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Aehr Take a look at Methods (NASDAQ:AEHR) Q1 2023 Earnings Convention Name October 6, 2022 5:00 PM ET
Firm Members
Todd Kehrli – MKR Investor Relations
Gayn Erickson – President and CEO
Ken Spink – Chief Monetary Officer
Convention Name Members
Christian Schwab – Craig-Hallum Capital Group
Bradford Ferguson – Halter Ferguson Monetary Group
Gregory Ratliff – Nobis Companions
Matthew Winthrop – Equitable
Larry Chlebina – Chlebina Capital
Operator
Good day. And welcome to the Aehr Take a look at Methods Fiscal 2023 First Quarter Monetary Outcomes Convention Name. All contributors shall be in listen-only mode. [Operator Instructions] After as we speak’s presentation, there shall be a possibility to ask questions. [Operator Instructions]
Please word this occasion is being recorded. I’d now like to show the convention over to Todd Kehrli of MKR Investor Relations. Please go forward.
Todd Kehrli
Thanks, Operator. Good afternoon. And welcome to Aehr Take a look at Methods first quarter fiscal 2023 monetary outcomes convention name. With me on as we speak’s name are Aehr Take a look at’s President and Chief Government Officer, Gayn Erickson; and Chief Monetary Officer, Ken Spink.
Earlier than I flip the decision over to you Gayn and Ken, I’d wish to cowl just a few fast gadgets. This afternoon Aehr Take a look at issued a press launch asserting its first quarter monetary outcomes. That launch is obtainable on the corporate’s web site at aehr.com. This name is being broadcast dwell over the web for all events and the webcast shall be archived on the Investor Relations web page of the corporate’s web site.
I’d wish to remind everybody that on as we speak’s name administration shall be making forward-looking statements which are primarily based on present info and estimates, and are topic to numerous dangers and uncertainties that would trigger precise outcomes to vary materially from these within the forward-looking statements.
These forward-looking statements which can trigger the outcomes to vary materially from these within the forward-looking statements are mentioned within the firm’s most up-to-date periodic and present studies filed with the SEC. These forward-looking statements, together with the steering supplied as we speak are solely legitimate as of this date and Aehr Take a look at undertakes no obligation to replace the forward-looking statements.
Now I’d like to show the decision over to Gayn Erickson, President and Chief Government Officer of Aehr Take a look at. Gayn?
Gayn Erickson
Thanks, Todd. Good afternoon, everybody. Thanks too for becoming a member of us on the primary quarter convention name. Let’s begin with a fast abstract of the highlights of the quarter and momentum we’re experiencing in semiconductor wafer stage take a look at and burn-in market after which Ken will go over the financials intimately. After that we’ll open up the strains to take your questions.
We’re off to a superb begin this 12 months ending the quarter with income and internet earnings forward of consensus estimates and robust bookings of $19.1 million. Income for the quarter was $10.7 million, which is up at 9% year-over-year and we’ve generated non-GAAP internet earnings of $1.3 million.
As we’ve famous earlier than and mentioned final quarter, over the past couple of years, our first quarter tends to be our seasonally softest quarter, because it was once more this 12 months and we anticipate every consecutive quarter to ramp greater all year long.
So let me get proper to it and speak about how we’re doing it moving into extra accounts centered on silicon carbide for electrical automobiles and different markets since that’s the place plenty of the questions are coming in at.
We’re presently engaged or in discussions with nearly all the prevailing and future silicon carbide suppliers now, concerning our distinctive low price multi-wafer stage take a look at and burn-in resolution that permits contact to and take a look at of 100% of units on each wave.
This enables our clients to burn-in each gadget at a decrease price than they might in another kind, on account of our means to contact 1000’s of units on every of 18 wafers at a time with our FOX-XP multi-wafer take a look at and burn-in system and proprietary FOX Full Wafer Contact WaferPaks.
All of those main silicon carbide firms anticipate that electrical car traction inverters will transfer to multi-chip modules as that is the place the electrical car producers are driving the business.
As such, they’ve instructed us they need to transfer to wafer-level take a look at and burn-in to take away the inherent failures earlier than they put these units into multi-die modules to satisfy the associated fee, yield and reliability targets of these modules.
Aehr’s expertise offers a complete turnkey single vendor resolution to satisfy this buyer’s essential take a look at and stress necessities at a price and take a look at ground footprint considerably decrease than another various in the marketplace.
Our lead buyer for silicon carbide wafer stage burn-in continues to ramp up use of our FOX-XP multi-wafer programs and WaferPaks, inserting one more important order with us throughout the quarter.
Much like previous orders, they bought the programs with out the required WaferPaks for wafer contactors and as such, we anticipate important orders from them for WaferPaks to match these programs. This want for added capability is being pushed by elevated demand for silicon carbide clients for electrical automobiles.
This semi — this buyer not too long ago introduced that they anticipate their development fee to speed up quicker than beforehand forecasted and so they proceed to forecast orders for a major variety of FOX programs and WaferPaks contactors with us over the following a number of years.
Past this lead buyer, our beforehand introduced benchmarks and evaluations with two extra main silicon carbide semiconductor suppliers persevering with to maneuver ahead with nice progress this quarter.
Following the top of the quarter, we introduced an preliminary buy order from one among these suppliers for our FOX-NP multi-wafer take a look at and burn-in system, a number of WaferPak contactors and a FOX WaferPak Aligner for use for qualification of our wafer stage burn-in resolution for silicon carbide units for electrical automobiles and different markets.
This new buyer is likely one of the world’s largest suppliers of silicon carbide units serving a number of important markets together with the electrical car business. We now have two of the highest 4 silicon carbide market contributors as clients.
We’ve already shipped the system to this new buyer’s facility and we imagine we’ll obtain their particular efficiency and performance analysis standards on their take a look at ground throughout the subsequent three months to 6 months.
This new buyer indicated to us that Aehr Take a look at is the one supplier that has a product that’s scalable to excessive quantity manufacturing to satisfy the manufacturing capability they should tackle the rising demand for silicon carbide units.
They’ve supplied us with forecasts for our FOX-XP programs for quantity manufacturing of their silicon carbide units at a number of amenities all over the world and we anticipate that they are going to buy FOX-XP manufacturing programs to be shipped earlier than the top of our fiscal 12 months ending Could 31, 2023.
The benchmark with the opposite potential buyer which candidly has been gradual and regular over the past 12 months has additionally progressed considerably since final quarter’s convention name. We accomplished a major milestone utilizing a brand new functionality we publicly introduced as we speak and I’ll focus on later the place we examined a major variety of wafers for a correlation of an automotive gadget and we imagine that we are going to efficiently full their manufacturing correlation over the following few months, permitting them to additionally transfer ahead with our FOX resolution.
With each of those main silicon carbide suppliers, I’m sorry, let me strive, we anticipate each of those main silicon carbide suppliers to implement our FOX platform resolution into their quantity product — manufacturing manufacturing stream as they appear to capitalize on the quick rising demand for silicon carbide units and electrical automobiles.
FOX demand is constructing for wafer-level burn-in in silicon carbide units and particularly for traction inverters and onboard and off board chargers for electrical automobiles. Throughout the previous few months, a number of extra silicon carbide suppliers have requested us to offer technical feasibility, quotations and schedules for manufacturing take a look at and burn-in of their wafers.
Whereas a few of these firms need to do on wafer validation of our options earlier than they place orders for programs from us, others are planning to maneuver immediately to buying our FOX programs and our WaferPaks to speed up their time to market.
An instance of that is just some days in the past, we obtained orders for WaferPaks on two designs from a model new buyer for silicon carbide MOSFETs focused electrical automobiles. This multibillion greenback semiconductor firm that’s already making silicon carbide MOSFET wafers that we’ve in-house by the best way, they haven’t even gone public with their silicon carbide MOSFET introduction plans.
