Aehr Test Systems

Q2 2022 Earnings Conference Call


spk_0: the day and welcome to the air test system second quarter the school twenty twenty two financial results call they've conference is being recorded at this time i would like to the covered over to mr gym buyers of mk or investor relations with go ahead sir
spk_1: thank you operator good afternoon and welcome to air to systems second quarter fiscal twenty two financial results conference call with me on today's color two systems president and chief executive officer gain erickson and chief financial officer can spend before during the call over again and canada like to cover a few quick items this afternoon right after market closer test issued a press release announcing it's second quarter fiscal twenty twenty two results that release is available on the company's website at air dot com with calls being broadcast live over the internet for all interested parties and the webcast will be archived on the investor relations page and the company's website like to remind everyone that on today's paul management will be making forward looking statements today that are based on current information and estimates and are subject to never risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements he factors that may cause results to differ materially from as the forward looking state months discussed in the company's most recent periodic and current reports filed with the fcc he forward looking statements including guidance provided during today's call are only valid as of the state and their to systems undertakes no obligation to update forward looking statements and now that said at lecture and the call over to gain erickson president and ceo
spk_2: hm i get up to never want to thank you for joining us for a second quarter pistol twenty two of each conference call we hope that everyone's after great new year and are healthy and managing to these historic times with covered my team also i do want to apologize in advance that i been lingering dry cough after recovering from covered myself over the holidays while i was fully vaccinated and one of those that had the breakthrough case and i'm happy to see them doing fine and fully recovered from what little symptoms i had let's start with a quick summary of the highlight for the quarter and momentum works for you to the semiconductor way below test and burning market and then can move over the financial financial to detail than will open up the line to take your questions the second quarter were happy to announce our second consecutive quarter of rapid bookings and solid results for revenue or bottom line or balance sheet and we finish the quarter with new record for bookings and a single quarter a twenty nine point one million dollars if followed the previous quarter where we set a record of twenty point seven million dollars revenue for caught to to with nine point six million a sequential sequential increase of seventy percent over the first corner and up over four hundred and seventy percent year over year a backlog a quarter and was thirty six point one million which is our highest backlog on record for the company with are strong backlog an incredible performance of our manufacturing supply chain team as well as the great job our suppliers are doing the ramp you to meet the significant uptick in revenues were confident and and are reiterate a previously provided guidance for for your total revenue of at least fifty million dollars for the fiscal year and he may thirty first twenty twenty two this equates to fiscal twenty two revenue which is three times that of last year's for your revenue are projected revenue of thirty five million dollars or more to the second half of this fiscal year is other two point three times or revenue for the first half of the fiscal year today i'm going to go into detail on the silicon carbide in silicon photonics market segment of a business let me start with a discussion on the falcon carbide testing burning market which has been driven substantially by anticipated growth in electric vehicles we continue to see very strong interest and an increase in inbound requests for information on our solutions for wait for level test in berlin a silicon carbide devices particularly for use it directly and and in support of the electric vehicle market not to those who have not followed air let me describe the market opportunities for silicon carbide test environment silicon carbide devices are used in solid state power conversion of electric vehicles some would say it's an enabling technology to electric vehicles silicon carbide moss pets are used in converting alternating current or a ac to direct current dc needed to charge batteries that store the power in the electric vehicles then the same devices are they'll higher current in power are used to convert the dc power in the battery pack back to a c to poly the engine the ac the dc conversion is the onboard or off battery charger and the dc back to a c is referred to as the traction in burger there's one traction burger poor engine so for a car like most tuszla model s's axes in threes it was the ford f one fifty lightning they're likely to engines and therefore to traction in voters a typical traction and burger today uses forty eight silicon carbide mosque that to address the courage and number of face as needed a typical fix and silicon carbide semiconductor way for today has about five hundred of these hi last fat and so yield about ten engines for way for with perfect meal yield and they do not get perfect killed every silicon carbide supplier agrees that these mosques that's must go through an extended stress tests called burning to remove the extrinsic or infant mortality failures to get to the quality rely required to meet automotive standards in addition companies use burn to stabilize the threshold voltages of the devices particularly for use in margins where the devices or gained imperiled up this burning step can be done in the final package form and discreet packages but looking ahead the industry is movie mostly to multi day modules the models are more efficient require less cooling and are easier to integrate into in butter the downside is that these modules contain many individual die that are all assembled in the modules when customers been in these modules the failure of a single die because the entire modular fail reducing the production you not only at the cost of the module packaging more expensive but the other die which could be it include up to ten or more diaper module are discarded the combination of the industry moving the modules and this carpet the implication a burning in a package part vs wafer or die level is great for us at air where we have a clearly differentiated solution for bowl way for level testing burning that these devices our fox x p way for little barn and system contest up to eighteen way present time with one hundred percent of the device has been tested in burned in in parallel the same time this is an extremely cost effective than skilled a solution for hi bonnie manufacturing at a critical the liability step in the many faction process we have qualified they have to eliminate the extrinsic failure seen on the south silicon carbide devices and it has been validated by multiple electric vehicle manufacturer so far during the last quarter we received a follow on nineteen point four million dollar on for fox xp way for that have been burden systems for my lead silicon carbide customer it's order with then followed by seven point six million dollar order for wafer packs that are the consumable you well that makes contact between our fox x p c system and that the vice specific wafers this way for tap water is actually not enough to fully populate the system they ordered said we are expecting additional follow on they prepare for dish for these production fox xp systems the systems and way for patch for been used to test and burn in moffat devices and traction in voters in electric vehicle motor controllers as well as both board and op board electric vehicle chargers this customer a major automotive semiconductors fly with a significant customer base in the ottomans semiconductor market continues to forecast significant additional system and way for purchases over the next several years to meet the silicon carbide market growth in addition to a very strong backlog and four cats from my new silicon carbide customer we're currently engaged in discussions and or valuations with several other silicon carbide suppliers regarding the way for leveled has been burning leagues this includes all of the current large silicon carbide suppliers and a number of companies both large and small that intend to enter the silicon carbide market the new entrants are actually quite interesting to us at several are starting from the greenfield without any install base of test your burn and equipment and are looking to air for advice on the best solutions for them to meet the critical quality and reliability to the electric vehicle as well as other silicon carbide market multiple industry forecasters and analysts expect a market for silicon carbide devices to growl at a compound annual growth rate a cage or a more than thirty percent over the next decade driven by demand from the electric vehicle market and other applications it is more and more clear that silicon carbide is becoming the industry standard for electric vehicle power train conversion in the traction and buggers as well as for the onboard and op board battery charges for he beats tesla was the first to move to jogging carbide over the historical i g b t high voltage silicon based devices as a silicon carbide devices pay thomas to be more efficient