think about.

The value creation in terms of some of those trade offs and what I'm really trying to get to is ASP differences between the.

Speaker: And then I have a follow-up. Yeah, you know, I mean, Jed, it's really, really based on the end markets. You know, I think, you know, our view is that when you go into things like smartphones, where they're going to laptops, you've got to get to, you know, 800,000 cycles in that range. You know, you think about it; if you have a phone, you're going to charge it every day. So you're looking at 350 charges, discharge cycles a year, you know, let's say you keep this one for two and a half to three years. You're quickly at the 1000 range, right? So you pretty much have to be able to do that.

Different.

Products, and then I have a follow up.

Yeah.

Yeah.

I mean, it's really really based on the end markets.

I think.

Our view is that when you go into things like smartphones, but theyre going to laptops, you've got to get to 800000 cycles in that range.

Do you think about it if you have a phone you're going to charge. It every day. So youre looking at 350 charges discharge cycles a year.

Let's say you keep this one for two and after three years Youre quickly at the thousands range right. So you pretty much have to be able to do that.

Speaker: If you look at a variable, or maybe some other IoT devices, you might keep them for less than a number of years; maybe you don't charge them every day. So you can get away with fewer number of cycles, right? When we decided to go after smartphones as the big market and then laptops, 1000 cycles, 800 to 1000 cycles, became a must, and we aimed at 1000 as a target. If some customers want to take an 800 cycle device, you know, that's, that's good; we can do that. But we set the goal aggressively. Now, the ASP is going to depend upon what the value is most, right? I mean, ultimately, there are must-meet requirements, which are fast charge, which is cycle life, which is not swell at high temperatures when you store the battery, safety, and so on.

If you look at a variable or maybe some other Iot devices, you might keep it for less a number of years, maybe you don't charge every day. So you can go get away with less number of cycles right.

We decided to go after the smartphones is a big market and then laptops.

Cycles, 801000 cycles became a must and we aim at thousand as a target.

If some customers wanted to take 800 cycle device.

That's that's good we can do that but we set the goal aggressively.

Now the SBA is going to depend upon them.

What they value most right I mean, ultimately there is must meet requirements, which is fast charge, we just cycled life, which is not.

<unk> well at high temperatures when you started the battery safety and so on once you meet those the amount of ETE would provide on top of that is what's going to change the ASP premium that we comment in <unk>.

Speaker: Once you meet those, the amount of ED you will provide on top of that is what's going to change the ASP premium that we command. In some other markets, maybe cycle life is not that important. We can index more on ED, and then we can get a premium for that. So it really depends on the end market. Some are must-have requirements, and some are requirements that, once you do them, you can get more premium for higher ED.

Some other markets maybe cycle life is not that important will be going to index modern.

And then we can get a premium for that so it really depends on the end market.

Some are must have requirements and somewhat requirements that once you do them you can get more premium for IDT.

Speaker: As a follow-up, I know about wearables we've talked about. The Apple Watch, in terms of value or the value of the additional battery life, is not as great as that of a phone. But I'm curious, Tom, when we look at Apple Vision or when we look at something that only has two hours of battery life and is certainly gating the adoption of that product. You know, how do you think about the value in terms of the and therefore the gating function of the battery to kind of help those markets open up to larger volumes? Thanks.

As a follow up I know on Wearables, we've talked about.

Apple watch in terms of the value.

Of the additional battery life is not as great as that of a phone, but I am curious.

When we look at Apple vision or when we look at it.

Something that only has two hours of battery life in a certainly gating the adoption of that.

Of that product.

How do you think about the.

The value in terms of the.

And therefore, the the gating function of the battery too to kind of help those markets open up to larger volumes.

Speaker: Yeah, absolutely. I mean, there are more and more applications like that coming out that absolutely need much higher energy density. And I'm one of those proud owners of Apple Vision Pro. I love the device, and I hate the two hour battery life.

Yeah.

Yeah, absolutely I mean that is.

There are more and more applications like that coming out that absolutely need much higher energy density and I'm one of those proud on herself Apple vision flow I love the device and I hit the two hour battery life.

Speaker: It's, the single biggest problem with the device is the battery life. So, but it's a phenomenal device. And you know, I think the reason the device is so great is because of the performance that's in there, you know, with the memories and the process and the displays. And I mean, there's an IMAX app that I tried on it, and it just feels like you're in a movie, you know, in an IMAX theater, but you know, the battery goes on pretty fast.

It's the single biggest problem with the devices the batter life, so, but it's a phenomenal device and you know I mean, I I think the reason the devices. So Greg is because of the performance. That's in there and now with the memory is in the process and the displays and I mean, there is an IMAX app I tried on it and it just feels like you're in a movie in.

An IMAX theater, but you know the battery goes down pretty fast. So I think the ASP premium is is there in those markets because that's I.