The silicon carbide marketplace for electrical automobiles and its supporting infrastructure necessities are rising at an amazing fee. With Canaccord Genuity estimated that wafer capability will improve from 125,000 6-inch wafers in 2021 to over 4 million 6-inch equal wafers in 2030 simply to satisfy the EV market alone. Add within the different functions for silicon carbide together with solar energy conversion, industrial and different electrification infrastructure and the market measurement doubles.
This previous month Vernon Rogers, our EVP of Gross sales and Advertising and marketing and I met face-to-face with a number of potential clients at their amenities in each the U.S. and Europe, and are very inspired about our prospects for successful this capability with these potential clients. We additionally had very productive conferences round our participation in two necessary business conferences in Europe.
Vernon attended this 12 months’s Worldwide Convention on Silicon Carbide and Associated Supplies often known as ICSCRM in Davos, Switzerland, thought of to be crucial technical convention collection on silicon carbide and associated supplies.
He and I additionally attended the EU Energy Semiconductor Government Summit in Munich, the place I gave a presentation on Aehr and the affect of wafer-level burn-in on reliability and stability of silicon carbide units to a big viewers of energy semiconductor business leaders, in addition to automotive and different customers of silicon carbide energy semiconductors from across the globe.
From our many discussions and introductions at these occasions, two themes have been essential. Primary, it’s clear there’s a continued momentum in silicon carbide. In reality, there appears to be an acceleration of the anticipated adoption fee, in addition to a rise within the anticipated development in electrical automobiles. A number of silicon carbide and electrical car firms are actually saying electrical automobiles usually tend to account for 50% of all automobiles made in 2030 versus the 30% quantity we’ve been acknowledged. In reality, VW Group, the primary or second largest automotive provider on the earth rely on the 12 months together with Toyota stated in a presentation that they anticipate electrical automobiles to comprise 50% of all their automobiles bought by 2030. I suppose I ought to say in 2030.
Quantity — the quantity two theme is there’s an rising consensus that not solely do you might want to do 100% burn-in silicon carbide units that go into the automotive area and different mission essential functions. However that burning of the die should be performed at wafer-level earlier than they’re put into the modules for the traction inverters, particularly for electrical automobiles.
In my presentation on the EU Summit, I famous that along with the plain price benefit of eradicating gadget failures earlier than they’re put right into a module with many different units, firms additionally needs to stabilize the inherent youth drift of threshold voltage is noticed in silicon carbide MOSFETs after which choose units with matching threshold voltages to place into multi-chip modules.
Increased than acceptable toddler mortality charges of silicon carbide MOSFETs require 100% manufacturing stress and burn-in testing to attain automotive and industrial high quality ranges. And worth and requirement for doing stabilization of the units goes past simply toddler mortality to incorporate essential parametric — parameters akin to the edge voltage.
With the transition from discrete silicon carbide parts to a number of silicon carbide die modules or built-in energy modules, the gate threshold voltage stability is essential to the module reliability, pushed by the prerequisite to have matching and secure gate voltage threshold die-to-die. Aehr’s applied sciences and capabilities allow visitor — gate threshold stability and reliability on the wafer stage.
Module producers are requesting and in reality requiring units with matching threshold voltage or complete on resistance between the drain and supply within the MOSFET. The most important silicon carbide firms anticipate that almost all EV traction inverters will transfer to modules and have instructed us they need to transfer to wafer-level stress and burn-in to take away the inherent failures earlier than they put the units into multi-die modules to satisfy their price yield and reliability targets.
Aehr’s distinctive low price multi-wafer stage take a look at and burn-in resolution offers a take a look at electronics and the gadget contactor expertise that permits contact to 100% of units on a single wafer, and the dealing with and alignment tools to offer a complete turnkey single vendor resolution to satisfy the wanted essential take a look at and stress necessities. We imagine we’ll have a number of extra buyer wins in silicon carbide for our options this fiscal 12 months.
Along with our progress with silicon carbide functions, we’re seeing a rise in our wafer-level burn-in enterprise for silicon photonics units utilized in knowledge communications. We shipped a number of FOX-NP programs this quarter to help the characterization and product qualification of recent photonics primarily based units. We’ve additionally obtained a number of orders for upgrades to current programs that allow the next variety of units and better energy wafer — per wafer, in addition to a number of new designs for WaferPaks from a number of firms. We anticipate these shall be first ordered for engineering a brand new product introduction after which they flip to quantity manufacturing with greater amount orders.
As I’ve famous earlier than, we anticipate to see a pleasant restoration within the silicon photonics market phase someday over this into subsequent 12 months as we’re being instructed by our clients. We’re anticipating clients to renew shopping for within the present fiscal 12 months 2023 and financial 2024, and a number of other clients addressing the silicon photonics market at forecast extra FOX programs and WaferPak or DiePak contactor capability wants throughout that point.
So let me spend a minute on our R&D investments. On our final earnings name, I discussed a number of assessments of some enhancements we plan to introduce that can prolong the capabilities of our FOR-P wafer-level take a look at and burn-in platform. At present we formally introduced two new superior take a look at and burn-in capabilities that allow silicon carbide and gallium nitride semiconductor producers extra flexibility to deal with a greater variety of stress and burn-in situations for his or her engineering qualification and manufacturing wants.
These embody our FOX Bipolar Voltage Channel Module or BVCM, which offers clients a variety of bipolar voltage programmability from constructive 40 volts to destructive 30 volts utilized to the gate for constructive Excessive Temperature Gate Bias or Destructive HTGB. This resolution together with our proprietary WaferPak for wafer contactors delivers a novel functionality, benefiting energy silicon carbide diodes and MOSFETs and each E-mode, D-mode gallium nitride energy MOSFET producers. Enabling these assessments is crucial in threshold voltage and gate oxide stabilization and screening within the new BVCM extends our present functionality even farther.
The opposite enhancement is our Very Excessive Voltage Channel Module or VHVCM that permits clients to carry out Excessive Temperature Reverse Bias testing on wafers of as much as 2,000 volts on MOSFETs and diodes and measure particular person gadget leakage present.
Aehr’s proprietary WaferPak Contactor implements arcing mitigation expertise to alleviate excessive voltage arcing on the wafer, particularly with fantastic pitch die-to-die geometries. The modularity of the FOX-P system gives clients the flexibility to configure options to offer superior take a look at capabilities for his or her energy digital gadget wafers. These superior capabilities are designed to allow producers to ship product with greater reliability and parametric stability necessitated by an EVs traction inverters and onboard chargers.
Suggestions from present and potential new clients has been very constructive and we’ve already taken orders for each programs and WaferPak for these — for these new choices that we mentioned with clients beneath non-disclosure agreements.
This consists of the brand new main silicon carbide buyer introduced final month and the model new buyer I simply talked about, who ordered a number of WaferPaks for a plan FOX-P system bought from us for his or her silicon carbide merchandise.
We anticipate these new enhancements to drive incremental bookings in income for our FOX-NP programs for brand new product introduction and engineering qualification wants, in addition to our FOX-XP multi-wafer programs for use for prime quantity manufacturing with these new options.
We’re additionally quoting and can settle for orders for our new totally automated FOX WaferPak Aligner, which is configured to completely combine with our FOX-XP multi-wafer programs to allow arms free operation and consists of full integration with our WaferPaks.
As capability and quantity forecasts improve eliminating all handbook interface for automated dealing with can turn out to be essential. We anticipate to see our new Aligner with this full automation functionality to start shipments by concerning the finish of our fiscal 12 months.
All proper, let me attempt to wrap this factor up. Whereas the timing for quantity manufacturing selections, preliminary manufacturing orders, in addition to comply with on orders from clients is rarely sure. There’s little doubt as to the best way the silicon carbide market is growing.
