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spk09: Good day, ladies and gentlemen, and welcome to the Acoustis Technologies Fiscal 2023 First Quarter Conference Call. As a reminder, this conference call is being recorded. At the conclusion of the company presentation, Acoustis Management will take questions. To ask a question, please press star 1 on your telephone keypad to be placed into the queue. A replay of this call will be available on the Investor Relations section of the Acoustis website.
spk01: Thank you, Operator, and good morning to everyone on the call. Welcome to ACOUSTA's first quarter fiscal 2023 conference call. We are joined today by our founder and CEO, Jeff Scheele, CFO Ken Bowler, and EVP of Business Development, Dave Eichle. Before we begin, please note that today's presentation includes forward-looking statements about our business outlook. All statements other than statements of historical facts included in this conference call such as expectations regarding our strategies, operations, costs, plans, and objectives, including the timing and prospects of product development and customer orders, our expectations regarding achieving design wins from current and future customers, the possibility of entering into collaborative or partnering relationships, potential impacts of the COVID-19 pandemic, litigation matters, guidance regarding expected revenue, product orders, and milestones for the current and future fiscal quarters and expectations regarding the integration of acquired business operations are forward-looking statements. Such forward-looking statements are predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties. The company and our management team assume no obligations to update any forward-looking statements made on today's call. Our SEC filings mention important factors that could cause actual results to differ materially. Please refer to our latest Form 10-K and Form 10-Q filed with the SEC to get a better understanding of those risks and uncertainties. In addition, our presentation today will also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the Investors section of Acoustis.com. I would now like to turn the call over to Jeff Scheele, founder and CEO of Acoustis.
spk03: Thank you, Tom, and welcome everyone to our fiscal 2023 first quarter conference call. I am pleased to report that Acoustis delivered over 195% year-over-year revenue growth and more than 6% sequential revenue growth as we continue to ramp commercialization of our leading RF filter products. This was in line with the revenue guidance that we gave at the end of the June quarter of up more than 5% sequentially. We were able to accomplish this despite the ongoing challenges in the macro environment driven by COVID triggered lockdowns, power outages in part of Asia, and semiconductor chip shortages. The silicon chip shortages continue to have a major impact on the number of Wi-Fi access points that can be produced by our customers and has created production backlog across the Wi-Fi landscape. Nevertheless, we were able to post record quarterly revenue in September of 5.6 million. Looking ahead, we expect to continue revenue growth in the current quarter with 5% to 10% sequential growth and further expect growth throughout calendar 2023. From a product development standpoint, we achieved the majority of our stated milestones for the quarter, including multiple targets in 5G mobile and Wi-Fi, as well as renewed activity in our 5G network infrastructure and other markets segment. During the September quarter, two new customers enter production with finished products incorporating Acoustus XBAL filters, bringing the total number of customers ramping production to 15. We expect to see this number continue to grow during the December quarter, including at least four new expected Wi-Fi design wins. Given the current headwinds, we have decided to protect our cash reserves by reducing spending where possible and by delaying new capital expenditures. Before discussing each of our target market segments in greater detail, I would like to give a brief update regarding the recent passage of the Chips and Science Act of 2022, commonly referred to the CHIPS Act, and how Acoustis hopes to benefit from the Act. The CHIPS Act legislation was introduced and authored in part by Senate Majority Leader Chuck Schumer. Its goal was to boost U.S. competitiveness with China by allocating tens of billions of dollars to increase domestic semiconductor manufacturing and science research. As some of you may recall, Senator Schumer gave a speech at the Acoustis Fab in upstate New York in June 2021, shortly after he introduced legislation to provide $52 billion in funding to implement semiconductor-related manufacturing and R&D programs in the United States. This past September, Senator Schumer once again visited our fab facility in Canandaigua, New York, and was pleased with the growth in manufacturing capacity and new jobs that we have delivered over the past year. Acousta Senior Management plans to work closely with the local, regional, and state government of New York, along with Senator Schumer's office, to support implementation of the CHIPS Act opportunities in upstate New York, which we expect will present a significant opportunity