GSI Technology, Inc.

ladies and gentlemen thank you for standing by welcome to gsi technology's second quarter fiscal 2023 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 q a before we begin today's call the company has requested that i read the following safe harbor statements The matters discussed in this conference call may include forward-looking statements regarding future events and the future performance of GSI technologies 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 conference call is being recorded today, October 27th, 2022, as a request of GSI Technology. Hosting the call today is Leland Hsu, the company's chairman, president, and chief executive officer. With him are Douglas Shirley, chief financial officer, and Dider Le Serre, vice president of sales. I would now like to turn the conference over to Mr. Hsu. Please go ahead, sir.

Good afternoon and thank you for joining us to review our second quarter fiscal 2023 financial results. Revenue in the second quarter of fiscal year 2023 grew year-over-year by nearly 15% to $9.0 million, the midpoint of our guidance range. Revenue growth was primarily due to increased sales of high-performance assets. and the shipment of radiation-hardened assurances in the quarter. As a result, our gross margin rose by 900 basis points year-over-year to 62.6%. Higher gross margin, along with flat operating expense year-over-year, led to a lower operating loss for the quarter. The loss for the second quarter narrowed to 3.2 million, As of September 30, 2022, GSI Technologies' cash balance, which includes cash and cash equivalents, as well as short and long-term investments, was $38.9 million. We have a number of islands in the fire with Gemini One, but our team is primarily focused right now on developing two real-time markets for the APU. The first is synthetic actual radar or SAR image processing accelerations. And the second is fast vector or neural search optimized for big data applications. Let me help you understand why these two markets are being prioritized. At the end of September, we announced that our synthetic virtual radar image processing acceleration system using GSI's APU was approved for use by IOTA, a subsidiary of Israeli aerospace industries. This is a chance to showcase the technological superiority of our APU and will open future opportunities for GSI in the field of accelerating SAR image formation with new customers. The features that make our star image processing acceleration system solution very attractive are, one, scalability, two, low power consumption, and three, portability. First, with respect to scalability, the scalable APU architecture allow depending to multiple boards on servers for added performance and redundancy without specialized link. The APU platform has the capability to stack servers together and bring real-time capability to time-consuming, compute-intensive process. Second, with respect to lower power consumption, GSI has demonstrated using a large area SAR image process in one second and higher resolution scenarios that APU use On average, 88% less power than CPU or GPU systems and requires significantly fewer servers. And so, with respect to portability, our solution uses one-tenth the number of servers than a CPU or GPU system, making it small enough to be installed on UAVs and ZONs. GSI SOC can support a broad range of platforms, aboard from 500 meters covers to 750 kilometers satellite, as well as data center deployment. The SAR market is an attractive market where we have existing relationship with prospective targets. Didier will elaborate on the go-to-market strategy for the SAR application in his comments to follow. Our fast vector or rural search product, which I will refer to as our FES product, supports on-prem, hybrid, and the cloud users. The FES plugin can be used by customers who are all on-prem, and those that may have hybrid storage and or processing in the cloud. For completely cloud-based customers, The search.ai website is live and available for trials. We currently have about 12 users exploring the platform. These users are primarily data scientists evaluating searchers' capability for their organizations, meaning they load their database and create a front end for the teams to search. The compelling features of the FES product A speed combined with a small hardware footprint and lower operating power consumption compared to traditional large platforms used for search in large compressed database. We still have a work to do on our end in developing business opportunity for the FVS product and scaling the business. The term for the specific search market we are pursuing is a very large market. Google has estimated that More than $300 billion is lost due to search abandonment each year in the US alone. We are providing an accelerator for existing search platforms, such as OpenSearch and the Elasticsearch that accelerate the search with lower power and less hardware, rather than just adding more traditional computation capability. The Gemini plugin expands search capability beyond text, and does it faster using a simple approximated nearest label of KNN vector similarity search. This is Gemini One's sweet spot in performance and an ideal application for the technology. We are ready for production supporting customer on-prem or hybrid solutions. Searching.ai allows FES part customer to try our product prior to committing their workloads or purchasing hardware. We also support full cloud-based customers utilizing the OpenSearch database. We have launched Searching.ai and attracted more than 500 visitors and are working with a dozen opportunities. We will have plugins for ElastiSearch database. With these three potential customer sources to grow this market, On-prem, hybrid, and cloud, we are confident that we can see revenue from FBS products in calendar 2023. Last, let me give an update on the compiler stack. We released the CoverHead, the first version of the full stack L-Python compiler for APU code development for alpha users. And we plan to migrate APU application library over the next few quarters. Currently, Copperhead is still in alpha mode and is used exclusively for internal development. We are targeting an end-of-year beta release and expect the compiler to be broadly available this calendar year. This is a longer timeline than we had originally anticipated, but we are building a fast and efficient tool for use in L-Python for library code generation. We believe the additional development time will yield a better outcome. Now I will hand the call over to Didier, who will discuss our business performance further. Please go ahead, Didier.

Thank you, Didier. In the second quarter, we shipped RadHard chips to a U.S. prime contractor who used them in prototyping a new program. This was a one-off sale, and we do not have visibility for a follow-on order from this customer at this time. However, if a few of the recent prototypes we've shipped move to production, it could add incrementally to the fiscal year's 2023 and 2024 revenues. As Aline mentioned earlier, we have finalized the SAR POC with IAI-ELTA. We have finalized all the sales and marketing materials needed for customers, including benchmarking, technical papers, and an online demo. We are now aggressively launching a campaign to engage with the leading players in the SAR market. It's the early stages of developing this market for Gemini One, but we have a great solution that is extremely flexible and can support a large variety of use cases. Typically, SAR applications are very specific, but Gemini One can be used in a wide range of altitudes, resolution, and image sizes. Also, due to the small footprint, our solution can be deployed in small drones or satellites. As a result, we are confident we can successfully build a customer base with this application. Let me switch now to customer and product breakdowns for the second quarter. In the second quarter of fiscal 2023, sales to Nokia were $1.2 million or $13.6 of net revenues compared to $1.9 million or 23.8% of revenues in the same period a year ago and $1.3 million or 14.7% of net revenues in the prior quarter. Military defense sales were 22.4% of second quarter shipments compared to 27.4% of shipments in the comparable period a year ago and 22.3% of shipments in the prior quarter. Sigma quad sales were 58.1% of second quarter shipments compared to 52.4% in the second quarter of fiscal 2022 and 44.8% the previous quarter. We remain confident we can fulfill the orders that we have in hand for the upcoming quarters for SRAM customers and that we have sufficient capacity to meet the demand. I'd like to hand the call over to Doug. Doug, go ahead, please.