Speaker: So I think the ASP premium is there in those markets because, you know, that's, I think all told, a $4,000 product. And I mean, people will be willing to pay. I mean, what if you could double that battery life? That'd be awesome. So I think a lot, a lot. I mean, I actually think that is just the first of many products that are coming. And this is what I mentioned when I first came to this job is that the performance and the end-user experience that great processors, great memory devices, great displays, and great cameras can deliver is huge. We haven't seen how good that can be, and now we are seeing with the early products coming out. There'll be a lot more like that that come out, and you'll see that to deliver the experience that advances in chips and cameras and memories have really delivered, you can't really realize them until you have a better battery. And that's why I think that once we produce this battery, there'll be a lot of opportunity for a differentiated ASP. Our next question comes from Derek Soderberg with Cantor. Please unmute your audio and ask your question. Yeah, hey, everyone.

I think all told 4000 dollar product.

And I mean people will be willing to I mean, what if you could double that battery life that'd be awesome. So I think that a lot.

Do you think that is just the first of the many products that are coming and this is what I've mentioned when I first came to this job is that.

The performance and the end user experience that great processors, great memory devices, great displays a grade cameras can Delaware is huge.

Haven't seen how good that can be and now we're seeing with the early products coming out there'll be a lot more like that that will come out.

And you'll see that to deliver the experience that these advances.

Chips and cameras and memories as really Delaware, you can't really realize them until you have a better battery and that's why I think that once he produces battery there'll be a lot of opportunity for a differentiator.

A differentiator to SP.

Our next question comes from Garik father, Barak with Cantor.

And ask your question.

Yeah, Hey, everyone. Thanks for taking the questions.

Speaker: Thanks for taking the questions. I wanted to start with the slide deck, it looks like you guys have the goal of multiple smartphone launches in 2025. I'm wondering what you're going to need from a production capacity standpoint to achieve this. Can you do that with a single line?

I wanted to start with.

On the slide deck. It looks like you guys have the goal of our multiple smartphone launches in 2025.

Wondering what youre going to need from a production capacity standpoint to achieve this can you do that with a single line do you need two lines any detail on that would be great. Thanks.

Speaker: Do you need two lines? Any more detail on that would be great. Thanks. Yeah, so I think it's important for me to explain how the process works. I know I get asked this question a lot.

Yeah. So I think it's important for me to like explain how the process works I know I get asked this question a lot.

Speaker: So if you think about where we are in our journey, we now have a recipe for EX1M that we feel pretty good about, that actually meets the requirements of the market. We have a factory coming up now, and we feel pretty good that we'll be able to get some samples in April from that. And so what happens next?

So if you if you think about where we are in our journey. We now have a recipe with the X one of them that we feel pretty good about that actually meets the requirements of the market. We our factory coming up now and we feel pretty good that we'll be able to get some samples.

In April from that and so what happens next right, we're going to give this to our customers, they're going to test them and theyre going to give us some feedback and theyre going to give us feedback on maybe some optimization on dimensions of how is that how big the battery should be and so on we're going to make those changes because we have an agility line that can actually do different sized batteries, we're going to give those back to them.

Speaker: We're going to give these to our customers. They'll test them, and they'll give us some feedback. And they're going to give us feedback on maybe some optimization of dimensions of how big the battery should be and so on. We're going to make those changes because we have an agility line that can actually make different sized batteries. We're going to give those back to them, and they're going to test them again. And, like I said, we are sampling multiple cell phone customers. And when you do that, typically, it's 9 to 12 months, as I mentioned, on how long it takes them to qualify the battery. Because you remember, we're talking about a 1,000 cycle battery, which means they have to charge and discharge it for 1,000 cycles to make sure it's OK. That'll take 9 to 12 months.

And theyre going to test them again, and like I said, we are sampling multiple cell phone customers.

And when you do that typically it's nine to 12 months as I mentioned on how long it takes them to qualify the battery because you remember we're talking about a thousand cycle battery, which means they've got a child decided 4000 cycles to make sure. It's okay.

That'll take some that'll take the nine to 12 months and and then you know we get designed into.

Speaker: And then we get designed into, if things go really well, maybe multiple models. They'll start with one model. If things go really well, maybe you'll have multiple OEMs.

If things go really wrong, maybe multiple models they'll start with my model I think is going to leave out maybe you'll have multiple Oems. So.

Speaker: So the amount of volume that we need is going to depend upon how these qualification cycles go. And that's going to determine how much capacity we need to build. We do have one line now that can produce, as I mentioned, 9 million batteries or so a year.

The amount of volume that we need is going to depend upon how this qualification cycles go and that's going to get how much capacity, we need to build.

We do have one line now that can produce as I mentioned around 9 million batteries or so a year and we're going to be watching those customer qualifications closely and may.

Speaker: And we're going to be watching those customer qualifications closely and making decisions on how to make sure we have enough capacity based on how the design wins are going. And that's something that, as this year goes by, we'll continue to update you on.