for the revitalization of upstate New York's semiconductor presence, and in particular, the greater Rochester area where Acousta's RF filter chip manufacturing is located. Over the past five years, Acousta has proudly manufactured its innovative RF filter chip products in the USA. We believe we are an ideal candidate for chips funding and that we fit perfectly as part of Senator Schumer's blueprint to make New York the global innovation and semiconductor hub. We plan to apply for funding under the CHIPS Act when the submission window opens in early calendar 2023 to add multiple new 8-inch silicon wafer manufacturing lines at our New York site. In addition, given the supply chain delays, energy shortages, and constraints associated with our Asia packaging partners, we hope to secure CHIPS Act funding to build an advanced packaging center to reshore our packaging supply chain to reduce product costs, and support shorter time to market. Such funding would position Acoustus to manufacture and deliver billions of XBall filter chips annually, and position us to service both tier one and tier two mobile companies for 5G smartphones, as well as other multi-billion dollar end markets, including 5G networks, high frequency Wi-Fi devices, and other wireless markets. The outstanding performance of Acousys XBall filters has, in fact, attracted the interest of many of the largest wireless companies in the world, names that everyone would recognize. But the reality is the capital cost to build out capacity to service these billion-dollar wireless companies is substantial. We believe that Chipsack funding would allow us to make that enormous leap and build a world-class, state-of-the-art fab and advanced packaging center that makes New York State and our country proud. I would now like to discuss each of our target markets segments in greater detail, beginning with the Wi-Fi segment. As I mentioned earlier, the Wi-Fi market continues to experience significant disruption from the supply chain issues, as well as further COVID lockdowns in China, and this continues to impede our top line growth in the near term. While we continue to gain design wins in Wi-Fi, our end customers simply are not able to procure several other components necessary to produce new access points, routers, and other Wi-Fi devices. While this has resulted in lower visibility in our near-term Wi-Fi related revenue, we are beginning to see signs that the supply chain challenges are being addressed through new capacity, fewer shutdowns, and the shift to newer Wi-Fi technologies, particularly Wi-Fi 6E and Wi-Fi 7. On a more positive note, we had multiple significant product achievements during the September quarter. We started sampling two exciting new Wi-Fi 6E and Wi-Fi 7 compatible XBAL filter solutions during the September quarter, including our next generation 5.5 and 6.5 gigahertz coexistence filter solution that covers the UNI 1 through 3 and UNI 5 through 8 bands. We have completed fabrication and plan to start sampling in the December quarter our new 5.6 and 6.6 gigahertz coexistence filter solutions that cover the UNI 1 through 4 and UNI 5 through 8 bands in the high frequency Wi-Fi spectrum. Each of these XBAL filters offer significantly reduced form factor relative to our legacy products with a greater than four times reduction in size utilizing our new advanced chip scale packages. The next generation 5.5 and 6.5 gigahertz solution offers enormous improvements in out of band rejection relative to our first generation products and has already attracted significant interest from Wi-Fi ODM and OEMs. Our new 5.6 and 6.6 gigahertz solution can utilize all the 5 gigahertz bands in Wi-Fi 6E and Wi-Fi 7 to support the North America market. We expect design wins for both our new next-gen 5.5, 6.5 gigahertz and our new 5.6, 6.6 gigahertz solutions and expect the new filters to be qualified and in production by the June quarter of 2023. Our current generation products continue to have success, and we announced two new Wi-Fi 6E design wins in early September in the gaming market, a new area for Acoustas. One of the design wins is for a specialized high-speed, low-latency gaming router that is expected to enter production in mid-calendar 2023. The second design win is with a leading mobile gaming platform and is also expected to go into production in mid-2023. Both devices use multi-user, multiple in, multiple out architectures and are expected to ship with multiple XBAL filters per device. Recently, we announced three additional Wi-Fi design wins in Wi-Fi 6E for carrier class applications. Two design wins are for leading European carrier class Wi-Fi OEM. that will be using the Acoustus 5.5 gigahertz and 6.5 gigahertz standard XBAL coexistence filter solutions, as well as the 5.6 and 6.6 gigahertz standard XBAL coexistence filter solution that allows for greater usage of the Uni-4 band. The first Wi-Fi 6E router is expected to ramp production by the end of calendar 2022. And the second router is expected to begin ramping by the end of March 2023 quarter. The third design win is for a global network communication solutions provider that will be using the Acousys 5.6 and 6.6 gigahertz standard XBAR coexistence solutions to sell a Wi-Fi 6E extender to its carrier partner