Q4 2026 Aehr Test Systems Earnings Call

July 14, 2026

Operator: Good afternoon. Thank you for holding. Your conference will begin very shortly. Please remain on the line. Your conference will begin in just a couple of minutes. Good day. Welcome to the Aehr Test Systems Fiscal 2026 Q4 and full-year conference call.

Speaker #1: Good day. Welcome to the AEHR Test Systems fiscal 2026 fourth quarter and full year conference call. At this time, all participants are in a listen-only mode.

Operator: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jim Byers at PondelWilkinson, Inc. Investor Relations. Jim, you may begin.

Speaker #1: A question-and-answer session will follow the former presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad.

Speaker #1: Please note, this conference is being recorded. I will now turn the conference over to your host, Jim Byers at Pondel Wilkinson Investor Relations. Jim, you may begin.

Speaker #2: Thank you, operator. Good afternoon, and welcome to AEHR Test Systems' fiscal 2026 fourth quarter and full year financial results conference call. With me on today's call are AEHR Test Systems' President and Chief Executive Officer, Gayn Erickson, and Chief Financial Officer, Chris Siu.

Jim Byers: Thank you, operator. Good afternoon, welcome to Aehr Test Systems' Fiscal 2026 Q4 and full-year financial results conference call. With me on today's call are Aehr Test Systems President and Chief Executive Officer, Gayn Erickson, and Chief Financial Officer, Chris Siu. Before I turn the call over to Chris and Gayn, I'd like to cover a few quick items. This afternoon, right after market close, Aehr Test issued a press release announcing its Fiscal 2026 Q4 and full-year results. That release is available on the company's website at aehr.com. This call is being broadcast live over the internet for all interested parties, the webcast will be archived on the investor relations page of the company's website.

Speaker #2: Before I turn the call over to Chris and Gayn, I'd like to cover a few quick items. This afternoon, right after market close, Aehr Test issued a press release announcing its fiscal 2026 fourth quarter and full year results.

Speaker #2: That release is available on the company's website at aehr.com. This call is being broadcast live over the internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company's website.

Speaker #2: And I'd like to remind everyone that on today's call, management will be making forward-looking statements that are based on current information and estimates and are subject to a number of risks and uncertainties.

Jim Byers: I'd like to remind everyone that on today's call, management will be making forward-looking statements that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors are discussed in the company's most recent periodic and current reports filed with the SEC. These forward-looking statements, including guidance provided during today's call, are only valid as of this date, Aehr Test Systems undertakes no obligation to update the forward-looking statements. Now, with that said, I'd like to turn the call over to Gayn Erickson, president and CEO.

Speaker #2: They could cause actual results to differ materially from those in the forward-looking statements. These factors are discussed in the company's most recent periodic and current reports filed with the SEC.

Speaker #2: These forward-looking statements, including guidance provided during today's call, are only valid as of this date, and AEHR Test Systems undertakes no obligation to update the forward-looking statements.

Speaker #2: Now, with that said, I'd like to turn the call over to Gayn Erickson, President and CEO.

Speaker #3: Thanks, Jim. Good afternoon, everyone, and welcome to our fiscal 2026 fourth quarter and full-year earnings conference call. I'll start with an update on the key markets driving our business, including the strong demand we're seeing in the AI and data center infrastructure markets.

Gayn Erickson: Thanks, Jim, and good afternoon, everyone, and welcome to our fiscal 2026 Q4 and full-year earnings conference call. I'll start with an update on the key markets driving our business, including the strong demand we're seeing in the AI and data center infrastructure markets, as well as the significant progress we've made this year in diversifying and expanding our end markets. Chris will then go over and review our financial results and open up the call for questions. We're very pleased with our fiscal Q4, which exceeded consensus street expectations and capped a year of significant bookings and revenue diversification for Aehr. Record quarterly bookings, a very strong and record backlog, and growing demand across AI processors, silicon photonics, and power semiconductors for both our wafer level and package level burn-in solutions positions us well for significant growth in 2027 and moving forward, fiscal 2027, that is.

Speaker #3: As well as the significant progress we've made this year in diversifying and expanding our end markets. Chris will then go over and review our financial results, and open up the call for questions.

Speaker #3: We're very pleased with our fiscal fourth quarter, which exceeded consensus Street expectations and capped a figure of significant bookings and revenue diversification for AEHR. Record quarterly bookings, a very strong and record backlog, and growing demand across AI processors, silicon photonics, and power semiconductors for both our wafer-level and package-level burn-in solutions position us well for significant growth in '27 and moving forward—fiscal '27, that is.

Speaker #3: We have strong momentum and a record backlog heading into fiscal '27. We're expecting revenue of between $130 million and $150 million, representing 2.6 times to 3 times the just-completed fiscal '26 revenue.

Gayn Erickson: With strong momentum and a record backlog heading into fiscal 2027, we're expecting revenue of between $130 million and $150 million, representing 2.6 times to 3 times the just completed fiscal 2026 revenue. non-GAAP pre-tax profitability at these levels is expected to come in between 18% and 22%. With current customer forecasts that we're seeing across our wafer level and package level burn-in platforms, we see the opportunity to increase our revenue guidance even higher as additional orders materialize. We believe we're not capacity limited, even at the $150 million revenue levels. To illustrate the progress we've made in diversifying into additional high growth markets, just 2 years ago, over 95% of our business was tied to silicon carbide for electric vehicles, whereas today, almost 95% of our fiscal year 2026 revenue came from markets not electric vehicle silicon carbide.

Speaker #3: Non-GAAP pre-tax profitability at these levels is expected to come in between 18% and 22%. With current customer forecasts that we're seeing across our wafer-level and package-level burn-in platforms, we see the opportunity to increase our revenue guidance even higher as additional orders materialize.

Speaker #3: We believe we're not capacity-limited even at the $150 million revenue levels. To illustrate the progress we've made in diversifying into additional high-growth markets, just two years ago, over 95% of our business was tied to silicon carbide for electric vehicles, whereas today, almost 95% of our fiscal year '26 revenue came from markets not related to electric vehicle silicon carbide.

Speaker #3: Reliability and production wafer-level burn-in screening for AI accelerators, CPUs, and network processors were our fastest-growing markets this year, representing approximately 71% of our total annual revenue.

Gayn Erickson: Reliability and production wafer level burn and screening for AI accelerators, CPUs, and network processors were our fastest-growing markets this year, representing approximately 71% of our total annual revenue. Optical device test and burn-in for data center infrastructure transceivers, chip-to-chip IO, and hard disk drives accounted for another 20%. We expect both of these markets to grow significant in fiscal 2027. We're seeing encouraging signs of recovery in the silicon carbide market, as well as new growth opportunities for power semiconductors, such as in gallium nitride and even silicon-based power MOSFETs used in both automotive and AI data center applications. Let me provide an update on several of the key markets and customer initiatives. I'll start with wafer level burn-in. Demand from AI-related applications continues to accelerate.

Speaker #3: Optical device test and burn-in for data center infrastructure transceivers, chip-to-chip I/O, and hard disk drives accounted for another 20%. We expect both of these markets to grow significantly in fiscal 2027, and we're seeing encouraging signs of recovery in the silicon carbide market, as well as new growth opportunities for power semiconductors such as gallium nitride and even silicon-based power MOSFETs used in both automotive and AI data center applications.

Speaker #3: So let me provide an update on several of the key markets and customer initiatives. And I'll start with wafer-level burn-in. Demand from AI-related applications continues to accelerate.

Speaker #3: Our lead AI processor wafer-level burn-in customer is significantly ramping their products, driving an increase in forecasted capacity needs for our FOX systems and proprietary WaferPak full wafer contactors this year and over the next few years.

Gayn Erickson: Our lead AI processor wafer level burn-in customer is significantly ramping their products, driving an increase in forecasted capacity needs for our FOX systems and proprietary WaferPak full wafer contactors this year and over the next few years. This past year, they've ordered our fully automated WaferPak aligners to integrate with their installed base, doubled their systems from us, and are forecasting significant increases in wafer allocation from their foundry this year and into the future. This had been a challenge to their growth over the last year. We're happy to see them move all production burn-in screening to wafer level burn-in on our systems this past year. They no longer need to perform any system-level screening of their products.

Speaker #3: This past year, they've ordered our fully automated wafer pack aligners to integrate with their installed base, doubled their systems from us, and are forecasting significant increases in wafer allocation from their foundry this year and into the future.

Speaker #3: This had been a challenge to their growth over the last year. We're happy to see the move to all production burn-in screening being done at wafer-level burn-in on our systems this past year.

Speaker #3: They no longer need to perform any system-level screening of their products. This customer sees AEHR as a critical supplier, and we're working to ensure we can meet all their capacity needs, as they forecast significant growth in system purchases and wafer packs this year and over the next few years.

Gayn Erickson: This customer sees Aehr as a critical supplier, and we're working to ensure we can meet all their capacity needs as they forecast significant growth in system purchases and WaferPaks this year and over the next few years. In addition, we're engaged with additional AI processor customers who are evaluating wafer level burn-in to improve their product reliability and reduce yield loss from production burn-in of their devices later in the manufacturing process. This includes one of our largest package level burn-in customers, who's now asking us about a wafer level burn-in evaluation for future production of one of their AI accelerators and CPUs. This is in parallel with ensuring we can meet their package level burn-in needs with our Sonoma systems.

Speaker #3: In addition, we're engaged with additional AI processor customers who are evaluating wafer-level burn-in to improve their product reliability and reduce yield loss from production burn-in of their devices later in the manufacturing process.

Speaker #3: This includes one of our largest package-level burn-in customers, who is now asking us about a wafer-level burn-in evaluation for future production of one of their AI accelerators and CPUs.

Speaker #3: This is in parallel with ensuring we can meet their package-level burn-in needs with our Sonoma systems. A key advantage of our proprietary WaferPak contactor technology is its ability to manage individual die temperatures, enabling significantly better thermal management than conventional package-level approaches.

Gayn Erickson: A key advantage of our proprietary WaferPak contactor technology is its ability to manage individual die temperatures, enabling significantly better thermal management than conventional package level approaches. Our systems can process up to a quarter of a wafer at a time, with as many as 9 wafers tested in parallel, delivering a compelling combination of throughput and cost efficiency. Let me provide an update on our wafer level burn-in evaluation with a major supplier of AI accelerators, CPUs, and network processors. We're excited to report that we successfully completed the benchmark testing of our wafer level burn-in solution on one of their processors, achieving results that exceeded their expectations and, in their words, produced results better than they can get at package level.

Speaker #3: Our systems can process up to a quarter of a wafer at a time, with as many as nine wafers tested in parallel, delivering a compelling combination of throughput and cost efficiency.

Speaker #3: So let me provide an update on our wafer-level burn-in evaluation with a major supplier of AI accelerators, CPUs, and network processors. We're excited to report that we successfully completed the benchmark testing of our wafer-level burn-in solution on one of their processors, achieving results that exceeded their expectations and, in their words, produced results better than they can get at the package level.

Speaker #3: This top-tier AI processor supplier has now expressed interest in moving to pilot production test validation at their semiconductor contract manufacturer in Taiwan for their current high-volume device, which we just completed the benchmark on.

Gayn Erickson: This top-tier AI processor supplier has now expressed interest in moving to pilot production test validation at their semiconductor contract manufacturer in Taiwan for their current high-volume device, which we just completed the benchmark on. Originally, this benchmark was to evaluate wafer level burn-in for their next generation device. Instead, they indicated that based on the results, they're interested to pull this device in and to consider wafer level burn-in on this current device as well. They told us this current device is expected to continue ramping and achieve significant volumes over the next year or more. In addition, they also requested that we evaluate a second device in parallel. The potential revenue opportunity from one of these devices is significant to Aehr in terms of near and long-term revenue streams related to the wafer level burn-in systems and proprietary Aehr WaferPak contactors.

