AEHR - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the Aehr Test Systems Fiscal 2019 Fourth Quarter and Full-Year Financial Results Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Mr. Jim Byers, MKR Investor Relations. Please go ahead, sir.

Jim Byers

operator. you, Thank and fourth everyone, Aehr Systems Test Good and welcome full-year XXXX quarter call. financial fiscal afternoon, to results conference on Aehr are Executive and today's President Financial me Chief Spink. Chief Erickson; Officer, Test Ken Officer, and Gayn With Systems' call

is over call full-year This like fiscal items. Gayn and Aehr XXXX announcing results. its be Test Company's is being for page the at the website website. issued fourth the parties, This the call to Investor Company's live on turn Ken, Internet broadcast a and cover available That all I release to and aehr.com. Before release quarter over few the archived afternoon, Relations interested the I'd the webcast a of will on press

remind be that that actual management and are in everyone differ today that are call, today's of forward-looking materially making statements. uncertainties from could number on a statements risks to current and will based on and subject cause I'd information estimates to the forward-looking like results those to

that statements, today's cause valid and filed in statements. in discussed of differ forward-looking to the recent the provided may guidance Test These Aehr results materially only undertakes this are forward-looking those Company's SEC. forward-looking and to the Systems from current update statements with most periodic call, reports, are obligation including during the date, factors as These no

Gayn Erickson, CEO. that like conference and Now, over to President I'd said, to the with turn Gayn? call

Gayn Erickson

up the continued and lines particular, later call, conference for first, open and questions. Ken product go quarter highlights few We'll will Thanks, a platform financial and fourth our minutes burn-in your singulated die/module Jim, test to online. discussing in our and level in FOX-P but and also over listening in then on the afternoon spend joining progress results systems. the call good I'll the wafer with those the and today's full-year and business for

the We this that with, our family, fourth CP fiscal earlier have off we good to in revenue for really are including year with a pleased and we strong finished newest quarter. in the had to that introduced product a solutions our profitability year. FOX-NP and quarter me Let FOX year start to return

announced of and that perform FOX-NP as new well production devices. to We and on module three these production, test each adding are systems. We've solutions the new family to year. FOX-P we newest use burn-in new semiconductor The for XXX% since customers editions customers customers CP this fiscal in burn-in solutions see and these of these test moving as and their our

is FOX-NP qualification Our product level entry system high-volume new an for easier a production to initial companies and product configuration test. production low-cost, small our price point system, and for enables do footprint transition to a providing FOX-XP and development,

solution is FOX-P compact systems new FOX-CP burn-in a These Our our expand for significantly the verification new market FOX-XP reliability we will test and solutions used low-cost, tests and for and the and that's capabilities logic, memory our single-wafer products. they FOX-XP devices. of believe and complement photonic

the both shipments these and quarter, FOX-NP new During the to of customers. fourth we began three CP

the platform FOX-P new FOX-NP utilize to burn-in of of for Carriers, qualification these production their in new the along silicon selected step One commitment DiePak integrated of first the our chips. photonics customers and as with family

and and FOX-XP a die production fiscal chips to of burn-in multi-wafer for production test to their the year. using FOX-NP will high-volume customer initial during of development, their plan then us they utilize module transition test singulated solution told and our product silicon our This qualification and XXX% photonics and

devices. FOX-XP existing increasing additional several as test systems qualification semiconductor and leading silicon complement to result FOX-NP new of of fleet capacity, and a other photonics manufacturer, provide The a systems ordered their customer to is variety who of

over case system FOX-NP thereby price allows initial as the to a for nomenclature NP In product to product transition many said completely different parallel new burn-in provides XP, that several of systems, different at them lead and process introduction variations them run the to having temperatures their point process. in qualification companies customer, enables wafers as multiple configuration to or do of FOX-NP and qualification conditions I part at The before. this

sampling, from the in build-out test of next This data initial a we ramp as market, $X.X to the the and also system talked devices for FOX-CP to our system. will During the of major very enterprise XXX% with this new volume quarter, which be announced production a years. new supposed past, and in center the over we've an high about application burn-in million several for customer used order perform

require As levels of opportunities reliability. for our extremely we test related have growth multiple the data quality devices as market we storage as the these where and our new high build-out opportunities, markets believe well to to XG look new market, at burn-in and are customers worldwide devices great long-term end systems, and

