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Enovix Corporation
2/19/2025
Thank you for standing by and welcome to the InnoVx Corporation fourth quarter 2024 earnings conference call. Currently all participants are in a listen only mode. After the speakers presentation there will be a question and answer session. As a reminder, today's program will be recorded. And now I'd like to introduce your host for today's program, Robert Leahy, head of investor relations. Please go ahead, sir.
Thank you. Hello everyone and welcome to the InnoVx Corporation's fourth quarter and full year 2024 financial results conference call. With us today are President and Chief Executive Officer Dr. Raj Shaluri, Chief Accounting Officer Christina Trong, and Chief Operating Officer Ajay Marathi. Raj and Christina will provide an overview and then we'll take your questions. After the Q&A session we'll conclude our call. Before we continue, let me kindly remind you that we released our fourth quarter 2024 shareholder letter after the market closed today. It's available on our website at .Innovix.com. A replay of this video call will be available later today on the investor relations page of our website. Please note that the shareholder letter, press release, and this conference call all contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are based on current expectations and may differ materially from actual future events or results due to a variety of factors. For a discussion of those factors that could affect our future financial results in business, please refer to the disclosures in today's shareholder letter and our filings with the Securities and Exchange Commission. All of our statements are made as of today, February 19th, 2025, based on information currently available to us. We can give no assurance that these statements will prove to be correct and we do not intend and undertake no duty to update these statements except as required by law. During this call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with the generally accepted accounting principles. You can find a reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the investor relations page of our website. I'll now turn the call over to Raj to begin. Raj?
Thank you, Rob, and thanks to everybody for joining us today. For our format today, I'm going to start with a recap of our recent results and some of our recent milestones before I turn it over to Christina for financials and outlook. I'll have a few closing comments and then we'll take your questions. We had a very productive 2024, especially Q4. To recap our recent achievements, first, our revenues in the fourth quarter were $9.6 million near the high end of our guidance range. For the year 2024, total revenues were $23.1 million, up from $7.6 million in 2023. Second, we completed our top manufacturing and product objectives for the quarter by completing site acceptance testing of our high volume manufacturing line and shipping our first samples of EX2M to customers. Third, we shipped early engineering samples to our lead smartphone OEM, with the results confirming the critical safety tests are all passing. Additionally, we received the cell dimensions as a continuation of the agreement we made with them. These dimensions are actually of the cell that they expect to be shipping in 2025. Now we're on track now for commercial smartphone launches in 2025, pending successful completion of the customer qualification. Fourth, in line with the agreement we announced in June 2024, we also delivered our first battery packs of our first custom cells from Malaysia with packs built in our Korea facility. In addition, we secured a purchase order from a custom battery from a second Marquis Smart Eyewear customer. The ramp of Fab2 in Malaysia in 2024 stands out as a pivotal accomplishment for the company. We managed to complete SAT of our HVM line in just one year after our first tools arrived. Yields are now well beyond the final levels we achieved in Fab1, and we have incremental targets in place throughout the year, and we believe that we believe will ensure readiness for smartphone mass production in the fourth quarter of 2025. We now have multiple customer audits going on, serving as a strong testament to our manufacturing readiness and our customers' interest in using our products. While we remain focused on smartphones, we're also prioritizing segments where major battery constraints or supply chain requirements are creating a strong competitive advantage for our technology. Recently, Smart Eyewear emerged as one of these segments, and we're now in the process of developing custom cells for Marquis customers in this space. Another market that recently emerged as a unique growth opportunity for us is the defense industry, where we recognized a significant portion of our 2024 revenues with conventional graphite battery products. Since the US elections last November, we observed an increase in inbound interest from drone manufacturers and defense suppliers seeking battery solutions that comply with allied country supply chain requirements. Earlier this year, we secured a sample purchase order from one of these suppliers for autonomous AI systems. While these developments are still evolving, we're optimistic about the potential upside from these. And on the product front, it's also been a very productive 2024 and Q4 for us. We successfully completed testing of EX1M and performance results indicate that we're on track to meet targets of energy density, cycle life, and fast charging. For EX2M, we delivered early engineering samples to OEMs across both smartphone and IoT markets, and we received positive feedback that the EX2M energy density is meeting customer targets. And looking ahead, we have officially kicked off the design phase of EX3M, incorporating feedback from our lead OEMs to ensure alignment with their evolving requirements. Now with that, I'll turn it over to Christina for the financials. Christina.
