Netlist Inc

Good day and welcome to the NETLIS first quarter 2025 earnings conference call and webcast. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mike Smargiasi, Investor Relations. Please go ahead.

Thank you, Michael, and good day, everyone. Welcome to NetList's first quarter 2025 conference call. Leading today's call will be Chuck Kong, Chief Executive Officer, and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investor section of the NetList website at netlist.com. Before we start the call, I would note that today's presentation of NETLIS results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings, and the cautionary statements contained in today's press release. NETLIS assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck.

Thanks, Mike. And hello, everyone. It's been a little over a month since our last call. And as such, our update today will be relatively brief. First quarter financial result was in line with our expectations. While the US tariffs have created some disruptions in the memory market, The majority of net list sales are shipped to locations outside of the U.S., thereby minimizing the direct impact of tariff on our business. That said, in early April, major memory manufacturers withheld pricing information and leading computer hardware producers paused shipments from Asia into the U.S. as the entire industry grappled with the impact of the tariffs. At the moment, memory and other semiconductor products are exempt from tariffs, but we expect a separate tariff scheme on semiconductors to go into effect in the months ahead. We have seen some price increases in April and would expect additional adjustments as tariff impacts the supply chain. There continues to be significant uncertainty as the business environment remains fluid and subject to change. Taking the longer view, however, the overall memory industry is expected to grow significantly over the next few years, mainly driven by AI. As I mentioned on our last call, Netlist is well positioned to capitalize on rapidly increasing demand for high bandwidth memory, or HBM, and on the industry's transition to DDR5, including MRDEM, the highest-end server memory that will go to market later this year. We've recently started to sample select customers with high capacity, high performance MRDM products for the AI memory market and plan to go to market later this year with a netless branded product line. Moving on to intellectual property, in the breach of contract case against Samsung, the Federal District Court for the Central District of California entered a final judgment on April 8. The parties have 28 days from that date to file their respective post-trial motions. We estimate that the court will rule on those motions within 90 days. When the judge issues the order on post-trial motions, the case will officially conclude at the district court. Samsung would then have 30 days to file a notice of appeal with the U.S. Court of Appeals for the Ninth Circuit. Samsung has lost this case three times now and it is unclear on what basis they might appeal. If Samsung does appeal and loses for the fourth time, their only option is to take the case to the Supreme Court. We believe the odds of the Supreme Court taking up this kind of case are very remote. In the Eastern District of Texas one case against Samsung, where Netlist secured an order finalizing the $303 million damages award in July 2024, the appeals process continues to advance at the Federal Circuit Court of Appeals. The Netlist patents in this case cover both HBM and DDR5 memory that are foundational to AI computing. Samsung filed its opening appellate brief in December with Netlist filing its response brief in March. Samsung's reply brief will be due in mid-May. A date has not been set for the appeals hearing at this time, but we estimate the case will be heard and decided early next year. In the Eastern District of Texas 2 case against Samsung, where NETLAS was awarded $118 million in damages in November, and the court issued a final judgment in December, we are in post-trial briefing phase. Once the final order is issued, both parties will have 30 days to file an appeal, which would go to the Federal Circuit Court of Appeals. The 445 million damages award case against Micron in the Eastern District of Texas, which took place in May 2024, is in the post-trial process. We expect this case to follow the same course as the other cases in the Eastern District of Texas. We await the court's final order and commencement of the post-trial briefing phase. With regard to the IPRs, We entered 2025 with eight appeals involving 11 NETLIS patents pending before the Federal Court of Appeals. In January, Samsung filed its Notice of Appeal of the PTAB's December 24 decision in the 608 IPR in which NETLIS had prevailed. In March, the Federal Circuit issued a judgment affirming the USPTAB's inter-parties review decision upholding the validity finding of Netlist's 523 patent. As a reminder, this IPR followed a preemptive legal action by Samsung against Netlist. Samsung has 90 days from this decision to file a petition to the Supreme Court. We expect oral arguments for NUTLAS' 314 and 506 patents to be heard later this year and the remaining IPR appeals to be heard in 2026. I would note that the appeal of the Samsung EDTX1 case and the three IPR appeals involving the five asserted patents in that case have been designated as companion cases by the Federal Circuit. So the oral arguments in all four appeals will be heard on the same day before the same panel of Federal Circuit judges. As I mentioned earlier, we estimate that oral arguments will take place in early 2026 in this case, in this consolidated case. Therefore, in the months ahead, we expect to be quite busy with these appeals that are in the pipeline. and we look forward to securing positive results. Now I'll turn the call over to Gail for the financial review.