Making decisions on how to make sure we have enough capacity based on how the design wins are going and that's something that as this year go through we'll continue to update you on that.

Speaker: And as a follow-up, Ajay, you spoke a bit about yield on the last podcast, and you mentioned a bit about throughput just now in the video. You know, from your perspective, how is the equipment as a whole?

Got it and then as my follow up RJ, you spoke a bit about yield on the last podcast on you mentioned a bit about throughput just now on the video from your perspective policy equipment.

Speaker: I know you guys did a bunch of proof of concept tests, so I'm just curious about your thoughts and confidence level around, you know, everything together hitting sort of that 1350 pH metric, and share any incremental details on, you know, how throughput is tracking as well. Thanks.

As a whole I know you guys did a bunch of proof of concept task.

I'm just curious your thoughts on confidence level around everything together hitting sort of about $13 50, you ph metric.

And share any incremental details on how throughput is tracking as well thanks.

Speaker: Sure. Yeah, good question. The yields. I mean, as a part of the SAT, as Raj mentioned, we are doing some rigorous, you know, just take one example, the laser. For example, there's about 25, 26 critical-to-quality parameters that we track.

Sure.

But yes, I mean as a part of it.

As I've mentioned.

Mentioned.

The bigger.

Yeah, the Big One example.

Or for example, it was about 35 46.

That number goes up your bag, they're bringing them back into equity.

Speaker: They're doing that in SAT, making sure the CPE and the CPKs of that are at a good level, more than 1.0 CPK level. We'll further fine tune that to 1.33. But yeah, fairly, fairly, looking fairly good that when we clear the FAT, that the yield on certain, you know, critical processes throughout the line, from our learnings in Fab 1, we'll not only hold, but we'll start at the right time at the right place. So you'll, you know, kind of feeling more and more confidence we're gaining actually as we finish the FAT. The POCs helped us design the equipment right.

It would be in the back there.

Good morning.

One zero.

It would be good level.

When you Peel back the worldwide.

Looking very good that we are going to be clear the F N b.

U S onshore doesn't you know critical path.

And what we're learning things bad one.

Not on the board, but you know, let's start at the right time.

Right.

You know kind of looking.

More and more confident theyre getting equity I agree with it every day.

He has helped US design they grew up on right now.

Speaker: Now the FATs are helping us ensure that the yields are going to hold. And then the SAT, which is going to happen here, some of it has already started. In fact, the machines behind me are going through SAT right now and are going to assure that the fine tuning will help us get that yield even at a better place, right? So that's yield. UPS wise, Zone 2 and 3 is really the battery line, which runs at or will run at 1350 UPS.

I would think of ensuring that the yields are going to work and then the S&P, which was going to happen here couple of where to go or departed.

But shouldn't be I'd be I'd worked with it right now.

Are you going to assure that the fine tuning will help us get that you.

You wouldn't at a better place.

Nuclear was one two and three is really the battery line, which runs.

Ron said or what I put it.

Speaker: Zones 1 and 4, we're tuning it to act as a farm. And we'll do 1350, but we can keep on adding to that, you know, to make sure it is the bottleneck. So 1 and 4 are the farm, they will be adjusted to 1350. 2 and 3 are the ones which are kind of locked in.

The only one in four fueling who as a barb and we'll go to 13 50, but if we can keep on adding that to make sure.

So what and for our farms.

Yeah.

We are the ones, which are kind of locked in.

Speaker: And we're feeling good about both of these things. Our next question comes from Anthony Stoss with Craig Helm. Please unmute your audio and ask your question. Hey Raj, a lot of my questions were asked, but maybe now that you've had Route Jade under your belt for a while, can you update us on what you've learned from Route Jade and, then also, just to get Farhan in the action here, just your view on OPEX for March and where OPEX is going for the rest of the year? Yeah, Routged.

Good about both what do you think.

Yeah.

Our next question comes from Anthony Stoss with Craig Hallum.

Audio and ask your question.

A lot of my questions were asked and maybe now that you've had <unk> under your belt for a while can you update us what you've learned from <unk> and then also just to get Farhan in the action here.

Your view on Opex for March and where trends through the rest of the year.

Speaker: You know, I visited the factory a few months ago. We are super thrilled by the acquisition. It's really phenomenal.

Yeah all good.

I visited our factory I think a few months ago.

Our super thrilled by the acquisition, it's really phenomenal I mean, this company has been making production batteries shipping for over 20 years and and it's an expertise that are that really complements what we have in the company.

Speaker: I mean, this company has been making production batteries and shipping them for over 20 years. And, and it's an expertise that really complements what we have in the company. They understand battery manufacturing, they understand safety, they understand different end markets. And, more importantly, their coating expertise is phenomenal.

They understand battery manufacturing they understand safety they understand.

Current end markets.