Thank you, Raj. All the relevant financials are in our quarterly report and our shareholder letter. So I will speak from a high level and then provide outlook. We deliver Q4 2024 revenue of 9.7 million above the midpoint of our guidance. Non-GAAP EPS came in at a loss of 11.7 million, above our guidance of a loss of 19 million to 25 million. And our non-GAAP EPS came in at a loss of 11 cents, also above our guidance of a loss of 15 cents to 21 cents. We ended the quarter with roughly 273 million of cash and cash equivalents. CapEx in Q4 was 16.4 million, and cash use and operation total 16 million. Our balance sheet is strong, giving us a runway and optionality for funding additional HVM lines. Now for our guidance. For the first quarter of 2025, we forecast revenue of 3.5 million to 5.5 million, an adjusted EBITDA loss of 21 million to 27 million, and a non-GAAP EPS loss of 15 cents to 21 cents. Now I'll turn back to Raj for close, Raj.
Thanks, Christina. As you can see, 2024 was a big year for us. We made significant strides by launching new high-volume manufacturing line in Malaysia, with custom battery cells already shipping from the Agility line and high-volume production slated for 2025. We also focused on building strong customer demand across key markets, including smartphone and IoT OEMs, while we continue to drive innovation and operational excellence. With that, we can go to the questions.
Operator? We will now begin the Q&A session. Please note that this call is being recorded. Before we go to live questions, we're going to read the two most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is, Regarding policies and tariffs implemented by the new administration, what are the potential implications for Enovix's current and future business operations and prospects?
Yeah, thank you for the question. As I mentioned in the prepared remarks, we are actually getting increased interest since last November for our batteries from defense and other industrial customers in the US. As a reminder, our factories are actually in Korea and also in Malaysia, which is actually very favorable to shipping batteries into the US. So we don't see much effect on the tariffs at this point.
And the second question is, Can you lay out the current guidance for adding lines? What is the current capacity? When will you begin ordering equipment and how long will it take to install any additional lines?
Yeah, I'll take a shot at the question and I'll have Ajay add more color to it. Firstly, we are super excited that we completed the SAT for high volume manufacturing line. The factory we have in Malaysia, we have the ability to add up to four lines there and we put in one line and that's the one we completed SAT on. In terms of current capacity, I'll let Ajay comment and then I'll talk about how to add additional lines.
Thanks, Raj. Good question. The current line one, Gen 2 line one, which is installed in our Malaysia fab is running and was bought off in SAT at 1350 UPH, just as a reminder, which is equivalent of roughly nine and a half to 10 million batteries a year. Now this is fed by what we call farms in Zone 1, which is dicing and Zone 4, which is testing. Now we're adding capacity to Zone 1 as we see the indications from the market as to how much volume do we need to support. So that's where the capacity lies. And the way we are looking at adding lines is basically long lead time items, such as, you know, various different items in the line, which are on the, you know, used as control systems on the manufacturing line. We are ordering and keeping them as inventory at our suppliers. So this, you know, makes us, gives us the ability to shrink the timeline as to when we can add second, third, fourth line. So that's how we are looking at this capacity.
Yeah. Thank you, Ajay. Nothing else to add.
We will now go to the queue. If you would like to ask a question, please use the raise hand feature on your screen. If you have dialed in via phone, please use star nine to raise your hand. Questions will be answered in the order they are received. Please ask one question and one follow up question at most. We will now pause a moment to assemble the queue. Our first question will come from Jed Dorschheimer with William Blair. Your line is open. Please go ahead.
Hi, thanks. Congrats on the quarter and thanks for taking my question. I guess first one, just the drone purchase order. I'm curious, just trying to get a better understanding of the growth profile of this customer. I think you mentioned it's a billion dollar that they're doing a billion in revenue. And I think if memory serves, they just hit that. So I just want to make sure that that customer is kind of on that S curve of inflection. Am I thinking about that customer in the right way? And maybe you can comment on is the defense is coming in better than expected, how you're thinking about that. And then I have a follow up to.