As lots of you recognize ON Semi, one of many prime silicon carbide suppliers on the earth introduced in August it would improve its silicon carbide manufacturing capability by 5 occasions and nearly quadruple the variety of its staff by the top of this 12 months at its new silicon carbide facility in New Hampshire.
And final month Wolfspeed, one other prime provider introduced a brand new manufacturing facility in North Carolina, a $1.3 billion manufacturing unit with a ten-fold improve in wafer capability. And ST, who final 12 months was the biggest silicon carbide provider on the earth simply introduced that it’ll construct an built-in silicon carbide substrate manufacturing facility in Catania, Italy, proper subsequent to its current gadget manufacturing facility, with manufacturing anticipated to start out in 2023. The choices being made as we speak are in response to the explosive demand in silicon carbide.
We’re very inspired by the continued constructive momentum and increasing development alternatives we’re seeing with present and potential clients. As such, we’re assured with our beforehand supplied forecasts for complete annual income of at the very least $60 million to $70 million this fiscal 12 months, which might characterize a development of at the very least 18% to 38% development year-over-year and clearly emphasize our perception that income will develop considerably via the fiscal 12 months to attain these ranges.
This consists of our perception that we’ll obtain manufacturing system orders from a number of silicon carbide clients past our preliminary lead buyer and start delivery programs to satisfy their manufacturing capability by the top of our present fiscal 12 months that ends Could 31, 2023. We additionally proceed to anticipate bookings to develop quicker than revenues this 12 months, significantly to deal with the ramp in demand for silicon carbide and electrical automobiles.
So final, I simply need to shortly announce a few adjustments in our group. I’m very excited to announce as we speak the appointment of Nick Spork [ph] as Vice President of our Contactor Enterprise. On this function, Nick shall be main the hassle to handle and develop our WaferPak Contactor and DiePak Service Consumables Enterprise, which has turn out to be an increasing number of strategic and has grown right into a considerably bigger a part of our total enterprise. Over time, we anticipate Consumables to not solely develop in complete income for Aehr, however as a complete proportion of our enterprise approaching 50% of our enterprise on an annual foundation.
Nick has a wonderful background to steer this effort with broad expertise within the semiconductor and electronics industries main folks, engineering groups and organizations in a number of areas overlaying product improvement, product design, manufacturing functions. Nick began out as a Product Take a look at Engineering Supervisor at LSI Logic, which is now a part of Broadcom. He then labored at FormFacto for 17 years in varied roles, however primarily as VP of Design Engineering. After leaving FormFacto, he was VP of Design and Functions at Translarity, VP of Enterprise Growth for ISC, which is a Korean socket and probe card firm, and most not too long ago, he had his personal firm making varied parts for the probe card and take a look at business. We’re extraordinarily happy so as to add somebody of his caliber and expertise to our govt staff.
On the identical time, I’d wish to announce that Dave Hendrickson, our Chief Expertise Officer shall be retiring on the finish of this fiscal 12 months subsequent Could. Dave has served as a worthwhile member of our govt staff for greater than 20 years and contributed considerably to our product portfolio lots of our enterprise practices. Most not too long ago he’s led a spotlight part sourcing job power, the place his mixture of engineering operations and enterprise abilities has allowed Aehr to attain our enterprise development within the face of a worldwide semiconductor disaster.
He’s additionally been main the hassle to develop our Consumables enterprise via strengthening and collaborating with our provide chain companions. Dave will proceed as a component time worker via the top of the 12 months as we transition our part sourcing management to our new Chief Expertise Working Officer, Adil Engineer, and our WaferPak and DiePak Applied sciences and Enterprise VP, Nick Spork.
And with that, let me flip it over to Ken earlier than we open it up for questions.
Ken Spink
Thanks, Gayn. Good afternoon, everybody. We’re off to a stable begin to fiscal 2023 after a report This autumn and financial 2022. Throughout our first quarter we acknowledged robust revenues, elevated backlog and improved money stream. As Gayn famous, income for the primary quarter was up 89% year-over-year. Each our backside — our prime and bottomline outcomes got here in forward of analysts estimates for Q1.
Bookings within the first quarter have been $19.1 million and we ended the quarter with a wholesome backlog of $19.5 million. Included in our bookings have been introduced orders of $16.8 million from our lead silicon carbide buyer for added programs, WaferPaks and a excessive quantity manufacturing WaferPak Aligner.
Taking a look at our monetary outcomes, internet gross sales within the first quarter have been $10.7 million, which is down 47% sequentially from our report gross sales of $20.3 million within the fourth quarter and up 89% from $5.6 million within the first quarter final 12 months. The primary quarter gross sales have been in keeping with our expectations and we’re forecasting important development within the upcoming quarters. The sequential lower in internet gross sales from This autumn features a lower in WaferPak, DiePak revenues of $8.7 million. These consumable revenues accounted for under 5% of revenues in Q1 2023, in comparison with 45% of revenues in This autumn 2022.
Prospects typically purchase programs after which WaferPaks later, after they’ve accomplished their WaferPak designs. Whereas our lead clients ordered a number of programs not too long ago, we’ve but to obtain all of the WaferPak orders to match up with these programs. We anticipate to obtain these WaferPak orders later this 12 months. This transformation in product combine had a direct affect on our gross margin in Q1 2023, as our Consumables enterprise delivers greater gross margins.
Gross revenue within the first quarter was $4.5 million or 42% of gross sales, down from gross revenue of $10.5 million or 52% of gross sales within the previous fourth quarter and up from gross revenue of $2.3 million or 40% of gross sales within the first quarter of the earlier 12 months. Direct supplies accounted for a rise in price of gross sales of three.5 proportion factors from This autumn 2022.
Additionally contributing to the lower in gross margin from the previous fourth quarter was a rise in unabsorbed overhead price a price of gross sales associated to decrease income ranges in comparison with This autumn accounting for a 3.3-percentage-point affect on gross margin. Lastly, a rise in different price of products bought together with elevated stock reserves, freight, guarantee and tariff prices accounted for a 2.7-percentage-point affect on gross margin from the prior fourth quarter.
Throughout this difficult provide chain setting, we’ve maintained the flexibility to satisfy buyer commitments. As our FOX-P platform comprises a excessive focus of frequent elements throughout the platform, it permits flexibility amongst varied buyer’s configurations. Additionally using contract producers offers means to scale simply and shortly with out rising our mounted prices. We anticipate our gross margins to enhance as we transfer via the rest of the 12 months, as we acknowledge extra consumable income and our absorption of our manufacturing overhead improves as income will increase all year long.
Non-GAAP internet earnings for the primary quarter was $1.3 million or $0.05 per share. This compares to non-GAAP internet earnings of $6.5 million or $0.23 per diluted share within the previous fourth quarter and the non-GAAP internet lack of $100 — $414,000 or $0.02 per diluted share within the first quarter of fiscal 2022.
Non-GAAP internet earnings excludes the affect of stock-based compensation. Within the first quarter of fiscal 2022, non-GAAP internet earnings additionally excluded the affect of forgiveness of $1.7 million keep in mind from the Paycheck Safety Program that we obtained in fiscal 2020.
Working bills within the first quarter have been $4 million, a lower of $625,000 or 13% from $4.6 million within the previous fourth quarter and up $749,000 or 23% from $3.3 million within the first quarter final 12 months. The decreased from the previous fourth quarter is primarily on account of greater incentive funds and inventory compensation in This autumn associated to bonus targets, ensuing from our report income and bookings final fiscal 12 months. The rise from prior Q1 is primarily on account of elevated headcount, greater incentive funds, inventory compensation and a rise in shareholder relations prices.