And more importantly, their coding expertise is a phenomenon so.

Speaker: So, you know, the thing I want to mention is that when you quote a job properly to the right specifications, it makes it much easier to cut it on the laser and stack it. So it's very important you know the quality and specification of the incoming material. And that's one of the problems we had when we were running in gen one, that we were relying on third-party toll booths who, you know, weren't that motivated to really code it like how we wanted it. Because, you know, you gotta remember, we don't just take rolls and make them jelly rolls like other people that they used to supply to. We cut them with lasers, so they're very different, and we stack them.

But the thing I want to mention is that when you caught it all properly to the right specifications at.

It makes it much easier to cut it on the laser and to stack. It. So it's very important you own the.

The incoming material quality and specification and which is one of the problems. We had when we were running in Gen. One that we are relying on.

Third party toll quarters, who want that motivated really recorded like how we wanted it because you don't you've got to remember we don't just take roles and make them Gilead also like other people that they used to supply we caught them at laser. So they are very different and we stack them. So it's a you know I realized when I came in last year that it was a key piece of the manufacturing process we absolutely.

Speaker: So it's, you know, I realized when I came in last year that it was a key piece of the manufacturing process that we absolutely needed. And now, you know, we are using that capacity for IJ to do FAT and SAT and so on. So when that material comes out, we're able to quickly go back and forth between making sure its coating is right and the laser cutting is right, and so on.

Needed and now.

We are using that debt capacity to even for Iga to do as I said and I said to you and so on so then material comes out being able to quickly go back and forth between making sure. It's coating is right in the laser cutting is right and so on so it's like an end to end optimization. The second thing we found is that.

Speaker: So it's like an end-to-end optimization. The second thing we found is that, you know, the team at Rodgers has two things that they do really well, in addition to the things I mentioned. They know how to make high-current batteries. So these are batteries that can actually propel things like run electric motors, run drones, run military applications.

The team at <unk> has.

Two things that they do really well in addition to the things I mentioned they're.

They know how to make high.

Hi current batteries. So these are batteries that can actually propel things like run electric motors run drones and military applications.

Speaker: That's a very unique value proposition that we are now looking at how to extend the customer breadth there. And the second one is they can make odd-shaped batteries. They can make donut batteries, they can make different-shaped batteries because of their ability to the way they laminate and the way they stack batteries.

That said very unique value proposition that actually we are able to now looking at how to extend the customer breadth there.

Second one is they can make.

Akshay batteries, they can make dawn at batteries that can make differentiate batteries because of their ability to the way the laminate in the way the stack batteries. So we have some customer base are actually overlaps that.

Speaker: So we have some customer base that actually overlaps that we're able to now go in and also present some of the some of the silicon anode based batteries. And, but some customer base where we're able to sell RoutGED made, you know, graphite batteries. And so we will continue to spend more time and grow the revenue of that company that we acquired. I mean, it's one team now.

And that we're able to now go in and also presented some of the some of the silicon anode best batteries, and but some customer base where.

We were able to sell Oh, Jed made graphite batteries and so we will continue to spend more time and grow the revenue of the company that we acquired I mean, it's a one team now so super exciting and it's a very fortuitous that we were able to get the acquisition done quickly.

Speaker: So, super exciting. And it's very fortunate that we were able to get the acquisition done quickly. So, yeah, touching on the OPEC side, from Q4 to Q1, it should be a similar level. From Q1 to Q2, there should be a decline because of the $18.5 million of the depreciation that we talked about and also because of the actions that we have taken in Fremont.

So yes. It does in the on the Opex side from Q4 to Q1, it should be similar level.

From Q1 to Q2, there should be a decline because of the 18 and a half.

Of the depreciation that we talked about and also because of the actions that we've taken in Fremont and there's some of those benefits will come through.

Speaker: Some of those benefits will come through, so you should get additional, low single-digit kind of a benefit like that should also decline, and then for the year after that, we should be holding it steady, maybe going up slightly towards the end of the year for the full year. Like, for example, if you look at the EBITDA of the company, you should kind of think of it for the full year very similar to what we had in 23 and you know fairly Best of luck, guys! Thank you. Our next question comes from Gabe Daoud with Cohen. Please unmute your audio and ask your question. Thank you. Thanks, everyone, for all the prepared remarks and Ajay for the great video. Raj was hoping we could maybe just go back to EX-1M and EX-2M. There's already been a lot of discussion around it, but I was just curious if you could maybe quantify what the energy density targets are for each and just how that compares to leading-edge mobile phones in the market today.

So you should get additional.

Low single digit kind of a benefit.

That should also decline and then for the year.

After that we should be holding steady maybe go up slightly towards the end of the year for the full year like handled like if you look at the EBITDA of the company you should kind of think of it for the full year very similar to what we had in 'twenty three.

And fairly steady through the year as well.

Pretty good best of luck guys. Thank you.