We carbide emerging good markets. have and automotive and modules, silicon device package the semiconductor die growth new devices for opportunities known heterogeneous

will very for for about multiple we've significant years. fiscal with had And growth sensors in photonics generated success Aehr remain Aehr be silicon optimistic which and also XXXX. the significant revenue our markets, We photonic drivers and believe we for the they

fiscal vertically FOX-P that as order day a in announced last of end right Technologies, out was from turns the integrated platform our it silicon photonics We the which Skorpios company. for new year, came a at customer our

of devices, to our production high-speed will and reliability as aging demand solutions high-power for and meet a ramp XXX% burn-in wafer and use transceivers. Skorpios significant optical silicon for infant mortality test verification level to part test perform of photonics

of and able NP from to out our transition systems Fox-XP test we production demand. family they very are are high-volume multi-wafer a building their With initial device seamless to to with meet new volume products, burn-in our Skorpios provide enabling FOX-P high systems, in requirements address production test

and WaferPaks of that customers our from FOX-XP Aehr and lead requirements. During the million test system burn-in capacity one system a FOX quarter, additional increasing silicon customer's an follow-on we $X.X order proprietary XP provide production for also this received test photonics totaling for

and FOX-XP contractors year forecast systems also and for customer calendar orders WaferPak This beyond. continues additional throughout to XXXX

now We with customers new engaged with family our different products. of actively over dozen a are FOX-P

talked their we've to systems on systems, past these new WaferPak customers with new contactors systems business each and and increase DiePak but our new corresponding to add also and installed FOX design business as about will of only continue they consumables we order our device ramp. calls, will our base As contractors as revenue, further grow not

least exceed more. a in The the business long expected half for annual and test FOX believe consumable years burn-in after at These life customers expected the to XX most or systems to is have these We systems a at few with our and reach very are system years, can continues installed. revenue. we DiePak our long contactors a WaferPak next of over point where use

number both and our expect market expand systems significantly base substantially. of customers our and of the CP products, that will FOX and we Fox the NP believe We for to increase installed

and stream term. the The along Aehr proprietary FOX-XX Fox-XP, FOX-X Fox-NP, revenue Fox-CP that Test with short DiePak this Aehr and legacy our WaferPak consumable and in systems, provide contactors for long the the and/or all use

of we number profitability of of in fiscal the expanding family growth systems with about fiscal as consumables XXXX, well with the remain in within returned FOX-P the fourth very customers, as and year finished Heading customers and quarter. installed optimistic revenue Aehr to our strong solutions. base into our

fiscal and anticipate die based solutions, we for traditional XXXX. year-over-year overall in we of burn-in and level, an business, our recovery test growth While slow customers legacy markets customer commitments model packaged our singulated to market in to part significant wafer expect generate upon FOX revenue

the XX% fiscal ends and million growth for For million, profitable XX, XX% fiscal be May that revenue generate XXXX, would $XX represent which total between year-over-year $XX and between the year. a we expect year to full-year a of to and

for let With that, it open questions. turn we up before to Ken, over line me the

Kenneth Spink

Thank you, Gayn.

$X.X the year Gayn up revenue in million and of we strong As year. than to compared in million profitability quarter from in more quarter double finished and preceding sales fiscal to $X.X the quarter. were quarter a return previous flat million, fourth in the the fourth fourth Net $X.X noted, the the with

burn-in service from decrease sequential a partially by increase in revenues increase $X.X The customer $XXX,XXX. includes wafer level at of offset QX revenues in million, an

revenues and a million XXXX revenues to a increased compared $X.X year, customer by prior of level in partially revenues flat burn-in million, wafer revenues QX $X.X offset part decrease by of were decrease While service in packaged $XXX,XXX.