which translated into live longer range and faster charging times to out if not the most important buying protein for electric vehicles shelter introduction in the model three tesla his out adopted children carbide an all of their vehicles and most of the new electric vehicles across the industry will start the silicon carbide at the solution of choice for the power conversion electronics one no one can completely predict exact quote rate of the electric vehicle automobile market there's no doubt that every car company and the world and many new companies are committed if not dedicated to new ab and volume production and example of how fast for cats changes that would just recently ford announced at all nearly double it's production capacity of it's upcoming electric f one fifty like new pickup truck to hundred and fifty thousand vehicles year by only mid twenty twenty three in response to an enormous customer demand the industry forecasters and analysts also appear to be converging on the idea that the typical electric vehicle will have more than one electric engine and traction and burner as electric vehicles with two or more engines are being marketed with longer ranges from faster charging tied to the most critical features an electric vehicle market what this means to areas that they'll be more silicon carbide device is forecasted private vehicle and we saw only a few months ago four cats from canaccord genuity estimate that the silicon carbide market for just devices and electric vehicles such as the traction and burgers and onboard chargers will require four million six inch equipment work wafers to meet demand in twenty thirty and another four million wafers for electrification infrastructure and just trail and photovoltaic power devices this is incredible when you realize that this year the entire market is expected to ship fewer than one hundred and fifty thousand wafers to meet the automotive electric vehicle market this represents a growth of over twenty five times the current way for capacity just for the air vehicle devices and then doubled back for the entire silicon carbide market why going that so much detail here is that folks i canaccord genuity are making the point that the industry has only yet has only get even announced capacity plans to meet this demand much less put in place to let me make shows that they do not have enough capacity even and out to meet this and place are forecasting that the announced capacity is somewhere near two million wafers and yet the total cop partially or may be true enough to point four i think versus the total capacity is over eight million waiters of demand were seen multiple companies come forth and approach air with a message that they're entering the market because there simply is not enough capacity out there to meet demand and there's plenty of room for newcomers think back on my comment about new companies not having an install base or bad habits of using package or burning systems to test your i g b t are searching carbide devices that mean mainly that we may have to talk them out of date tuned on our progress with a broader array of customers than just the current top companies again remember last year the current companies that address the silicon carbide market only shipped about two percent of the wafers needed against the total to man either by the end of the decade can they look all of the companies today including quote the big ones are only two percent of the told the man so stay tuned to find out about the new companies entering the market the having highlighted that new players are not to be ignored we have announced that we do have at least one currently large silicon carbide supplier that is moved to on way for evaluation and benchmarking of air fuck six people to a persistent for testing and bringing in the silicon carbide wafers we feel these benchmarks have demonstrated the value air can provide and also validate our solution for screen antics transit or only i failures and we had predicted by looking at the actual failures of their devices on their way for it we're now been asked to do more tests and experiments and run more wafers which were happy to work with them on without getting into too much detail i do want to say that companies all have their own internal processes and timelines for evaluating and qualified the new tool and not all companies move that the same pace one thing that's for sure every company we talk to is a combination of excited and scared at the size of the ramp expected to meet the electric vehicle market particularly in the second half of this decade some companies are driving to meet this demand sooner than others i do want to be clear that independent of different companies timelines we expect that we will add several new silicon carbide customers that will ramp into production with our solution by next fiscal year as they look to capitalize on the rapidly expanding joking carbide market we are ramping are fox multi way protesting barn systems and for way for pack capacity for way for way for pack apache to meet this upcoming silicon carbide market opportunity which we believe will grow significantly over the next decade or more we really are only at the very beginning of this ramp at the electric vehicles accounted for some while percent share of the overall market last year and are expected to be over thirty percent of total be a coastal by twenty thirty we provide a very cost effective solution protesting and bringing in the silicon carbide devices and we're confident in our ability to capitalize from expected growth in the silicon carbide market over the next several years and for many years beyond that so let me turn to the silicon photonics stabilization and burn and market john addition track success in the silicon carbide applications we continue to see strengths of signed of strengthening and the silicon photonics testing burning market as our fox multi way persistence and way prepared to provide a very cost effective and scale the solution for bernie and the optical lasers and stabilizing output power while also removing expensive early on failures silicon photonics describes tonic system that you silicon as an optical medium it can be made using existing semiconductor fabrication techniques a critical manufacturing step is a stabilization step or energy is use by applying high temperatures and electric power to quote burnham the optical lasers and stabilize their output power a air is able to do this critical step while the devices are still in way for form before their cingulate and input into a modular system eat or system using our fox multi way for systems and way for packs this provides a very cost effective scale the solution for this critical step are also remove the extreme dick or only like the years today silicon photonics devices the just the five he had data center infrastructure industry as well as several other key markets and your research projects that the silicon photonics twenty her magical mon will reach four point six billion dollars and twenty twenty sex with a cage or of twenty five percent between twenty twenty one and twenty twenty six several companies including intel and cisco cisco had proven it is possible to create hybrid devices in which the optical electronic components are integrated onto a single microchip and the first products and volume production or being used for fiber optic transceivers used in the data the telecom infrastructure such data centers and bargy communications but in addition there been many technical presentation in public announcements about silicon photonics and cult packaged opic optics been integrated with mp use in gp use some companies such as intel and nvidia as a means for keeping on track with moore's law by using optical interconnect to provide faster data transfer but between and within microchips we believe that the market for silicon photonics will expand beyond being used for only fiber optic transceiver photonic integrated circuits and will start to be used and high and passage or applications and and in truck chip as well as intercept communications within the next few years during the last few months we received orders from the current silicon photonics past my for six additional fox np wave a lot of testing barn systems just support the characterization and prada qualification of new types of photonics based devices and way for form this customers expected to purchase new sets of way perpetually for can't doctors to be used would be systems that the applications and market for silicon photonics based devices continue to grow we expect a customer to continue to increase the capacity in the future several other customers addressing the silicon photonics market have also forecast additional fox systems as was way for pack a day pack contact your capacity need over the next twelve months these include needs to address and climax incremental production capacity as well as capacity to address new customer and new product qualification and engineering again as the only supplier of a commercially available and cost effective solution protesting and burning in the silicon photonics devices and way for form were also very confident in our ability to capitalize growth broken so can put on it's market over the next several years before turning over the can't let me summarize when ron
spk_3: we remain very focused on serbian the very large market opportunities we see it had which include a significant opportunity for testing barnett silicon carbide devices for electric vehicles and electrification infrastructure silicon photonics devices for data center confide he had the structure and to the and treaty sensors for mobile and were