Our next question comes from the.

How long does that meet your audio and ask your question.

Thank you thanks, everyone for all the prepared remarks, and I was there for the for the Great video.

I was hoping we could maybe just go back to the X one M N E X to them, there's already been a lot of discussion around it but just curious if you could maybe quantify what the energy density targets are for each and just how that compares to a leading edge mobile phones in the market today.

Yeah.

Speaker: Yeah, we haven't put out exactly a precise target, mainly because we are making the right, I would say, trade-off between energy density, cycle life, fast charge, safety, and then and then also fast charge. And that's very important. It'll definitely be higher than what is in the market today. I think, and we put some slight variations we put in our investor deck on what we expect to get on EX2M. Where exactly EX1M will land is a decision we're going to make together with our customers. As I mentioned, it's not just one parameter that drives a dozen driver design wins. It's the sum total of all those five parameters that we need to be thinking about.

We haven't put out exactly a precise target mainly because we.

We're making the right.

I would say tradeoff between energy density cycle life fast Judge safety and then and then also the <unk>.

Past, Josh and Thats very important.

It'll definitely be higher than what is in the market today.

And we put some slight we put in our investor deck, what we expect to get to on X to them, where exactly E X one of them will land.

His decision, we're going to make together with our customers as I mentioned, it's not just a one parameter that drives it doesn't drive design wins.

It's a sum total of all those parameters that we need to be thinking about and that's where we're focused on it'll definitely improved over what's in the market for sure. We just want to make sure that we did it right with our customers because they also I didn't want it now and the tradeoff that that you want to make to get the right battery in time.

Speaker: And that's where we are focused. It'll definitely improve on what's in the market, for sure. We just want to make sure that we did it right with our customers, because they also are involved now in the trade-off that they actually want to make to get the right battery. In time.

Speaker: Yep, okay. Okay, guys, that makes sense. Certainly a lot of parameters you need to solve for depending on the customer.

Okay. Okay got it that makes sense certainly a lot of our parameters that you need to solve for it depending on the customer.

Okay. Then just as a follow up are very clear on when E X one M and E X two of them are expected to be a shift for customers to ship for our customers to sample but.

Speaker: Okay, then just as a follow-up question. Very clear on when EX1M and EX2M are expected to be shipped for customers to sample, but when will the cells actually be coming off the high volume manufacturing line? I guess I'd imagine that some customers would want to see cells off of that line as part of the qualification process too. But is that within the 9 to 12 month window that you talked about? The short answer is yes. The good news is that our agility line and the high volume manufacturing line use the exact same modules. So in that sense, it's also from the same place. They're both in Malaysia, in the same factory that you see where Ajay is right now.

When will the cells actually be coming off the high volume manufacturing line I guess I'd imagine that some customers will want to see sales off of that line as part of the qualification process to was that within the nine to 12 month window that you talked about.

The short answer is yes. The good news is our agility line and the high volume manufacturing line use the exact same modules. So in that sense. It's and also from the same place that are bought in Malaysia in the same factory that Youll see that Ajay is right now so in that sense that it's a lot of similarity. So our expectation is that once they get samples from one.

Speaker: So in that sense, there is a lot of similarity. So our expectation is that once they get samples from one, moving to the other one, it should be a short cycle time call because they're really the same machines. It's just the scale is different, which is actually a very key part of our strategy to reduce that cycle time. But ultimately, look, we'll get them the samples. But the exact qualification time, like I said, is going to depend upon the phone level of qualification. And when I talk to my customers, they basically tell me, look, Raj, depending upon how good your first samples are and where we put them, anywhere between 9 and 12.

Moving to the other one it should be a short cycle time call.

Because they are really the same machines is just the scale is different which is actually a very key part of our strategy to reduce that cycle time.

Look we'll get them the samples, but the exact qualification time like I said is going to depend upon.

One level of qualification and then I talked to my customers. They basically tell me look Roger depending up on how good you have a sample side and where do we put it anywhere between nine and 12 and that's kind of what we're looking at working towards.

Speaker: And that's kind of what we are working towards. Okay. Okay. Got it. Got it. Great. Thanks, Russ. Our next question comes from... Our next question comes from Ananda Baruah with Loop Capital Market. Please unmute your audio and ask your question.

Okay. Okay got it got it great. Thanks Ross.

Absolutely. Our next question comes.

Our next question comes from Ananda Baruah from loop.

Capital markets.

I mean, your audio and ask your question.

Speaker: Yeah, good afternoon, guys. Thanks for taking the questions. I really appreciate it. I guess the first one is for Ajay, if you're still online, Ajay.

Yeah. Good afternoon, guys. Thanks for taking the questions really appreciate it.

I guess the first one maybe is for Ajay if you saw in line RJ.