We proceed to put money into R&D to exams towards, excuse me, improve our current market main merchandise and to introduce new merchandise to keep up our aggressive benefits and develop our functions in addressable markets. These new merchandise embody the not too long ago launched new superior testing capabilities on our FOX-P programs for silicon carbide and gallium nitride applied sciences and our totally automated and built-in aligner.
Turning to the steadiness sheet for the primary quarter, we’ve completed the quarter with a powerful steadiness sheet. Our money and money equivalents have been $36.1 million at August thirty first, up $4.7 million from $31.5 million on the finish of the previous quarter and up $29.6 million from $6.5 million on the finish of the primary quarter of fiscal 2022. The numerous improve year-over-year consists of the $24 million we raised in our ATM providing in Q2 22. Working capital at August thirty first was $49.4 million.
Inventories on the finish of the primary quarter have been $17.2 million, a rise of $2.2 million from the previous quarter finish and $7.1 million from Q1 final 12 months. As we’ve famous earlier than, we’ve been ordering lengthy lead parts for programs and WaferPaks to make sure enough provide to satisfy buyer lead occasions and to help our anticipated development in fiscal 2023.
Now turning to our outlook for the 2023 fiscal 12 months, which ends on Could 31, 2023, we’re assured within the firm’s development trajectory and our distinctive capabilities and product choices to satisfy buyer calls for.
As such, we’re reiterating our beforehand supplied steering for stream your complete income of at the very least $60 million to $70 million, representing development of at the very least 18% to 38% year-over-year, with robust revenue margin much like final 12 months. We proceed to anticipate bookings to develop quicker than revenues in fiscal 2023, because the ramp in demand for silicon carbide and electrical automobiles will increase.
The corporate continues to make investments to help its future development. This consists of investments in headcount and operations. The corporate plans to make enhancements to its company amenities to permit for elevated manufacturing. As well as, the corporate has invested in increasing its international operations, together with its Philippine restore heart. This restore heart replaces assets near our Asia clients and a decrease price area to help repairs, installations and upgrades. This additionally offers for decrease freight prices and quicker response occasions because the Asia market accounted for 90% of revenues in fiscal 2022.
Lastly, wanting on the Investor Relations calendar, our Annual Shareholders Conferences shall be held at our company headquarters on Tuesday, October 18th. We will even be collaborating in a number of investor conferences within the subsequent few months. On October twenty fifth, we shall be presenting on the LD Micro Primary Convention happening in Los Angeles. On November seventeenth, we’ll be collaborating in Craig-Hallum Alpha Choose Convention happening in New York. And on December thirteenth, we’ll be collaborating within the CEO Summit Convention, which can also be happening in New York. We hope to see a few of you in particular person at these occasions.
This concludes our ready remarks. We are actually able to take your questions. Operator, please go forward.
Query-and-Reply Session
Operator
Thanks. [Operator Instructions] The primary query as we speak comes from Christian Schwab with Craig-Hallum Capital Group. Please go forward.
Christian Schwab
Good night, guys. Congrats on an amazing begin to the 12 months. Gayn, are you able to…
Gayn Erickson
Hello, Christian.
Christian Schwab
Might you give us a quantity, you talked about being engaged in discussions with nearly all current and future silicon carbide suppliers as you see it as we speak? What number of potential clients is there?
Gayn Erickson
Properly, that’s a superb query. I really don’t have that in entrance of me. I’m wanting — I’m sort of mentally imagining the record that Vernon has and it’s a fairly lengthy record. I’m sort of guessing right here, however a dozen or extra it sort of vary, I’d say.
Christian Schwab
Okay. Nice. After which…
Gayn Erickson
Yeah.
Christian Schwab
Because the a number of new clients ramp all through the course of this 12 months, is that this the kind of ramp that you simply anticipate to speed up strongly this 12 months and be higher subsequent 12 months, and might it ramp to the extent that your largest buyer ramped, as soon as they began making manufacturing sort of orders on a sort of a…
Gayn Erickson
Couple — I imply, a few questions in there. I imply, the normal mannequin is folks often take like one system and they’re going to, I name it, sit on it and work via some points or simply be sure that it will get known as into manufacturing, then they’ll order one other one and also you undergo lead occasions after which begin delivery it. I’d say, that’s not what the form seems to be like with these clients. It’s extra of full programs, possibly a number of programs in a brief time frame and a few circumstances in a number of amenities and it’s sort of go, go, go.
So, now, the opposite buyer has — our lead buyer has been making some actually important investments. They to some extent led the business on this wafer-level burn-in portion. It’s definitely been felt within the business, all people’s fairly conscious of it and so they took a fairly very long time to soak up the primary one after which began ramping fairly laborious.
My guess is, is that, it’s softer throughout the first six months to 12 months after which it will get stronger thereafter. We’ll see it. It relies on the shopper. Even — it’s sort of attention-grabbing, I imply, even with take a look at occasions, I’ve had been engaged with clients and so they’ll inform me their take a look at time is such and such over and again and again. After which they go to position the order after which they instructed me the true take a look at occasions and they’re longer than they have been. Why is that? Is it simply they’re making an attempt to be coy or not let you know the whole lot?
So we’re proper now when issues occur is we’re positively making an attempt to ferret out lengthy, lead and forecasts for a number of clients, as we simply acknowledged, to only be sure that we’ve loads of materials on that’s being bought. However I feel they are going to begin a little bit slower after which regularly decide up.
And as we had — when you take a look at the quantity of capability that everyone’s speaking about to hit in 2025 calendar sensible, most individuals are simply actually centered on second half 2023 and into 2024 is the place simply plenty of capability is coming on-line and so it could be much less to do with the timing of us because the timing of that silicon carbide ramp. And our objective is to get certified earlier than that ramp occurs and have a ton of capability and materials readily available to have the ability to tackle it.
Christian Schwab
That’s an amazing query, Gayn. Are you able to remind us what you suppose your yearly manufacturing capability is or could possibly be, by the point you get to calendar 2025?
Gayn Erickson
Yeah. I imply, it’s damaged up of possibly just a few issues. One is that seemingly what most individuals suppose is the plain, which is when you come take a look at our facility, and also you say, nicely, what number of instruments are you able to construct on the ground right here. However in actuality that’s some methods the simplest factor.
The testers principally bolt-in to water and energy and so they take a look at themselves. And we’ve a fairly good sized facility right here with sufficient take a look at primarily based to construct considerably. Ken alluded to that. We’re really going to be doing a little investments most likely couple few million {dollars} into the ability over the following couple of years, placing in extra energy, water drops and another enhancements to help our WaferPak enterprise as nicely. However that might permit us to have possibly 10 plus drops, that means we will be billing 10 programs at a time on two weeks spreads. I imply, that’s plenty of capability, greater than the entire business would take proper now. We have been constructing 20 programs a month for instance.
The subsequent one is the subcontractors which are constructing all these subassemblies that come to us after which I’ve to go down the record of them. However principally, we’ve a number of chambers suppliers, a number of blade suppliers, a number of printed circuit board suppliers. And usually talking, at the same time as grandiose as we’re excited, we don’t actually press that.
And the important thing right here is we’ve been in a position to do that with out actually being impacted by all people’s whining about provide chain, outdoors of 1 factor and that’s the final one and that’s the semiconductor parts.
Semiconductor parts we’ve a very, actually good deal with on. We all know precisely what number of that go within the system, we’re forecasting and we’re shopping for semiconductor parts proper now 12 month and 18 months out, and have been for 18 months. And due to the, fairly frankly, huge leverage on semiconductor parts to our income, we’re capable of afford to purchase plenty of semiconductors forward of time. So we’re simply not likely being caught.
Now having stated that, we nonetheless have our onesie, twosie alongside the best way and hiccups, and the blokes are working their butts off to only be sure that it seems to be prefer it’s straightforward. However for probably the most half, we’ve simply not been impacted and permit us to maintain each our lead occasions down and our capability up. However might we go ship $100 million, $200 million, $300 million price of FOX-XP programs in a 12 months, completely.
