Aehr Test Systems

Good day, ladies and gentlemen, and welcome to the Aehr Test Systems first quarter fiscal 2022 financial results call. Today's conference is being recorded. At this time, I turn the conference over to Mr. Jim Byers of MKR Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Aehr Test Systems first quarter fiscal 22 financial results conference call. With me on today's call are Aehr Test Systems President and Chief Executive Officer, Gane Erickson. and Chief Financial Officer Ken Spink. Before I turn the call over to Gane and Ken, I'd like to cover a few quick items. This afternoon, right after the market closed, Aehr Test issued a press release announcing its first quarter fiscal 22 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, and the webcast will be archived in the investor relations page of the company's website. I'd like to remind everyone that on today's call, management will be making forward-looking statements today 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 that may cause results to differ materially from those in the forward-looking statements 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, and Aehr Test Systems undertakes no obligation to update the forward-looking statements. And now, with that said, I'd like to turn the call over to Jane Erickson, President and CEO.

Thanks, Jim. Good afternoon, everyone, and welcome to our first quarter fiscal 22 earnings conference call. Thanks for joining us today. Hey, Ken, I think if you could make sure you're muted over there. Thank you. Let's start with a quick summary of the highlights of the quarter and the strong business momentum we're experiencing. And then I'll give an update on our expectations for increased revenue growth this fiscal year. We're off to a strong start for fiscal 22, finishing the quarter ending August 31st with record bookings for a single quarter of $20.7 million. Since the end of the quarter, we have announced an additional $19.4 million in bookings, bringing our total bookings for the fiscal year to over $40 million as of today's date. Our strong bookings include several sizable orders received over the past few months from our lead silicon carbide test and burning customer for our Fox XP wafer level test and burning systems and full wafer pack contactors to support testing of silicon carbide devices for electric vehicles. Each of these silicon carbide focused XP systems is configured to test 18 silicon carbide wafers in parallel. in the footprint of a single test wafer test solution, while contacting and testing 100% of the devices in parallel on each wafer. This Fortune 500 customer is a major automotive semiconductor supplier, and we continue to work closely with them to achieve their test and burning requirements and capacity needs. They continue to forecast orders for additional FOX systems and wafer packs this fiscal year and a significant number of systems and wafer packs over the next several years, driven by electric vehicle semiconductor tests and burn-in demand. We're seeing very strong demand across the industry for wafer-level burn-in of silicon carbide devices and continue to ramp our FOX multi-wafer testing burn-in systems and full wafer wafer packs to meet the silicon carbide market opportunity, which we believe is only just beginning. We're currently in detailed discussions with multiple major silicon carbide suppliers regarding their wafer-level test and burn-in needs. This includes at least one potential customer that has moved on to wafer evaluation and benchmarking of AERIS Fox XP multi-wafer system for test and burn-in of their silicon carbide wafers. We believe we will add several new silicon carbide customers over the next 18 months that will ramp into production on our solutions. Silicon carbide power semiconductors have emerged as the preferred technology for the electric power conversion and control of the electric engines in water-controlled traction inverters, as well as the onboard electric vehicle battery chargers. Our Fox family of products are cost-effective solutions for ensuring the critical quality and reliability of devices in this market, and we anticipate that wafer-level test and burn-in will become the industry standard for quality and reliability screening of silicon carbide devices. Aehr's Fox XP solution allows for one of the key reliability screening tests to be completed on an entire wafer full of devices, testing all of them at one time while also testing and monitoring every device for failures during the burn-in process to provide critical information on those devices. This is an enormously valuable capability as it allows our customers to screen devices that would otherwise fail after they are packaged into multi-die modules where the yield impact is 10 times or even 100 times as costly. With the most cost-effective solution in the market to address this opportunity, we believe that air has the chance to achieve a significant, perhaps dominant market share for silicon carbide wafer-level burning. In addition to the devices and electric vehicles, the energy infrastructure market that includes charging stations, wind farms, and solar panels in both solar farms and for individual homes and businesses All are markets that are consuming more silicon carbide devices than electric vehicles today and are growing at a rapid rate over the next decade. We believe it is very clear that this infrastructure is going to need to grow to support the electric vehicle demand. Many countries, including the United States, are putting in place government subsidies and infrastructure for these charging stations, wind farms, and solar farms to be installed to support a greener, more sustainable, and reduced carbon emission world. The silicon carbide power semiconductor device market is expected to increase over 500% between 2020 and 2026, growing at a compound average growth rate or CAGR of 36% to $4.5 billion, according to your research's latest forecast. And a report from Deloitte forecast that the total electric vehicle industry will likely grow at a CAGR of 29% yearly from 2020 to 2025. before reaching 31.1 million vehicles by 2030 and securing approximately 32 percent of the total market share for new car sales. Market research firm Exawatt estimates that the total market for silicon carbide wafers for power semiconductors just for electric vehicles in 2021 will be 130,000 150-millimeter equivalent wafers, and the total market will exceed 1.23 million 150-millimeter equivalent wafers by 2030. These stats