Speaker: Just to the earlier question about yields, is there a useful way to think about where you guys think yields will be, you know, in fact, who will be in April, May, when you start putting out legitimate samples, and then are there yield targets through the year as well? And I guess I have a quick follow-up, but what's the value of the yield targets that you guys have as well? And I have a quick follow-up after that. Thanks. It is a good question, Ananda.

Just to the earlier question about about yields is there a useful way to think about where you guys think yields.

In fact, it will be.

In April May when you start start putting out we're getting the samples and then their yield target.

Through the year as well and I guess I have a quick follow up but like what what's the value of the target that you guys have as well.

Yeah, a quick follow up after that thanks.

Good question.

Speaker: So all the learnings and all the root cause analysis that we have done on the Gen 1 yields for the last whole year, we have been sort of ramping up, ratcheting it up slowly. Where we ended in Gen 1, that's where we will begin in Gen 2. All the learnings have been incorporated into the Gen 2 equipment and the design.

So the all the learnings and all the root cause analysis battle, but what.

Yeah.

For the full year that we are in sort of ramping up ratcheting it up slowly.

And what that's where we will begin.

And through all of the learnings have been completed.

And then boom.

Speaker: And what Gen 1 could not provide, we have you know, made sure the design accommodated that here in Gen 2. So we'll start there. Pretty decent yield. Mostly all CPK windows are process driven.

And the design.

What we didn't want to not go wide.

Sure.

The design I, probably did that here in Denver.

Start there.

Pretty decent yield.

All.

Your windows or the process driven more than 1.11.

Speaker: More than 1.1, 1.2 CPK kind of thing for every process step. There are several yield points during the line. So you can multiply those, and you'll get a pretty decent yield. But then immediately after that, you know, all the fine tuning, and within three quarters, we are going to deliver, you know, upwards of 90% plus yield in the Gen 2 line. That's how we are thinking, and that's how we are actually planning. And the SATs are supporting that, so that's super helpful. Thanks. Yeah. Super helpful. And I guess the follow-up is: Maybe this is for Raj and Farhan as well.

Oh boy.

There are several viewpoint during the life.

And you know you've got a pretty decent yield, but then immediately after that you know all the fine tuning and within the Threep water.

They were you know upwards of 90% plus.

In the in the dental life, that's how we're thinking and that's all you're planning actually in the equity it could be that was supporting that.

So that's super helpful. Thanks Super.

Super helpful and I guess the follow up.

Maybe just for for Raj and Farhan as well like what in terms of your margin model right. So, let's say you hit.

Speaker: In terms of your margin model, right, so let's say you hit the 90% plus yield targets that Ajay just spoke about, is that at scale margins? Is that in the margin model? I guess where you are in the margin model when you start shipping volumes of those kinds of yields to initial customers at production? Yeah, that's the right number. That's the right number to think about. I mean, look, this is consumer products, right? I mean, we've all done this with the process and memories, and I have done it for, I don't know how many decades.

The 90% plus yield targets that that as you just spoke to.

What is.

Is that at scale margins as that in the margin model I guess, where are you in the margin model when you started shipping.

Volumes at those kinds of deals into your initial customer production production.

Yeah, that's the right number that's the right number to think about I mean look this is consumer products right.

All done this with the processors and memories and RJ and I have done it for I don't know how many decades, but you got to get to 90 plus percent yields I mean high Ninety's is where we really need to get to but.

Speaker: But, you know, you got to get to 90 plus percent yields. I mean, the high 90s is where we really need to get to. But, you know, we have premiums that we believe we can come in on because of what we're able to provide. And that will help us for a while. But ultimately, we have to get to those numbers, and I think we factored that in into how the FAT is done and the SAT is done. And that's kind of the important part here is that the acceptance criteria for the machines is to be running at that level of CPK. So that when we get them, we string them all together, you know, it shouldn't take, hopefully, a lot of optimization to get to target yield.

But you know we have premiums that we believe we can come in because of what we're able to provide and that will help us for a while but ultimately we got to get to those numbers.

And I think we factored that in into how the fed is done unless it is done and thats kind of important part here is that the acceptance criteria for the machines used to be running at that level of <unk>. So that when we get them the string them altogether. It shouldnt take hopefully shouldnt take a lot of optimization to get to target deals. So that's kind of.

Speaker: So that's kind of what we're planning. Okay, awesome. Thanks a lot.

What we're planning.

Okay awesome. Thanks, a lot appreciate it.

Speaker: Appreciate it. Our next question comes from Chris Feller with B. Reilly. Please unmute your audio and ask your question.

Our next question comes from Chris <unk>.

All right.

Speaker: Hey guys, thanks for taking my question. I just wanted to follow up on you talking about a 9 to 12 month period to qualify for some of these wins. Is that after DX1M is already in customers' hands, or are we already in that like 9 to 12 months with some of the samples of prior sales you supplied to some of these customers, and then, you know, should we think about is there kind of a lead time out, you know, between design in and kind of a launch that's a good kind of rough time frame we should expect? I just wanted to kind of get a little bit more on the rhythm there.