Christian Schwab
Nice. After which only one final query, I’ll let others chime in. In your steering of $60 million to $70 million, are you able to give us simply sort of your tough expectation of what you suppose you’ll be buyer shall be of that?
Gayn Erickson
Properly, not as a lot because it was final 12 months as a proportion. In order that’s a superb signal. And a few of the upside inside that vary and a few of the upside past that vary embody them. And simply not at all times having all the right visibility we’ve, clearly, we all know much more about sharing, however they’re going via all types of various manufacturing plans situations the place they’re going to be placing programs extra amenities. And we don’t — even with our present put in base buyer, we don’t have excellent visibility.
So partly we simply purchase sufficient materials, as a result of we are able to anticipate the quantity of market share that we’re going to have. However we positively have inside that quantity a number of new clients and never simply engineering, however product — first manufacturing programs being put in.
And the a part of the entrance finish of that, too, is what number of will we get put in in time, will we’ve any sort of rev rec issues with respect to being proper on the sting with their acceptance, that creates a few of the form of uncertainty.
Guys, if we didn’t need to do quarters or years, you hear from CEOs on a regular basis, my life can be loads simpler. The truth is, if I simply look within the subsequent 12 months or I look out to subsequent December and also you take a look at what that ramp seems to be like, I’m far more centered on that. However I get it, we’ve bought straight expectations to satisfy and we need to make our shareholders completely satisfied too.
I simply suppose precisely timing the whole lot inside 1 / 4. Generally it’s tougher. And that’s the place you see that sort of wiggle room of the $60 million to — at the very least $60 million to $70 million and we — after which make statements like and we’ve capability to do past that, okay.
Christian Schwab
That’s nice. Properly, only a fast comply with up on that, is — utilizing your phrases, when you might simply look out for December, after of subsequent 12 months, if we checked out your enterprise within the calendar foundation, subsequent 12 months that you simply’re enthusiastic about it, how large of a income vary alternative are you enthusiastic about?
Gayn Erickson
Yeah. I’m not going to go there, Christian. Sorry, we spent plenty of time ensuring that I’m — that’s the one factor we do focus on as a Board fairly laborious to ensure. I apologize for that. However I’ll let you know, I’m very assured and I’ll go forward and it’s not an enormous stretch on the market. We positively imagine that can develop subsequent 12 months over this 12 months. Let me depart it at that.
Christian Schwab
Yeah. Nice. All proper. No different questions. Thanks, Gayn.
Gayn Erickson
Okay. Good strive although, Christian. All good.
Operator
The subsequent query comes from Bradford Ferguson of Halter Ferguson Monetary Group. Please go forward.
Bradford Ferguson
Good day. I’m curious, is your lead buyer efficiently making their very own substrate. Wolfspeed has come out and stated on a go-forward foundation, as of some sure date, they’re not going to be promoting substrate or additional substrate to different suppliers of silicon carbide units. I’m curious if it is a danger for Aehr Take a look at Methods?
Gayn Erickson
So clearly we’ve perception beneath non-disclosures and given the truth that I stated I’m speaking to all of them main suppliers, you may suggest I’m speaking to each one of many large guys, together with those you talked about after which some beneath non-disclosures. And that provides me in some ways far more visibility than others, however primarily associated to the units.
There precisely what they know private associated to their substrates. I don’t have as a lot visibility and I wouldn’t actually share. It’s my perception that the entire main suppliers are all having success and relying on success of growing their very own substrate provide chain, and clearly, that features the massive guys.
Wolfspeed, in fact is, has been, was the key provider of it, they’re clearly anticipated to be very profitable making units out of that. ST, with their announcement of their new fab or their manufacturing facility is totally relying on ramping their very own. And clearly, on Semiconductor is one other one alongside these strains within the course, Infineon has bought some extra occurring, too.
It’s my perception that each one of them shall be profitable. I don’t — I’m not listening to anybody that may genuinely say, there’s definitely folks which are saying it’s not as straightforward because it seems to be. It’s take a while, however there’s some huge cash being put in.
I imply, Wolfspeed spent 30 years engaged on these items and so they — their rivals are spending extra money to make swimming pools on this 12 months that possibly Wolfspeed spent of their entire profession or so. I don’t know if that’s truthful, however it seems like that. So, there’s plenty of vitality to go attempt to remedy this downside and my perception is that they’ll discover, they’ll determine it out.
Bradford Ferguson
One identify I haven’t heard you talked about is Infineon, are there any massive silicon carbide makers who aren’t doing wafer-level burn-in or doing that in math because the others intend to do?
Gayn Erickson
Let me do it otherwise. There’s a lot of the distributors, a lot of the firms as we speak have both little or zero wafer-level burn-in excluding our lead buyer. I really occur to know by amount what number of wafers a capability and it’s a very small fraction comparatively.
Be mindful, one among my programs can take a look at 18 wafers at a time. We’ve publicly talked about our rivals. I select actually to not do it on this discussion board, as a result of then they will examine it and it’s not as a result of — however the folks which are on the market take a look at a method for at a time with a prober and it simply doesn’t scale.
I imply, in the identical footprint of, I really use this analogy. I apologize if I did it on this group earlier than. However our tester and the encompassing space that it takes to truly service it’s concerning the measurement of like a small Prius automotive and it sits in a parking zone, like think about that area, okay.
That’s what our system is and in that stall I’m taking a look at at our parking zone, in that room — really it’s smaller than that, however in that room, you may take a look at 18 wafers. That’s about the identical measurement as our rivals take a look at one.
In the event you undergo the mathematics and I’ve performed this earlier than, when you understand that the world wants 8 million wafers in 2030, that was a Canaccord quantity and I spherical down utilizing like 8700 hours a 12 months with inefficiencies, et cetera. You want 1000 wafers an hour, okay, to satisfy that demand.
So when you begin taking a look at like a 10-hour burn-in time, you may have 10,000 wafers of capability, that’s a ten,000 automotive parking zone by my competitor. Now we’re 18 occasions smaller. It’s — we’re not zero footprint. However in the price of it of a producing ground of a wafer fab, that’s monumental.
And so when you’re a participant enjoying in a market that’s going to want 10,000 wafers of capability of testers and also you need to have 20% market share and also you want 2000 wafers a capability. The place are you going to place that? There isn’t a take a look at ground on the earth that has 2000 wafers that — it will possibly help 2000 wafers — wafer probers for silicon carbide. There’s no means. So we’re simply — clearly a really large alternative.
Bradford Ferguson
Can I ask another?
Gayn Erickson
Certain.
Bradford Ferguson
You talked about a model new participant that’s an expertise chipmaker, are there chipmakers which are going to enter this market and sizes like the present introduced plans of the highest three gamers like our different folks going…
Gayn Erickson
Yeah. I had — we’re speaking to now a number of. I needed to go double verify that, as a result of we’ve been speaking to those guys for not very lengthy by the best way. I imply, I wouldn’t say it’s been 4 months that we went from zero to first order in 4 months with these guys. I needed to go double verify to ensure they haven’t publicly stated something once I wrote that, however they haven’t.
And we — there’s one other buyer we’ve been working with that has by no means stated something public, both. However I did discover they confirmed up at one of many tradeshows not too long ago, I nonetheless not going to speak any extra about it. However we all know they’ve huge plans, on the order of to a few of the present prime fours.
Be mindful, and that is at all times, I’ve performed this math earlier than, it’s at all times attention-grabbing, when you simply undergo the straightforward math of those forecasts and say there was 125,000 wafer begins to do silicon carbide final 12 months and there’s 4 million, I feel, when you keep in mind, like, 25 occasions.