spk_2: mobile devices with a record book you on the strength of our semiconductor test invited solutions are confident in our ability to deliver significant revenue growth and i'll reiterate and guidance and at least fifty million dollars in revenue for the fiscal year and he may thirty first this represents revenue in the second half which has two point three times that of the first hour as we have discussed in the past and a prove proving now air has the manufacturing infrastructure and supply chain in place to ramp to significantly higher level levels we have been ordering longleat components for systems and wake for pounds particular for the enormous opportunity we see for silicon carbide that is gaining momentum and we have been able to maintain recently times to meet customer requests are supply chain is holding up to the increasing demand and we're wrapping all of our sub suppliers to meet the customer but games and porch as we are seat air has a very well by supply chain with well as a contract manufacturer than subsistence of i touched systems contractors way for pack a liners and aipac handlers is a very mature sub contractors that had success with supplied the such systems to air for years in all cases the suppliers of capacity well in excess of eric historical shipments an ability to amp significantly higher as well we're very confident our ability to meet the customer forecast to demand cause considerable upside as we discussed and anticipated the became and the covered nineteen pandemic aircraft has emerged that stronger company with more production customers more markets and applications and higher value product when we had before the start of the pandemic with a record booking from the strength of our semiconductor test and burning solutions as was a pilot rifts response we're getting from multiple new potential customers and and silicon carbide space for confident in our growth forecast captain ability to meet them the hard work we put in the past several years is paying off our customers or financials and our shareholders and works i did about the large market up to the head and for the future their test systems
spk_4: without let me turn it over the can to be our finest resulting guidance and more teacher before we opened up the line questions
spk_1: think again and good afternoon everyone is game noted we had another solid quarter for que to with our second consecutive quarter of record bookings strong sequential growth and revenue and our highest backlog on record a quarter and looking at our financial results net sales in the second quarter were nine point six million up seventy percent sequentially from five point six million in the preceding first quarter and up four hundred and seventy one percent from one point seven million in the second quarter of the previous year the sequential increase in net sales from the preceding first quarter includes an increase in weight for packed aipac revenues of four point one million this was partially offset by a decrease in system revenues of one hundred twenty five thousand
spk_4: the increase from que to last year include an increase in way for packed aipac revenues of three point former or four point three million and an increase in system revenues of three point six million customer service revenues were flat for both period we for pack and aipac revenue comprised over half fifty three percent or five point one million of our total revenue in the second quarter we also had a record number of weaver packs and dye packs ship during the border
spk_1: reflecting growth and a consumable piece of our business as well as our ability to scale and meet customer demand non gaap net income for the second quarter was one point four million or five cents per diluted share this compares to a non gaap net loss of four hundred and fourteen thousand or two cents per diluted share in the preceding first quarter which include who did the impact of food the impact of forgiveness of one point seven million in low
spk_4: loans from the paper check protection program that we received in fiscal year twenty twenty and non gaap net loss of one point seven million or seven cents per diluted share in the second quarter of fiscal twenty twenty one none on gap results also exclude the impact of stock based compensation and all periods reported
spk_1: stock based compensation cost of seven hundred and eighteen thousand dollars and que to twenty to reflect a significant increase from five hundred eighty thousand dollars in the preceding quarter and two hundred fifty seven thousand and the prior year second quarter this increase is primarily due to two hundred and forty six thousand dollars and stock awards accrued and que tu to many to related to exceeding stretch goals for fiscal year twenty twenty two key business objectives
spk_4: and over two hundred thousand and expenses related to the employee stock purchase plan due to increased employee contributions and noon romans
spk_1: while these noncash expenses exceeded our plan it is good to have such problems were stretch goals are being exceeded and we recognize and appreciate the hard work of all of our employees who help achieve these goals on a gap basis net income for the second quarter was seven hundred and seventeen thousand or three cents per diluted chair compared to gap net income of six hundred ninety six thousand or three cents per diluted share in the preceding first quarter which includes the impact of the ppp loan forgiveness and a gap net loss of two million or eight cents per diluted share in the second quarter of the previous year
spk_4: gross profit in the second quarter was four point five million or forty seven percent of sales up from gross profit of two point three million or forty percent of sales and the preceding first quarter and up and groups profit of three hundred and seventy seven thousand or twenty two percent of sales in the second quarter the previous year the increase in gross margin from but the preceding first quarter and que to the last year is primarily due to a decrease in and absorbed overhead costs to cost of goods sold due to higher revenue levels and queue to twenty two as noted in prior cause we scale very well as manufacturing overhead remains relatively
spk_1: fixed as revenues increase
spk_4: the benefit and labor overhead was partially offset by unanticipated costs impacting cost of goods related to tariffs and brooker related premiums paid to resolve short term semiconductor shortages in addition we include increased freight charges we incurred increase freight charges on many item
spk_1: particularly for items shipping historically by ocean were due to the shortage in ocean freight capacity which shipments into the u s we were required to ship by air in one example we're seeing an increase in freight costs for a chambers by over forty thousand dollars per chamber to ship them by air from one of our suppliers and asia to the u s
spk_4: while this appears temporary we do not see this reducing materially any time soon
spk_1: the good news is our suppliers are able to meet that man but we are certainly feeling it and higher shipping costs
spk_4: operating expenses in the second quarter were three point eight million an increase of five hundred and twenty eight thousand or sixteen percent from three point three million in the preceding first quarter and up one point five million or sixty four percent from two point three million in the second quarter the previous year
spk_1: sg dna and second quarter was two point five million an increase of five hundred and thirty six thousand from two million in the preceding first quarter and up nine hundred and eighty thousand and from one point five million in the prior quarter of the second part your second quarter the increase in the prior quarter includes an increase in appointment costs at three hundred and forty eight thousand the increase from the per year second quarter included in increase employment cause at seven hundred and forty five thousand the increase unemployment costs and good at salary increases related to raise his private prop provided to employees during fiscal twenty twenty two hire commissions and incentive payments related to increased bookings and key bonus objectives and stock based compensation costs related to employ stock purchase plan due to new participants to the plan and employee in contribution increases in addition to the increase unemployment costs the company recognize and increase travel costs and consulting posturing the quarter
spk_4: aren't in the second quarter was one point three million unchanged from the preceding first quarter and a pointer ninety three thousand from eight hundred twenty thousand and the second quarter the prior year the increase in rd from the party or including an increase unemployment cost of four hundred and twenty seven thousand the increase employment cause
spk_1: and could it's our increases related to raises provided to employees during fiscal twenty twenty two hire incentive payments related a key business objectives and stock based compensation costs related or employee stock purchase plan to the do participants to the plan and employee contributions increases in a dent in addition to the increase unemployment cost the company recognized an increase in contractor cost and army the materials related to new or in program initiatives drink fiscal twenty twenty two
spk_4: we continue to invest in already to enhance our existing market leading products and energies new products to maintain our competitive advantages and expand our applications in addressable markets turning to the balance sheet for the second quarter