The audio and ask your question.

Hey, guys. Thanks for taking my question I just wanted to follow up on you talked about a nine to 12 months to qualify.

For some of these wins is that.

Or one of them is already in customers' hands or we already about like nine to 12 months with some of the samples of pride ourselves ease acquired some of these customers and then.

Should we think about it is there kind of a lead time between design. It in kind of a launch that's a good kind of rough.

The timeframe, we should expect just wanted to kind of get a little bit more on the cadence there.

Speaker: Yeah, that is what they will do after we deliver the samples from for in April from our factory, right? I mean, what we have done previously has really helped them understand our technology and how it works and so on. But the product that's actually targeted to go into the cell phone is the 1000 cycles, fast charging product, which is one we want to sample in April. And that's when you can think of the clock starting.

Yes that is what after we delivered the samples from for in April from our factory right. I mean, what we have done previously has really helped them understand our technology and how it works and so on but the product that's actually targeted to go into the cell phone is a thousand cycles fast charging product, which is one we wanted to sample in April and that's when you know you.

Think of the clock starting.

Speaker: Now, you know, typically, my experience in these kinds of things is that we will get to a model that we're going to be in, and then there will be technology evaluation where they're just evaluating the battery in isolation in terms of the tests and so on. Then they'll actually pass that, then they'll actually put it in an actual phone model, and that'll go on for some time. And then the precise phone it will go into is the one that happens next.

No.

Well you know typically my experience in these kind of things is that.

We will get to a model that we're going to be in there'll be technology evaluation. We're just evaluating the battery in isolation in terms of the tests and so on then they'll actually passed that then they'll actually put it in actual phone model and that'll go on for some time.

And then at the precise point it'll go into is the one that happens next so that's the total period of nine to 12 months.

Speaker: So that's the total period of 9 to 12 months. The actual design of what model we are on will come just a few months before high volume typically doesn't, they don't decide way ahead. But, but the good news is once you pass the technology qualification, once you're on their vendor list, subsequent models can come much faster because you're now inside. Right?

The actual design win of what model there and will come in just a few months before high volume typically doesn't.

They don't decide way ahead, but but the good news is once you're past the technology qualification once you're in the India.

In their vendor list a subsequent models can come much faster because youre now insight right and that's what my experience has been previously with memories and process. The first one takes a little longer once we get them all on models can come faster.

Speaker: And that's what my experience has been previously with memories and processes. The first one takes a little longer. Once we get in, follow-on models can come faster. And then maybe just on the Routgade contribution in the fourth quarter. Can you update us on what the run rate is for that legacy business? It seemed a little bit, you know, stronger than I had been expecting, at least.

Understood and then maybe just on the <unk> contribution in the fourth quarter can you update us on what the run rate is for that for that legacy business seemed a little bit stronger.

Speaker: Yeah, no, I can talk about that. So, in the fourth quarter, routier business tends to be stronger. There's normally a seasonality associated with it. So, for the year, the seasonality is that the second quarter is kind of the low point. The fourth quarter is the strong point, generally speaking.

Back to you at least.

Yes, no I can't I can talk about that so in the fourth quarter rounded business tends to be stronger.

There's normally a seasonality associated with it so be it for the year. The seasonality is that the second quarter is kind of the low point in the fourth quarter as the <unk>.

Speaker: This year, in 23, what we saw was that there was a bunch of business that was at the end of the year and the beginning of 24, so end of 23, beginning of 24, and a lot of that got shipped in 23. So, that was a factor where revenue came in stronger. And also, like, you know, the quarter-on-quarter decline, also contributed to it.

Strong point generally speaking.

This year in 'twenty, what we saw was that there was a bunch of business that was.

At the end of the beginning of 'twenty four signed off going into the beginning of 'twenty four and a lot of that got shipped in <unk> and.

<unk> 23, so that was a factor of where the revenue came in stronger.

And also like you know quarter on quarter decline also a contributor to it. So generally speaking the for the first three quarters, you should think of it.

Speaker: So, generally speaking, though, for the first three quarters, you should think of it as about 18 million annualized run rate, and then the fourth quarter being stronger. So, and with, like, you know, the fourth quarter of 23 being somewhat exceptionally stronger. Our next question comes from Tim Moore with E.F. Hutton. Please unmute your audio and ask your question.

About 18 million annualized run rate and then fourth quarter.

<unk>.

So and like you know the fourth quarter of 'twenty, three being somewhat exceptionally stronger.

Okay.

Yeah.

Our next question comes from Ken Moore with E F Hutton.

