Aehr Test Systems

All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, and welcome to Aehr Test Systems' fiscal 2022 fourth quarter and full year 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 Spank. Before I turn the call over to Gane and Ken, I'd like to cover a few quick items. This afternoon, right after market closed, Aehr Test issued a press release announcing its fiscal 2022 fourth quarter 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, and the webcast will be archived on the investor relations page of the company's website. And 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 from 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. Now, with that said, I'd like to turn the call over to Gane Erickson, President and Chief Executive Officer.

Thanks, Jim. Good afternoon, everyone, and welcome to our fiscal 2022 fourth quarter and full year's earnings conference call. Thank you for joining us today. Let's start with a quick summary of the highlights of the quarter and fiscal year and the momentum we're experiencing in the semiconductor wafer level test and burn-in market, and then Ken will go over the financials in detail. After that, we'll open up the lines to take your questions. We're pleased to report very strong growth for fiscal 2022 with record revenue for both the fourth quarter and full year. Total revenue for fiscal 2022 was $50.8 million, our highest annual revenue on record and more than three times last year's revenue. We also had record bookings for the year at $60.2 million. Importantly, we're seeing the significant leverage in our operating model as evidenced by the strong profit for the fiscal year. We also improved our balance sheet significantly with our year-ending cash position of $31.5 million and no debt. Let me go ahead and start and talk about the wafer level test and burn-in market for silicon carbide for electric vehicles. That's where a lot of the excitement is going on. Our strong revenue growth in fiscal 2022 was driven by the demand for our wafer level test and burn-in solutions, particularly for wafer level stress and stabilization of silicon carbide devices for use directly in electric vehicle market. The silicon carbide market for electric vehicles and its supporting infrastructure requirements are growing at a tremendous rate. with Canaccord Genuity estimating that wafer capacity will increase from 150,000 six-inch wafers in 2021 to over 4 million six-inch equivalent wafers in 2030 just to meet the electric vehicle market alone. This represents growth of over 25 times the wafer starts just for electric vehicles. They also forecast another 4 million six-inch equivalent wafers to address other markets, such as industrial and solar power conversion. Our lead customer for silicon carbide wafer-level burn-in made significant investments in their silicon carbide production throughout this past fiscal year. Today, we're excited to announce that we received $12.8 million in new orders from them for multiple Fox XP systems, a high-volume production wafer pack aligner, and a small number of wafer pack full wafer contactors to meet their increased production capacity needs for silicon carbide-based power semiconductors for the electric vehicle market. All of this is expected to ship by the end of our fiscal third quarter ending February of 2023. This adds to the backlog of systems that we're shipping to them this fiscal year. or fiscal quarter actually. In addition to the system capacity order, we expect significant subsequent orders for wafer packs needed for the system orders announced today, and they will ship at approximately the same time as the systems. We have continued to optimize the shipment and installation processes of our Fox XP systems, with the last system shipped to them installed and released fully into production within eight days after we shipped it out of our factory. and that includes international shipping. We're excited to see them continue their ramp, and we continue to expect significant additional system and wafer pack purchases from them over the next several years and through the end of the decade as they strive to be a market-leading supplier of silicon carbide devices. Aehr Test provides a highly unique and cost-effective solution for applying the stress test across every device on an entire wafer before they're singulated and put into packages or multi-chip modules. This allows our customers to burn in every single device at a lower cost than they could in any other form due to our ability to contact thousands of devices on a single wafer and test 18 wafers in a single system with our Fox XP multi-wafer test and burn-in system and proprietary Fox full wafer contact wafer packs. Silicon carbide-based devices such as MOSFETs, which stands for metal oxide semiconductor field effect transistors, are extremely efficient, rugged, and reliable semiconductors that are used in the power conversion to charge the batteries in battery electric vehicles and in the engine controller traction inverters that drive the electric engines in EVs. Industry-leading semiconductor suppliers like our lead silicon carbide customer tout key differentiators of silicon carbide over the silicon-based IGBTs, which are insulated gate bipolar transistors, that include silicon carbide's higher system level efficiency, owing to the greater power density, lower power loss, higher operating frequency, and increased temperature operation. This translates into a higher driving range on a single charge, smaller battery sizes for traction inverters, and faster charging time for onboard chargers. These silicon carbide-based traction inverters were first used by Tesla in their Model 3 electric vehicle