Yeah, I'm you know, we can't really comment on which customer. But one thing I can tell you is we are seeing a lot of interest for the batteries that that we're making in in in our courier facility because they're high rate batteries and they're very good for these kind of applications where you need the fast discharge and high rate high rate of discharge. And the market is growing. It's hard to put an exact number on it. It's early stage in terms of qualification. But hopefully as the qualifications go through, we'll be able to add more color on how we see the business going. But we are getting multiple inquiries for those batteries from different customers now in the U.S.
Great. And then just as my follow up, just pivoting to the commercial smartphone, you're now starting to build a backlog of that customer base. I was wondering if you could just rank order the cell phone customers in terms of the pipeline in the commercialization stage. If you could just remind us of that. Thanks.
Yeah, I mean, we had mentioned that we have sampled, you know, seven of the top eight customers and another one just placed an order for samples from us clearly showing interest is building up in our products and what we can build. We talked about two agreements that we have with two customers and they're both progressing. One of them, we actually received the, you know, after passing the milestones. And last time I talked about getting getting a payment for the milestones. We now got a very important miles next milestone, which is we got the exact dimensions of the battery that will be in the phone this year. So that is a huge step because now we understand exactly what it is. Just to remind the viewers what we sampled with a standard battery that we made here of a standard size. But now we got dimensions of battery and this is not of 7000 million powers. So sizable battery. But again, the space is still constrained in the phone. So our energy density clearly adds a value there. And next stage is, you know, we expect that to, you know, get qualified with with our technology in their phone. And we expect to get other custom cells from the following customers in that order. And again, this one particular battery that we are making, you know, for this customer, it could go into multiple models. Typically, you know, these batteries go into multiple models within the segment of the market. So super excited by the progress we're making. It's a study and, you know, gradual and thought through.
Our next question will come from Ananda Barua with Loop Capital. Please go ahead.
Hey guys. Yeah, thanks for taking the question. Really appreciate it. I guess Raj and Ajay is sort of sticking right there. Can you remind us for EX2M and you mentioned Raj EX3M. Two things like number one, like the capabilities of each each model. And then when do you think each of those models like get into the marketplace and get to volume and anything you can say about the volume that each of those can bring to the company would be awesome. Thanks.
Yeah, the way to think about this is, you know, we have we've made a choice of of different anodes and cathodes and electrolytes and so on, which is our first EX1M product where we got requirements for the customers and we sample them. We're now getting feedback from them on, you know, we like this part. We want you to increase this part. We want you to kind of, you know, trade off of energy. I've said this before trade off of energy density versus fast charge, versus cycle life, versus temperature performance and so on. We are now optimizing that to meet the customer requirements. Meanwhile, we make a step forward in choosing a newer set of materials that give increased energy density. And that's the EX2M. And then we make more advances in terms of both materials and also our architecture in terms of, you know, reducing the amount of inactive materials so that we can get more energy density. And that's, you know, the EX3M, which we just started. In terms of volumes, it's difficult to comment on volumes at this stage because it'll depend upon which customers go to product production first, how many models we get designed into, how quickly we can ramp that. And that I think towards the later part of the year, we'll be able to comment more because at this stage, they're all in different stage of qualification and we have visibility into one of the models, but there's a lot more behind that. So it just takes time to be able to answer that question more precisely.
Okay, that's awesome. And I guess this is the follow up. Just, Ajay, just make sure we fully understand the context around, you know, sort of the four lines. Is it line one, you mentioned nine and a half to 10. Is there anything implied in your description of that, that the nine and a half to 10 can get filled in a sort of reasonable amount of time? You know, and then you're sort of, sort of speaking to the expansion of the lines, then you said you're sort of, sort of you'll ramp lines as things progress, or is it, you know, you can do sort of nine and a half, 10 to start per line. I think you'll probably tweak that up from there, just with efficiency gains. But even inside of that line is sort of, as things progress, is that also wrapped into the line one as well? Just context around that, thanks.
