GSI Technology, Inc.

Greetings, and welcome to the GSI Technology Inc. Third Quarter Fiscal Year 2023 results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Leland Hsu, Chairman, President, and Chief Executive Officer. Thank you, Mr. Hsu. You may begin.

Good afternoon, and thank you for joining us to review our physical third quarter 2023 financial results. Third quarter revenue of $6.4 million was within guidance, but at the lower end. Revenue growth was impacted this quarter by the uncertain outlook for the global economy. Despite this, we continue to see demand for our SM products, an interest in our radiation-hardened and radiation-tolerant products. While customer order patterns are variable right now, these fluctuations are related to economic and external factors. not changes in the market requirements for our products. Despite the low revenue in the quarter, increased sales of higher margin products resulting in gross margin of 57.5%, exceeding the high end of our guidance range. While research and development caused decline sequentially, we saw an increase in selling, general and administrative expenses primarily related to the difference in the level of quarterly adjustments to contingent considerations and surveillance related to recent layoffs. To ensure success and align our resources within the company goals, we announced several cost reduction initiatives at the end of November 2022. The executive team took a comprehensive approach to identify and implement all expense reduction measures, which include a thorough review of all expenses and ways to streamline process and improve operation efficiency. We have two objectives with this strategy. One, to reduce all cash burn, and two, to align our resource along developing the APU. We are on track to achieve $7 million in savings on an annualized basis to target cost reductions. These measures aim to right-size our operations and precisely manage spending to increase efficiency and focus our resources on advancing the proprietary APU technology. Let me update you on where we are today with APU hardware and software. The hardware development team is on track to take out Gemini 2 in the first half of this calendar year, which puts us on the schedule to see the first spin by late summer. In that case, we could test the Gemini 2 chip by early fall. If everything goes accordingly, we could have a second table to fix bugs by early next calendar year. In parallel, once we have a chip that the software team can use, They will start developing the API and the library for Gemini 2. Keep in mind that it took 3 spins to fix all bugs in Gemini 1 and 4 to increase the yield and speed. Gemini 2 has 8x memory density over Gemini 1 and has 30x cost performance improvement. Gemini 2 can greatly enhance all market push of APU technology. and provide further substantial savings in power and smaller server footprint while enabling large-scale real-time search and HPC workloads. Software for Gemini 1 is an area of intense focus currently. We have a full built-up GVML library deployed and used by customers, and one research institute has been able to run their own library based only for their project. Our GRL library is developed for SAR applications, and we have completed a POC project with IAI slash ELTA based only. ELTA is also evaluating a GPU solution to benchmark against the APU. We could see some initial sales once the APU performance is proven favorable. In the meantime, we are marketing the SAR solution to other customers. We have recently improved our GSL library for similarity search applications. We are engaging with a large corporation for a POC project for an on-prem similarity search project that requires very high accuracy and low latency. The improved GSL library is perfectly suited for this application. On the compiler front, we have a completed C compiler that customers are using to program APU with C code. We are in the process of completing L-Python, a Python compiler to allow customers to run API applications and their libraries in Python. Currently, L-Python is still in internal use and will be released for general use in June 9. Now I will handle hand the call over to Didier, who will discuss our business performance further. Please go ahead, Didier.

Thank you, Lillian. Let me switch now to customer and product breakdown for the third quarter. In the third quarter of fiscal 2023, sales to Nokia were $1.3 million, or 20.0% of net revenues, compared to $1.9 million, or 24.0% of revenues in the same period a year ago, and $1.2 million, or 13.6%, of net revenues in the prior quarter. Military defense sales were 26.2% of third quarter shipments compared to 27.1% of shipments in the comparable period a year ago and 22.4% of shipments in the prior quarter. Sigma quad sales were 45.2% of third quarter shipments compared to 40.5% in the third quarter of fiscal 2022 and 58.1% in the prior quarter. Regarding increased production costs, we are evaluating where we can pass on the increased wafer prices that TSMC announced last year, which became effective starting January of this year. Gemini One hardware is now market-ready. We have two board configurations, the LITA-E, which is in production, and the LITA-S, which is an SSD form factor board, and is being finalized today. In the third quarter, We shipped one LIDA-E board to a potential SAR customer, and we shipped one LIDA-E server to a research institute that will explore Gemini One for encryption applications. I'd now like to hand the call over to Doug.