with a production ramp expected by August of calendar 2023. I am also pleased that we received a development order from a Fortune 100 internet company for two new diplexer products during the September quarter. This is our second Fortune 100 diplexer customer, and the new diplexers we are developing are for Wi-Fi 7 applications, including virtual reality and augmented reality headsets, as well as advanced wearable devices. The new diplexers are expected to be completed and enter production in calendar 2024. Additionally, we continue to advance the progress of our Wi-Fi 7 diplexer, which we are currently developing for one of the largest PC chipset makers in the world. The first design of this new diplexer was shipped to this Fortune 100 customer in December 2021, and we received positive feedback on the design. The initial diplexer performed well. and enable the customer to characterize it within their system architecture, providing valuable technical feedback for the next design iteration, which has already been produced in our New York manufacturing facility. We remain on schedule for commercialization of this extremely exciting product and have received interest from other OEMs for diplexer, triplexer, and other multiplexer products. We attributed our surge in recent design wins to the fact that we were an early entrant in Wi-Fi 6, 6E, and Wi-Fi 7 ball filter solutions, and today have one of the most extensive high-frequency Wi-Fi portfolios that address the enormous challenges of difficult dual-band coexist, wideband operation within the 5 to 7 gigahertz frequency spectrum. While near-term macro supply chain issues remain, we are executing on design wins new product ramps, and new product development at a higher pace than ever before, and we expect to see the outlook improve quickly once the broader supply chain issues improve. To summarize our recent Wi-Fi activity, with the addition of the new 5.5, 6.5 gigahertz, and 5.6, 6.6 gigahertz solutions, we will have 16 commercialized XBALL Wi-Fi filters, 12 for Wi-Fi 6E, and Wi-Fi 7 and 4 for Wi-Fi 6. As of today, we have announced a total of 20 design wins, including the three we recently announced. We are currently in production with 10 customers in Wi-Fi 6 and Wi-Fi 6E. And lastly, we are advancing the development of our XBAR multiplexer products, led by our diplexer efforts, which have resulted in two development orders from two different Fortune 100 companies. Moving on to 5G mobile. We continued our momentum in 5G mobile during the September quarter, getting closer to our goal of securing our first design win in the 5G mobile market by the end of the current quarter and entering production in the first half of 2023 with the first of three tier one customers with whom we are currently engaged. We shipped a second design to this tier one customer in the June quarter using our new advanced wafer level packaging. We recently completed a quality audit with this customer and received a volume order for the first design during the September quarter. And we remain focused on entering production with this customer. During the September quarter, we received our first purchase order from our second tier one RF module maker that we engaged with in the December quarter of 2021. The new filter was designed using resonator models that were delivered to this customer earlier in the year with our PDK and will target challenging 5G transmit and receive coexistence requirements. We now expect a production ramp with this new filter in calendar 2025. We also successfully developed and delivered one new engineering sample to our third tier one mobile customer, an RF front end module maker. We initiated the next phase of this development with new engineering samples expected to be delivered in the first quarter of calendar year 2023. These new XBAL filters incorporate the customer's designs and we are targeting production ramp in late calendar 2024 or early calendar 2025. During the June quarter, we also iterated a redesigned filter for our Tier 2 5G mobile customer and shipped first samples to this customer in our new wafer-level packaging. We continue to target a production ramp with this customer in mid-calendar 2023 for the first filter And during the September quarter, we received a purchase order for the development of two additional XBAL filters that target Wi-Fi 6E applications. As we have discussed previously, we are bringing the production of our WLP in-house within our New York FAB. We continue to work towards the design lock of multiple new advanced packages with full WLP process qualification expected to complete later this calendar year. I am pleased to announce that we have completed the process flow for our new WLP products and have a design locked the first package for our tier one RF component company. During the September quarter, we shipped a second filter design to this tier one RF component customer in our new wafer level packages. We believe bringing the WLP process in-house enhances substantially our ability to control the quality cost, and customization of our advanced packages. To summarize our 5G mobile activity, we have multiple customer-funded XBAL filters in design with four customer engagements, including three Tier 1 customers. We received our first purchase