GSI Technology, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the GSI Technologies fourth quarter and fiscal 2022 results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, we will provide instructions for those interested in entering the queue for the Q&A. Before we begin today's call, the company has requested that I read the following Safe Harbor Statement. The matters discussed in the conference call may include forward-looking statements regarding future events and the future of performance of GSI technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's form 10-K filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this call is being recorded today May 5th, 2022, at the request of GSI Technology. Hosting the call today is Li-Lin Xu, the company's chairman, president, and chief executive officer. With him are Douglas Shirley, chief financial officer, and Didier Lassaire, vice president of sales. I would now like to turn the conference over to Mr. Xu. Please go ahead, sir.

Good afternoon, and thank you for joining us to review our physical fourth quarter. and the full year 2022 financial results. Our fourth quarter revenue grew year-over-year by 14%, and for the full fiscal year 2022, revenue increased by 20%. The growth in the quarter was due to new projects, expanded business in all categories, and the price increase effective in December 2021. Gross margin improved in the fourth quarter by 840 basis points year over year, reflecting a more attractive mix of higher margin product sales and our ability to manage supply chain challenges and increase the cost. As a result, we narrowed our operating loss year over year by 19%. We ended the year with $44 million cash, cash equivalents, and the short-term investments. Our biggest use of cash remains R&D. The R&D budget and ongoing software development are two large funding projects. One is a software project, the upcoming launch of version 2 of the Gemini 1 compiler stack. The second is a major hardware project representing the most significant portion of the R&D budget, the design of Gemini 2. that we intended to complete by calendar year end. We will incur a one-time mass charge when we table. Other than that, our R&D budget will remain at the current runway for the foreseeable future due to ongoing need for software development and our commitment to continuously advancing the hardware platform. We are on track to release version two of the compiler stack in July. which will be entirely Python-enabled for coded algorithms, applications, and the library. This is exciting because our team will be armed with the tools to increase our Gemini One customer engagement across the various markets we are pursuing. GSR has a highly talented software team that has achieved impressive outcomes in several competitions. This team is a valuable resource as the software is a crucial component to produce success in this market, and one of the reasons we commit a significant portion of our R&D budget to it. The GSI software team has been especially effective and efficient in their work on several high-profile contests, which resulted in a first-place win in two challenges. We took one of the top spots in bidding scale approximate year's labor search challenge and proved our technology could perform on par with category leaders in AI. In addition to the great PR, the biggest benefit of this contest is how they raise GSI's profile in key market sectors, such as with the US and the Israeli military and defense agencies, and other government agencies, and the organizations related to defense and security. Recently, we announced our first-place win in the Mosaic Challenge for the Human and Object Attacking category. GSI loads software and algorithms that could most successfully, as judged by speed and accuracy, automatically detect, classify, and track humans. and differentiate between males and females, plus identify objects of interest such as weapons like a rifle, pistol, or knife that the person might be carrying. Our software was the fastest and the most accurate in performing at various distances and under diverse lighting conditions using images from real-time HD video source from the moving drone. This capability has many applications in the large global security market. The MOSAIC challenge gave GS a high-profile exposure to the leading agencies in the Israeli and American military and defense organizations, including the U.S. Department of Defense and the new agency, the Irregular Warfare Technical Support Directory. Using our contacts from the military and defense SM business, We are working aggressively to pursue the additional opportunities that the Mosaic Challenge win may offer. In fiscal year 2022, we also had the wins in other challenges. GSI was among the bidding scale of POSIMILIA's labor search challenge leader. We proved that APU technology and software could perform on par with the prominent industry leaders in AI. In addition to the industry exposure, participating in this contest also teaches a lot about what we need to work on and how we can improve our performance. Our first place win in the MAFE challenge resulted in several variable benefits to GSI. First was our POC with ELTA, which is funding a SAR image processing acceleration system on APU technology. Second is the inclusive perpetual license of the fast SAR algorithm that ELTA will allow GSI to sell as a SAR system product