spk_1: or cash and cash equivalents were thirty five million and november thirty at twenty twenty one up twenty eight point five million from six point five million at the end of the preceding quarter during the quarter we completed successful capital raise that netted twenty four million in cash to the company
spk_4: a total of one point seven million shares were issued to the offering at an average price of fourteen dollars and seventy three cents per share these proceeds provide additional working capital to serve a very large market opportunities we see ahead
spk_1: in addition we generated year to date cash flow from operations at five point two million dollars in fiscal twenty twenty two
spk_4: i kept receive a whole a quarter and with seven point four million up from four point three million at the preceding quarter and due to the and to do the impact of higher revenue levels inventory that november thirtieth were thirteen million an increase of two million from the preceding quarter and and four point two million from que for twenty one the increase in inventory is to support our existing back on and prepare to fulfill expected future orders a significant portion of the inventory increase is due to summer camp abductor components which we have been ordering and stocking up on to meet the anticipated demand we see from the markets we address this is critical as we ordered all these long in advance and have been able to continue to provide reasonable if not best in class lead time to customers in an environment where most semiconductor test companies are quoting up to fifty two week lead times on their equipment property and equipment was six hundred and sixty one thousand compared to six hundred and six seventy six thousand at the preceding quarter and customer deposits and deferred revenue short term and long term were ten point three million an increase of six point eight million from the preceding porter and ten million from que for twenty one really added to the increase in back from prior course
spk_1: the company has no debt
spk_4: this compares to or may thirty first twenty twenty one fiscal year and where we had one point four million outstanding on our line of credit and one point seven man outstanding on our paycheck protection program or ppp lamb
spk_1: bookings in the second quarter were twenty nine point one million or highest quarterly bookings on record this is our second consecutive quarter of record bookings and is up from twenty point seven million in the preceding quarter
spk_4: including the announced order since the beginning of the fiscal third quarter or total bookings for the fiscal year to date as over fifty two million backlog as of november thirtieth was thirty six point one million our highest backlog on record
spk_1: this is up from sixteen point six million at the end of the preceding first quarter and up from one point one million at the end of the second quarter last year
spk_4: now turning to our outlook for fiscal twenty twenty two year which ends on may thirty first twenty twenty two with a record but bookings and the strength of our side my conductor test and born and solutions
spk_1: we're confident in our ability to deliver significant revenue growth for the year and our growth opportunities over the next several years for fiscal twenty twenty two and in may thirty first twenty twenty two we are reiterating or previously provided guidance for throw your total revenue at at least fifty million which represent revenue have three times that of last fiscal year
spk_4: while the increase in gross revenues on a relatively fixed manufacturing overhead will increase gross margins this benefit is partially being offset and temporarily with the noted increase in frightened tariff costs as well as the additional non cash based noncash stock based compensation one expense from our equity and cent of plans related to exceeding stretch goals
spk_1: still we expect our full year gap net profit which included the one point seven million benefit from the ppp loan forgiveness would be above ten point five million dollars or twenty percent of revenues
spk_5: lastly looking at the investor relations calendar next week will be presenting and meeting with investors virtually that the twenty fourth annual meeting virtual growth conference on wednesday january twelve we hope to see some of you virtually at the conference this concludes are prepared remarks we are now ready to take your questions operator
spk_0: please go at thank you if you would like to ask a question please single by pressing star one on your telephone keypad and a carry on phone with much of that you meet me i'm turned off to allow your signal to reach our equipment again and a star one to ask a question of a positive moment to live in when an opportunity to signal for question
spk_6: and we will ago first to christian schwab of craig home capital group
spk_2: regulation
spk_1: a great quarter and and continuation of strong bookings ah thanks
spk_2: again i just wanted you to give us just a little bit of or help me with a little bit of clarity on the silicon carbide we talked about a large you know silicon carbide supplier you know who's an evaluation and then and then we talked about several new silicon carbide customers that aware of into production so is that and you know a minimum of of of three customers you though they could be close at hand or is is a are you referring to the a large like and carbon supplier when it when you talk about several card customers it wasn't clear to me i'd let me let me try and and folks i'd had it you know one of the challenges that with dealing with right now is and we've made statements like talking to all of the suppliers and then some you know there are that the subtlety here is when you are talking to all of the players there's always the balance that trying to maintain you know how a competitive information and where they're out and not giving too much information about one player versus the other and says sometimes my i guess interaction and all it's just related to that because obviously you know my customers listening on this thing as well and we have pretty it's clear nondisclosure to in place that we always have to try and muddy it as best we can but when you're talking some of these deals and that you know my a large deal open a discrete know seven i know that too difficult so let me try out a little bit a color is while so just for clarity on your we the the the industry the market forecasters that talk out there generally referred to the largest suppliers in the space on traditionally have been at you know s t had the number one position arm and then and penny and and creed now low speed are others and then on semiconductor that kind of came out outta nowhere and people know that on semiconductors one of my top ten percent customers on are generally thought it by most people as the current larger players in the space in addition to that you have mitsubishi and won't let historically what kind of filled out the top check on your we have yeah some level if not a the level you gauge meet with all of the above bay and we certainly are and conversations with that that in all pop four of them including one of them been a big actually customer
spk_1: what we have done is we'd been involved in i generally refer to it at least one benchmark at different levels of engagements and discussions but would clearly doing on way for our measurements and all for one of those as a new potential customers and the data is quite compelling and is giving us we
spk_2: dogs consistent with what we've told him we would show them and expect and made actually asked for additional testing and clarification to my for etc and we're happy to oblige on your it's our expectation and not offer to all of the suppliers out there pretty much all the big guys that we'll be happy to them and straight on way for for them on and what i had he had tried to allude to and i said it in a lotta different way it's quite interesting to see the difference in paid between all the different companies on and it isn't necessarily how big you are you just may be how aggressive management is about commitment to new puppy faculty or to changes etc
spk_7: you know one thing that historically is true in general and tested nuts and i've been doing this all my life
spk_2: is that you know been installed base has it's advantages it's usually pretty hard to just place someone or that's not to say that we can't display them nor we can't despite all of them but if there were companies that were shipping a lot of silicon carbide before we got there by definition they're using another tool and may have in fact convince their cuffed rumors that the quality associated with that is good enough so as we got a ship the customer not only do we have the dynamic of shifting them away from the current installed base but they have to convince their customers that the reason they're switching is because the new tool with better and that is our intention to do that pay companies that a brand new to the space a poor and train or have very little market share have effectively nothing approved and they don't have to nephews jelly top their customers that in one thing i'm into something else also companies that are entering the market face right now in many cases like on it very public about this year his entering based upon quality and reliability and their modules i buried differentiated solution and you know imagine if you they were our customer it's little easier to work with them because i've also stated every single company that we have talking had stated they are getting into way for level burning they're moving from package to wait for mobile now now the companies that were talking to that are not in silicon carbide are saying they're starting with way too awkward it there's no reason to switch so one of the challenges that i haven't and you know kind of frustrated as well as time is the the pace of which companies will go to their valuations to identify but the best move did for them and just one thing i tried to make pretty clear and that he said yes it's large customers are really important and they're very important and we're going to cover them to work it's our intention to win his many if not all of them that if at all possible but having said that the combined capacity of all of the the and all six with