order from a Tier 1 RF module maker customer that we engaged with last December. We iterated our first RF filter design for a Tier 2 foundry customer and received a purchase order for two additional filters. We received a volume order from a Tier 1 RF component company for an expected production ramp in the first half of calendar 2023. And finally, we have completed the process flow for our new WLP and chip scale package products and have design locked the first WLP for our Tier 1 RF component company customer. And now I would like to discuss our network infrastructure business highlights. We continue to ramp production with three citizen broadband radio service or CBRS infrastructure companies in the September quarter, one of which is experiencing higher than expected in customer demand. We expect these three customers to continue to ramp in the current December quarter and beyond and believe we may see revenue upside in this segment given the current demand picture is improving. We announced a new design win for our 3.5 gigahertz 5G network infrastructure filter in the September quarter with a new customer. This is the fourth design win we have received for this filter and it is expected to be one of the first to enter production. Our customer is targeting both small cell and MIMO applications with our XBAL filter in the European and Asian network infrastructure markets. We are currently expecting this customer to begin ramping in the current quarter. We recently completed the first iteration of our 3.7 GHz to 3.98 GHz XBAW infrastructure RF filter for the U.S. 5G market. We are currently sampling this new C-band filter with multiple OEMs and expect to see greater small cell adoption beginning in the second half of 2023, when we will be well positioned. To summarize our 5G network infrastructure activity, we have four completed 5G network infrastructure XBAL filters, three for 5G small cell base stations, and one for CBRS. We are currently sampling our new T-band filter for the US 5G market. To date, we have announced five design wins in 5G small cell, and additionally, we have received four design wins for CBRS from three leading network infrastructure OEMs. And now, I would like to discuss the highlights from our other business segment during the September quarter. In our defense contract business, we continue to progress on our existing R&D contract with DARPA to further enhance our XBAL PDK. In addition, we recently began executing on a multi-year, multi-million dollar contract with DARPA to extend the operating range of our XBAL RF filters up to 18 gigahertz using novel materials and device manufacturing. These new materials may have positive implications in our current two to seven gigahertz frequency range that we are focused on today, given higher power handling capability and higher Q values. Our acquisition of the RFMI brand continues to bear fruit as the new product line has added to our growing portfolio of filter and timing control products and we are beginning to leverage the RFMI sales channel with our XBAL portfolio of high frequency filters. RFMI experienced a significant design win during the September quarter being selected by a leading IC supplier as a reference to be used in a secure wireless battery management system for electric vehicles. Also in our other market segment, we recently announced entering the RF timing and frequency market with our leading XBall resonators. We are working with a leading maker of timing RF components to develop ultra high frequency XBall resonators for use in the customer's finished devices. During the September quarter, we started the qualification of our first two timing control products for our first customer, who is expected to start production ramp in the first half of 2023. I am pleased to announce that our work with this first customer has led to an order from a new second timing control customer, which has placed a development order and will start evaluating our resonators for use in their products. The timing RF market represents a significant opportunity for Acoustus in both unit volume and revenue. Our primary customer is developing products that could be disruptive in the timing RF components market, looking to displace older analog technologies with ultra-low jitter and phase noise devices. We are extremely excited that our leading XBall resonators can be part of this groundbreaking opportunity. To summarize our other markets segment activity, we have seven completed XBAL filter solutions for the civilian and defense markets. Further, our ultra high frequency XBAL resonators are now being used to develop disruptive digital timing and control products for the broader communications industry. In addition, we continue to refine and improve our XBAL PDK driven by the direct to phase two contract with DARPA. We started executing on our new multi-year, multi-million dollar contract with DARPA to scale our XBAL technology up to 18 gigahertz. And finally, in addition to the numerous customers acquired through the RFMI product line acquisition, we have a total of three XBAL customer engagements, two of which have already placed purchase orders with us or provided NRE revenue. And now I would like to hand the call over to Ken to go through our financial highlights.