Speaker: Thanks, and most of my questions were already answered. But regarding, you know, you mentioned the 90% yield gold commentary two questions ago. Can you maybe give us, you know, a rough, better sense, and we won't hold you to it, of the timing roadmap, maybe for potential revenues run rate? And when you look out to maybe the December quarter or the March quarter next year from the fab to sample production, if that goes pretty well, any rough thoughts on maybe what the revenue ties of that could be, you know, a year from now, quarterly? Yeah, Rodgers.

Our audio and ask your question.

Thanks.

Most of my questions were already answered but.

Regarding you know you mentioned the 90% you'll go commentary two questions ago.

Can you maybe give us a.

A rough better sense, we won't hold you to hold you to it.

The timing roadmap, maybe for potential revenues run rate.

And when you look out to maybe the December quarter or the March quarter next year from the fab two sample production.

If that goes pretty well.

Any rough thoughts on maybe what the revenue tied to that could be.

For mountain quarterly.

Yes.

Speaker: Yeah, go ahead, Mark. Now, I was just saying that, you know, we are guiding one quarter at a time. And so, you know, we'll get to that when we get to it. But, you know, we kind of talked about the timing of the production ramp, and we talked about how we gave you some good color on that. And we have given, you know, 25 that we will be in smartphones. And, you know, so you will have a revenue ramp associated with that. I don't know.

Yeah go ahead.

No I was just saying that you know we're guiding one quarter at a time.

So we will get to it when we get through it but you know you'd be kind of talked about the timing of the production ramp and you talked about when we gave you. Some good color on that and we have given like you know 25 that we will be in smartphones.

You will have a revenue ramp associated with it that I don't know.

Speaker: Yeah, I mean, absolutely. I mean, look, we're going to sample products from our fab two in April. And, you know, hopefully, there'll be some IOT type customers that can go to production earlier in twenty four, but the smartphone ones will really be in twenty five. So I think that's just the way you guys should be thinking about this. You know, and again. Super excited by the technology and the acceptance of the customer base. You know, once we qualify, it's just gonna be a lot more fun.

Absolutely I mean look we're going to sample products from our our fab two in April and so.

Hopefully there'll be some some Iot type customers that can go to production earlier in <unk> and 'twenty four but the smartphone months will really be in 25. So.

Yeah, I think that's just the way you guys should be thinking about this.

And again.

Super excited by the technology and the acceptance of the customer base once.

Once we quantify you know it's just a.

Speaker: That's good. Yeah, I think you were pretty clear on the 2025 timing for smartphones. But the IoT, you know, that could be pretty promising, maybe towards the end of the year. The other question I had just on smartphones. I mean, I mentioned it was a sum total of parameters, and there are trade-offs.

I'm, just going to be a lot more fun so.

So that's good yeah, I think you were pretty clear on the <unk>.

2025 timing for the smartphone, but the Iot pretty promising maybe towards the end of the year and the other question I have is on smartphone.

I mean, I mentioned it was a sum total of parameters and there's trade offs.

Speaker: You know, if you get asked during qualifications and maybe pilot, do you think you could get asked to do an exclusive contract for a major OEM customer and make you do a unique specification exclusively for them, or is that something you wouldn't consider? Yeah, I mean, look, it's just a business case, right? I mean, if there's guaranteed volumes and a good ASP, we're totally open to it. But by the way, the nature of this business, you know, what I expect to happen is that we'll probably, you know, sign some joint development agreement or something like that. And then they'll talk about, you know, what size battery they want, what size battery we make, what time the yield is. And, and that's how these things typically go, from my experience, but, In some way, it will become a little bit exclusive because of the shape of the battery, not the technology itself.

You know if you get asked during qualifications and maybe pilots.

Do you think you could get asked to do an exclusive contract for a major OEM customer I think you do.

Specification exclusively for them or or is that something you wouldn't consider.

Yeah, I mean look.

It's just a business case right. So this is guaranteed volumes and good asps, we're totally open to it.

But by the way the nature of this business is that.

What I expect to happen is that we'll probably find some giant particularly meant or something like that and then they will talk about.

What size battery they want what side battery, we make what time is it yield and and that's how these things go typically from my experience but.

I mean, some of it will become a little bit exclusive because of the shape of the battery not the technology itself right.

Speaker: Brett. Okay, that makes sense. Well, thanks and good luck with the April sampling, and that's it for my question. Thank you. There are no further questions at this time. With that, I'd like to turn it over to Dr. Raj Pilluri for closing remarks. Yeah, thank you all. It has been a really great year and 23 recap. Super excited by where we are on 24. So I look forward to talking to you guys next quarter. Thank you for all your interest.

Uh huh.

Okay that makes sense well, thanks, and good luck with the April sampling and that's it for my questions.

Thank you.

Fair enough, but there are no further questions at this time with that I'd like to turn it over to Dr. Raj Hillary for closing remarks.

Yeah. Thank you all been a really great year in 'twenty three recap Super excited by where we are in 24. So I look forward to talking to you guys next quarter. Thank you for all your interest.

Yeah.