One other mind-set about it’s that, the entire silicon carbide that was constructed final 12 months, proper, shouldn’t be even what 2% or 2, what’s that like, I’m sorry, go forward 25 12 months, 4% of the general market, you get that. So the entire suppliers as we speak don’t even dent the market in eight years.
So all of them need to develop considerably. Individuals must develop loads to only maintain a small proportion market share. So that they’re going to want much more gamers. I imply, I sat in conferences the place leaders like ST Microelectronics, who’s the primary at a convention final Could in San Diego, he stood up and stated, hear, I simply need to be very clear, we’ve no plans to construct sufficient capability to keep up a 50% market share like we did final 12 months.
They simply don’t. They’re not going to spend that a lot. So by definition, they’re going to lose market share from being primary at 50%. However they’re nonetheless planning to develop like an enormous quantity, however they’re not going to go 25x. So the world really wants much more gamers.
Bradford Ferguson
Hey. Thanks very a lot.
Gayn Erickson
You’re welcome.
Operator
The subsequent query comes from Gregory Ratliff with Nobis Companions. Please go forward.
Gregory Ratliff
Yeah. Mr. Erickson, congratulations on the corporate and the nice the chance [ph]. One thought I’ve is to hold on with that closing query and when you have been to have a look at the possibly the weaknesses within the construction of the corporate presently or the aggressive threats down the highway. Might you give us a little bit of your pondering concerning what you might want to do to proceed to be a champion or to be a champion, however the powerful competitors that they had? That’s…
Gayn Erickson
Okay. So, I’m not silly to suppose that because the market is clearly massive and rising, there received’t be folks making an attempt to determine the way to get into it. We’re in a specific distinctive situation the place the best way we do our testing is really distinctive. Maybe you would say, it could possibly be in a destructive connotation.
In the event you take a look at each means for tester on the earth, I’ve been on this business for 35 years. I constructed them for many of that. The best way you construct an ATE system to check semiconductors is all the identical. Each one of many firms, all 20 of them within the final 20 years have performed it the identical means.
You construct a tester field that sits on one of many three foremost wafer prober firms probers, it docks to one among 20 probe card suppliers and the three completely different industries, the tester, the prober and the probe card provider have successfully have a number of folks competing for a similar functionality after which folks purchase these instruments, built-in themselves and put them on their ground.
And that could be a very profitable enterprise. It’s — mixed it’s an enormous chunk of the $13 billion semiconductor automated take a look at enterprise final 12 months. The issue with that’s that these take a look at occasions are all designed round seconds of take a look at time. And in order that take a look at model may be a mean someplace between $1 million and $2 million to check the wafer. In the event you simply take a look at the capital depreciation, testing one or two or 4, eight units at a time, it’s extraordinarily costly to do it, however the take a look at occasions are so low, it’s okay.
Now you are taking that very same take a look at time. And by the best way, that’s the way you take a look at silicon carbide at wafer stage as we speak. Practical take a look at of a silicon carbide gadget takes about 2.5 seconds. And a lot of the testers which are in manufacturing as we speak are between one and eight units at a time. It’s actually low-cost and straightforward to do this. Once you go to burn them in, they now take 12 hours.
Properly, how are you going to do this with a tester that absorb solely take a look at eight on the time, you simply can’t try this. We constructed a machine aimed toward a very completely different market, which is the concept we’re going to take package deal half burn-in stage prices and parallelism and implement that at wafer stage and we made investments over the past decade to do this, fairly frankly taking a look at macroeconomic developments of heterogeneous integration of semiconductors, of automotive units going on this course, of multi-die that modules going on this course.
Don’t child your self, we didn’t suppose silicon carbide eight years in the past was going to be this nice scorching market or that the world would really be considering that we’re all going to be driving electrical automobiles in 20 years, okay.
However what we did do is anticipate the market developments that have been headed on this course, and fairly frankly, we’re sitting out in entrance of this when the silicon carbide hit us sideways. And we’re simply — we simply have — we — name it what it’s, we name the shock that it was heading this course and we have been prepared and ready to reap the benefits of the wave and it’s it actually thrilling.
It isn’t that straightforward to do what we do and we’ve a whole record of patents to defend it and we are going to defend that with any firm that tries to construct a take a look at or like ours or any buyer that tries to make use of a tester constructed by another person that appears like ours.
Within the meantime, we’ve a protracted head begin and we’re — our objective is to get engaged with as many of those clients as we are able to. Additionally, we’re working immediately with a few of the automotive suppliers now, who now would look to qualify the device after which they might qualify it backwards into a number of distributors. So that after we’re certified, I don’t suppose anybody’s going to need to change anyhow. I do know I’m fairly been particular about our technique, however that’s the way it’s enjoying out proper now.
So, having stated that, we’re additionally working like hell, we’re completely ensuring that we don’t restrict anybody in capability of testers. We’ve the shortest lead occasions of any tester firm I’ve heard of. I imply, I took an order like two weeks in the past and shipped on the finish of the week. I’ll take an order. I’m prepared to speak about what my subsequent orders are. However I’m going to be asserting some orders which are going to ship inside 1 / 4, okay.
We’ve that means and we are able to inform the shopper we are able to meet their capability calls for that they’re imagining out 12 months and 6 months and 18 months, proper, 12 years, 18 years and two years, sorry.
So the following factor is that this, technically, there are some issues and it’s not a lot a weak point as it’s folks want to do extra testing or be capable to do. So we took our energy provides that have been going at about 30 volts and we improve them to 40 volts. We’re not making an attempt to ensure there’s no technical purpose you might want to go away from us.
So now we’ve the flexibility to offer you a technical resolution for engineering characterization of excessive voltage, excessive gates, all of the completely different threshold voltages and stuff that you simply do for qualification after which transfer that into excessive quantity manufacturing, both in the identical configuration or in price optimized configuration that we don’t actually get to on these calls, however we’ve some methods up our sleeve to truly do characterization with greater price performing programs after which go to a manufacturing quantity one which hits a worth level that may be very novel.
And so we’re making an attempt to hit it on all of those, technically, commercially capability to have the ability to tackle it after which we’ve IP patents to guard ourselves after which we’re simply paranoid and working as quick as we are able to.
Gregory Ratliff
Thanks a lot for that.
Gayn Erickson
Thanks, Greg. It’s good speaking to you.
Gregory Ratliff
My pleasure, sir.
Operator
The subsequent query comes from Matthew Winthrop with Equitable. Please go forward.
Matthew Winthrop
Hello. Hello, there. Gayn, how are you?
Gayn Erickson
I’m good, sir. In a very good temper today.
Matthew Winthrop
You sound it. I needed to only blow some smoke for a fast second. As you recognize, as a retail advisor, I’ve been following Aehr for 4 years or 5 years. I’ve lived via this downtime. And also you have been so brutally sincere when issues weren’t nice and I simply needed to thanks and commend the truth that you guys have stored your eye on the ball, and clearly, you’re beginning to see some successes and that’s a uncommon attribute on this setting that we’re in. So good work, sir.
Gayn Erickson
All proper. I actually respect that. Actual shortly, it does appear on the outset that you simply’re having shorter lead occasions, due to how nicely a buyer needed to see and once they bought it and so they messed round for some time. Am I deciphering that right that the mass adoption or that your system actually does work that nicely. However what’s modified now, are they extra within the workforce that out of the blue sounds just like the gross sales lead time is a little bit faster except I’m misinterpreting that?
Gayn Erickson
Yeah. I feel I bought it. You broke up a little bit. So I apologize if I feel I bought the gist of it. So let me sort of repeat it again a little bit bit. So this concept that, it looks as if issues are going a little bit quicker, possibly the gross sales cycles a little bit shorter, et cetera. There’s — that’s completely the case and I feel there’s just a few issues occurring there.