spk04: Thank you, Jeff. For the first quarter, ended September 30, 2022, the company reported revenue of $5.6 million, which is an increase of more than 6% over the prior quarter ending June 30, 2022, and representing an increase of over 195% year-over-year. On a gap basis, operating loss was $18 million for the September quarter, mainly driven by revenue of $5.6 million. offset by labor costs of $9.9 million, depreciation of $2.5 million, and other operational costs totaling $11.2 million. As a result, GAAP net loss per share was $0.33. On a non-GAAP basis, operating loss was $15.6 million and non-GAAP net loss per share was $0.28. Reconciliation of these amounts to the corresponding GAAP measures is available in the press release issued this morning available on the investor section of our corporate website. CapEx for Q4 was $4.8 million, a decline from $5.9 million in the prior quarter, reflecting the ongoing capacity expansion and equipment redundancy project in the company's New York FAB. Cash used in operating activities was $15 million, up from $11.9 million in the prior quarter, mainly due to year-end expenses and certain expense items outside the normal course of operations. The company exited the June quarter with $60.7 million of cash and cash equivalents versus $80.5 million at the end of the previous quarter, primarily resulting from cash needed to fund operations and capex spend. In the current December quarter, we expect multiple new Wi-Fi 6E and network infrastructure customers to ramp production, and therefore we expect to see record revenue, with revenue up between 5% and 10% sequentially from the September quarter And based upon our growing backlog of design wins, we anticipate that robust top-line growth will continue into our next fiscal year and beyond. I would also add that I expect our cash operating burn in the December quarter to reduce by more than 25% from the current quarter, resulting from our spending reduction efforts and normalization. I will now turn the call back over to Jeff to discuss our second fiscal 2023 quarter performance and future milestones.
spk03: Thank you, Ken. The ongoing semiconductor chip supply shortages and supply chain delays that are impacting the broader industry continue to impact our customers. While our design wind momentum and customer activity continues to grow, driven by Wi-Fi 6, Wi-Fi 6E, Wi-Fi 7, 5G mobile, 5G infrastructure, and other markets, our ability to grow revenue continues to be impeded in the near term, given the broader market disruptions. Despite the near-term supply chain impacts, we were able to deliver revenue growth of over 195% year over year in the September quarter, and we are currently expecting between 55% and 70% growth year over year in the December quarter. We are expanding our market share in CBRS and now 5G infrastructure, experiencing strong demand for our new Wi-Fi 6E and Wi-Fi 7 products, and are targeting production ramp in the 5G mobile smartphone market in the first half of calendar 2023, which should result in accelerated revenue growth. By the end of the current quarter, we expect to ramp production to more than 17 customers, with additional customer design wins expected across all our markets to finish calendar 2022. In the December quarter, we expect to generate revenue from each of our business segments including 5G mobile, Wi-Fi, 5G network infrastructure, and our other market segments. We continue to strive towards executing our target milestones and will continue to keep you informed of our progress. Our anticipated December 2022 milestones include, in our Wi-Fi segment, first, we expect to ship samples of our next generation Wi-Fi 6E, Wi-Fi 7 filter solutions to multiple customers. Further, we expect to secure at least three new Wi-Fi 6E design wins during the quarter, and we expect to secure a Tier 1 SoC chipset Wi-Fi 7 reference design win. For our mobile 5G segment, we expect to receive a volume production order from our Tier 1 RF component company customer while securing our first mobile design win. In addition, we expect to complete our WLP and CSP technology qualifications, and release our new packages into production. And we expect to deliver the first sample to the Tier 1 5G RF front-end customer announced in September. Next, in our 5G network infrastructure segment, we expect to receive a development order for a new 5G massive MIMO infrastructure receive filter solution. We expect to sample 6 gigahertz XBall filter to a Tier 1 OEM targeting a new radio unlicensed 5G 6 gigahertz IMT application. And we expect to scale our 5G N77 XBall filter for a recently announced design win. And then finally, in our other market segment, we expect to receive a purchase order for the development of a new XBAW multi-chip module for a multi-billion dollar tier one defense customer. Further, we expect to complete the qualification of two resonators for the timing market for our first customer. And finally, we expect to demonstrate a 10 gigahertz XBAW resonator targeting X-band applications and continue both development projects with DARPA. In conclusion, we believe the market opportunity for our patented high-frequency XBAL filters is significant. As of October 28th, we have 73 issued patents and 123 patents pending as we continue to build a substantial IP moat around our technology. We continue to work diligently to achieve each of our stated objectives, and we will continue to provide updates on our execution against these objectives going forward. Finally, I would like to thank our employees for their hard work, passion, and dedication, which accounts for multiple design wins across the Wi-Fi, 5G network infrastructure, and defense markets. We have also experienced exceptional momentum in the 5G mobile market, driven by our leadership and filters that operate above 3 gigahertz and our new and expanding wafer-level packaging capabilities. I also wish to thank our shareholders who continue to support the company. And with that, I would like to open up the call for questions from the investment community. Operator, please go ahead with the first question.