Speaker #3: Originally, this benchmark was to evaluate wafer-level burn-in for their next-generation device. Instead, they indicated that, based on the results, they're interested to pull this device in and to consider wafer-level burn-in on the current device as well.

Speaker #3: They told us this current device is expected to continue ramping and achieve significant volumes over the next year or more. In addition, they also requested that we evaluate a second device in parallel.

Speaker #3: The potential revenue opportunity from one of these devices is significant to AEHR in terms of both near- and long-term revenue streams, related to the wafer-level burn-in systems and proprietary AEHR WaferPak contactors.

Speaker #3: Turning to wafer-level burn-in for silicon photonics devices, as we have anticipated for the last year, silicon photonics devices and the need for production burn-in are now seeing strong momentum as AI data center architectures increasingly rely on optical I/O and high-speed optical interconnects.

Gayn Erickson: Turning to wafer level burn-in for silicon photonics devices, as we have anticipated for the last year, silicon photonics devices and the need for production burn-in are now seeing strong momentum as AI data center architectures increasingly rely on optical IO and high-speed optical interconnects. Our lead silicon photonics customer is ramping with follow-on orders over the past year and more already in this fiscal year for fully automated wafer level burn-in systems powering AI optical IO and data center interconnects. These systems are fully integrated with their automated wafer handling equipment, enabling fully automated high-volume production burn-in with hands-free operation using automatic guided vehicles, marking another important milestone with this long-term customer.

Speaker #3: Our lead silicon photonics customer is ramping, with follow-on orders over the past year and more already in this fiscal year for fully automated wafer-level burn-in systems powering AI optical I/O and data center interconnects.

Speaker #3: These systems are fully integrated with their automated wafer handling equipment, enabling fully automated, high-volume production burn-in with hands-free operation due to the use of automatic guided vehicles.

Speaker #3: Marking another important milestone with this long-term customer. In addition, our newest major silicon photonics customer—a global leader in networking products and solutions—has provided us with a forecast for additional systems this calendar year, as it ramps capacity to support next-generation hyperscale data center deployments.

Gayn Erickson: In addition, our newest major silicon photonics customer, a global leader in networking products and solutions, has provided us with a forecast for additional systems this calendar year as it ramps capacity support next generation hyperscale data center deployments. This customer first engaged with us just last November and has since ordered two of our nine-wafer FOX test cells and two of our FOX-NPs. This engagement progressed quickly from initial contact to their first order and our first delivery of fully integrated test cell. We believe our sales process is shortening over time as our wafer level burn-in solutions are becoming more pervasive across multiple industries, customers, and countries. We believe the silicon photonics and optical test and burn-in market has substantial growth potential and can be a meaningful long-term growth driver for Aehr.

Speaker #3: This customer first engaged with us just last November and has since ordered two of our nine-wafer FOX test cells and two of our FOX NPs.

Speaker #3: This engagement progressed quickly, from initial contact to their first order, and our first delivery of a fully integrated test cell. We believe our sales process is shortening over time, as our wafer-level burn-in solutions are becoming more pervasive across multiple industries, customers, and countries.

Speaker #3: We believe the silicon photonics and optical test and burn-in market has substantial growth potential and can be a meaningful long-term growth driver for Aehr.

Speaker #3: So now let me share some highlights of our progress in power semiconductors and wafer-level burn-in in the past year. We completed more than a dozen designs for gallium nitride wafer packs, which are now being sampled by potential customers.

Gayn Erickson: Now let me share some highlights of our progress in power semiconductors and wafer level burn-in in the past year. We completed more than a dozen designs for gallium nitride wafer packs, which are now being sampled by potential customers. Many, if not all, are expected to move to volume production on our wafer level burn-in systems, driving the need for systems and wafer packs this year and going forward. We also just completed the world's first 300-millimeter GaN wafer level burn-in solution using our high voltage wafer packs to stress and test the critical High Temperature Reverse Bias test needed to screen for GaN MOSFET defects in production. Just recently, we closed the sale of our first FOX system for a silicon MOSFET wafer level burn-in application.

Speaker #3: Many, if not all, are expected to move to volume production on our wafer-level burn-in systems, driving the need for systems and wafer packs this year and going forward.

Speaker #3: We also just completed the world's first 300-millimeter GaN wafer-level burn-in solution, using our high-voltage wafer packs to stress and test the critical high-temperature reverse bias test needed to screen for GaN MOSFET defects in production.

Speaker #3: Just recently, we closed the sale of our first FOX system for a silicon MOSFET wafer-level burn-in application. Prior to this, customers had purchased our FOX wafer-level burn-in systems only for non-silicon MOSFETs, such as silicon carbide and gallium nitride.

Gayn Erickson: Prior to this, customers had purchased our FOX wafer level burn-in systems only for non-silicon MOSFET, such as silicon carbide and gallium nitride. We're working with this customer to determine test times and quality screening modes that we hope will lead to production burn-in capacity needs as the customer has indicated. We also captured our first silicon carbide customer in Taiwan. This customer works closely with several automotive manufacturers in Taiwan and China, as well as other international companies. Securing this win was especially important to us because they chose Aehr over Semi, a Chinese company that recently reincorporated in Malaysia as Nexus Test for their silicon carbide wafer level burn-in products. As some of you know, Aehr Test is currently suing Semi Nexus Test for patent infringement of their silicon carbide-focused wafer level burn-in system.

Speaker #3: We're working with this customer to determine test times and quality screening modes that we hope will lead to production burn-in capacity needs, as the customer has indicated.

Speaker #3: We also captured our first silicon carbide customer in Taiwan. This customer works closely with several automotive manufacturers in Taiwan and China, as well as other international companies.

Speaker #3: Securing this win was especially important to us because they chose AEHR over Semite, a Chinese company that recently reincorporated in Malaysia as Nexus Test for their silicon carbide wafer-level burn-in products.

Speaker #3: As some of you know, AEHR Test is currently suing Semite Nexus Test for patent infringement of their silicon carbide-focused wafer-level burn-in system. We believe they are violating our IP and patents that we hold in many countries around the world, including China, Taiwan, Japan, Korea, Singapore, the EU, and the United States.

Gayn Erickson: We believe they're violating our IP and patents that we hold in many countries around the world, including China, Taiwan, Japan, Korea, Singapore, the EU, and the United States. We were chosen over Semi due to technical superiority, cost, and our reputation in the automotive industry for production wafer level burn-in of silicon carbide devices for EVs. We are seeing encouraging signs of recovery in the silicon carbide power semiconductors and actively engaged to meet the wafer level burn-in needs of several of the world's largest automotive OEM manufacturers, the car and EV suppliers, and several of their silicon carbide suppliers for their new electric vehicles. We also announced today that we received approximately $8 million in new orders in just the last month for silicon carbide wafer level burn-in wafer packs as global electric vehicle programs accelerate.

Speaker #3: We were chosen over Semite due to technical superiority, cost, and our reputation in the automotive industry for production wafer-level burn-in of silicon carbide devices for EVs.

Speaker #3: We are seeing encouraging signs of recovery in the silicon carbide power semiconductors, and are actively engaged to meet the wafer-level burn-in needs of several of the world's largest automotive OEM manufacturers, the car and EV suppliers, and several of their silicon carbide suppliers for their new electric vehicles.

Speaker #3: We also announced today that we received approximately $8 million in new orders in just the last month for silicon carbide wafer-level burn-in wafer packs, as global electric vehicle programs accelerate.

Speaker #3: These include expanded production orders from our lead silicon carbide customer for WaferPak full wafer contactors, and a key order directly from one of the largest automotive companies in the world for multiple WaferPaks to be used in the qualification of silicon carbide devices from suppliers for their new generation of electric vehicles using AEHR's FOX wafer-level burn-in systems.

Gayn Erickson: These include expanded production orders from our lead silicon carbide customer for WaferPak, full wafer contactors, and a key order directly from one of the largest automotive companies in the world for multiple WaferPaks to be used in the qualification of silicon carbide devices from suppliers for the new generation of electric vehicles using Aehr's FOX wafer level burn-in systems. This year, we expect renewed demand for both silicon carbide and GaN power semiconductor test and burn-in, driven by automotive electrification and AI data center power infrastructure. Let me talk a little bit about wafer level burn-in for memory. We also continue to pursue opportunities in memory, including NAND flash and potential High Bandwidth Memory DRAM applications as part of our wafer level burn-in solutions roadmap. The growth of these two memory markets may be stronger than ever, with massive capacity increases planned for this decade.

Speaker #3: This year, we expect renewed demand for both silicon carbide and GaN power semiconductor test and burn-in, driven by automotive electrification and AI data center power infrastructure.

Speaker #3: Let me talk a little bit about wafer-level burn-in for memory. We also continue to pursue opportunities in memory, including NAND flash and potential high-bandwidth memory DRAM applications, as part of our wafer-level burn-in solutions roadmap.

Speaker #3: The growth of these two memory markets may be stronger than ever, with massive capacity increases planned for this decade. With our wafer-level burn-in benchmark with a global leader in NAND flash completed, we're in discussions on how to move forward.

Gayn Erickson: With our wafer level burn-in benchmark with a global leader in NAND flash completed, we're in discussions on how to move forward. As we said last quarter, we hope to close on discussions about test system specifications needed for their next-generation flash memories, and in particular, their High Bandwidth Flash devices, which would lead to a development agreement to supply systems and WaferPaks to them over a 12 to 18-month deployment development of our new memory-optimized blades for our FOX-XP and FOX-MP multi-wafer test and burn-in platform. We're also in ongoing discussions with other key memory suppliers that produce High Bandwidth Memory, the new DRAM standard used in AI GPUs, as well as standard DRAM and flash memories, to align our solutions with the production needs of these companies' new capacity coming online.

Speaker #3: As we said last quarter, we hope to close on discussions about test system specifications needed for next-generation flash memories, and in particular, their high-bandwidth flash devices, which would lead to a development agreement to supply systems and wafer packs to them over a 12- to 18-month deployment, and the development of our new memory-optimized blades for our FOX-XP and NP multi-wafer test and burn-in platform.

Speaker #3: We're also in ongoing discussions with other key memory suppliers that produce high-bandwidth memory—the new DRAM standard used in AI GPUs—as well as standard DRAM and flash memories, to align our solutions with the production needs of these companies' new capacity coming online.

Speaker #3: As we've noted before, this is a key focus for AEHR this year, with the goal of reaching an agreement with these customers to develop the enhancements needed to extend our FOX system into these markets.

Gayn Erickson: As we've noted before, this is a key focus for Aehr this year, with the goal of reaching an agreement with these customers to develop the enhancements needed to extend our FOX system into these markets. We believe this market could drive orders in fiscal 2027, with ramps in fiscal 2028. Now turning to package level burn-in. Our package level burn-in business for AI processors also gained momentum over the year, highlighted by record follow-on production orders from our lead hyperscale customer for Sonoma systems supporting high-volume AI processor production burn-in. This customer is a premier large-scale data center provider and is forecasting a substantial expansion of Sonoma system purchases for a second device, which is twice the power per package as the first device that they're using Sonoma systems for today.

Speaker #3: We believe this market could drive orders in fiscal 2027, with ramps in fiscal 2028. Now, turning to package-level burn-in: our package-level burn-in business for AI processors has also gained momentum over the years, highlighted by record follow-on production orders from our lead hyperscale customer for Sonoma systems, supporting high-volume AI processor production burn-in.

Speaker #3: This customer is a premier, large-scale data center provider and is forecasting a substantial expansion of Sonoma system purchases for a second device, which is twice the power per package as the first device that they're using Sonoma systems for today.