spk_1: last year
spk_8: it's still only two percent of the forecasted lead in twenty thirty so the largest of them if it's only two percent of the market share of at the end of decade so if you're the market leader or not if you're not anticipating growing your business
spk_2: by can apps you're not gonna have twenty percent market share in so the will p as which companies are growing their silicon carbide business the most and making sure that we align with them south on i'd mention six company there's also think four maybe five more apologize i've been i've been going to this right now so far so about another half a dozen companies that have come forward and are talking about new silicon carbide capacity and babs are going and so there's a lot of activity that's going on it all part of the challenges you know how you'd that on which horses do that on our current strategy is would betting on all of them on we have the capacity in sales at a one thing that it's frustrating and he i tried promise not to complain and lying about forbid but get it's very real the travel restrictions are still real me we have companies and i'm companies cup carl in japan in china and korea and taiwan in southeast asia that we have not been able even go to either because of pure restrictions or very extreme ah restrictions that would preclude us from going in and making sales calls so having to do all this stuff of resume and things like that that it's not it's not as easy on and we kind of thought about and i were pretty happy with got to travel around europe and the new us in the inner earlier this fall and and that kinda stuck to show it it's something that is slowing down but you know i think yeah we're making the back and we were little bit and okay people over us but we like try to sell shovels tabby one it's really hard to pick through the market leaders are but i do believe that death you know we're going to have an opportunity to win more than our fair share and when you know on a number of companies and by the way they're going to be companies that are irrelevant even next year two thousand and twenty three the say that will be significant and twenty four twenty five and so a part of this is trying to nativity play the long game but make sure that we don't keep lose track of the fact that you know some of the smaller players are the new entrants made end up be significant market leaders you know treat
spk_9: three four years out hope that helps
spk_2: the did it does help gain and then just follow up on the on the pesos you know a valuation of the other customers a in the press release you the talked about adding several new silicon carbide customers that a ramp into production by next fiscal year so i assume that means that by the end of may have two thousand twenty two they'll be a couple other customers ramping if the am i reading that sentence correctly i would know i i apologize if that's how i wrote it on and know the intent was and not to put it all away out but you know i i wouldn't say we expect several companies to be mad been into production by death knight and i intend to pay implied by next or through next fiscal year so by next night now that that suggest that you know out we couldn't get a customer or even make shipment by may that's not the intent but i probably wouldn't describe that is ramping into production the me how but i think you know we were we cut him or repairing to be born in over the next eighteen months we said that before miss try to tighten that up a little as to what we're thinking but we do bullied by our next fiscal year which we call go twenty three which ended and may at the end of may have twenty three that we would expect to be adding several new customers right it went in and production is different from like for dental initial or would you would you anticipate the orders from other customers he here in the first half of the of of this calendar year that would lead to ah more quote unquote gonna get me a lot of depth it it is fair i eight would you i get it would surprise me it's most likely that cause any new customer will start by ordering one before they will order multiple and there might be in a lot three to six month break in between perhaps mean it with longer than that to begin with i feel like it will move faster but on so so not sent there instead of a tiny i'm is it it it's certainly possible odd that we could be getting our first customer orders before the end of it's fiscal year i'm i also you know one i i guess hedge my bets a little bit in terms of you know if we didn't does that mean we have bought the production of these key custom more them to that is definitely not the case in a one thing that it as kind of surprised me a little bit is on and i know i don't i don't want to get too carried away with specific customers but the other some company that were out there that were talking about this expansion new tabs that we're going and you know and twenty twenty two and six months ago i would like oh my god we gotta hurry hurry hurry we're going to miss the ramp your them back from of yet they're going to be ramping into in january of twenty twenty two were going to miss out that it's not the case for mean though thing companies are now saying well we're going to be sampling and twenty twenty two so they barely even need a production tool by the and twenty twenty two show are you know i part of this is just trying to understand what's really going on out there and make sure that we're not missing anything that specific customer for example we don't be a limited ah we're still talking to them etc and they're they're not on a timeline you are not looking for a solution to be installed you know give this quarter for example south i'm i you know i think there's a little or this challenge of trying to get exactly when people are going to be ordering and does the timing of and bobby cp important as if you pure in the stock before that that's good nephew you're out when when those orders are now dhabi that bad on i am i tried my best to try and get an estimate of what's going on he then i'll give you at least the window that i expect not only will people about their first orders but will start to see orders that would be not into production by the end of next may great is it i guess that last question this is what is it relates to silicon photonics ah and in the in a package in technology changes it's and or us ah an internship technologies a if you guys had a chance they know you get can have previously talked about how like you got the that budget tam could be overtime if everybody you know ah was a silicon carbide customer ah and there is you know thirty seven million cars all by two thousand thirty have you guys been able to do any work behind the scenes and silicon photonics the say you know a range of potential revenue outcomes to the company could be kind of extra why him and and two to three yeah i said add candidly i don't think we have really good numbers on that yet i'm and in will be working with that and doing the best we can you put your there's not actually anyone forecasting that yet publicly so obviously anything we would know that that through nondisclosure with customers and staff that you have to wait for some talk about it publicly on yeah it it can to us right now we see it as a rising tide in an area we have a great very fast boat you know if you are caught that also just in general physics are such that it makes sense to have to be thinking about stabilization it makes sense could be doing is that way for level so many of the best that we'd made for those folks that have followed us for you know a number of years we make the bat to basically anticipate major waves i'm you know it's path can make calls him but for mark aptitude for don't exist on but this would be one of them they've had been example where you know you can see why people are going to adjust your i didn't mention it in my prepared month remarks but one of the things that i was against just surprised that or i'm shocked is right word but the folks that really get into the technical details related to why silicon photonics makes sense long term for these internship communications or these tip to chip communications in these marty died modules or in the packaging technology that intel is talked about publicly is that so thirty it's or sir serial to dc realize high speed gigabyte channels are nearing the end of their physics so basically today you know you can go get a surgeon channel that chinula in our hundred pm took twenty take a better something like that are as a while for when a reader something that is sort with the standards out there right now and you can buy that from xilinx r f p g a on our tools actually one these channels a high speed digital serial channels that are running down copper interconnect chip the check now they don't run very far and not only runnymede or something like that but they're nearing apparently the physical limitations that and electrical signal and an electron can travel in a copper media a and what that means is