sedan. Tesla then converted all their electric vehicle engine controller traction inverters from silicon-based to silicon carbide-based MOSFETs. Forecasters like Canaccord Genuity, Yule Development, and Exawatt believe that most traction inverters will be silicon carbide-based within the next several years. One of the biggest concerns of existing and would-be electric car buyers is range anxiety. the fear of running out of energy before making it to a charging station. As some of you may have seen, just recently, an all-electric Mercedes-Benz recently drove 747 miles without recharging, handily beating every electric vehicle on the market today. This ultra-long-range electric car, called the Vision EQXX, was sponsored by On Semiconductor or On Semi, and highlights the significant progress that is being made with these concerns by using silicon carbide traction inverters, among other features. Silicon carbide MOSFETs are tested to ensure they meet technical performance and specifications at wafer level before the devices are singulated, and then again in package or multi-chip module form before they're shipped to customers. However, the extrinsic failure rate or the early life failure rate of silicon carbide is much too high for mission-critical applications such as the traction inverters or even the onboard chargers of the EVs. As such, all silicon carbide MOSFET suppliers apply what is known as a stress test or burn-in test to every device that induces early life failures to happen within hours rather than years to weed out the devices that would otherwise fail in the vehicles. We are currently engaged in discussions with most other current and future silicon carbide suppliers. The major silicon carbide companies expect that most EV traction inverters will move to multi-chip modules. As such, they have told us that they must move to wafer-level stress and burn-in to remove the extrinsic failures before they put these known-good dye into multi-dye modules to meet their cost, yield, and reliability goals of these modules. Aehr's unique, low-cost, multi-wafer-level test and burn-in solution provides the test electronics and the device contactor technology that enables contact to 100% of all devices on a single wafer. and the handling and alignment equipment to provide a total turnkey single vendor solution to meet the needed critical test and stress requirements. Our benchmarks and evaluations with prospective new silicon carbide customers continue with very good momentum. We've recently completed a wafer stress benchmark with yet another of the current large suppliers of silicon carbide with excellent results. They have told us that the FOX platform is the only solution that can scale to meet the production capacity needed to address the silicon carbide device growth, particularly for electric vehicle applications. This is in addition to our previously announced engagement with another large silicon carbide supplier with whom we've been working closely with over the last year to correlate and qualify the FOX system to displace their current production reliability screening test and burn-in systems. The results of that benchmark also met a key milestone this last quarter, and we believe that we will successfully complete their correlation process over the coming months, which will allow them to move forward with our Fox solution. We expect both of these companies to implement the Fox platform solution into their manufacturing production flow. In addition to the benchmarks with these two large silicon carbide companies, We have been approached by several more silicon carbide suppliers to evaluate our Fox XP systems to meet their production needs for traction inverters and onboard chargers for electric vehicles, and also for other applications such as electric commuter train engine controllers, photovoltaic power conversion, and other industrial applications. As a result of all these positive evaluations, we believe that we will receive orders from at least several new silicon carbide customers and begin shipping systems to meet their production capacity by the end of our current fiscal year that ends May 31st, 2023. With major production releases and ramps of many new electric vehicles from every automotive supplier in the world and many new electric vehicle focus players coming into the market in 2024 and 2025, there is a significant industry ramp needed to expand silicon carbide production to meet the forecasted needs of these electric vehicles over the next few years and through the end of the decade and beyond. Now moving to other markets, we're seeing a continued recovery and strengthening in several key wafer-level test and burn-in market segments after the last two years of softness related to COVID-19. This includes silicon photonics devices for data center and 5G infrastructure, 2D and 3D sensors for mobile and wearable devices, and a new high-volume application for data storage on the horizon. Specifically for silicon photonics, during the COVID-19 shutdowns, the data centers such as Facebook, Google, and Amazon did not upgrade their data centers from copper-based LANs to fiber optic communication links as originally planned. The silicon photonics market had been forecasted to have 30% to 40% cumulative average growth rates for the last few years, and through to the end of the decade. However, they end up being flat over the last two years with COVID-19 with no growth at all. We're fortunate enough to work with the market leader and several other key players in the space who all qualify our solution in 2019. However, if they're not growing, they're not buying test systems to meet their increased needs. At the IMEC Technology Forum last week, silicon