spk09: Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. You may press star 2 if you'd like to remove your question from the queue. Our first question comes from the line of Sujit Silva with Roth Capital. Please proceed with your questions.
spk07: Good morning, Jeff. Dave, Ken, congrats on all the progress here in the outlook. Sounds exciting. So on the smartphone wins, the mobile wins, Jeff, what dictates the timing of various customer production starts? Is it your product availability or is it their program plans? What are the factors across the three or four, rather?
spk03: Hey, good morning, Suji. Jeff here. I appreciate your opening comments. I'll let Dave start, and then I'll get some comments on that.
spk02: Good morning, Suji. With respect to the Tier 1 RF component, it was a combination of both the availability of the WLP, which we've addressed, and as we highlight in the remarks, that is released or will be released by the end of this quarter, so the timing aligns well with their release into production. With the respect to the other Tier 1s, it's mainly going to be driven by their product roadmap and inserting with the designs that they're working on. It's a multiple iteration that we've highlighted in the calls, design efforts with them. It's the timing of that and then inserting it to when they would release with their end customers. Suji, I'll add to that.
spk03: The WLP, as Dave said, gave you the qualification timing. I just wanted to note for everybody that we're currently shipping in volume WLP to this customer, and so they're getting the final version of the product. And then in terms of other things that contribute to the timing, is the qualification of their customer as well. So there's a few things that go into it, but not only our customer's qualification, but also their customer qualification. So as we said in the prepared comments, we're looking forward to a pretty significant milestone this quarter in the mobile with the milestone of a first design win in mobile technology.
spk07: Okay, I know that's a very helpful color, guys. And then separately on the wireless infrastructure, CBRS, seeing the accelerating demand perhaps upside versus what you'd expected. Can you talk about the drivers there versus macro? You would think macro would cause spending to be a little bit more conservative, but it sounds like you guys are seeing momentum there. Appreciate that color there.
spk02: I'll let Dave start on that one. Yeah, as we've highlighted in the prepared remarks, we've got three customers that are ramping. Two of them are medium volume, low volume type customers. One of them is ramping significant volume, and part of that is driven by the design. One of the units that we're in at the a higher count MIMO, and then the one that's at the home is a lower count MIMO. So you've got multiple filters that are in each of the designs, and also this customer has aligned with a service provider that they're making some investments in the CBRS rollout. So we expect this demand to continue to be robust. With this one customer, we're launching other service So we expect, you know, continuous activity, you know, with the CBRS rollout. And we're also looking at, you know, the additional 5G spectrum, you know, that the U.S. has released as well. So these are, you know, I think right in our sweet spot from our frequency and a performance and, you know, particularly with these higher MIMO count architectures. So we're looking. robust comparably to what we've seen in the Wi-Fi as well. Yeah, Suji, Jeff here. The CBRS, I think as you know, but maybe for the broader audience, is unlicensed.
spk03: So that is really a fast track to get higher data rates deployed into the marketplace. So we expect that market to continue to grow. And as Dave briefly touched on, The licensee band spectrum, we've got product that's available into the market for that band, and we expect that to be heavily adopted as it's a licensed band. So that's just some additional color on that.
spk07: Okay. Helpful, guys. Thanks. Congrats again.
spk02: Thank you, Suji.
spk09: Thank you. Our next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed with your question.
spk08: Yeah. Hey, guys. First of all, congratulations on all the strong activity that's going on in the wireless space, particularly. I had a question around that. You mentioned two Tier 1 customers, one of them being a Fortune 100 customer. Jeff, the question is, are these customers telling you to get the WLP facility and the packaging inside your own umbrella versus... letting you outsource, is that the onus of the move that you're making towards the packaging facility?
spk03: Hey, Harsh, Jeff here. I appreciate your opening comments. Dave will start just on exactly what the customer is telling us, just to give it. Yeah, so, Harsh, we've got two initiatives from packaging that we've been investing in. One is chip-scale packaging, and then the other one is WLP packaging.