Absolutely. Thanks, Sarinda. Yes, the line one, as just a reminder, is what we call the universal line. So it is a line which is capable of running equally efficiently the smaller cells, you know, which we are also feeding into the AR VR market. I think Raj alluded to that in his prepared remarks, as well as the, you know, the large cell which we are now working on, you know, custom cell, which is more than 7000 milliamp hours. So it can handle all of it, the capacity kind of remains the same. Line two, three, four, when we would order that all, you know, depends on the customer qualifications cycles, as Raj also said, and whatever improvements we do, actually the focus from line two to four is going to be optimizing the line for also CapEx spend per line, as well as the speed. And we will do the learnings and backward, make it backward compatible to also the line one. So universally we can ship and make and ship from any of the four lines that Raj talked about.
Yeah, and one other thing I don't know, maybe just to remind you, as Ajay mentioned, when we built the first line, we built what is called a universal line, which can go from very small batteries to much bigger batteries. That's a more expensive line, but gives us the flexibility because we're not sure exactly where the demand would be when we build that line. As we get more and more visibility into, you know, like these kind of custom cells, we can optimize our lines more to that size cells and not have so much flexibility in it, which optimize the cost of the line, which increases the throughput of the line. So, which is kind of like a natural evolution of how you do manufacturing as you understand the product, you know, demand better, we optimize it for both cost and speed. Right. And that's kind of how this is going to go.
Thank you guys. Appreciate that.
Our next question will come from Colin Rush with Oppenheimer. Please go ahead.
Thanks so much, guys. You know, getting to a 7000 milliamp hour cell, it seems like a bit of an acceleration on some of the roadmaps. Can you talk a little bit about how quickly those specs are changing and how you're seeing that translate into potential pricing appreciation for the company?
Yeah, I mean, it's a really good question, Colin. I mean, I, you know, I mentioned, I think maybe, I probably think like 2023 when I mentioned we are seeing a lot of AI coming to the edge that will drive a lot higher demand for battery, because those applications consume a lot of energy. And I'm pleased to say that that's coming through today. You know, what is happening now is the GenAI applications consume so much battery and every app in the so many apps now running on the phone that consume that, that the customers are having to put higher and higher capacity batteries, much higher than we expected. You know, 7000 plus that we saw today that we are working on, I see that, you know, getting even larger over time, and clearly is a good tailwind for us in ASP because when you have to deliver that kind of capacity on a limited form factor because the phone can't get bigger, which means the energy density is what drives that. And, and we get a premium for energy density. So we, this is a good, good tailwind for us in terms of both ASP premium and, and, and margin expansion as these, as these trends continue.
It's super helpful. And then I guess my follow up here is really about the competitive landscape. Obviously there's been a lot of capital invested in materials and, and along with different electrolytes and rebalancing different cell structures. Just curious how quickly you're seeing competitors move and how intense that environment is for you guys as you go through this qualification process with, with all of these smartphone makers.
Yeah, I mean our competition continues to be incumbent graphite batteries which have, you know, kind of dope the graphite with some amount of silicon. You know, I think we mentioned we saw five to 10%. But in a big cell like 7000 milliamp hours kind of range if you put more than that. We are seeing that the swelling is, it becomes becomes too much. So you can't really keep doing that. Our constraint and our innovative architecture, we use 100% active silicon, and as far as I know we're the only ones that were able to put 100% active silicon. And this is validated by our customers and also validated by the people who supply these, this silicon material they do. They're excited to work with us because we're able to use 100% of their material. So it's a competitive advantage we have in with our architectural approach. And, and I hope, hope to get this into product soon.
Thanks guys.
Our next question will come from Bill Peterson with JP Morgan, please unmute and ask a question.
Yeah, hi, thanks for taking the questions and recognizing your focus on smartphones and maybe some of these emerging IoT applications but I wanted to come back to this defense opportunity. You can you speak more on the format or the size of the batteries and I guess how much can the Korean site support in terms of, I don't know whether it be megawatts or revenue, just trying to get a sense for how fast you can go into this market and I guess if it were to be of interest, how fast could you expand your capacity.