photonics was described as an industrial reality. in the critical path of data centers and AI scaling, and that advanced CMOS processing and heterogeneous integration will be necessary to address the silicon photonics scaling challenges. We have been told by several of our customers, including our lead customer, that wafer-level burn-in and stabilization plays a key role in enabling silicon photonics mass production. Our lead silicon photonics customer that is one of the world's largest semiconductor manufacturers continues to use air for wafer-level burn and then stabilization of their silicon photonics wafers. During the last year, they added a significant number of additional Fox NP systems to support the characterization and product qualification of new photonics-based devices. This customer is expected to purchase new sets of wafer packs to be used with these systems, and as the applications and market for silicon photonics-based devices continues to grow, we expect this customer, as well as our other customers in this space, to continue to increase their capacity in the future. In just the last month, we received wafer pack orders for new devices from a couple of our silicon photonics customers, and we're expecting customers to resume buying in the current fiscal 2023 and 2024. Several customers addressing the silicon photonics market have forecasted additional Fox systems and wafer pack or die pack contact or capacity needs over the next 12 minutes. We expect to see a nice recovery in this market segment sometime over the next year or two based on what we're being told by our customers. We continue to see new programs for our Fox XP solution for 2D and 3D optical sensors. Last year, we saw yet another device for a new application that we feel will drive our consumables business and possibly require incremental system capacity this fiscal year. We continue to be optimistic that this market segment has significant potential over time, and we continue to meet our lead customer and their Subcons needs and to play an important role in their test and reliability supply chain. Our new lead customer in a new very high volume application for data storage devices that purchased a Fox CP single wafer production test and burden system essentially went dormant during the COVID-19 shutdowns. They have begun to show signs of recovering and restarting their planned production capacity ramp, which feels like it will begin later this fiscal year or next fiscal year at the latest. We continue to believe that this will drive a significant number of Fox CP systems. Now let me spend a few minutes talking about our R&D investments in manufacturing and supply chain. We continue to make investments in our FOX full wafer and simulated dye test and burn-in solutions. Last year, we shifted resources away from a planned new package part test system to focus on our FOX products. This year, Aehr will be releasing several test system enhancements that will extend our market leadership of our FOX products for full wafer test and burn-in. These include added voltage ranges, increased parallelism per wafer, new burn-in and stress conditions, and a new fully automated Fox wafer pack aligner configured to fully integrate with our Fox XP multi-wafer systems to enable hands-free operation. We believe that this will become more important over time for a widespread adoption of wafer-level burn-in for multiple markets beyond the markets we address today. As I've noted before, despite a few bumps in the road, our supply chain is holding up extremely well to the increase in demand and growth. and we've been able to maintain reasonable lead times to meet customer requests. We're very confident in our ability to meet the customer forecasted demand plus considerable upside. I also want to emphasize that we purchased additional material and have a supply chain in place to significantly grow beyond our revenue guidance for the fiscal year. We will have better visibility in the second half of the fiscal year on exactly what that looks like, and once we get closer to understanding the actual capacity needs and requests of our customers, will provide an update. We're very encouraged by the positive momentum we're seeing with current and prospective customers and anticipate multiple new customers will begin placing orders and taking shipments to meet the enormous needs of silicon carbide devices used in electric vehicle market over the next decade. We also see a recovery beginning this year in other key market segments, including silicon photonics and 2D and 3D sensors, and another new market opportunity for data storage on the horizon. If current and or new customers increase their forecasts and or decide to pull in orders, we have significant upside capacity to meet their needs. This provides us with the confidence that we can meet a significant upside in revenue shipments if the customer demand pulls in. We believe we will add several new silicon carbide customers that will be ramping into production by the end of our fiscal 2023 that ends next May. This is in addition to the significant additional investment and capacity by our current lead customer for our silicon carbide wafer-level burning solution. For the fiscal year ending May 31, 2023, Aehr expects total revenue to be at least $60 to $70 million, with strong profit margins similar to last fiscal year. Aehr also expects bookings to grow faster than revenues in fiscal 2023, as the rampant demand for silicon carbide and electric vehicle vehicles increases exponentially throughout the decade. With that, let me turn it over to Ken to review our financial results and guidance in more detail before we open up the line for questions.