This actually is one the place COVID being over helps, okay. I imply, simply issues have been so gradual with present and new clients and folks weren’t touring and it’s simply laborious to promote and it’s laborious to speak. You may solely accomplish that a lot over tune. In order that’s positively one among them.
There’s additionally this aspect that, when you — three years in the past, proper, we have been promoting these programs, folks know the lead clients of this platform have been Apple and Intel and ST Microelectronics and a few of these, as a result of they have been 10% clients for us, proper? However they’re nonetheless sort of…
Matthew Winthrop
Proper.
Gayn Erickson
… is it actual, does it actually make sense, it’s sort of area of interest, these are bizarre merchandise, no matter it’s, proper? It’s like, I’m undecided. Then impulsively as folks know that one of many large silicon carbide clients got here alongside and acquired this, and fairly frankly, purchased one system and sat on it for greater than a 12 months, in fact, code was occurring.
So there’s nonetheless form of this, is it actual, is it actually going to work, does — that entire factor. Then all sudden, they begin ramping, then impulsively, from what it seems like and I’ve heard this immediately, they — firms that they’re promoting to are sort of coming again, as a result of they actually have performed a superb job of promoting themselves has being high quality differentiated, promoting the modules, promoting the standard of the modules, and fairly frankly, they did shows, I talked about their wafer-level burn-in earlier and I feel it’s come via.
So then they’re successful offers and people clients, their clients are turning round and speaking to now their rivals and saying, oh, do you may have wafer-level burn-in? There’s little doubt a few of that’s occurring, okay. And we’re doing the whole lot we are able to do to foster that setting, okay.
As a result of all we’ve to do is get anyone say, I need to do wafer-level burn-in and proper now, we win. We’re performed, as a result of our worth proposition, our resolution, our lead occasions, our worth factors, they’re a slam dunk. And so proper now it’s like, we’re not benefiting from this. We’re not elevating up. We didn’t increase our costs, guys, okay. Didn’t do it.
We had some issues the place our price went up. I imply, I did pay $50,000 to ship a chamber and final Christmas, it was loopy. However I didn’t go that on to my buyer. I’m not doing that recreation. And I — we make good cash. We’re going to make plenty of it. We’re going to offer a worth to our clients and we’re going to be there for them. And I feel that we’re on this — in good place due to that.
Matthew Winthrop
That’s nice. I’ve one comply with up if I could. I’ll act like an analyst right here. Final quarter what have been you projecting for potential revenues for was a calendar of fiscal 2023, however now I feel you’re launch stated $60 odd million, possibly extra. Had that quantity simply within the final quarter elevated dramatically or was that?
Gayn Erickson
No. We offer — we actually solely present steering yearly and we solely do it annually, somewhat we’ve sort of fallen into the we reiterate or in some circumstances we’ve uptick.
Matthew Winthrop
Okay.
Gayn Erickson
So we supplied that steering. And I get it, folks stated, what does that imply at the very least $60 million or $70 million? Is it $60 million and is it $70 million. What — and we weren’t deliberately making an attempt to be acute, however that also feels about proper? I imply, we expect we’re in fine condition for that and it simply actually relies on a few of the timing of those clients ramps.
So typically I don’t feed anybody questions, however I’m going to feed you a query that’s, have been you capable of ship the whole lot your clients needed final quarter? Sure. So why was it solely 10 no matter? That’s all they needed? I imply, that’s the fact of it. And also you suppose you’re going to develop? Why? As a result of the shoppers need extra and I can construct extra. It’s like — it’s form of like that we have been really forward of the sport on this.
And so now we’re moving into why is it that there was it appears softer than This autumn and I do know a few of these causes. So very personal about clients ramps and their design wins and once they needed WaferPaks and I bought facility points with folks which are speaking about bringing on new amenities and a few of that stuff simply laborious to handicap and know what the reply is.
And so — and naturally, I’ve to guess accurately with these guys. And a few of that is, I’m fairly assured in successful these clients, however it’ll be — it’ll really feel good once they give us the primary POS, too, proper? So…
Matthew Winthrop
Yeah.
Gayn Erickson
… it’s laborious to information that means. However, yeah, we didn’t change our steering, if you’ll. I suppose, we stated, we’re very assured of that quantity. And as our backlog builds up and if the backlog and the shoppers requested for greater than that, we are going to information up at the moment or because it is smart, however once more, we’re not making an attempt to play that recreation.
Matthew Winthrop
Good work.
Gayn Erickson
Okay.
Matthew Winthrop
Recognize your efforts. Let’s be sure that I get to see you if you’re in New York.
Gayn Erickson
Okay. Superior. It’d be good to return. I like the journey personally, so.
Matthew Winthrop
I do know you’ve talked about Europe on a regular basis. Thanks a lot.
Gayn Erickson
Okay. Thanks.
Operator
The subsequent query is from Larry Chlebina with Chlebina Capital. Please go forward.
Larry Chlebina
Good afternoon, Gayn. Actual fast query on this new model of your XP by way of the upper voltages or the adjustable voltages.
Gayn Erickson
Yeah.
Larry Chlebina
The testing that you simply did in a previous for a specific massive silicon carbide buyer, I feel, it was in August of final 12 months. Does that imply that that is the method that they’re going to make use of these greater voltages one, I feel, you simply despatched him some…
Gayn Erickson
Yeah. Let me attempt to reply as clear as I…
Larry Chlebina
[Inaudible] The next is…
Gayn Erickson
Go forward.
Larry Chlebina
… is the upper voltage or is that this adjustable voltage, the best way you suppose most potential clients are going to go or they construct like…
Gayn Erickson
I’m glad you requested it that means. That’ll be simpler for me to reply.
Larry Chlebina
Yeah.
Gayn Erickson
As a result of it’s — I’m not making an attempt to be coy right here, okay. However let me strive. Let me attempt to guess. So there are a number of methods, not 10, there’s primarily two foremost methods that you could stress these MOSFET units to weed out toddler mortality, okay.
A MOSFET is a transistor. A transistor, when you think about a water valve, like in your sink is a superb analogy. All you do is a transistor permits electrical present or water to stream via it, if you activate the valve, or on this case, apply a voltage to the gate. That’s it. You apply a voltage, water flows via it, you flip off the gate, the water stops flowing via it.
If the gadget works correctly, if you flip it off, it doesn’t drip. Recall that leakage. In the event you put an enormous energy strain behind it, it’d leak a little bit and so they really specify how a lot it leaks. But when it leaks greater than that, it’s dangerous, okay.
Now, there are two foremost stresses you are able to do to confirm that. One in every of them is, is a gate bias, a excessive voltage gate bias on the gate itself. Think about the valve I’m describing, I need you to place your hand on the valve and I need you to show it over as laborious as you may, attempt to break it on, okay. Sounds sort of odd, however that’s precisely what we do.
We principally overstressed the gate, and if the gate breaks, it snaps off. We really name {that a} glass rod snap in-house. It –we love displaying these to clients, significantly once they take 24 hours or 48 hours to point out up, okay. That could be a failure that reveals up. It’s the major failure in silicon carbide MOSFETs that everyone talks about and it’s a must to eliminate these.
These present up in automobiles and you’ve got what we name a stroll dwelling occasion, which is you get out of your automotive and also you stroll dwelling when it dies, okay. So these should be weeded out and that’s what we do primarily, okay, as a result of the hole, the gate oxide has defects in it within the manufacturing course of, that I’ll get into it, however they’re not going away, that when you — if these flows via all the best way to your finish buyer, that’s dangerous, okay. So we apply a excessive voltage gate bias onto the gate to overstress it to attempt to crack it off and that’s a major means of doing it.