Speaker #3: As their current and next-generation devices ramp, we believe Sonoma systems and consumables can become an increasingly important contributor to AEHR's revenue. This past year, we secured key new device wins on the Sonoma platform for high-temperature operating light qualification.

Gayn Erickson: As their current and next-generation devices ramp, we believe Sonoma systems and consumables can become an increasingly important contributor to Aehr's revenue. This past year, we secured key new device wins on the Sonoma platform for High Temperature Operating Life qualification. We're also engaged with multiple current and prospective customers for package level reliability qualification and production burn-in of AI accelerators, ASICs, network processors, and also for edge AI processors for automotive and robotics, which represent significant opportunities for Aehr over the next few years. Recently, we introduced an enhanced Sonoma high-power configuration designed for next-generation CPUs, GPUs, and high-performance network processors used in AI data center and communications applications. This enhanced system expands the Sonoma product family's capabilities with per-device power up to 2,000 watts or more, increasing total system power capacity and improved device count scalability.

Speaker #3: We're also engaged with multiple current and prospective customers for package-level reliability qualification and production burn-in of AI accelerator ASICs, network processors, and also for edge AI processors for automotive and robotics, which represent significant opportunities for AEHR over the next few years.

Speaker #3: Recently, we introduced an enhanced Sonoma high-power configuration designed for next-generation CPUs, GPUs, and high-performance network processors used in AI data center and communications applications.

Speaker #3: This enhanced system expands the Sonoma product family's capabilities with per-device power up to 2,000 watts or more, increasing total system power capacity and improving device count scalability.

Speaker #3: It also includes an optional, fully integrated auto aligner and a high-throughput automated loader/unloader that enables completely hands-free operation in a production environment. Unlike traditional batch flow burn-in, the Sonoma high-power configuration with its ALU is designed for continuous flow operation, enabling devices to begin testing immediately upon insertion.

Gayn Erickson: It also includes an optional fully integrated auto aligner and a high throughput Automated Loader/Unloader that enable completely hands-free operation in a production environment. Unlike traditional batch flow burn-in, the Sonoma high-power configuration with its ALU is designed for continuous flow operation, enabling devices to begin testing immediately upon insertion. The automation and thermal systems run continuously, maximizing equipment utilization, throughput, and return on investment for both engineering qualification and high-volume manufacturing environments. Our Sonoma systems deliver what we believe is the industry's lowest cost solution, enabling customers to transition seamlessly from early reliability characterization to full production burn-in and early-life failure screening. This approach helps reduce costs, improve quality, and accelerate time to market. To meet anticipated demand, we've been expanding manufacturing capacity for both our systems and consumables. That's both on the wafer level and on the package level.

Speaker #3: The automation and thermal systems run continuously, maximizing equipment utilization, throughput, and return on investment for both engineering qualification and high-volume manufacturing environments. Our Sonoma systems deliver what we believe is the industry's lowest-cost solution, enabling customers to transition seamlessly from early reliability characterization to full production burn-in and early-life failure screening.

Speaker #3: This approach helps reduce costs, improve quality, and accelerate time to market. To meet anticipated demand, we've been expanding manufacturing capacity for both our systems and consumables, both on the wafer level and on the package level.

Speaker #3: This additional capacity positions us to support expected customer ramp-ups and provides flexibility if demand exceeds our current outlook. Looking ahead, we're very excited about our position entering fiscal 2027.

Gayn Erickson: This additional capacity positions us to support expected customer ramp-ups and provides flexibility if demand exceeds our current outlook. Looking ahead, we're very excited about our position entering fiscal 2027. We have multiple customers who began production over the past 12 months and are now ramping up, creating the potential for meaningful follow-on demand for systems and consumables. With multiple customers entering or expanding production, a record backlog, and additional opportunities under discussion for both wafer level and package level burn-in, we believe Aehr is well-positioned for multiple years of strong revenue growth. With that, I'll turn it over to Chris.

Speaker #3: We have multiple customers who began production of it in the past 12 months and are now ramping up, creating the potential for meaningful follow-on demand for systems and consumables.

Speaker #3: With multiple customers entering or expanding production, a record backlog, and additional opportunities under discussion for both wafer-level and package-level burn-in, we believe AEHR is well positioned for multiple years of strong revenue growth.

Speaker #3: With that, I'll turn it over to Chris.

Speaker #1: Thank you, Gayn. Before I review our financial results, I would like to provide a brief update on the steps we are taking to expand our manufacturing capacity and consumer support infrastructure to support our growing backlog and future growth opportunities.

Chris Siu: Thank you, Gayn. Before I review our financial results, I would like to provide a brief update on the steps we're taking to expand our manufacturing capacity and consumer support infrastructure to support our growing backlog and future growth opportunities. As Gayn mentioned in the last conference call, we continue to scale our manufacturing capacity to support growing demand. In addition to our Fremont expansion, we began shipping Sonoma systems from one of our existing contract manufacturers in Southeast Asia. This adds capacity for more than 20 additional Sonoma systems per month and gives us greater flexibility as we scale to meet customer demand. With the recent record $41 million purchase order we received from our hyperscale customer in April, we are very active operationally as we build Sonoma systems to meet the customer's delivery schedule.

Speaker #1: As Gayn mentioned in the last conference call, we continue to scale our manufacturing capacity to support growing demand. In addition to our Fremont expansion, we've begun shipping Sonoma systems from one of our existing contract manufacturers in Southeast Asia.

Speaker #1: This adds capacity for more than 20 additional Sonoma systems per month and gives us greater flexibility as we scale to meet customer demand. With the recent record $41 million in purchase orders we received from our hyperscale customer in April, we are very active operationally as we build Sonoma systems to meet the customer's delivery schedule.

Speaker #1: This system is expected to be delivered this year to the existing set of our hyperscale customer, which is based in Taiwan. Gayn also reported today that we successfully completed benchmark testing of our wafer-level burn-in solution with a major supplier of AI accelerators, CPUs, and network processors.

Chris Siu: These systems are expected to be delivered this year to the offsite of our hyperscale customer, which is based in Taiwan. Gayn also reported today that we successfully completed benchmark testing of our wafer level burn-in solution with a major supplier of AI accelerators, CPUs, and network processors. The testing was completed on one of their processors and achieved results that exceeded their expectations. This top-tier AI processor supplier has now expressed interest in moving to pilot production test validation for its current high-volume device. In anticipation of next stage of this project, we have recently signed a new lease to expand our office in Hsinchu, Taiwan. This expansion will allow us to increase our local sales and customer support personnel, deepen our engagement with customers and ecosystem partners in the region, and strengthen our ability to support future production ramps.

Speaker #1: The testing was completed on one of their processors and achieved results that exceeded their expectations. This top-tier AI processor supplier has now expressed interest in moving to a pilot production test validation for its current high-volume device.

Speaker #1: In anticipation of the next stage of this project, we've recently signed a new lease to expand our office in Hsinchu, Taiwan. This expansion will allow us to increase our local sales and customer support personnel, deepen our engagement with customers and ecosystem partners in the region, and strengthen our ability to support future production ramps.

Speaker #1: With recent manufacturing capacity enhancements and an increased presence in Taiwan, we believe we're well positioned to support significant growth in both wafer-level and package-level burn-in systems as customers ramp production.

Chris Siu: With recent manufacturing capacity enhancements and an increased presence in Taiwan, we believe we are well-positioned to support significant growth in both wafer-level and package-level burn-in systems as customers ramp production. Now to our financial results. Bookings in Q4 of fiscal 2026 were $60.7 million, up more than 500% from $11.1 million in the prior year quarter. The increase was primarily driven by purchase orders for Sonoma package-level and FOX wafer-level burn-in systems, WaferPaks, and burn-in module boards for AI and silicon photonics processor burn-in, partially offset by lower customer orders for silicon carbide WaferPaks. Backlog at year-end was a record $80.6 million, up from $15.2 million at the end of fiscal 2025. Subsequent to year-end, we received an additional $20 million in bookings during the four-week transition period and the first two weeks of fiscal 2027.

Speaker #1: Now to our financial results. Bookings in the fourth quarter of fiscal 2026 were $60.7 million, up more than 500% from $11.1 million in the prior year quarter.

Speaker #1: The increase was primarily driven by purchase orders for Sonoma package-level and Fox wafer-level burn-in systems, wafer packs, and burn-in module boards for AI and silicon photonics processor burn-in.

Speaker #1: Partially offset by lower customer orders for silicon carbide and wafer packs. Backlog at Gayn was a record $80.6 million, up from $15.2 million at the end of fiscal 2025.

Speaker #1: Subsequent to Gayn, we received an additional $20 million in bookings during the four-week transition period and the first two weeks of fiscal 2027.

Speaker #1: As a result, our effective backlog increased to approximately $100.6 million, before taking into account minimal shipments during the transition period and June 26, 2026, which is not part of fiscal year 2027.

Chris Siu: As a result, our effective backlog increased to approximately $100.6 million before taking into account minimal shipments during the transition period and the 26 June 2026, which is not part of fiscal 2027. Turning to our Q4 performance, we are excited about our continued momentum in the artificial intelligence and data center markets. AI processors and silicon photonics burn-in accounted for more than 80% of our Q4 revenue, compared with 56% in the prior year period. For the Q4, we had three customers representing more than 10% of total revenue. Two of these customers target the AI market, and the third focuses on the data center optical transceiver market. Revenue for the Q4 totaled $18.8 million, up 34% from $14.1 million in the prior year quarter.

Speaker #1: Turning to our Q4 performance, we're excited about our continued momentum in the artificial intelligence and data center markets. AI processors and silicon photonics burn-in accounted for more than 80% of our fourth-quarter revenue, compared with 56% in the prior year period.

Speaker #1: For the fourth quarter, we had three customers representing more than 10% of total revenue. Two of these customers target the AI market, and the third focuses on the data center optical transceiver market.

Speaker #1: Revenue for the fourth quarter totaled $18.8 million, up 34% from $14.1 million in the prior year quarter. The increase was primarily driven by strong demand from AI and data center customers for our FOX systems, Seral Auto Aligners, and WaferPaks.

Chris Siu: The increase was primarily driven by strong demand from AI and data center customers for our FOX systems, Sierra Auto Aligners, and WaferPaks. Contacted revenue was $5.8 million, representing 31% of our total Q4 revenue, compared with 30% in the prior year period. This remains a sizable revenue stream for Aehr, driven by demand for new WaferPak designs as existing and new customers deploy FOX systems for additional device applications. Non-GAAP gross margin for the Q4 was 45%, up 1,000 basis points compared with 35% in the same period last year. The increase was primarily due to higher revenue levels, improved manufacturing capacity utilization, and more favorable product mix. In the Q4 of fiscal 2025, our revenue was driven primarily by the sale of package-level burn-in systems, which had lower product margins.

Speaker #1: Contractor revenue was $5.8 million, representing 31% of our total fourth quarter revenue, compared with 30% in the prior year quarter. This remains a sizable revenue stream for AEHR, driven by demand for new wafer pack designs, as existing and new customers deploy FOX systems for additional device applications.

Speaker #1: Non-GAAP gross margin for the fourth quarter was 45%, up 1,000 basis points compared with 35% in the same period last year. The increase was primarily due to higher revenue levels, improved manufacturing capacity utilization, and a more favorable product mix.

Speaker #1: In the fourth quarter of fiscal 2025, our revenue was driven primarily by the sale of package-level burn-in systems, which had lower product margins. Non-GAAP operating expenses in the fourth quarter were $7.5 million, compared with $5.4 million in the prior year quarter.