Yeah, we have capacity now in our Korean factory, you know to support some of these for now. And we have space available nearby, and we can expand that and and build more capacity I mean the good news is that as these things start getting qualified we get visibility into into what in these opportunities we will, and we can, you know, expand in our facility there. It's a very nice site it's a non son, and we have, we have opportunity to grow there so we're excited by that.
Yeah, thanks for that and you added in your press release about the EV, your advancing development agreements with the two customers. I had a sense that that would have already been done so I guess what areas remain to be resolved I guess before anything official happens and I guess maybe to that point As any of the joint development work happened thus far. I know this year, these are long dated but are there any key milestones we should be looking for this year or is the work really going to begin in earnest in 2026 and beyond.
No, absolutely. I mean work is ongoing. I mean, you know, we have some, we are able to now get the materials from the from these EV makers and we have them in our Malaysia factory because you know as you remember we shot the factory down here, originally we were thinking of doing some of that work here, but we would call the Malaysia and IJ was able to Create some space there because these are different materials there to be handled a little differently. So we have an area there where we're doing the work and we're now able to dice that material and you know we're working on making those into cells to prove out the advantage of our architecture even in the EV space. So stay tuned for that. I think this year we should have some some updates on that.
Thanks, Raj. Our next question will come from George Chianarikas with Canaccord. Please go ahead.
Hey, good afternoon everyone. Thank you for taking my questions. I just had a question about the smart glasses business. You mentioned in your press release that you expect commercial shipments to commence mid year. And in 2024 you had a couple press releases one that mentioned a California company where you had an ARV I think mixed headset and another one in December, that was another potential customer with a similar sort of device so can we confirm that this commercial purchase orders for one of those two companies?
Yeah, these are for actually from both the companies we have we have purchase orders. And in fact I do have the cell here. If you know I was going to show this to you guys, since we are on video. This is actually the cell that we made that goes into the legs like that. And super exciting you see in our investor letter, we are able to not only make this cell but we are able to package it with the battery management and so on into a pack in our Korea facility. And we were able to deliver that to the customer so it's a tremendous progress from the time we got the purchase order to actually you know get some early samples out from our new factory. And the results look really good. And you know like I said, we're going to continue to make that and I'm kind of bullish on this market as a market that has a lot of potential in the out years, particularly because of the user interface problem has been really solved well with GenAI. You can speak to these devices. There's always clunky how to interact with the pair of glasses before. That problem, you know, I think is all pretty well. And also, you know, I was at this AR conference I think last month or earlier this month, you could see the advances made in the waveguide optics and the brightness of the projectors and the miniaturization. You know, I've been in this space since I was at Qualcomm, I don't know maybe a decade ago, but it looks like a lot of progress here so we are pretty optimistic about that. And also the cells we make are a huge advantage because there is not that much space to put batteries in these glasses, and the applications demand a lot of performance from the battery to go for an all day use. That's the reason we are seeing tremendous interest on our technology in this space. It'll take some time to get to, you know, multiple tens of millions, but it's a good place to start.
Thank you.
And also on manufacturing, you said the last time we spoke you've completed your site acceptance test. And you expect to begin production in earnest in the fourth quarter this year for smartphones, some point this year for the devices you just mentioned. What are the bottlenecks to being confident from here that you can scale that production? Obviously you've been, I'm assuming, tinkering with some of the lines and so I'm curious as to what has to be solved between now and then to really gain confidence that you can make the batteries in the millions. Thank you.
I'll take a quick shot and then I'll let Ajay speak. We are very pleased with the progress that Ajay and his team has made. You know, we see cells coming out, we're shipping them to the customer. And now the factory is going through ISO audit, which will be a big step and it's done in the next few months. You know, I think really the work now is, you know, producing these at volume and scale and, you know, getting the UPH and yields up. I guess maybe Ajay can comment somewhere.
Absolutely, Raj. So yeah, the proof points obviously are yields and, you know, how fast can we ramp on this line? The line is qualified. There is really no technological bottleneck, if you will. We are, you know, doing this with different material sets as Raj pointed out, EX1 and EX2M at the same time, depending on what the customers are needing in terms of performance, which one is more important for them versus the other. And therefore, working with all these materials and getting the yields higher, continuously learning and, you know, getting into the ramp mode. And yeah, we are well on our way for the ramp to happen in the second half, which is exactly when we are expecting some of these things to come to fruition in terms of customer qualifications.