spk02: The WLP solution is primarily being utilized right now for the end customers that are integrating it into their module. So this is more of the RF FEM front end module manufacturer tier ones that we've engaged with, and then also the RF component customer as well. The chip scale packaging is being utilized in our discrete and multiplexer designs to Customers that we commented, tier ones that are doing Wi-Fi 7, are utilizing a chip-scale packaging approach. So we have both of those initiatives that we worked on and deployed on the chip-scale packaging and actually have a product in production that's been able for us to reduce the form factor, increase performance, and also do these more complex multiplexer designs and hit really world-class performance.
spk03: Yeah, and Harsh, just a couple comments on the broader significance of a chip scale package and WLP. These represent significant cost savings to our company in the cost of goods or the bill of materials, if you will. We're able to, with these innovations and both of these, we're able to shrink the size of the package by at least four times, and that has significant impact on cost savings. And, of course, the WLP, doing that in-house, actually eliminates the cost of doing it through a third party and is being rolled right into the wafer fab. So significant cost savings roadmap is really the broader implication as well, and that's consistent with what you would expect from a tier one company that has cost sensitivities.
spk08: Great, guys. Thank you for that color. And then when we, Jeff, so obviously when you talk about, you know, 5G wireless handset type customers, analysts like us get really excited. You mentioned that you'll have some revenue starting 2023. Can you talk about, maybe Dave, proper question for you, maybe talk about how this would scale and You know, what are you expecting in terms of the ramp with these kind of large customers that you are now, you know, able to bring home?
spk02: Okay, Dave, we'll start with that. Yeah, so the, you know, the Tier 1 ARC component is the one that we've highlighted that we expect to be in production for staff of next year. So as Jeff commented earlier, and it was in our prepared remarks, we've already started receiving volume. And there will be further announcements. We'll have this quarter to shore up everything. But the expected volume will pick up more towards the second quarter of next year and then continue to ramp. And the further announcements we'll make will give you more color as to what the end application is and highlight some of the volume. But it'll be substantial compared to what we see in the infrastructure. And, you know, the advantage is, you know, you've got a fairly small DAI WLP solution that goes into, you know, this end customer's application. So a lot of the DAI you have that we provide is going to improve the margin and also the revenue, you know, will be a nice step function comparably.
spk03: Yeah, and Harsh, one more on that. The current orders that we're receiving are comparable to the orders that So the current orders we're receiving in mobile are comparable to the quantities of orders that we're receiving in production in Wi-Fi. So we expect that order size will certainly step up by an order of magnitude once we're in production. So we're excited about the volume we're seeing and clearly we've been preparing to be able to support even higher volumes. Pretty exciting market opportunity for us.
spk08: Exciting stuff, guys. Thank you so much.
spk03: Thanks, Arsh. Thanks, Arsh.
spk09: Thank you. Our next question comes from the line of Anthony Stoss with Craig Helm Capital Group. Please proceed with your question.
spk05: Hi, guys. My congrats as well on the nice progress. Jeff, maybe for you. So if you're going to enter calendar 2023 with roughly 17 customers that you're shipping to, can you give us a guess how many total customers you think you'll be shipping to by the end of 2023? And then as a follow-up, I'd love to hear as much detail as you can provide now that you've been shipping to a bunch of customers. Give us the nature of kind of follow-up. After they've used your parts, are they coming back for more design wins? Any color would be appreciated there.
spk03: Okay, Tony, again, I appreciate your kind comments. Let me start with, I'm going to answer in reverse and get Dave and Ken involved here, but in terms of follow-up, particularly in Wi-Fi, these programs come up every two quarters, for example, and they can run for two to four quarters, and then In terms of those customers, if it's a successful product, there's certainly a tail to it. But typically what we're seeing is things we started in Wi-Fi 6 have been moving to Wi-Fi 6E. That would be a pretty obvious trend. But in what we're doing in Wi-Fi 6E, we mentioned a customer that we're in production with with some custom chipsets. They actually have a new platform, and they could be reusing our current chipsets for that platform or developing new chipsets. I think the thing that I particularly look at is if the customer is coming to us to solve a new technical problem and really engaging on a new platform, then we know we've taken care of them on the initial production of their first product. So we're seeing repeat activity, repeat engineering. And that's the type of supplier that we want to be, is we want to be strategic for these new Wi-Fi 60, Wi-Fi 7 platforms, and really be the go-to supplier for filters and Wi-Fi. And if you look in the mobile market, we want to do the same. We're the world's only merchant supplier provider. of filters for mobile. We don't compete with our customers there. So I think we're a good strategic partner there, and we would expect in the mobile market, once we have the traction there, that that will lead to follow-up programs with existing customers as well as be a proof of concept for new customers to give them the confidence to engage with us. In terms of what the number of customers roll out, I'm going to pull Dave and Ken into that conversation.