Chris Siu: Non-GAAP operating expenses in the Q4 were $7.5 million, compared with $5.4 million in the prior year quarter. The year-over-year increase was primarily attributable to higher employment costs as we add headcount to support our R&D projects, as well as high commissions related to record bookings from customers in the AI and data center markets. As an update on our patent litigation against Semi in China, we continue to incur legal fees during the Q4 to support our claims. We are encouraged that the patent office in the Beijing District of the People's Republic of China has upheld two of our Chinese patents, which is critical to our litigation against Semi. The case is still ongoing, and we anticipate incurring additional legal expenses in upcoming quarters as we continue to protect our intellectual property rights in China.

Speaker #1: The year-over-year increase was primarily attributable to higher employment costs as we add headcount to support our R&D projects, as well as higher commissions related to record bookings from customers in the AI and data center markets.

Speaker #1: As an update on our patent litigation against Sanmite in China, we continue to incur legal fees during the fourth quarter to support our claims.

Speaker #1: We are encouraged that the patent office in the Beijing district of the People's Republic of China has upheld two of our Chinese patents, which is critical to our litigation against Sanmite.

Speaker #1: The case is still ongoing, and we anticipate incurring additional legal expenses in upcoming quarters as we continue to protect our intellectual property rights in China.

Speaker #1: Non-GAAP net income for the fourth quarter, excluding the impact of stock-based compensation and amortization of intangible assets, was $3.6 million, or $0.11 per diluted share.

Chris Siu: Non-GAAP net income for Q4, excluding the impact of stock-based compensation and amortization of intangible assets, was $3.6 million, or $0.11 per diluted share, well above Street Consensus. This compares with a non-GAAP net loss of $0.2 million, or -$0.01 per diluted share in Q4 of fiscal 2025. Turning to the full year results, we reported revenue of $50 million, down 15% year-over-year. Full year non-GAAP gross margin was 38.5%, compared with 44% in the prior year. Full year non-GAAP net income was $0.9 million, or $0.03 per diluted share, compared with non-GAAP net income of $4.6 million, or $0.15 per diluted share in fiscal 2025. At the end of Q4, cash equivalents, and restricted cash totaled $116.5 million, compared with $26.5 million at the end of fiscal 2020.

Speaker #1: Well above street consensus. This compares with a non-GAAP net loss of $0.2 million, or negative $0.01 per diluted share, in the fourth quarter of fiscal 2025.

Speaker #1: Turning to the full year results, we reported revenue of $50 million, down 15 percent year over year. Full year non-GAAP gross margin was 38.5%, compared with 44% in the prior year.

Speaker #1: Full-year non-GAAP net income was $0.9 million, or $0.03 per diluted share, compared with non-GAAP net income of $4.6 million, or $0.15 per diluted share in fiscal 2025.

Speaker #1: At the end of the fourth quarter, cash, cash equivalents, and restricted cash totaled $116.5 million, compared with $26.5 million at the end of fiscal.

Speaker #1: During fiscal 2026, we raised approximately $100 million, primarily through our ATM program, significantly strengthening our balance sheet. Although AEHR remains a capital-light company, with only $2.1 million in capital expenditures in fiscal 2026, this enhanced financial position provides the working capital and flexibility to pursue larger customer opportunities and scale production to meet customer demand.

Chris Siu: During fiscal 2026, we raised approximately $100 million primarily through our ATM program, significantly strengthening our balance sheet. Although Aehr remains a capital-light company with only $2.1 million in capital expenditures in fiscal 2026, this enhanced financial position provides the working capital and flexibility to pursue larger customer opportunities and scale production to meet customer demand. Now I will share our guidance. For the fiscal year ending 25 June 2027, we expect total company revenue to be between $130 million and $150 million, representing expected year-over-year growth of approximately 160% to 200%. This outlook is based on the information available to us today, including our current backlog and anticipated customer demand. We continue to pursue additional orders from existing and prospective customers. We also expect pre-tax non-GAAP net income to be 18% to 22% of total revenue.

Speaker #1: Now I'll share our guidance for the fiscal year ending June 25, 2027. We expect total company revenue to be between $130 million and $150 million.

Speaker #1: Representing expected year-over-year growth of approximately 160% to 200%. This outlook is based on the information available to us today, including our current backlog and anticipated customer demand.

Speaker #1: We continue to pursue additional orders from existing and prospective customers. We also expect pre-tax, non-GAAP net income to be 18% to 22% of total revenue.

Speaker #1: Lastly, looking at our investor relations calendar, AEHR Test will be participating in three upcoming investor conferences over the next couple of months. We'll meet with investors virtually at the Needham 6th Annual Semiconductor and Semicap One-on-One Conference on Wednesday, August 20.

Chris Siu: Lastly, looking at our investor relations calendar, Aehr Test will be participating in three upcoming investor conferences over the next couple of months. We will meet with investors virtually at the Needham Sixth Annual Semiconductor and SemiCap One-on-One Conference on Wednesday, 20 August. The following week, we will meet with investors in person on Tuesday, 26 August, at the Jefferies Technology Summit Conference in Chicago. On 10 September, we will meet with investors in person at the Lake Street Capital annual Big Ideas Growth Conference in New York City. We hope to see some of you at these conferences. This concludes our prepared remarks. Operator, we are now ready to take questions.

Speaker #1: The following week, we'll meet with investors in person on Tuesday, August 26, at the Jefferies Technology Summit conference in Chicago. On September 10, we'll meet with investors in person at the Lake Street Capital Annual Big Ideas Growth Conference in New York City.

Speaker #1: We hope to see some of you at these conferences. This concludes our prepared remarks. Operator, we're now ready to take questions.

Speaker #2: Thank you. At this time, we will be conducting a question-and-answer session. If you’d like to ask a question, please press star 1 on your telephone keypad.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star one on your phone at this time if you wish to ask a question, and please hold while we call for questions. The first question today is coming from Christian Schwab from Craig-Hallum Capital Group. Christian, your line is live.

Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star one on your phone at this time if you wish to ask a question.

Speaker #2: And please hold while we pull for questions. The first question today is coming from Christian Schwab from Craig-Hallum Capital Group. Christian, your line is live.

Speaker #3: Thank you. Congratulations on the fantastic outlook. Gayn, I know you gave some description of revenue by application for the last fiscal year, but as we're thinking about the $130 to $150 million—not obviously asking by wafer-level burn-in or the Synopsis systems—but can you just give a rough idea of the assumption as far as product mix between AI chips, silicon photonics, power, and if there'll be any memory revenue?

Christian Schwab: Thank you. Congratulations on the fantastic outlook. Gayn, I know you gave some description of revenue by application for the last fiscal year. For this, we're thinking about the $130 to 150 billion, not obviously asking by wafer-level burn-in, or the Sonoma systems, but can you just give a rough idea of the assumption as far as product mix between AI chips, silicon photonics, power, and if there'll be any memory revenue? Sounds like that's fiscal 2028.

Speaker #3: It sounds like that's fiscal 2018.

Speaker #4: Yeah, so we will. And the only challenge, of course, is we've never done that before, and so, in reality, our ability to always predict.

Gayn Erickson: Yeah, we will. The only challenge, of course is, we've never done that before, in reality, our ability to always predict. In our current kind of roll-up right now, it's pretty similar to last year in terms of AI, 70%-ish, the silicon photonics, maybe 15% to 20%, maybe in that same range. The power semiconductor and miscellaneous, it's kind of the rest. By the way, I will state, we currently do not anticipate any memory revenue in even the $150 number. Upside on any potential revenue from memory would be in addition to that, but right now, we're not assuming any of that. The bulk of that, if not the majority of all of that range of $130 to 150, is coming from current customers.

Speaker #4: But in our current kind of roll-up right now, it's pretty similar to last year. In terms of AI, it's about 70 percent, and the silicon photonics, maybe 15 to 20 percent.

Speaker #4: Maybe in that same range. And then the power semiconductor and miscellaneous is kind of the rest. But there's some pretty good—and, by the way, I will state, we currently do not anticipate any memory revenue in even the $150 million number.

Speaker #4: So, upside on any potential revenue from memory would be in addition to that. But right now, we're not assuming any of that. And the bulk of that, if not the majority of all of that range of $130 to $150 million, is coming from current customers.

Speaker #4: So not really even including—I want to give myself a little leeway—this new benchmark customer that we just completed with amazing results.

Gayn Erickson: Not really even including, I want to give myself a little leeway, this new benchmark customer that we've just completed with amazing results. That would be upside to that as well. I think last year I talked about the silicon carbide customers a year ago were all talking about how great it's going to be, and it's going to be a turnaround year. They didn't really give us really detailed forecasts. I think I shared a year ago, I'm kind of in a wait-and-see mode. I'll just believe it when I see the orders. This year seems a little bit more specific. We have some people with real numbers, some real forecasts, some real targets. We're seeing the population of our installed base be at pretty well full capacity. It does feel more real this year, I'm more optimistic.

Speaker #4: That would be an upside to that as well. So I think last year I talked about the silicon carbide customers—a year ago, they were all talking about how great it’s going to be, and that this is going to be a turnaround year.

Speaker #4: They didn't really give us any detailed forecasts. So, I think I shared a year ago that I'm kind of in wait-and-see mode. I'll just believe it when I see the orders.

Speaker #4: This year seems a little bit more specific. We have some people with real numbers, some real forecasts, some real targets. We're seeing the population of our installed base be at pretty well full capacity.

Speaker #4: So, it does feel more real this year, and so I'm more optimistic. But we still have a pretty small number. Yeah, a pretty small number.

Gayn Erickson: We still have a pretty small number. Actually, I think we might have just exceeded it. Chris is looking at me like I'm sharing too much already. Those orders we just got in I think exceed what we were already planning. We'll see how this goes. There's just a lot of opportunity, AI is going to be a big chunk of our business this year, both in dollars and percentage.

Speaker #4: Actually, I think we might have just exceeded it. So, that's probably more detail than needed. Chris is looking at me like I'm sharing too much already.

Speaker #4: So, that order we just got—those orders we just got in—I think we're exceeding what we were already planning. So, we'll see how this goes.

Speaker #4: There's just a lot of opportunity. But AI is going to be a big chunk of our business this year, both in dollars and percentage.

Speaker #3: Fantastic, thanks for that clarity. And then, just on the memory, it sounds like you feel more confident in the development program. Last quarter you did mention, using roughly the same words, that it could lead to orders in '27 and revenue in '28.

Christian Schwab: Fantastic. Thanks for that clarity. Just on the memory, it sounds like you feel more confident in the development program. Last quarter, you did mention kind of roughly the same words that it could lead to orders in 2027 and revenue in 2028. It sounded like you were more confident that you will get orders at some point in fiscal 2027 for revenue in 2028. Did I hear that right?

Speaker #3: But it sounded like you were more confident that you will get orders at some point in fiscal '27 for revenue in '28. Did I hear that right, or did I?

Speaker #4: No, if I'm more confident than last—I’m not sure I'm more confident than last quarter. I mean, I was moderately confident last quarter as well.

Gayn Erickson: I don't know if I'm more confident than last. I'm not sure I'm more confident than last quarter. I was moderately confident last quarter as well. We have more detail. We've actually started to spend money on it. We've hired some people and redirected some people, and we're doing architectural schematics and assessment. There's some software that started physical board layouts as part of the proposals to the customers. We really believe you need a committed customer to a project. There's a sort of, whether it be a PO or a sponsorship, you need to make sure you're aligned

Speaker #4: We've started to get more detailed. We've actually started to spend money on it. So we've hired some people and redirected some people, and we're doing architectural schematics and assessments.

Speaker #4: There's some software that's started physical board layouts as part of the proposals to the customers. But we really believe you need a committed customer to a project.

Speaker #4: There's a sort of—whether it be a PO or a sponsorship—you need to make sure you're aligned with what they want and what they're going to buy, at the price point you're willing to sell them at.