that someone had said that as soon as two hundred gigabytes are like two generations from now you will not be able to make an electrical signal go any faster period it's at the end of it's from the whole concept of photonics which a photon member like a light be if you member for those of us that when physics the whole debate about electromagnetic radiation or like is it a particle or gives it away in a particle a particle have mass and as such can only go so fast whereas a wave does not have mouse and part of the whole argument is one of the reason that a electronically the electromagnetic radiation a white or photons can't really top notch is that can be a can travel faster than number asked to travel so what that shows up dad is all the sudden we're testing silicon photonics devices today he said we're burning amend that are two hundred four hundred eight hundred gigabytes devices take to your own able to get transmission speeds that just get started at eight hundred kids that are at at a at one hundred take a bit so what may just you know it's electrical engineer and canada myspace what's exciting is that you know as we look out ten twenty years from now or five years really three years be collecting video an intel or talking about having chips with integrated silicon photonics on their processors in their gp use even a couple years out so it's pretty exciting to see what that looks like and i do know that other companies are making big investment in the testing of it we've been making investments in the burning of it and you know we hope it will play out as we get a little bit more clarity will be sharing that with you folks up and yeah we're just trying to get on job it
spk_10: but that how egg that that helps game takes no the question thank you
spk_11: thank you and we'll go next to john gruber look at it as investors a good afternoon of cook too quick quick answer questions one
spk_1: i'll confused use why year property brand equipment which with a gun down and twelve months given the amount of throughput your breakthrough through it so you're spending nothing on them factories or what what what why is that why or why is probably print got from seven hundred plus the six hundred thousand dollars which is pretty by it by by any stretch of imagination
spk_4: yes to let london game let me address that yeah we we close the year out who are seen the current of november thirtieth at six hundred sixty one thousand to thirty six seventy six like we talked about even to be compared to the last year six seventy seven something isn't remained relatively flat keep in mind we depreciate yeah
spk_11: one hundred thousand dollars will call it in depreciation per quarter so we're actually adding equipments it were just happened to offset the ads with the amount of depreciation it's getting recognized also a key that we like to say that allows us to scale as we use contract manufacturers so doing final assembly and ten and having the capacity that we have here in our fifty one thousand square foot facility it allows us to really grow without him to add capital towards great benefit that we haven't a great opportunity we are the i got from five point six and que onda nine point six and due to you're going to have to go to
spk_12: the scene five and twenty one to two to be okay you're fifty
spk_11: even with that you will not be there any cab property plant equipment for year facility
spk_2: very little bit a bite of the very okay i'll do my like my ex question
spk_11: gave us a help her i'm gonna say i have a couple of engineers that are asking me to buy some really fancy test equipment right now that are listening but dutch it still won't that number come up but ah now gross margin let them run a rough forty one the boy seventy one a que to the al your revenue going up it's exploded into free and in and even further in queue for what kind of gross margin go the we have here as we get up to the big numbers like over twenty me
spk_4: oh am i realize you're you're shipping costs have gone up some but we're talking such huge numbers gary relative the what we've been we're we're we increase six points and get in in queue to whoa what what's gonna happen and skew three and four and the gross margin got a gross margins just to reiterate what i'd i'd mentioned in our last call we expect as we grow to ours year fifty million dollars a year and a new number to get gross margins up to fifty percent so we're at forty seven percent now we've talked about there being you know impact for some unanswered
spk_13: abated costs and we still see those cost a the even though we called a temporary it's still impacting us for at least the next quarter potentially his ex other way through our fiscal year end however i still believe that we expect to show gross margins in each of those quarters approaching fifty percent
spk_11: i wouldn't say it's gonna be fifty percent next quarter that probably que for
spk_2: okay thank you
spk_10: i got my questions answered thank you
spk_2: exact nature
spk_1: sorry
spk_2: and will go next town patel of semi analysis video and hey thank you have a two questions the first one is that someone else is this track southern firms and china in destiny over hundred million in two agreement in an hoses of the southern over one billion in silicon carbide materials in the most manufacturing and it's basically all ah greenfield you know just like lot about the syntax big wins and traction have a the us japan and europe but what is air doing to penetrate the china silicon carbide burn and tough market given it's you know potentially going to be just as large as the us here okay well i'll take that one fairly high level and i actually specifically i'm prepared comments mention customers with the plural as in china on yeah there is actually a number of companies and china that are talking about greenfield at silicon carbide bad as of which i guess i think it's notable reached out to us okay so are the arkham marketing and non better jean and and our reputation as getting out there so i know at least one at not to have them all that and we'd never even heard of a before feel for what that maybe that scary to buy to their contacting us and talking about their capacity and it's priests
spk_1: never again that we do have systems are we have born in systems in china we actually last quarter announced our first way for level burning or or for first box at ah system that was going to be have been installed in to china in addition to you know if a fairly large customer base of package or burning systems and job we do have infrastructure and people there than cabin as it's particularly difficult to travel in another china right now so we have the ability from a sales pitch
spk_2: fact that well below the from a applications and in a support perspective to support folks and in china and the company that been talking to us are actually near move or people are which actually helps his well i'm so were were working with them that's awesome to hear my other questions regarding on on device line ours and dot illuminator switch will grow by are incredibly not privy to the fear big believer in the metaverse artificial reality virtual reality these devices can use our dicks lasers and you've told us about brennan test for them in the past the new death in are you updated on the burn and test market for these lasers for two hundred g four hundred kcal package optics the can you update us on in other burn and test market for since your applications and potential given how pervasive the made of metaverse could the okay so actually lied are when i think allied are think of the automotive side of things the dot eliminator as i think of what's on you know certainly on i phones and and things like that work are colored consumer type electronics or bob heads up displays or a b are on of things right so i'm were actually talking with both of those a we've got some activities going on with light are our it's out and time but on ah apart say we've we've we've got our our toes and not right now ah with one lee customer and real
spk_1: later dot illuminator is actually one of the our lead customer very first customer on the fox i'm p system that we've now are parlayed into number of others i think people understand that you know they were ten percent customer early on which was apple on but we do our we are using
spk_2: that tool into the treaties and seen in mobile applications and number of them on it's always been an interesting thing for us and we pride of and i'm in i'm pretty optimistic guy this was an area you'll see a little bit of a cloud over and that is most of the time the dod illuminator as in the pixel arrays on people are able to deal with when i'll called sampling they are not doing one hundred percent burning and they're not necessarily aging them whereas in the communication application with the pixel they do one hundred percent burning so one hundred percent burning in the age it might take twenty four forty eight hours but if you're actually only sampling and you're not trying to aged you know you might do that for your several hours and certainly not twenty four hours but if the only sampling a few percent then all of sudden the market size is not as big show today so far most of that is played out that way because the amount of time that the illuminator is actually on in particularly with facial recognition and security access tied point it's a very very small amount of time the me if it's only on for milliseconds even if you look at your phone a hundred times a day it's only on for hundreds of millisecond
spk_14: in the entire life it might only be on for three hundred seconds or something