One other thing I'll add is, as we see this demand now, these are for slightly different shaped cells. So, you know, big cell of certain form factor, a small cell like this. So some of the work Ajay's team is doing is how to get the cycle time down so we can quickly make different cells on the same machine. But what's the tooling to be done? That's going to be something that we'll continue to work on.
Our next question will come from Derek Soderberg with Cantor. Please go ahead.
Yeah. Hey guys, thanks for taking the questions. Raj, did you say that you had two purchase orders from AR companies? I know the first one you guys said you're going to commence shipments midway through this year. Is the second one for a commercially planned device? Was that for sample orders? And then just given the other density benefit that you can deliver with, you know, these AR devices, what's the average selling price you think you can get for this form factor?
Yeah, yes, we do have purchase orders from both the customers. And again, we are in the process of getting the exact dimensions and making those exact dimensions because they're both slightly different in shape. The ASP premiums are actually very nice in this market because of how important the battery is to the life of the products. I mean, you probably see in the investor deck, we put some material on the advantages of our product versus what's commercially shipping. So you can see that that translates to a nice ASP premium. I can't exactly comment on the numbers, but we are quite pleased with that business. And the other thing is our ability to make full packs. I mentioned this when we acquired the RouteJet company that is going to be important to us. And because when you make a full pack, there's also an ASP premium of instead of just selling the cell. That is something that also is playing out nicely, which is the reason I think I mentioned at that time why we acquired that company. One of the reasons in addition to the coating capability.
That's helpful. And then just related to one of the first questions. When you guys want to add, say, high volume line number two, can you talk about in months how long it would take to procure and install that second HPM line two? It feels like the demand for some of these AR devices could be coming in pretty soon here. How fast could you order a second high volume line and turn it on?
So before we answer that, let me tell you this. The demand will come in next year. So again, we will make some cells and give it to them. But the qualification timeline takes the timeline it takes. So it's kind of important to understand. We are talking about 26 demand now and we will plan capacity accordingly. And Ajay is doing that. Yeah,
just to just to add to that, as I mentioned earlier, we are taking the approach of taking all the long lead time items because not all the components that make up the line have the same amount of lead time. So there are some longer lead time items which we have told working with our suppliers. We have started stockpiling them at their place on their dime. But they're taking the risk on us, which is a really good way of handling of how quickly you can set up this line number two and then line number three. And so we are trying to always look for ways of shrinking that timeline. The first one took whatever time it took. The second one will be significantly lesser. And our ability to quickly ramp that into the production is also going to improve over time. Thanks, Ed.
Our next question will come from Das Richard with Northland Capital Markets. Das star six will allow you to unmute.
Yes. Thanks for taking my questions. Just real quick on the production coming out of Kokum. It sounds like it's tailored to military applications and high-rel. And I'm just curious, is it more of a standard lithium ion battery or what sort of sets it apart for the military applications?
Yeah, so the router acquisition that we made is standard lithium ion battery, except it's a high discharge rate battery. So, for example, think about something that powers moving things, you know, like drones and so on. So when you have a mechanical object that's moving, you need to discharge it a much higher rate. And that's one of the things they can do, this part of the company can do for us. And they can also do different shape and size cells that can go into some of the consumer electronics. So they have two, three different variations of products that we can do there. The military ones are high-rate big cells.
Got it. Very helpful. And then just on line one, you said that the UPH is 1350. You know, that's a, I believe an instantaneous throughput. You know, can you talk about capacity utilization with just one line? You can't commit that volume to your customers. How should we think about the utilization in the first year until, you know, line two comes up and you can bring that up?
Yeah, good question. That will depend on how quickly the qualification cycles are running through with several customers now in play. And we, I mean, a good manufacturing company would look at it, you know, in terms of how much are you filling the line up so that you can start ordering those longer lead time items first, followed by the other components to make up the line. So it's all a, you know, gradual feedback directly coming from our customers' qualifications, actually. So that's where I would, you know, I would leave it.
Got it. Thanks so much.
Our next question will come from Sean Milligan with Jani. Please go ahead.