Gayn Erickson: With what they want and what they're going to buy at the price point you're willing to sell them at. That's the piece that we still need to get ourselves resolved to. There's been some dynamics during the last year, if you look in the last 12 months, what's kind of changed. The introduction of High Bandwidth Flash is a doozy. That has really put at least a couple of them, it's publicly known, on their heels in terms of what they were going to do, how they could test it, and it broke a lot of things. The other piece is the new HBM, which is a DRAM. High-bandwidth memory is DRAM. High Bandwidth Flash is, of course, flash.

Speaker #4: And that's the piece that we still need to get ourselves resolved to. There have been some dynamics during the last year—kind of, if you look at the last 12 months.

Speaker #4: What's kind of changed? The introduction of high-bandwidth flash is a doozy, right? That has really put at least a couple of minutes—publicly known—on their heels in terms of what they were going to do, how they could test it, and it broke a lot of things.

Speaker #4: The other piece is the new HBM, which is a DRAM. High-bandwidth memory is DRAM. High-bandwidth flash is, of course, flash. But HBM, new standards that are coming out—and I don't want to get too carried away here.

Gayn Erickson: HBM, new standards that are coming out, and I don't want to get too carried away here, some of which are driven by specific end users, have embedded BIST capabilities in it, which means that the testability changes dramatically, and we think could be in our favor. It's given me some additional optimism with respect to our ability to maybe do HBM sooner than we were thinking certainly six months ago. I'm going to just keep an optimistic attitude that we're going after this business, I would be hesitant for you to build models with a lot of revenue in that yet, certainly not next year.

Speaker #4: Some of which are driven by specific end users, have embedded BIST capabilities in them, which means that the testability changes dramatically. And we think could be in our favor.

Speaker #4: So it's giving me some additional optimism with respect to our ability to maybe do HBM sooner than we were thinking, certainly six months ago.

Speaker #4: But I'm going to just keep an optimistic attitude that we're going after this business, but I would be hesitant for you to build models with a lot of revenue in that yet.

Speaker #4: Certainly not next year.

Speaker #3: Great. And then I'll just slip in one more, if I could. There was a lot of different discussions regarding capacity, and I guess I couldn't write all the answers down quickly enough to kind of do the math.

Christian Schwab: Great. I'll just slip in one more, if I could. There was a lot of different discussions regarding capacity, I guess I couldn't write all the answers down quick enough to do the math. As you sit here today, as far as top-line revenue capacity, what do you believe it is?

Speaker #3: But as you sit here today, as far as top-line revenue capacity, what do you believe it is?

Speaker #4: Yeah. So we've talked about some different pinch points, okay? So people that have visited us know that, until recently, all of our systems and our consumable wafer packs came out of our Fremont facility.

Gayn Erickson: Yeah. We've talked about some different pinch points. People that have visited us know that we have until recently, all of our systems and our consumable WaferPaks came out of our Fremont facility. The supply chain of our chambers, our blades, and all the subsystems and printed circuit boards are, of course, built by contract manufacturers. For the 150 employees or thereabouts that Aehr has, we have probably another 250 people in direct contract manufacturers building stuff for us in low-cost regions around the world. We have increased our capability in our facility maybe tenfold with the remodel and the other things that we've done, we still are only running one shift. From an operational perspective, we don't have the people to ship tenfold, the capacity is here to be able to do that. People go, "Well, that's crazy.

Speaker #4: But the supply chain of our chambers, our blades, and all the subsystems and printed circuit boards are, of course, built by contract manufacturers. For the 150 employees or thereabouts that Aehr has, we have probably another 250 people in direct contract manufacturers building stuff for us in low-cost regions around the world.

Speaker #4: We have increased our capability in our facility maybe tenfold with the remodel and the other things that we've done. But we still are only running one shift.

Speaker #4: From an operational perspective, we don't have the people to ship tenfold, but the capacity is here to be able to do that. People go, well, that's crazy.

Speaker #4: Why would you do that? Well, as with some of the deals we're talking about, if a customer comes to us and says, "I want 100 systems," you have to be able to say, "I can do that, and it won't take me three years to build it for you." Okay?

Gayn Erickson: Why would you do that?" Well, as some of the deals we're talking about, if a customer comes to us and said, "I want 100 systems," you have to be able to say, "I can do that, and it won't take me three years to build it for you." In parallel, we talked about this in more detail last quarter. We pulled the trigger last September with one of the contract manufacturers in Asia that does assemblies of one of our chamber suppliers. They upgraded their facility to near clean room space in anticipation of some of the projects that we wanted to outsource to them. We initiated and gave them orders and worked with them to build our Sonoma systems. The last quarter, we shipped our first Sonoma systems directly to a customer out of that facility.

Speaker #4: In parallel, we've talked about this in more detail last quarter. We pulled the trigger last September with one of the contract manufacturers in Asia that does assemblies for one of our chamber suppliers.

Speaker #4: And they upgraded their facility to near clean room space in anticipation of some of the projects that we wanted to outsource to them. We then initiated and gave them orders and worked with them to build our Sonoma systems.

Speaker #4: And then, last quarter, we shipped our first Sonoma systems directly to a customer out of that facility. Now, our team was there working with them, bringing them up, qualifying everything, demonstrating, then observing, then qualifying.

Gayn Erickson: Now, our team was there working with them, bringing them up, qualifying everything, demonstrating, observing, qualifying the tools. Those systems are actually being installed, I think last week or this week, at our large hyperscaler customer. Their entire backlog is expected to ship directly out of there. We think the capacity out of that is probably upwards of 20 Sonoma systems a month, that would basically not impact any of our capacity here. Our capacity is significant, measured in $ hundreds of millions, for sure. We're doing some things to even potentially increase that. Not that we would ship $1 billion a year, what happens if we have to ship $ a couple hundred million in a quarter? Think of it that way. One of the challenges in our business is that it's always going to be lumpy.

Speaker #4: The tools, but those systems are actually being installed—I think last week or this week—at our large hyperscaler customer. And their entire backlog is expected to ship directly out of there.

Speaker #4: We think the capacity out of that is probably upwards of 20 Sonoma systems a month, and that would basically not impact any of our capacity here.

Speaker #4: So our capacity is significant. I mean, measured in hundreds of millions of dollars for sure. And we're doing some things to even potentially increase that.

Speaker #4: Not that we would then ship a billion dollars a year, but what happens if we have to ship a couple hundred million in a quarter?

Speaker #4: Think of it that way. So one of the challenges in our business is that it's always going to be lumpy. And we do not want to put money in place and infrastructure that's permanent because the business is cyclical.

Gayn Erickson: We do not want to put money in place, an infrastructure that's permanent, because the business is cyclical, and five, eight years from now, what's this thing look like? We don't want to have built up into an enormous business, and if there's a softer year that we start losing money or not making as much profit. I know that's a negative tone on this thing, but the discipline is how do you build up massive amounts of capacity without building up massive amounts of just fixed infrastructure.

Speaker #4: And five, eight years from now, what's this thing look like? We don't want to have built up into an enormous business, and if there's a softer year, that we start losing money or not making as much profit.

Speaker #4: So I know that's a negative tone on this thing, but the discipline is: how do you build up massive amounts of capacity without building up massive amounts of just fixed infrastructure?

Speaker #3: Got it. That’s fantastically clear. Thanks. No other questions.

Christian Schwab: Got it. That's fantastically clear. Thanks. No other questions.

Speaker #4: Thanks, Christian.

Gayn Erickson: Thanks, Christian.

Speaker #3: Thank you.

Christian Schwab: Thank you.

Speaker #2: Thank you. The next question is coming from Jed Dorshimer from William Blair. Jed, your line is live.

Operator: Thank you. The next question is coming from Jed Dorsheimer from William Blair. Jed, your line is live.

Speaker #5: Hey, thanks. Thanks for taking my question. And big congratulations to you again, Chris. I know how long it's been coming, in terms of this inflection.

Jed Dorsheimer: Hey, thanks. Thanks for taking my question. Big congratulations to you, Gayn and Chris. I know how long it's been coming in terms of this inflection. A few questions for you. I guess first one, maybe just piggyback off your last response, Gayn, to Christian there. Did I hear you correctly, 20 Sonoma systems per month? And if that is the case, that's about $100 million of Sonoma. Is that the right way to think about that in terms of the $140 midpoint of guide?

Speaker #5: So, a few questions for you. I guess the first one, maybe just to piggyback off your last response given to Christian there—did I hear you correctly, 20 SONOS systems per month?

Speaker #5: And if that is the case, that's about $100 million of Sonoma. Is that the right way to think about that, in terms of the $140 million midpoint of guide?

Speaker #4: So let me make sure I understand. So at our 140 midpoint, that's nowhere near 20 Sonoma systems a month. The production Sonoma systems that we have in backlog, we've shared this with different people, including the consumable elements are somewhere in the 6, 7 hundred thousand dollars a piece.

Gayn Erickson: Let me make sure I understand. At our $140 midpoint, that's nowhere near 20 Sonoma systems a month. The production Sonoma systems that we have in backlog, we've shared this with different people, including the consumable elements, are somewhere in the six, $700,000 a piece. They're actually smaller configurations than times quantity. I think that we've done a pretty good job of announcing orders along the way. Our package level burn-in Sonoma revenues are. Make sure I do this. I have them in front of me right now. Probably $50 million, something along that range.

Speaker #4: They're actually smaller configurations by then times quantity. And I think that we've done a pretty good job of announcing orders along the way. So our package-level burden in Sonoma revenues are—let me try to do this.

Speaker #4: I have them in front of me right now. Probably $50 million, something along that range. I think that's good. Sorry, guys. I should have that in front of me.

Gayn Erickson: I think that's good. Sorry, guys.

Chris Siu: Okay.

Chris Siu: I should have it in front of me. Think of the math of that, whatever, like 60, 70 systems or so. We're actually shipping, the customers actually ask for those kind of in a small period of time. Very much centered around our Q2. That's going to be one of the challenges. We're actually building them right now. We're going to start shipping them here during this quarter, and then the bulk of them actually get delivered in the Q2.

Speaker #4: So that's, think of the math of that—whatever, like 60, 70 systems or so. But we're actually shipping those, or the customers actually asked for those, kind of in a small period of time.

Speaker #4: Very much centered around our second quarter, and so that's going to be one of the challenges. We're actually building them right now. We're going to start shipping them here during this quarter.

Speaker #4: And then the bulk of them actually get delivered in the second quarter.

Speaker #5: That is helpful. And then, on the wafer level, if we took that midpoint, what are—are you mixing in—I'm trying to separate consumables from package and wafer level.

Jed Dorsheimer: That is helpful. Then on the wafer level, if we took that midpoint, are you mixing in-- I'm trying to separate consumables from package and wafer level. Can you give some framework in terms of that breakdown?

Speaker #5: Can you give some framework in terms of that breakdown?

Speaker #4: Well, let me answer that question, Jed. So if you heard me, I mentioned that we're roughly in the 30% kind of distribution—wafer, packs, and, yeah, in revenue.

Chris Siu: Well, let me answer that question, Jed. If you heard me, I mentioned about we're roughly in the 30% kind of distribution.

Gayn Erickson: Yep.

Gayn Erickson: WaferPak in revenue.

Chris Siu: Yeah, in revenue.

Speaker #5: And that's wafer packs and BIMs?

Gayn Erickson: That's WaferPaks and BIMs.

Speaker #4: Yeah. Yeah. Oh, I think that's a good assumption. It's about 30%.

Chris Siu: Yeah.

Gayn Erickson: Yeah.

Gayn Erickson: Well, I think that's a good assumption. It's about 30%.

Speaker #5: That sounds right to me as well.

Gayn Erickson: That sounds right to me as well.

Speaker #4: Yeah.

Speaker #5: Okay, that's super helpful. And then two more from me—just along those lines, or maybe three more, sorry. But your largest processor, GPU, TPU, CPU customer—your AI customer, I think, is how you describe it.