spk_15: on so in reality that isn't even the not to notice that the thing is actually decaying like but in a pixel or a for communication that's a big problem so the one thing that people talked about it when you go into gaming and other applications are certainly automotive my dark the decay of that would be a problem
spk_2: and because it's in continuous use and so we continue to keep our fingers and not you know some of those deals are fantastic that that great margin they just haven't had the volume to them yet but we're still involved in those and you know believe that give some of the applications proved to need capacity that will be a great bender already
spk_0: qualified and certainly have the manufacturing capacity to meet their needs
spk_16: hope that helps thank you so much operating under we have others
spk_2: and we were moved next to a willard brown otter creek investment hi and a great quarter you did exactly what you said you would do
spk_17: i have haven't question ah out of the
spk_2: nine point six million in revenues and the quarter how many customers did the did you have
spk_18: we typically aren't giving that but i think it would be fair to say it was quite dominated by one lead customer and silicon carbide just by the announcement that we made although it probably was made up bug
spk_16: he of total i mean yet up get down it's services and things like that but he certainly a dozen or more customers but so and at added
spk_19: that's a fair to say that our lead customer silicon carbide is is you dominating our revenue right now
spk_16: so as we go forward
spk_4: into the third and fourth quarter and then into fiscal twenty three
spk_16: what kind of ideas do you have i understand this market good
spk_2: explode what kind of ideas you have as the number of customers as you will serve in a given quarter and you know one of the one of the the the problems here is concentration i don't think that the big problem here because of your technology but it's something i think about so if you go at yell for several supporters are we looking at more of a dispersed customer base seventy five did it that i i mean i think as it is absolutely fair to point out that no matter how and concentrated we get were still concentrated by snapped navtej on my previous company which was very you it was bought by been test for about a billion dollars in two thousand and eleven yeah we were doing six seven eight hundred million dollars a year but i'll tell you every single year two or three customers accounted for thirty forty percent of the rapidly on in the semiconductor world it's very typical gathered fairly high concentration if you've got you know if if you need twenty customers to get the ninety percent of you doing pretty good on the rally there's more concentration of semiconductor company than there were certainly when i started in my career show in a we have to build a business model around the fact that you know of what we were aspired to be able to have twenty customers make up ninety percent of those avenues that most industries that the high concentration but you know i will not be surprised if we continuously have a twenty thirty percent customer ah even even over the next decade because even if we have to as drummers it's it's very typical that one might be ramping you know more than the others doubt having said that problem maybe fact during planning perspective were actually betting a little bit different than that and that is seldom do you see or have i seen where a market is so uniform and so clear on what the discontinuity in the what the ramp it as their i we thought you in flash memory is one of my experiences where every company was growing every single company could not supply enough and so you'd have to be able to apply to everybody on the doesn't mean we're when everybody but what i mean by that it's it's not like you're gonna see one customer ramp one year and then the next customer the next most of the most customers over the next decade are going to have to ramp every single year to keep up with the demand the and com ela conclusion after the winter
spk_16: were in a beep when to we have we have you know in as we've done the ties with our customers we have an almost every case at least two suppliers for every political system and for the one of we have single suppliers be done some pretty split spectacular things game show that we have poppers in there we are not only activating our second suppliers but will ramp in both primary and second suppliers like mad right now because they have to have the bandwidth to be able to react to it and it's not just told but also to within reasonable shortly times because the reality is we think that companies are going to get to a point where it's like going on you know at some point come on i'm sure we'll have something that will compete less faith and if they do we want to be able to bleed based upon be in the industry experts the industry standard you know we can list all the company that already counting on us and also be the people that can supply in shortly times
spk_20: but i wish to our concentration don't don't don't bet against
spk_2: so here's my second question i my last question but it's a really tough one and it's really tough because of what appears to be a mind boggling expansion of the products that you supply and that is the total addressable market i've tried to do this i've i've gone through the number of wafers they're going to be of a you dog are going to be needed and okay how many air systems do we we throw in there i don't know how to do the math that's basically what the problem as and felt how do i look at that well i we walked through the mouth several different ways and you know what i let me do it a little bit briefly at without filling in the numbers let me just find out how to calculate and then i'll you a that's been working class fake will catch shout figure out how many cards are gonna be built and how many engines there's gonna be and i guarantee that the at least one engine and type right a year now because people were assuming that every car had one engine and most people were saying they'll be at least thirty million cars are you built by the at that the decade exact a epic car engine needs about fifty devices it's actually forty eight plus i'm on board stuff and a way for today for those type of devices contest about habits about five hundred divisive on it or ten engines so you just go through the mouth and say okay we need thirty million cars pay and of wafer can give you ten of those cars but wafer if there's one engine on it
spk_21: and then you start looking at burning times and test times and american people that a pocket ranges from six hours or twelve hours or twenty four hours or forty eight hours and we talked about people would hope to get to twenty four hours right now i am and then you can get some estimates but we ended up doing is there was a couple of people that a
spk_22: and i think it's still very conservative rule of thumb and that it's for every million cars that are shit you're gonna need at least eight of i systems in the world he that from us or somebody else who to the my knees are eating way for systems
spk_2: guy and with another they burn new yorker up yeah at something on the order of it's system with all the way for and everything else being maybe four million bucks apiece opinion about thirty two my knowledge work and yeah that's that's what we're looking at and i wonder will hold up under pressure and knows there's there's it's easy to say that conservative but it's still have a camper i appreciate very good job young okay thank you an upper maybe top of one or more mingling be quicker is rather folks and we have a question mark on with a pipeline okay it again thanks to take it a call on you know you talked about the us with the sampling going on at the potential new customer is that the yield is that the typical process that we should be looking for as you go down a path you you been great about giving his disability to how you pipeline lux your publicly and the and things of that nature of one of you get it briefly walk us through what the processes the getting to the point yelled a sample ah do they have the do feel in turn all wrangling qualification negotiate with what the project that leads to the finish line bags it generally speaking and that should be typically of our test equipment burn and systems in our history in a process from the time you are talk to somebody and jill day my place of first order is probably minimum you know nine months i mean one we used one example worldly lead silicon carbide customer we talked him in february they collect day we were on way for doing benchmarks with them in the summer they were shipping wafers that we were building for them on to sample with their customers and we actually installed the system in november now ah or shifted to minimum but i am now to be out there and not to advertise that we do this with very often or at all anymore daddy the games the order a couple days before we shifted to that's pretty rare but nevertheless that's how it played out on you know and that i think would be fair to say that was moving pretty quick i'm we've had at a discussion going on with another silicon carbide customer for over a year and they're still taking data i'm so you know it it it can as he can it can depend this is not typically your this isn't a at at thirty day process and historically what people will do to whenever they start the been bringing a system and the now start doing qualifications or that with both internally and with their custom most and then they will ramp so i think it's also reasonable to imagine that you know that the time between the