Release Date: April 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aehr Test Systems reported solid bookings in the third quarter of fiscal 2024, totaling $24.5 million.
- The company has a healthy backlog of $20 million, with the majority expected to be recognized as revenue in the fourth quarter of fiscal 2024.
- Aehr Test Systems maintains a strong balance sheet with $47.6 million in cash and cash equivalents and no debt.
- Interest income earned during the higher interest rate environment was $584,000 in the third quarter, showing effective cash management.
- The company has secured a total of seven silicon carbide customers for its FOX-P family of systems and is engaged with over a dozen additional silicon carbide players.
Negative Points
- Total revenue for the third quarter was down 56% from the same period last year, at $7.6 million.
- The decrease in revenue was attributed to delays in significant customer orders and a last-minute pushout by a customer of a system in the backlog.
- Gross margin for the third quarter decreased to 41.7%, down from 51.6% in the previous year's third quarter.
- Operating expenses in the third quarter slightly increased due to higher R&D expenses.
- The company faced challenges due to softness in the overall semiconductor capital spending and shifts in electric vehicle introductions and ramps, impacting bookings and revenue forecasts.
Q & A Highlights
Q: Can you provide more clarity on the silicon carbide electric vehicle opportunity for fiscal year 25?
A: Gayn Erickson, President and CEO of Aehr Test Systems, mentioned that while they normally don't discuss the next fiscal year, there is visibility that all current customers, including the largest historical ones, are expected to generate material revenues in the next fiscal year. He also noted that the electric vehicle market in Asia, particularly China and South Korea, is robust and that there is a strong focus on silicon carbide, which is encouraging for Aehr Test Systems.
Q: Will there be measurable revenue from China in the next fiscal year?
A: Gayn Erickson expressed that there is a very real chance of generating revenue from China in the next fiscal year, based on the company's engagements with numerous potential customers in Asia.
Q: How will Aehr Test Systems address the China market? Will it be through direct sales or partnerships?
A: Erickson explained that they would use a combination of both direct sales and partnerships with local reps in China. Aehr Test Systems already has a presence in China, including employees and infrastructure, and they are discussing expanding their presence further.
Q: What is the status of the new customer for the FOX-1P system, and when do you expect them to transition to the FOX-XP multi-wafer test and burn-in systems?
A: Erickson chose to be vague on the specifics but indicated that the transition from the FOX-1P to the FOX-XP systems is expected over the next couple of years as the customer ramps up to high-volume production.
Q: Can you comment on the potential for wafer-level burn-in in the memory and silicon photonics markets?
A: Erickson highlighted that the shift to modules or chiplets is a significant driver for wafer-level burn-in. He mentioned that memory has always required burn-in, and with the stacking of die and movement towards multichip modules, there is a push to perform burn-in at the wafer level. He also noted that every DRAM is burnt in, and the need for burn-in in memory is significant, especially for stacked die applications.
Q: When do you expect to conduct a benchmark process with a memory supplier?
A: Erickson mentioned that they hope to have a benchmark process with a leading NAN supplier within the next year, using their proprietary wafer packs and FOX wafer level test and burn-in system.
Q: How many of the seven current silicon carbide customers have the FOX-XP production system?
A: Erickson indicated that about half of the seven silicon carbide customers have the FOX-XP production system, and all customers with the FOX-NP system plan to transition to the FOX-XP systems.
Q: Is there any insight into when the second optical network for GPUs and AI data centers will be deployed?
A: Erickson expressed that the timing of the deployment of the second optical network is somewhat secretive, but he believes it could be a couple of years out before volume production begins. He emphasized that Aehr Test Systems is ready for it and that there is a lot of design activity currently happening.
Q: What are the plans for addressing the potential for copying Aehr Test Systems' technology in China?
A: Erickson acknowledged the concern but did not provide specific details on their strategy to protect their intellectual property in China. He mentioned that they have legal IP, security, and contractual measures in place and believe it is not easy to replicate their systems without violating their IP.
Q: What is the holdup with the long lead item customer that has been evaluating for a couple of years?
A: Erickson suggested that market shifts in the electric vehicle industry and changes in OEM commitments for fab capacity might be causing delays. He believes that the market will become more fortified, with larger players gaining more confidence in their plans going forward.
Q: Is the delay in purchasing related to waiting for 200 millimeter wafer capabilities?
A: Erickson mentioned that some customers are ensuring that Aehr Test Systems can handle both six-inch and eight-inch (200 millimeter) wafers, but no customer has explicitly stated that they are waiting for 200 millimeter capabilities to make a purchase.
Q: Is there a timeline for when memory manufacturers might realize the benefits of Aehr Test Systems' automated XP systems in their fab designs?
A: Erickson did not provide a specific timeline but emphasized the importance of partnering with memory manufacturers to work on their unique test requirements and the benefits of Aehr Test Systems' solutions.