Jed Dorsheimer: Okay. That's super helpful. Two more from me. Just along the lines, or maybe three more, sorry. Your largest processor, GPU, TPU, CPU customer, your AI customer, I think is how you describe it. In addition to the benchmark testing, I'm just curious that they're going with package level, but could you update on the activity or discussions around wafer level? I'm assuming that they're also engaged in kind of-

Speaker #5: In addition to the benchmark testing, I'm just curious—they're going with package level, but could you update us on the activity or discussions around wafer level?

Speaker #5: I'm assuming that they're also engaged in kind of that 'open the door,' if you will. So, just an update.

Gayn Erickson: Yeah

Jed Dorsheimer: that opened the door, if you will. Just an update there.

Speaker #4: Yeah, let me be clear. It’s a bit of a lookup table. So I think what you’re talking about is our kind of lead AI production package-level burn-in customer, who we’ve identified as one of the big hyperscalers.

Gayn Erickson: Let me be clear because it's a bit of a lookup table. I think what you're talking about is our kind of lead AI production package level burn-in customer.

Jed Dorsheimer: Correct.

Gayn Erickson: Who we've identified as one of the big hyperscalers. Okay?

Speaker #4: Okay? All right. They use Sonoma for all their qualification. They had never done production burn-in before, and they moved to production burn-in as we acquired Intel.

Jed Dorsheimer: Yep.

Gayn Erickson: All right. They use Sonoma for all their qualification. They had never done production burn-in before, and they moved to production burn-in as we acquired Incal. That's been a great win for everybody because of our capabilities to support them and obviously to meet their capacity needs. That customer, the first device that ever went to production was on Sonoma. The second device is also going to be on Sonoma. They already bought some of the systems for it. That particular device has been a little bit delayed in terms of its timing, but is still expected to ramp, or at least start to ramp during our fiscal year at this point. That's the one I described that has twice the power, and they're expecting higher volumes off of it. Okay? That same customer talked to us, what, maybe six months ago the first time.

Speaker #4: And that's been a great win for everybody because of our capabilities to support them, and obviously to meet their capacity needs. That customer—the first device that ever went to production was on Sonoma.

Speaker #4: The second device is also going to be on Sonoma. They already bought some of the systems for it. That particular device has been a little bit delayed in terms of its timing.

Speaker #4: But it's still expected to ramp, or at least start the ramp, during our fiscal year at this point. That's the one I described that has twice the power.

Speaker #4: And they're expecting higher volumes off of it, okay? And then that same customer talked to us, what, maybe six months ago, for the first time.

Speaker #4: The third device, they really want to consider wafer-level burn-in. And one way you might want to think about it is, if there's a progression of the number of compute chips in a single package, as they get higher, wafer-level burn-in has a huge advantage because the devices fail during burn-in.

Gayn Erickson: The third device, they really want to consider a wafer level burn-in. One way you might want to think about it is if there's a progression of number of compute chips in a single package, as they get higher, wafer level burn-in has a huge advantage because the devices fail during burn-in, and if you fail one of the compute chips, you throw away the other compute chips and all of the memory. At that point, it gets extremely expensive from a yield loss to continue to do package level burn-in. That would be where you'd want to cut in at wafer level burn-in. They've actually recently, again, this quarter, again, they're just bringing up their second device, but the third one, they've been talking to us about, "Okay, what DFT do we need to do? What do we need to put in?

Speaker #4: And if you fail one of the compute chips, you throw away the other compute chips and all of the memory. So at that point, it gets extremely expensive from a yield loss perspective to continue to do package-level burn-in.

Speaker #4: So that would be where you'd want to cut in at wafer-level burn-in. So they've actually recently, again, this quarter—again, they're just bringing up their second device—but the third one, they've been talking to us about, "Okay, what DFT do we need to do?"

Speaker #4: "What do we need to put in? How do we optimize it around the FOX system?" So it's pretty encouraging.

Gayn Erickson: How do we optimize it around the FOX system? It's pretty encouraging.

Speaker #5: Got it. That's helpful. And just shifting gears—silicon photonics and co-package optics. I know you mentioned activities. The gallium nitride really had struggled with reliability in auto.

Jed Dorsheimer: Got it. That's helpful. Just shifting gears, silicon photonics and co-packaged optics, I know you mentioned activities. The gallium nitride really had struggled with reliability in the auto. Auto requirements are far lower than in data center, by about 5x, in terms of meantime failure. I think that would be a good thing for you guys, but I'm just curious how you're thinking about market adoption, timing, and then role in GaN specifically. I know what you've got for silicon carbide. Just curious in terms of activity around GaN and the higher failure rates there.

Speaker #5: Auto requirements are far lower than in data center—by about 5x in terms of mean time to failure. So I think that would be a good thing for you guys.

Speaker #5: But I'm just curious how you're thinking about market adoption timing and then the role in GaN specifically. I know what you've got for silicon carbide.

Speaker #5: Just curious, in terms of activity around GAN and the higher failure rates there.

Speaker #4: Okay. You actually mentioned silicon photonics. You mentioned silicon carbide and GaN. Let me just think through that window. GaN has been interesting.

Gayn Erickson: Okay. You actually mentioned silicon photonics, you mentioned silicon carbide and GaN. Let me just think through that window. GaN has been interesting. If you remember a year and a half ago or so when we were engaged with the first GaN customer, we didn't know if they were going to go to production burn-in or not. Since then, we've been able to verify they are, and they're going through a major qualification with a bunch of industrial, automotive, and infrastructure, and data center applications. Unlike silicon carbide, that's like two or three big applications, GaN, we've done- Like 12 different types of devices. They're different voltages and power and requirements that they go through all, from solar to data center to electric switches in infrastructure and homes to automotive. They're all over the place.

Speaker #4: If you remember, a year and a half ago or so, when we were engaged with the first GAN customer, we didn't know if they were going to go to production burn-in or not.

Speaker #4: Since then, we've been able to verify they are, and they're going through a major qualification with a bunch of industrial, automotive, infrastructure, and data center applications.

Speaker #4: Unlike silicon carbide, which has two or three major applications, GaN—we've done like 12 different types of devices. So there are different voltages, power levels, and requirements that they go through, all from solar to data center to electric switches in infrastructure and homes.

Speaker #4: To automotive, they're all over the place, so they all have different kinds of requirements. But, so far as we can tell, every one of them needs a production burn-in screening to meet the reliability requirements.

Gayn Erickson: They all have different kind of requirements, but so far as we can tell, every one of them needs a production burn-in screening to meet the reliability requirements. It's been a learning process for us. Silicon, again, is extremely difficult to actually test and burn-in at wafer level. We've learned, but it's now been debugged and fully working through, and things are going really well for us right now. We think that that will grow. Now, the GaN market, by the market forecasters is, just dollar-wise, is measured in single to tens of billions of dollars in this decade, whereas, AI or memory is 10x that. They simply could never spend as much money as some of the other markets.

Speaker #4: And it's been a learning process for us. Silicon, again, is extremely difficult to actually test and burn in at the wafer level. We've learned, but it's now been debugged and is fully working through, and things are going really well for us right now.

Speaker #4: So we think that that will grow now. The GAN market by the market forecasters is just dollar-wise is measured in single to tens of billions of dollars over the decade in this decade.

Speaker #4: Whereas AI or memory is 10x that, so they simply could never spend as much money as some of the other markets.

Speaker #4: But from a reliability perspective, it's very clear the value of burn-in. And we've been proving and validating the value of wafer-level burn-in of GaN, similar to silicon carbide.

Gayn Erickson: From a reliability perspective, it's very clear the value of burn-in, and we've been proving and validating the value of wafer level burn-in of GaN, similar to silicon carbide. Then silicon photonics, similarly, that's been the big debate, is as the data centers really need to go to burn-in or to silicon photonics, optical transceivers for fiber optic communication, basically. The burn-in requirements are kind of very clear and front and center. The hyperscalers, the big data center guys are all talking about this, and it's sort of cool to be in burn-in, if you will, right now. That sounds kind of funny a play on words. Chris is laughing. I've never said that before, but it is. It's just right now, a lot of people are talking about burn-in as the kind of the place.

Speaker #4: And then silicon photonics, similarly, that's been the big debate—whether the data centers really need to go to burn-in or to silicon photonics.

Speaker #4: Optical transceivers for fiber optic communication, basically. The burn-in requirements are kind of very clear and front and center. So the hyperscalers—the big data center guys—are all talking about this.

Speaker #4: And it's sort of cool to be in burn-in, if you will, right now. That sounds kind of funny—a play on words. Actually, Chris is laughing.

Speaker #4: I've never said that before, but it is. It's just, right now, a lot of people are talking about burn-in as kind of the place. I believe that burn-in is by far the fastest growing segment in all of semiconductor test right now.

Gayn Erickson: I believe that burn-in is by far the fastest-growing segment in all of semiconductor test right now, and wafer level burn-in, in particular.

Speaker #4: And wafer-level burn-in in particular.

Speaker #5: Awesome. Last question from me, I promise. Chris, can you just help with cadence in terms of how you look at the year? How are you thinking?

Jed Dorsheimer: Awesome. Last question from me, I promise. Chris, can you just help with cadence in terms, as you look at the year, how are you thinking? I mean, Gay mentioned Q2 in terms of some concentration on the package level burn-in systems. Is there some way to think about, there's a pretty big shift year-over-year in terms of the uplift, how to think about that flow as we go through the year? Any thoughts there or, not specific guidance, but just general seasonality if you will.

Speaker #5: I mean, Gayn mentioned second quarter in terms of some concentration. On the package-level burn-in systems, is there some way to think about this? This is a pretty big shift year over year in terms of the uplift.

Speaker #5: How should we think about that flow as we go through the year? Do you have any thoughts there—not necessarily specific guidance, but maybe just general seasonality, if you will?

Speaker #4: Yeah. I mean, the revenue run rate, kind of, right? So if you know, historically we kind of said, "Hey, our first half is softer than the second half." But I would say this year, it's hard to say that because, as Gayn mentioned, we're going to ship a lot of the package-level Sonoma systems in the second quarter.

Chris Siu: You mean the revenue run rate kind of.

Jed Dorsheimer: Yeah

Jed Dorsheimer: Yeah.

Chris Siu: question?

Chris Siu: Exactly. Yeah.

Chris Siu: question?

Chris Siu: Exactly. Yeah.

Chris Siu: If you know historically, we kind of said, Hey, our H1 is softer than the H2. I would say this year it's hard to say that because, as Gay mentioned, we're going to ship a lot of the package level Sonoma systems in Q2.

Gayn Erickson: Right.

Speaker #4: So, second quarter is going to be a big quarter. So, you could—yeah, pretty good.

Chris Siu: Q2 is going to be a big quarter.

Gayn Erickson: Q1 could be pretty good.

Gayn Erickson: Yeah, pretty good.

Gayn Erickson: Q2 is going to be bigger. Maybe Q3's flattish.

Speaker #5: Maybe third quarter is flat-ish. Fourth quarter is up from there.

Gayn Erickson: Yeah.

Gayn Erickson: Q4's up from there.

Speaker #4: So there's a high likelihood that the first half might be the same or even better than the second half. But the second quarter is going to be a very strong quarter for us.

Chris Siu: There's a high likelihood that H1 might be the same or even better than H2, but Q2 is going to be a very strong quarter for us.

Speaker #5: Got it. I'll jump back in the queue. Thanks, guys. Thanks, Jack.

Jed Dorsheimer: Got it. I'll jump back in queue. Thanks, guys.

Gayn Erickson: All right.

Chris Siu: Thank you.

Gayn Erickson: Thanks, Jay.

Speaker #2: Thank you. And once again, as a reminder, if you have any questions, please press star one on your phone at any time. The next question is coming from Max Michaelis from Lake Street Capital Markets.