first system in the next system often times is a minimum of a quarter or to ah the as well so the result yeah there's a link to this and i know that that can be frustrating is to me sometimes but you also don't want to drop the ball nor do you want to you know keynote gas swag yeah this is deshazer there's yes it's interesting i said it might prepared remarks and i mean it i mean i've had conversations with executive management the children have customers and they're literally like aghast with the the forecast that their customers italian i'm in get twenty twenty six he'll just there so much bigger than what they built and near they spent ten years or five years building what they've done and his customers are saying these ridiculous in their my numbers you know three years from now know like how the heck are we gonna do this right so they're both excited but also just frightened about it and so a lot of my conversations with companies are less about when they can get the first tool and how many they could get when they get around to it very interesting come if i listen you're jumping the gun you need a bait by the first one first i'd written i had no intention of buying a system from you if you would not be able to meet the capacity to that so it's pretty fun it's a it's it's it's a been posted it right course now you're looking at both incumbents obviously they have prophecies replaced by which they test systems you know our research indicates a yours
spk_23: it would be superior to what most if not all of them are using it for at at present
spk_2: but you obviously to replace those existing systems would be prohibited because they sunk money if that's i would assume that a day to assume that any thing that you would do with the an existing ah vendor would be for of your future capacity that's usually easiest i mean it started it's can hardly compete with free there are things for technical reasons like if you're going to put these devices into a module
spk_1: yes there's no package to put them into your package that burning doesn't do you any good so incremental might not only be capacity but it might be type of device
spk_2: but a company that might be increasing capacity of their package or devices discreet devices on as well as modules may choose to move you know need more capacity for the modules and then shift the other capacity towards the exit package part of something like that so but generally speaking it's it's pretty bold the think you're just going to displace but they have that i've seen it done okay and and do you feel there's any potential of our road blocks or push back to the idea of running multiple prophecies in parallel right they have any the thing said i'm snow the brought we both i ordered a very specifically people would it would actually intend to be that made by the way a discrete component that is in a packaging of find him and digital you are using had one with me up pointed out in on hold my hand on there still a market for that and evident in a discreet packet and you can put it on a package by burning like one of my systems i'm if it's not crazy actually we think it's cheaper at way for level we've shown that and customers at agreed to it but it's gonna cheaper than pre show at yale people would just continue do package for burned why not that's fine but i'm brett there's your bill ability perspective if this if this market stayed at package part they're gonna need it literally thousands of package or burdensome so you know those guys are disappointed percent of the twenty thirty market they grow fifty times
spk_0: so if they have backed barbara systems and they didn't go to wait for love or they're gonna need about fifty times as many baggage by bernard systems do
spk_24: that i went the right about it and so in that commercial disconnect we call it was like wow you're not to go write a check to somebody for twenty nine i'll going to pack the part and systems it's like what you know if you buy my machine it's twelve million bucks to and it's way for level and it's get more scale of and by the way you get that advantage because you can also do put him into modules and you get
spk_2: the yielded damage it cetera so there's no value proposition and a sales pitch they're simply to displace yeah oddly customers only has shifted away from package park
spk_24: they move in everything the wafer it's just cheaper the but hey i appreciate the insight or year you've been fantastic in guide you through all this your easy gotta get fine thanks a lot
spk_2: thanks mark and what take our last question from learned subpoena up the mean the capital i'm very glad i'm glad you're safe and sound from colbert me to thank you down
spk_24: i have three quick questions of i could them the mp sales are you you than announcing recently for certain photonics the lead customer large customer in that area
spk_2: his are they buying the and peace vs xps because a multitude of applications or the p with his flexibility
spk_24: cost effective enough word it actually makes more sense of be sack him up and use them instead of an xp or what's what's going on there a week
spk_2: i'm going to be a little back here but i just at least eight know i thereby the bridge nearing characterization and early qualification i'm now companies could use and np member and np contest to a present time i'm so i guess it's or applications or wafers a lotta devices but now these are being used in propagation injured perturbation because they're easy to do quick changeovers you don't have to you can run amok different you know each other in peace can be different temperatures each other position can be a different configurations odd it's the flexibility for it on and in of the just have a bite sized they're guilty for than the production system but time but they were so eager to scale up so the am i the think that that's for the same application are they different applications all i've said is it they are different applications don't and i really wanted early
spk_24: take a cab and and right away and at a we don't know yet exactly what that would look like and yeah no intentions of are not forecasting what production may or may not be or anything else but i'm very excited about this that that what they're doing i know some right
spk_1: you have an update a thing on the p
spk_2: business for data so gathered that that's yeah works in but larry we don't add some folks that are join in on that i'm from a with it are we allowed stayed cp as a single a for system that we announced to a customer we refer to it in a and any extremely high volume application and they bought one system so it can't be that high i am that that customer has continued to communicate to us on a fairly long period basis every three to six months that the ramp of that product line hat continues to keep be delayed and what i heard was it was listen given covered another thing they sold everything they can build you know having
spk_24: one of the update i heard was even last may i think i would have said this in one of those cause your they sold everything out for a year and more so it's our understanding that they are still fully committed to whenever those new products are gonna be which we really know what they are but we are very vague about it i'm it's just out the time and you know i think i think vernon
spk_25: and she whispers begin an update again of an of during his first quarter something i'm bad job if they're still using the tool every single day twenty four hours a day
spk_24: on in doing all this characterization and in preproduction minority runs with things like that and it's believed to be the tool records they just clearly have not ramp yep
spk_26: can do you have a target date when you plan on the reducing your automated xp what i'm calling the x p h
spk_27: i'm
spk_24: that so i have had some progress asians are mostly off with this because a competitive reasons but just as a reminder i told people that if you're investing in there you are investing in some level of automation and ends like called and he's got it's own name for it better and we will
spk_2: can pick what i want to say years on
spk_28: it'll be something that will be introducing a shipping at certainly this calendar year and we just leave it at that
spk_29: did you say it'll be shipping this calendar year
spk_2: yes it is a reason yes and is at automation are you are your make it so as adaptable to existing xp said some i want the upgrade the ransom that's little is only adaptable and then last layer on sept one said is launched to anticipate providing that tool on an evaluation basis to him
spk_24: a memory potential memory customer immediately as at the the idea of the lab yeah you you he emphasized immediately the had been a little bit i'd love to get i'd like to introduce a job memory and not make any predictions on that yet again but i'm one of things that we do think that that is a critical aspect
spk_2: for it is it that that all wet it it's important to the memory guys but we also think it's important to other areas by the way i think it would be important to that non silicon of that non fiber optic transceiver silicon photonics business i think it would be important to some of the high volume silicon carbide guys that are talking about like shot operations i'm i think a become more important when the two hundred millimeter silicon carbide kicks and because there's more levels of automation for how that wafers i moved around things like that so there's a number of applications that that would fit towards ah
spk_0: and sort of stay tuned and i know you always hit me up on that said that most out of a but death

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