highlight the tremendous opportunity Aehr Test has in front of it with its wafer-level test and burning solution for electric vehicle semiconductors. In addition to our success in silicon carbide applications, we continue to see signs of strengthening the silicon photonics test and burning market. During the quarter, we received and shipped our first order to China for our FOX solution for production test to silicon photonics devices. expanding our customer base for silicon photonics with this new customer that serves international as well as China markets. Several other customers addressing the silicon photonics market have also forecast additional box system and wafer pack or die pack contactor capacity needs this fiscal year. These include needs to address incremental production capacity as well as capacity to address new customer and new product qualification and engineering. Silicon Photonics devices address the 5G and data infrastructure industry, as well as several other key markets. And real research predicts that the Silicon Photonics market will grow at a 36% CAGR from 2020 to 2025. Our customers are using Fox wafer-level solutions for 100% test and burn-in rather than just quality and reliability sampling of their integrated Silicon Photonics devices. as this step is used to stabilize the devices before they're integrated into the fiber optic transceiver modules. Silicon photonics laser transmitters, like other photonics devices, have a characteristic where their emitted output light power decays with time before it stabilizes its output power. This decay can be an issue for high-speed transmission bandwidths in our devices with multiple lasers transmitting different wavelengths or multichannel transmission which is very typical in 5G infrastructure and data centers. Our Fox systems allow our customers to test all the devices on their wafer at one time using our proprietary wafer pack contactors up to 2,000 watts of power per wafer. This energy plus added thermal energy up to 150C temperature allows the stabilization to happen very quickly in hours or days rather than weeks or months. and our solutions are very cost effective way to do this at the wafer or simulated dye level before porting this into the full fiber optic module or system. We currently have five silicon photonics customers that are shipping silicon photonics based products to their customers using our FOX solution. We see a significant opportunity for growth as we expand these customers and add additional new silicon photonics customers. Additionally, for the first time, companies are making public announcements of adding optical transmission and reception to semiconductors beyond just the silicon used for this combined silicon laser transmitter and optical detection receivers used in discrete fiber optic transceiver modules. Companies like Intel and Nvidia are talking about integrating fiber optic transceivers into their core and graphics processor units, or CPUs and GPUs. This is very exciting, and we believe an enormous opportunity for air test. with our unique position of having a cost-effective and proven multi-wafer solution for testing and burning in or stabilizing silicon photonics devices at a massive scale while still in the wafer form. Stay tuned for more news on this in future calls. We also continue with multiple programs using our Fox systems for production test and burn-in of new devices for 2D and 3D sensors for mobile devices. These devices include some really exciting new applications and even completely different functionality than has ever been seen before. I wish I could talk more about these devices, but our NDAs are extremely clear and preclude us from talking at all about these programs and products. However, what I can say is we expect to see meaningful bookings and revenue from these programs this fiscal year and continue to be optimistic about this market space into the future. With all the growth opportunities starting to gain momentum, let me quickly touch on our supply chain. On our last call, I noted that given all the issues with semiconductor shortages and rising costs in material costs and lengthening lead times across many industries, there have been reasonable concerns about our supply chain and ability to meet capacity needs for systems and contactors. As we are proving now, Aehr has the manufacturing infrastructure and supply chain in place to ramp to significantly higher revenue levels. We have been ordering long-lead components for systems and wafer packs, particularly for the enormous opportunity we see for silicon carbide that is gaining momentum, and we have been able to maintain reasonable lead times to meet customer requests. Our supply chain is holding up to the increase in demand, and we're ramping all of our sub-suppliers to meet the customer bookings and forecasts we are seeing. Aehr has a very robust supply chain with world-class subcontract manufacturers on subsystems of our test systems, contactors, wafer pack aligners, and die pack hammers. These are very mature subcontractors that have successfully supplied these subsystems to air for years. In all cases, these suppliers have capacity well in excess of air historical shipments and the ability to ramp significantly higher as well. We are very confident in our ability to meet the customer forecasted demand plus considerable upside. As we discussed and anticipated last year during the beginning of COVID-19 pandemic, Aehr Test has emerged a stronger company with more production customers, more markets and applications, and higher value products than we had before the start of the pandemic. With our record bookings and the strength of our semiconductor test and burn-in solutions, as well as the positive response we're getting from multiple new potential customers in the silicon carbide space, we are confident in our growth and are raising our guidance for revenue for the year. The hard work we've put in over the past several years is finally starting to pay off for our customers our financials, and our shareholders, and we're excited about the large market opportunities ahead and the future for air test systems. For fiscal year 2022, ending May 31st of next year 2022, we are raising our previously provided guidance for full-year total revenue by approximately 80% to at least $50 million, which is over three times our revenue from last fiscal year. With that, let me turn it over to Ken to review our financial results and updated guidance in more detail before we open up the line for questions.