Operator: Thank you. Once again, as a reminder, if you have any questions, please press star one on your phone at any time. The next question is coming from Max Michaelis from Lake Street Capital Markets. Max, your line is live.

Speaker #2: Max, your line is live.

Speaker #5: Hey, guys. A few questions from me. One is a clarification question. So, that April order you put out—I think it was a $41 million production follow-on order with a lead hyperscaler.

Max Michaelis: Hey, guys. A few questions from me. One is a clarification question. That April order you put out, I think it was a $41 million production follow-on order with a lead hyperscaler. I think that was an order, production order for the Sonoma systems. Just to be clear, they aren't transferring over to wafer level burn-in. This is a completely different customer, correct?

Speaker #5: I think that was an order, a production order, for the Sonoma systems. Just to be clear, they aren't transferring over to wafer-level burn-in. This is a completely different customer, correct?

Speaker #4: No, that's the one we're talking about. That is currently on package. Then the second part is package, and the third part is wafer-level, or potentially being evaluated for wafer-level.

Gayn Erickson: No, that's the one we're talking about that is currently on package.

Max Michaelis: Okay.

Gayn Erickson: The second part is package, and the third part is wafer level or potentially being evaluated for wafer level. It gets kind of interesting because they want to make sure we can also do the package for the third one. We have to, I guess, we have two dogs in that race, and it's a two-dog race. Yeah.

Speaker #4: It gets kind of interesting because they want to make sure we can also do the package for the third one. So we kind of, I guess, have two dogs in that race, and it's a two-dog race.

Speaker #4: So, yeah. But, by the way, that third device we think is not even this fiscal year.

Max Michaelis: Okay.

Gayn Erickson: By the way, that third device we think is not even this fiscal year.

Speaker #5: Okay. And I guess kind of my follow-up to that would be: should we expect sort of a similar order size, I mean, on the wafer-level side for them?

Max Michaelis: Okay. I guess kind of my follow-up to that would be, expect sort of a similar order size, I mean, on the wafer level side for them?

Speaker #4: Good question. If they do the same capacity, it would be higher. Our wafer-level systems do, in fact, cost more per DUT than the package-level today.

Gayn Erickson: Good question. If they do the same capacity, it would be higher. Our wafer level systems do in fact cost more per dut than the package level today. Margins are better too, but the value proposition is different because you get the yield advantage, which more than makes up for the price of the machine. Just from a product positioning and a pricing, I mean, we have a lot more IP in it. There's a lot more R&D people. We have enormous investments that we recover through the wafer level. We have all this IP that is worth it.

Speaker #4: Margins are better, too. But the value proposition is different because you get the yield advantage, which more than makes up for the price of the machine.

Speaker #4: So just from a product positioning and pricing standpoint, I mean, we have a lot more IP in it. There are a lot more R&D people.

Speaker #4: We have enormous investment that we recover through the wafer level. And we have all this IP that is worth it. So customers come to us not just to cost-effectively do burn-in at wafer level—it's because the device doesn't even exist in another form, or they put the device in with something else and then, if they burn it in and it fails, then the something else gets thrown away.

Gayn Erickson: Customers come to us not just to cost effectively do burn-in, but at wafer level, it's because the device doesn't even exist in another form, or they put the device in with something else, and then if they burn it in and it fails, then the something else gets thrown away. The wafer level burn-in value proposition has more to do with the yield improvement. Which can be measured in 1% of all products. If they have eight devices in a package, it's equivalent of 8% yield advantage. The cost to test might be 0.1% or 0.01%. The price doesn't really come into effect.

Speaker #4: And so the wafer-level burn-in value proposition has more to do with the yield improvement, which can be measured as 1% of all products if they have eight devices in a package. It's the equivalent of an 8% yield advantage.

Speaker #4: The cost of test might be 0.1% or 0.101%, so the price doesn't really come into effect.

Speaker #5: Okay. And then, last one from me—and I don't know, you might have mentioned it—but that second major AI processor, that just completed the benchmark testing.

Max Michaelis: Okay. Last one for me, and I don't know, you might have mentioned it, but that second major AI processor that just completed the benchmark testing, what's sort of the ramp-up there? I know you kind of left it open-ended with the guidance range of being $130 to $150 million. Could you take it higher? Could you see a major order come in in fiscal year 2027, be able to complete that?

Speaker #5: I mean, what's sort of the ramp-up there? I know you kind of left it open-ended with the guidance range being $130 million to $150 million.

Speaker #5: Could be taken higher. I mean, could you see a major order coming in in fiscal year '27 and be able to complete that?

Speaker #4: Yes. Pretty brief.

Gayn Erickson: Yes. Pretty brief.

Speaker #5: All right.

Speaker #4: Yeah, we can. We can. I mean, as we’ve been adding capacity and we have multiple AI customers that we’re engaged with to some extent, we can build two forecasts.

Max Michaelis: All right.

Gayn Erickson: Yeah. We can. As we've been adding capacity, and we have multiple AI customers that are engaged with, to some extent, we can build to forecast. We are having discussions about what if you throw a party and everybody comes, right? What does that look like? We're trying to meet at very high levels with the customers and potential customers and make sure we get an idea of what kind of capacity they look like. These systems have a lot of capacity, though. When you think about a tester that in the footprint of a competitive ATE machine, like a 93K from Advantest, I'm testing 9 AI wafers in parallel. I would say a quarter of the 60 devices that are running, this is a lot of capacity that you put in place. So if we say, "Oh, I'm going to go ship 20 machines," right?

Speaker #4: We are having discussions about, what if you throw a party and everybody comes, right? What does that look like? And we're trying to meet at very high levels with the customers and potential customers and make sure we get an idea of what kind of capacity they look like.

Speaker #4: These systems have a lot of capacity, though. I mean, when you think about a tester that, in the footprint of a competitive ATE machine like a 93K from Advantest, I'm testing nine AI wafers in parallel.

Speaker #4: I would say a quarter of the 60 devices that are running. This is a lot of capacity that you put in place. So if we say, "Oh, I'm going to go ship 20 machines," right, it's 180 blades.

Gayn Erickson: It's 180 blades, 180 wafers of capacity. 180 wafer test floor is a big test floor. We could put 18, we put 20 of these, and it's in the size of 20 parking stalls in the garage and out in your parking lot. Think of 20 cars out there. That's more than enough to support 20 of our machines. Now think of 180 of our competitors in the same garage. These are state-of-the-art clean rooms space. These are bunny-suited test floors. Yeah.

Speaker #4: 180 wafers of capacity. 180 wafer test floor is a big test floor. And we could put 18—we put 20 of these, and it's in the size of 20 parking stalls in the garage.

Speaker #4: And out in your parking lot, think of 20 cars out there. That's more than enough to support 20 of our machines. Now think of 180 of our competitors.

Speaker #4: In the same garage. And these are state-of-the-art clean room spaces. These are bunny-suited test floors. I always have to remember that when someone says, "Oh, you can ship five XPs a month," if they're 18-blade machines, that's 100 testers a month of capacity.

Max Michaelis: Awesome. Thanks, Gayn.

Gayn Erickson: I always have to remember that when someone says, "Oh, you can ship five FOX-XPs a month," if they're 18 blade machines, they're 100 testers a month of capacity. Like in silicon carbide, testing all 3,000 die in parallel in one insertion per wafer. These are very high volume, very capable machines. It's why we get $several million a piece for them, upwards of six, including WaferPaks. Okay? Oh, we lost you, Max.

Speaker #4: And like in silicon carbide, testing all 3,000 die in parallel in one insertion per wafer. These are very high-volume, very capable machines. It's why we get several million dollars apiece for them, upwards of six, including wafer packs.

Speaker #4: Okay? Oh, we lost you, Max.

Speaker #5: It's all good for maintenance.

Max Michaelis: All good for me, thanks.

Speaker #4: Okay.

Gayn Erickson: Okay.

Speaker #5: Thank you, Max.

Chris Siu: Thank you, Max.

Speaker #2: Thank you. The next question is coming from Larry Chlebina from Chlebina Capital. Larry, your line is live.

Operator: Thank you. The next question is coming from Larry Chlebina from Chlebina Capital. Larry, your line is live.

Speaker #5: Hi, Gayn. I just want to quantify the capacity in Fremont. You mentioned one shift, two shifts. So, on the Sonoma side, at what I call Sonoma Max—I guess those are fully automated.

Larry Chlebina: Hi, Gayn. I just want to quantify the capacity in Fremont. You mentioned one shift, two shifts. On the Sonoma side, what I call Sonoma Max, I guess those are fully automated. What is the throughput capacity expected in Fremont? Is it still 20 Sonoma Maxes per month?

Speaker #5: What is the throughput capacity expected in Fremont? Is it still 20 Sonoma MAXes per month?

Speaker #4: So if you were to come and look at our—if you were to come and look at our facility, as many shareholders have, one of the things we did in our big modification and upgrade a couple of years ago was add an enormous amount of additional cooling and power capacity.

Gayn Erickson: If you were to come and look at our facility, as many shareholders have, what we did in our big modification upgrade a couple of years ago was add enormous amount of additional cooling and power capacity. That gives us drop locations for upwards of potentially 16 locations, physical locations for the equipment to be plugged in, another four mechanically, plus the test labs. What does that mean? That means that theoretically you could have 16 of these machines plugged in and powered up and going through different levels of test. Now, depending on the tool, they could take from several days to several weeks to be on that floor. What we've been doing in parallel is bringing up the CMs to be doing most of that work so that when it comes into the facility, maybe they only sit there for one week.

Speaker #4: That gives us drop locations for upwards of potentially 16 physical locations for the equipment to be plugged in, another four mechanically, plus the test labs.

Speaker #4: What does that mean? That means that, theoretically, you could have 16 of these machines plugged in and powered up, going through different levels of test.

Speaker #4: Now, depending on the tool, they could take from several days to several weeks to be on that floor. What we've been doing in parallel is bringing up the CMs to be doing most of that work, so that when it comes into the facility, maybe they only sit there for one week.

Speaker #4: So if you do that math, you're like, "Well, wait a minute. You could do 16 a week and four per week. Wow, that's a lot." What I've shared with people is we can reasonably see the ability to do, say, 20—combination of package or wafer-level systems—a month out of this facility.

Gayn Erickson: If you do that math, you're like, "Well, wait a minute, you could do 16 a week and four per week. Wow, that's a lot." What I've shared with people is we can reasonably see the ability to do, say, 20 combination of package or wafer level systems a month out of this facility within the supply chain infrastructure that we have. We have not initiated all of that. In certain cases we have, like chambers, we've been talking to the CMs about auto aligners for both the package and also the wafer level. If those were, say, million-dollar Sonoma Maxes, as you call them, we actually call them Ultras, okay? It's $20 million a month of Sonomas. If you were 20 wafer level burn-in systems a month, they have an ASP closer with the WaferPaks of $5 million.

Speaker #4: Within the supply chain infrastructure that we have. But we have not initiated all of that. But in certain cases, we have—like chambers—we've been talking to the CMs about auto-aligners for both the package and also the wafer level.

Speaker #4: And so, if those were, say, million-dollar Sonoma Maxes—as you call them. We actually call them Ultras, okay? It's $20 million a month of Sonomas.

Speaker #4: If you were 20 wafer-level burn-in systems a month, they have an ASP, closer with the wafer packs, of $5 million. They're $100 million a month.

Gayn Erickson: They're $100 million a month. People are like, "Oh my gosh. You have $1 billion worth of capacity." Conceptually, yes. For my employees that are listening, we need to hire more people, and there's a lot more work that needs to be done. With a running head start and a customer forecast, we could do enormous amounts relative to our current size just out of this facility.