spk02: Hi, Tony. There's a couple comments I'll make there. By the end of calendar year 23, we should have more than 25 customers in production. As you can see, we are typically adding about two per quarter. And if you look at the dollar content per system and also the shift, It's increasing from maybe $2.50 up to $7 to $10. So the overall revenue per program should continue to shift upwards as well. So for the Wi-Fi side, it's a pretty exciting time for us. And as Jeff highlighted, we've got a lot of stickiness with our customers. HP Aruba is one that we publicly announced. you know, as Jeff highlighted, there's a plan for reuse of those products into other programs. And, you know, I spent two weeks over in Asia recently and visited with over 16 ODMs and OEMs and had very positive reception on, you know, the product portfolio. You know, we're leading the industry in the products that we're releasing right now. So, you know, this is –
spk05: Perfect. Thanks, guys. Really nice to see things come together for you. Thanks, Tony.
spk09: Thank you. Our next question goes to the line of Rick Schaefer with Oppenheimer and Company. Please proceed with your question.
spk06: Hi. Good morning. This is Waymark on the line for Rick. Congrats on all the activity in Wi-Fi, mobile, and 5G infrastructure. My first question is on Wi-Fi announcements. It looks like all three design wins are on 4x4 MU MIMO. Can you remind us, from a unit and AASP perspective, what does that mean for Acoustus? And do you see a path towards higher orders of transmit and receiving such as 8x8? Okay.
spk03: Wade, thanks for your comment. Good to talk to you. Dave will touch on your question on Wi-Fi.
spk02: Yeah, hi, Wade. So, yeah, you're correct. You know, 4x4 MIMO, you know, there has been platforms that are 2x2 MIMO on the Wi-Fi 6, and then there's mixes of 2x4. There's, what I see on the horizon is more percentage of the system shipping that are tri-band architecture with Wi-Fi 6E and Wi-Fi 7, so that'll be a We're seeing a mix of tri-band and quad-band architecture. Most of these are still sticking to a four-by-four architecture, but the dollar content is still going up. There are some out there that are four-by-eight, so it just depends on what the end application is. But either way, we're seeing either a number of systems increasing or increasing the dollar content.
spk06: Great. Thank you. As for my second question, it's in regards to the U.S. CHIPS Act. Are there any updates you can share on how much and when you can expect to receive funding? And do you see any potential strings attached that could limit your ability to sell to China Android handset vendors? Thanks.
spk03: Okay. Regarding the U.S. CHIPS Act, in terms of timing of that, I don't want to comment on the ask I think the That's that's pretty closely held right now in terms of but what what we would what we would be looking for would be an increase in capacity another 10x to be able to to Really have tier one type capacity For them for that in market in terms of the timing of that we expect that And there's been some announcements that have come out around the election, but we expect the program to be stood up and applications to be open sometime in Q1, perhaps middle of Q1, the February timeframe. These sorts of announcements will take typically three months in order to receive feedback. from the government on the application. And then the funding, the contracting vehicle could be an additional three months on that. So you're looking at somewhere in the middle of summer timeframe for actual receive of funding. We'll have to look at the rules in terms of if there's, how they roll the program out to whether you can actually get started sooner than that. That's the timing, and we'll be more vocal going forward. I think it's safe to say that the magnitude of a proposal could be a multiple of what our current market cap is. I think that that would be safe to say.
spk00: Great. Thank you. Thank you, Wade.
spk09: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Shealy for any final comments.
spk03: I'd like to take the opportunity to thank you all for your time today. We look forward to speaking with you during our next update call to discuss the current quarter execution against our milestones and future expectations. And with that, I'd like to wish everyone a happy Monday. Thank you for joining us.
spk09: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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