containing this algorithm. We plan to go after the entire SAR market with this product. The third benefit is ELTA is intended to deploy this system in volume, assuming that the POC is successful. In fiscal year 2022, We increase the customer engagement for the APU and make contacts into new market segments. We are in the early stage of working with the numerous POCs and expect to further our engagement with the second version of our compiler. In fiscal year 2023, we plan to launch our open search platform on AWS marketplaces with the software to accelerate vector search. Our OpenSearch software plugin is particularly good on multi-model search that can search with multiple inputs like image, text, voice, etc. We are working with a partner to build a software platform that performs multi-model and multilingual vector search with hardware accelerations based on APU in AWS OpenSearch. The software platform called Mewv will be presented at the Buzzwords conference in June being held in Berlin, Germany. We have servers in place and are now building the website with the goal of having the open search platform available for client use by the third quarter of calendar 2022. Ideally, we are targeting a fully functioning platform where clients can download the plugin and work independently of our support to the process. Another important goal will be the new version of the compiler and then using the Santa Clara data center to allow customers to work with the APU more easily. This will enable us to build a funnel of prospects and move toward building the future revenue stream for the APU. The US team has been working on the design of Gemini 2 and finalized the layout for taking out the chip. We are very excited about what Gemini 2 could deliver. Gemini 2 could extend our addressable market with a simpler goal, dramatically enhanced performance, and much lower cost. We have a great team, and I appreciate their dedication and hard work. We are aligned on our goal for this year and have lots of motivation to achieve them. I thank all the HSI shareholders for the support. And I value the contribution from that many of you make the feedback and input as a CEO and a shareholder and determined to make the APU successful. Now I will hand the call over to Didi, who will discuss our business performance further. Please go ahead, Didi.

Thank you, Lillian. Let me start with an update on our radiation-hardened or rad-hard business. We have seen increased traction in this area, and in the fiscal year 2020, we shipped four prototypes to three separate RadHard customers. All the customers are currently testing these systems that require chips to withstand harsh conditions. In the first quarter of fiscal year 2023, we have another program with a major prime contractor for RadHard prototype, which is anticipated to ship in the first half of this fiscal year. This prototype order could potentially be the same revenue magnitude as all of our radiation hardened orders from last fiscal year. As a reminder, RadHard is a high-growth profit product, and if a few of these prototypes move to production, it could add incrementally to fiscal year's 2023 and 2024 revenue. In terms of building a pipeline for APU right now, we are creating awareness of our technology and getting the brand known in the right places. We are encouraged by the response and the incoming interest that we have received from these efforts. The company is evolving from the engineering to the production stage, meaning we are getting the tools and systems in place and modifying how we work to build a sales culture for the APU. I'm optimistic we can progress on these fronts in the upcoming fiscal year. Let me switch now to customer and product breakdowns for the fourth quarter. In the fourth quarter of fiscal 2022, sales to Nokia were 2.0 million, or 23.1% of net revenues, compared to 2.8 million, or 36.5% of net revenues in the same period a year ago, and $1.9 million, or 24.0% of net revenues in the prior quarter. Military defense sales were 22.3% of fourth quarter shipments compared to 22.5% of shipments in the comparable period a year ago, and 27.1% of shipments in the prior quarter. Sigma quad sales were 47.6% percent of fourth quarter shipments compared to 52.9 in the fourth quarter of fiscal 2021 and 40.5 in the prior quarter. Lastly, I want to comment on the supply or the current supply chain situation. We currently moved the majority of our chip substrate suppliers out of China last year to limit the potential damage by any COVID-related lockdowns in China could cause. We are actively addressing supply chain variances that could potentially impact our order fulfillment, but the situation remains fluid. Overall, most of the cost increases from our suppliers were successfully passed on to our customers in December of 2021. We are closely watching costs and evaluating if we need to change prices and procedures. GSI and the industry as a whole are constrained by the availability of FPGAs. Since we use FPGAs on our leaderboard, we could potentially be constrained if we receive a large order for an APU platform. For our SRAM sales, we have implemented some changes to our supply chain management to ensure that we can fulfill orders that we have in hand for the upcoming quarters for our SRAM customers. We are optimistic that we have sufficient capacity to meet this demand. And now I'd like to turn the call over to Doug.