One other take a look at known as the reverse bias, which is think about placing actually excessive strain on that valve, water strain, it’s known as voltage on this case and it shouldn’t leak via. Now the distinction between that take a look at, that’s a superb high quality take a look at or a reliability take a look at. That means you need to do that in your course of to validate the units don’t fail and also you’ll try this over, say, a 2000 hour, that’s not essentially a manufacturing take a look at.
The manufacturing take a look at could solely take just a few seconds. However there are folks that need to do qualification of that top voltage and there’s some folks that have performed it in manufacturing and we’ve now present them with an answer to do this, okay.
Having stated that, you may’t do the identical because the gate, you really, if let’s say the gadget is rated for 1200 volts, you don’t apply 1800 volts to the gadget, it would kill it, it would weaken it and it’ll not be shippable. So you may solely put 1200 volts on it. So it’s not likely a burn-in stress situation. It’s a purposeful take a look at validation and also you may need to do it for just a few seconds, however it’s not essentially a manufacturing take a look at.
However what, if you wish to put my system in manufacturing with that, you go for it, it prices a little bit bit extra, I’ll be completely satisfied to do it and I’ll store — I’ll promote you FOX-XPs eternally. Our opinion and we’ve been pretty open about it’s that you simply need to do characterization, you need to try this and also you need to get that out of manufacturing as quickly as you may and it’s best to go to this gate bias testing and that’s our story.
And also you — we now have the instruments to offer you no matter you need to do. You should purchase no matter you need, we’ll be completely satisfied to promote it to you. It’s costlier to do reverse bias, however we’re cheaper than anyone else by a good distance.
Larry Chlebina
So that you…
Gayn Erickson
Okay. Now…
Larry Chlebina
You suppose a lot of the programs shall be like the unique variations going ahead?
Gayn Erickson
I do. I do. I do.
Larry Chlebina
Okay.
Gayn Erickson
I feel over time, that’s actually the place the associated fee goes and that’s we’ve been speaking a number of. We — by the best way, the brand new BVCM, I do know no person cares about our language right here. However the brand new bipolar voltage, it really permits it to go a little bit greater voltage. We had some folks that need to try this. Curiously, because the units mature, the voltage is definitely taking place. So we’re sort of really feel like, however there’s some folks that ask for it, significantly within the gallium nitride and so we’re like, positive, no downside.
We even have a destructive voltage and there’s some technical white papers on the market that individuals are doing to do this as an accelerant and now we’ve, I feel, the one resolution on the market to do this, even in packaged elements.
So now we’ve the flexibility to do a destructive voltage, which is one thing folks could need to do too and we’ll be completely satisfied to promote them these programs. It seems to be similar to our present system. It simply merely goes a bigger voltage vary, okay.
Larry Chlebina
Okay. I’m glad you launched the totally automated aligner, which supplies you the totally automated XP. Do you may have a reputation for the XP totally automated but?
Gayn Erickson
No. As a result of I — I’m leaking my, that we’re taking orders, however I haven’t — we haven’t even put it on the web site but. So I don’t but. However, really, I do when you’re beneath non-disclosure. However it’s a must to qualify first as a silicon carbide purchaser and also you don’t qualify. I’m kidding. For everyone’s watching. Larry at all times requested me about this factor. We’ll be speaking about that in a little bit bit right here, Larry. However, yeah, as Larry alludes to, we’re promoting as a turnkey resolution with an built-in XP with the automated aligner connected to it. And we’ll most likely…
Larry Chlebina
[Inaudible]
Gayn Erickson
… make these bulletins with these first manufacturing orders that we get from clients.
Larry Chlebina
I do know that that was initially focusing on reminiscence and there’s plenty of reminiscence exercise on the market.
Gayn Erickson
Yeah.
Larry Chlebina
We can get to a report standing for that kind — wafer sorting, since you talked about the necessity to kind wafers or units for threshold voltage and silicon carbide. So you may match them up later, when you may have the same want and flash, the thought goes primarily based on high quality or out there cells, is that sort of the identical thought there?
Gayn Erickson
Yeah. I imply, I’m most likely a little bit too acquainted with that, since you bought a little bit flawed. However typically, sure, the biking take a look at of a NAND flash reminiscence and wafer-level is one — as a — is a probably critically, it’s a good suggestion earlier than you place it into enterprise-based stable state units and there are folks which are doing that as we speak.
And you’re right, our FOX-XP system, after we first have been speaking to it, we have been engaged in speaking with a few of the reminiscence suppliers and our FOX-XP system is able to testing flash reminiscence. So it’s sort of humorous {that a} MOSFET is a single transistor and the tester can also be able to testing in full reminiscence.
Larry Chlebina
Okay.
Gayn Erickson
As folks know, one of many challenges we had on the time, we didn’t have automation and candidly, we have been fairly small and we have been on the drafting board with this resolution, versus now we’re delivery it in quantity. So that will offer you some perception as to what our long-term intentions are.
Larry Chlebina
So only one thing more on that rating, you may probably get two birds with one stone, you get the toddler mortality, screening, in addition to the sorting. And the way are they doing that presently, what are they utilizing?
Gayn Erickson
Are we speaking about reminiscence guys?
Larry Chlebina
Yeah.
Gayn Erickson
Reminiscence guys use a Reminiscence ATE system primarily from Advantest Teradyne or in-house constructed programs and…
Larry Chlebina
So these are single wafer programs, aren’t they?
Gayn Erickson
They’re or there are — there’s a resolution on the market for those that utilizing multi-wafer prober. So that they’re principally like 12 probers sort of bolted collectively on prime of one another. They’re very costly. However with a customized in-house take a look at system that does it. That architecturally is considerably costlier than us and it has a bigger footprint.
Larry Chlebina
Yeah. So your system is substantial a smaller footprint, as a result of you are able to do 18 at a time. So it appears to me that whereas these guys are beginning to plan out new fabs and also you talked about within the final time there can be a brand new fab deployment. You’d need to get to a report standing as quickly as potential. And you then may suppose that that might upset the folks that promote these testers and masks as a result of there’s entire ground is for them, proper?
Gayn Erickson
Do it upset me if I have been promoting them testers? Sure.
Larry Chlebina
And only one last item, up to now you talked about, regardless that you are able to do 18 at a time, the quantity can be so huge, you’d nonetheless want what number of potential XPs for a typical, say, a flash fab?
Gayn Erickson
75 to 100 per ground.
Larry Chlebina
Absolutely automated?
Gayn Erickson
Sure. If there have been counted. Of us on-line, Larry, I do need to be additionally clear, we don’t presently have income expectations for delivery into the reminiscence guys this 12 months. However in case you are investing in us, you’re at all times investing in us moving into reminiscence sometime. I simply need to steadiness the passion. And Larry is aware of darn nicely, that it’s one among my absolute pet peeves and one among my passions is to get this firm into the reminiscence enterprise. So, thanks, Larry, for teeing that up.
Larry Chlebina
However — hey, nice job and sustain the good work.
Gayn Erickson
Thanks, Larry.
Larry Chlebina
We’re approaching it. We’re approaching it.
Operator
At the moment, there aren’t any extra questions within the queue.
Gayn Erickson
All proper.
Operator
I would really like…
Gayn Erickson
I’m glad we have been capable of get to all people. Thanks, Operator. Glad we had an opportunity a few occasions, I feel, we minimize off a little bit early and we’re making an attempt to get our cam statements in, within the first half-hour and provides folks sufficient air to get their questions in. So I actually respect all our shareholders which have been sticking with us and we’re actually enthusiastic about this new market alternative this 12 months and heading into the following years. And we’ll sit up for seeing anybody that occurs to be coming into city to go to. We do take these or at one of many shareholder conferences or the investor conferences. We’re getting much more miles on us today. So thanks very a lot to your time and we’ll speak to you subsequent time. Bye-bye.
Operator
The convention has now concluded. Thanks for attending as we speak’s presentation. It’s possible you’ll now disconnect.
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