Speaker #4: So people are like, "Oh my gosh, you have $1 billion worth of capacity, conceptually." Yes. For my employees that are listening, we need to hire more people, and there's a lot more work that needs to be done.

Speaker #4: But with a running head start and a customer forecast, we could do enormous amounts—relative to our current size—just out of this facility.

Speaker #5: So actually, the number would be 20 Sonoma Ultras per month or 20 XPs per month—not both, not 20 each.

Larry Chlebina: Actually the number would be 20 Sonoma Ultras per month or 20 FOX-XPs per month, not both, not 20 each.

Speaker #4: Yeah, okay. So you're right. You caught me on some, except for we just initiated the 20 Sonomas outside of our facility.

Gayn Erickson: Yeah. Okay, you're right. You caught me on some. Except for we just initiated the 20 Sonomas outside of our facility.

Speaker #5: No, I know. I know about that.

Larry Chlebina: No, I know about that.

Speaker #4: No, what it means, Larry, is we could run the 20 Ultras shipping directly from Southeast Asia, and then still do 20 XPs here. A month.

Gayn Erickson: No, what it means, Larry, is we could run the 20 Ultras, shipping directly from Southeast Asia, and then still do 20 FOX-XPs here a month.

Speaker #5: Okay.

Larry Chlebina: Okay.

Speaker #4: And by the way, I need to put some disclaimers for all the attorneys listening. Some of these challenges would be particular material or getting access to some of the challenges that we've seen on the power supplies, for example, on Sonomas.

Gayn Erickson: By the way, I need to put some disclaimers for all the attorneys listening. Some of these challenges would be particular material or getting access to. Some of the challenges that we've seen on the power supplies, for example, on Sonomas, is some of the power supply manufacturers that we use in Sonoma are supplying to Nvidia and others. They've come back, and they've raised their prices 40%, if you want to get them. We've been buying components with long lead time items and things like that. If we make it sound easy, that we're overstating. It's actually quite difficult to do what we're doing right now. So far, we're able to keep ahead. I think almost everything in my backlog, we could ship before the customer has requested it. I'm thinking like all the Sonomas, Chris, all my silicon photonics customers.

Speaker #4: Some of the power supply manufacturers that we use in Sonoma are supplying to Nvidia and others, and they've come back and raised their prices.

Speaker #4: Forty percent, if you want to get them. And so we’ve been buying components with long lead time items and things like that. So, if we make it sound easy, we’re overstating. It’s actually quite difficult to do what we’re doing right now.

Speaker #4: But so far, we're able to keep ahead, and I think almost everything in my backlog we could ship before the customer has requested it.

Speaker #4: I'm thinking, like, all the Sonomas, Chris, all my silicon photonics customers—so far, we've been on top of that. And our goal is to stay ahead of that.

Gayn Erickson: So far we've been on top of that, and our goal is to stay ahead of that. Customers, if they want it, we could ship it as soon as they'd like it.

Speaker #4: So, customers, if they want it, we could ship it as soon as they'd like it.

Speaker #5: Okay. Then on the paid evaluator, did you say that in your guide for the full year, you don't really have any revenues in there from this particular potential customer?

Larry Chlebina: Okay, on the paid evaluator, did you say that in your guide for the full year, you don't really have any revenues in there from this particular potential customer? Did you say that?

Speaker #5: Is that what you said?

Speaker #4: Let's call it little to none. At this point, it's at the noise level.

Gayn Erickson: Let's call it little to none at this point. It's in the noise level.

Speaker #5: So, that's a potential big upside assuming that gets kicked off. And then lastly, in your written release, you mentioned on the memory side that you're working with multiple memory suppliers.

Larry Chlebina: That's a potential big upside, assuming that gets kicked off.

Gayn Erickson: That's right.

Larry Chlebina: Lastly, in your written release, you mention on the memory side that you're working with multiple memory suppliers. Does that mean more than one HBM? How far are you engaged with the HBM potential customers that you mentioned with that?

Speaker #5: Does that mean more than one HBM? I mean, how far are you engaged with the HBM potential customers?

Speaker #4: You had specific conversations with suppliers? Okay. Let me make sure I do this right: two to three on flash, and two on DRAM.

Gayn Erickson: We've had specific conversations with suppliers. Okay, let me make sure I do this right. Two to three on flash and two on DRAM.

Speaker #5: Okay. And the primary flash?

Larry Chlebina: Okay. The primary flash.

Gayn Erickson: For those that are listening that aren't aware, there's literally four memory manufacturers in the whole world that matter, apologize. For those that are in the fifth and sixth, they might be offended by that, of the top ones, I'm listing them from those.

Speaker #4: For those that are listening that aren't aware, there's literally, like, four memory manufacturers in the whole world that matter, so I apologize. And if you're in the fifth and sixth, you might be offended by that.

Speaker #4: But of the top ones, I'm listening to those.

Speaker #5: Okay. And then the Primary Flash—you engaged them over two years ago, and yet they haven't had any revenue or orders from them. Is that—nothing going to happen there unless HBF gets kicked off, as far as you can see?

Larry Chlebina: Okay. The primary flash, you engaged them over two years ago, yet to have any revenue or orders from them.

Gayn Erickson: That's fair.

Larry Chlebina: Is nothing going to happen there unless HBF gets kicked off, or as far as you can see?

Speaker #4: I don't know. That was a huge change, among some other organizational things that happened to them pretty dramatically about a year and a few months ago.

Gayn Erickson: I don't know. That was a huge change amongst some other organizational things that happened to them pretty dramatically about a year and a few months ago. At this point, feedback recently has been they really need something for the HBF, they really want something for their standard flash. HBF, architecturally, is way more power, more power supplies. It's technically a more expensive tester. They really like the price point of the current test capability, we're kind of working through that. We got to find the math for that. We need their help to sort of get the ball going because we obviously have a lot of opportunities ahead in all kinds of markets, and we'd just as soon them sort of help us help them.

Speaker #4: So, at this point, feedback recently has been they really need something for the HBF, but they also really want something for their standard flash. HBF, architecturally, is way more power—more power supplies.

Speaker #4: It's technically a more expensive tester, but they really like the price point of the current test capability. And so we're kind of working through that.

Speaker #4: We got to find—we got to find the math for that. And we need their help to sort of get the ball going, because we obviously have a lot of opportunities ahead.

Speaker #4: In all kinds of markets, and we just soon them, sort of, help us help them.

Speaker #5: Yeah. But on the memory side, that would still be the first potential sale revenue for any of the four memory people you're talking to.

Larry Chlebina: Yep. On a memory side, that would still be the first potential sale revenue for any of the four memory people you're talking to.

Speaker #5: They would be.

Speaker #4: I think so, Larry. I'm going to, I would put some bet on a wild card. Because this new HBM has a logic interface for its testability, it's breaking the memory testers.

Gayn Erickson: I think so, Larry. I would put some bet on a wild card. Because this new HBM has a logic interface for its testability, it's breaking the memory testers. Technically, when I describe a new memory tester, I am talking about, well, most people don't know or care on this call what a memory tester is, but a memory tester is built with algorithm pattern generations. It's sort of a different architecture and a different beast than a logic machine. If you have an APG-based memory tester, it would be really good for flash or DRAM. If you had a logic BIST engine in the device, then it may not even be very good at doing BIST. You would need something that looks like a logic tester, which candidly is more like what we build today with flash.

Speaker #4: And technically, when I describe a new memory tester, I am talking about — well, most people don't know or care on this call what a memory tester is.

Speaker #4: But a memory tester is built with algorithm pattern generations. It's sort of a different architecture and a different beast than a logic machine. So, if you have an APG-based memory tester, it would be really good for flash or DRAM.

Speaker #4: But if you had a logic-based engine in the device, then it may not even be very good at doing BIST. And so you would need something that looks like a logic tester, which, candidly, is more like what we build today with flash.

Speaker #4: The FOX-XP was originally designed for the BIST engine of a couple of the big flash memory manufacturers. Flash has built-in self-test. DRAM, until recently, never has.

Gayn Erickson: The FOX-XP was originally designed for the BIST engine of a couple of the big flash memory manufacturers. Flash has built-in self-test. DRAM, until recently, never has.

Speaker #5: You mentioned that these HBM potential customers were coming to you. Would that be a function of, potentially, this paid evaluator telling them, "Hey, get over to Aehr Test and get your reliability better before you take out your accelerators"?

Larry Chlebina: You mentioned that they were coming to you, these HBM potential customers. Would that be a function of potentially this paid evaluator telling them, Hey, get over to AEHR TEST- Get your reliability better before you take out our accelerators. Is there any angle on that? Do you think that could be a driver?

Speaker #5: Is there any angle on that? Do you think that could be?

Speaker #4: That would be a little too bold for me right now. I don't think that's the case. I do think there is a general tone among, and growing among, the data center buyers—all the hyperscalers from Google and Meta, all the papers that you see, Apple, certainly Tesla.

Gayn Erickson: That'd be a little too bold for me right now. I don't think that's the case. I do think there is a general tone, and growing, amongst the data center buyers, all the hyperscalers, from Google and Meta, all the papers that you see, Apple, certainly Tesla, of an increasing expectation of test and reliability to screen out defects so that doesn't show up on my data center floor. That's more of a go get your act together in general than necessarily go to Aehr. I will say that by contrast to the automotive guys, we specifically have automotive EV suppliers telling their suppliers, Go get Aehr. Okay? That's true. We love that.

Speaker #4: There’s an increasing expectation for test and reliability to screen out defects so that they don’t show up on my data center floor. So that’s more of a ‘go get your act together in general’ than necessarily ‘go to air.’

Speaker #4: I will say that, by contrast to the automotive guys, we specifically have automotive EV suppliers telling their suppliers, "Go get air." Okay? I mean, that's true.

Speaker #4: So that's different. We love that, right? But imagine one of the two biggest automotive suppliers in the world buys our wafer packs, tells their suppliers, "We'd like to qualify you for your silicon carbide reliability, and we're going to use the Aehr Test FOX system with our wafer packs to validate your devices, and good luck to you." Pretty impactful, right?

Gayn Erickson: Imagine that one of the two biggest automotive suppliers in the world buys our WaferPaks, tells their suppliers, "We'd like to qualify you for your silicon carbide reliability, and we're going to use the Aehr Test box system with our WaferPaks to validate your devices, and good luck to you." Pretty impactful, right?

Larry Chlebina: Yeah.

Speaker #4: So I don't have that with the AI customers today. That would be nice, but we don't have that.

Gayn Erickson: I don't have that with the AI customers today. That would be nice, but we don't have that, not yet.

Speaker #5: Yeah.

Larry Chlebina: Well-

Speaker #4: Chris said not yet.

Gayn Erickson: Chris said, Not yet.

Larry Chlebina: Good job. Hey, I'll let you go. Thank you.

Speaker #5: Good job. Hey, I'll let you go. Thank you.

Speaker #4: Thanks, Larry.

Gayn Erickson: Thanks, Larry.

Speaker #2: Thank you, Larry.

Chris Siu: Thank you, Larry.

Speaker #1: Thank you. I'm not seeing any other questions in the queue at this time. I'll now turn the call back to management for closing remarks.

Operator: Thank you. I'm not seeing any other questions in queue at this time. I will now turn the call back to management for closing remarks.

Speaker #4: All right. Well, thank you, everybody, for listening in and joining us. We're really excited to work hard for you all this year. This is going to be a great year for Aehr and hopefully for our customers and our shareholders as well.

Gayn Erickson: All right. Well, thank you everybody for listening in and joining us. We're really excited to work hard for you guys this year. This is going to be a great year for Aehr, and hopefully for our customers and our shareholders as well. We'll look forward to getting you guys an update as we go along. Take care.

Speaker #4: And we'll look forward to getting you guys an update as we go along. Take care.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

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