Hey, hey, Raj. Thanks for taking my questions. Can you talk to like CapEx outlook for this year as it stands today? What do you expect CapEx to be? And then sort of underline assumptions there in terms of how many lines are you ordering long lead time items for?
Yeah, we don't really give the full guidance for the year, but maybe Christina, if you want to comment on that a little bit.
So as Raj said, a lot of the long lead time items are ordered by our equipment vendors and on their dime due to relationship and whatnot. But for our 2025 CapEx, we have about between 30 to 40 million currently budgeted.
Okay. And then, Ajay, on the next line, like line two, do those economics fit the slide deck, the 1650 UPH that's in the back of the slide deck? Is that sort of the expectation on the next lines? Yes,
that's correct. The UPH is always measured in equivalent of a cell size. So as Raj alluded, we are now obviously getting cell sizes which are significantly larger, which is really good for the value that we bring and ASP and everything attached to that. But yeah, 1650 is the goal for a Diablo size cell, which we have talked about. So it'll vary based on which size cell goes through the line.
Okay. And then Raj, I know still qualifying some of those early samples with the cell phone customers, but there's a slide in your presentation that talks about the top cell phone OEMs, the average model size is around 3.5 million units per year. I'm just curious, like in the two that you're in advanced stages with, do you have visibility into the potential models that you'd be in? And just curious if those programs are expected to be like below, at, above that kind of average model size that's mentioned in that slide?
Yeah, so one of them, like I said, we actually got the specific spell dimension. So we have a little bit more visibility into where it would possibly go. But one thing to remember is that, you know, in the Android market that we're going after initially, each cell phone model, when you talk about a model, the model has a certain, how should I say, features for you, if you will, a certain camera, a certain display, certain process, certain memory configuration, so on and so forth. But there are variants within that, you know, for example, the customers may choose to take that model, change some software features and ship that into India, for example, and maybe change a few other things, ship that into Europe and maybe some other features and ship that into, you know, golf. So, so, each, so we don't have clarity yet on which exactly product we will be in. And that will come in time as we get closer to production. And, and that's typical, and I've done this many, many years, that's got quite typical and how it works. So that clarity will come closer to production time.
Okay, and then just one last one. Can you remind everyone like how the, the sales cycle works for cell phones? So like you, you start to get in qualification kind of early in the year, and that's for commercial volumes that ship later in the years. That's sort of the same thought process for 2026 also, or because you're sampling more cells in 2025, would you be in earlier programs in 2026? I'm just trying to understand maybe cadence in terms of seasonality.
Yeah, so good question. So, so just for, I mean, since I get this question quite a bit, I'll just talk one more time about how this works. We typically work with the customers to get from them requirements on what this particular product and the launch timing is like, for example, in 2024, we talked to them about what's the kind of phone model that would launch in late 2025. And we get requirements in terms of, you know, cycle life, you know, energy density in terms of size in terms of fast charge capability and so on. At the same time, they give us these requirements, they're also working on what process they should pick how much memory should have watched display they're using what camera they should use. And we give them a certain standard size cell, the cell that we we've made internally, they test them and then they extrapolate from that, what the performance will look like and what performance they need when they fix all the other components in the phone, right. And then they give us the exact dimensions of the cell, which is what we just got now. And then we make that cell, and we give it to them and then they test it along with all the other components which are now frozen. And if everything passes, you know, and everything looks good, then they give us a purchase order to make, you know, multiple, you know, volume production of that cell. Now that one particular cell could now go into multiple models in 25 and in 26 to so that it's not like it's only stops at 25. Because, like I mentioned, there could be different phone models that can be launched in different parts of the world. And that could continue through 26, for example. And then when they start thinking about what's going to launch in 26, you know, if there's some changes to that cell, they'll give us those and we start working on them. So this is going to be a continuum, if you will, it's not like we make this cell it goes 25 done, we make another cell it goes 26 done, it doesn't work like that. It's usually a continuum there'll be some overlap between the phone launches, based on the regions they're launching based on the volume they're launching. That's typically how this works.
Great, great. Thank you.
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Yeah, thank you very much for your for your interest and following us. We'll get back to you next quarter. Thank you.