per $X.XX and excess compensation the share was of non-GAAP million diluted previous exclude expense, of Non-GAAP to or net income income the the $X.XX in per non-GAAP The or charges of share the results the or inventory. year. of $X.X $XXX,XXX and diluted obsolete quarter per fourth fourth write-down $XXX,XXX impact net in stock-based of non-GAAP and preceding a compared quarter $X.XX net share diluted loss quarter a restructuring in

income which diluted income quarter included net the and write-down impact GAAP of was per million QX. share the diluted for $X.X compares $X.XX our basis, in the inventory million year. $XXX,XXX in GAAP or approximately the $X.XX restructuring share the workforce fourth diluted or GAAP in to a $XXX,XXX or the loss $X.XX This share, announced quarter includes a related in charges we of On net to restructuring reduction quarter impact in share net per taken of fourth $X.X preceding charges which a quarter, the or of per prior $X.XX of $XXX,XXX in and per

to fourth in gross was XX% profit QX sales or of $X.X million a fourth quarter was the Gross or million preceding compared inventory profit sales Gross year. profit the prior of $XXX,XXX or quarter $X.X of profit in the the quarter impacted preceding of $XXX,XXX sales, by the write-down. in XX% third of and gross X% in of

QX a forma gross pro for excluding write-down, this XX%. was basis, On margin

primarily of QX of due the gross from is margin the Excluding The in year lower in in a change percentage inventory due QX sales increase to gross due margin write-down, overhead in increase product from higher the to QX impact the a to revenue mix. costs as prior levels. of is

accounted Packaged burn-in packaged revenues compared for in part QX level XX% of in to parts XXXX. revenues QX in accounted XXXX. were in for XX% XX% revenues burn-in revenues There revenues XXXX. Wafer burn-in QX of QX revenues of XXXX, no

operating Operating in in in charges million to and fourth of of the were the quarter. the expenses $X.X the $XXX,XXX million the $X.X quarter preceding taken in the which restructuring included and expenses $XXX,XXX operating in expenses prior-year included in charges quarter, $X.X This quarter restructuring quarter. million fourth new compares taken

$XXX,XXX quarter were and QX of FOX-P of due to new fourth previous our from the million to material in quarter preceding products. R&D expenses was The increase quarter. fourth project the increase release in for year the million $XXX,XXX compared the $X.X an to $X.X in expenses related primarily

related $X.X to in The quarter and fourth for preceding fourth million the in increase expenses. million $X was primarily quarter. employment-related SG&A year $X.X from prior the prior-year million compared quarter is to the

the were Turning to fiscal $XX.X for compared net sales million sales in million to and in million, customer XXXX. XXXX due million, $X.X $XX.X packaged net in $X.X part burn-in XXXX year primarily for and year, prior the in $XX.X results net full million included wafer revenues, $X.X Fiscal level XXXX a of service fiscal revenues. part results of $X.X in Fiscal revenues. fiscal revenues packaged reflect to decrease from a million of sales decrease revenues million

and Non-GAAP per $X.X loss $X.X GAAP share included fiscal the for million approximately to of or On $X.XX million was or write-down per in million diluted share, a fiscal was net of $X.XX or during XXXX income restructuring million basis, which for XXXX. $X.X impact per XXXX in net per $X.XX share, charges a non-GAAP taken diluted $X.XX one-time the year. share $X.X diluted loss or inventory fiscal net fiscal compared

a in income per The restructuring or a approximately to our million related to announced for $XXX,XXX the quarter $X.XX in net third in of consists XXXX. diluted share compares adjustment workforce fiscal QX fiscal $XXX,XXX in obsolete and in This XXXX one-time reduction in and charges $X.X inventory. of excess taken charges GAAP $XXX,XXX

and restructuring reductions reduction sales, force. and began are As cost of future reduce quarter prior to expected included noted The the action the growth. starting company for result in costs to consisted XXXX was over XXXX. QX headcount company and impacted of the that taken and by for officers, marketing, align X, in per severance quarter, June managers reduction in headcount of savings $XXX,XXX charges resources cost operations. in These impacted staff The fiscal individuals R&D

unique to related more shift level included reserves The to customer-specific inventory packaged ABTS ABTS products usage FOX-P primarily packaged provision and to obsolete The low older $XXX,XXX parts wafer $XXX,XXX portfolio excess for The MAX forecast taken products. and FOX-X related part standard, reduce and Company products for volume MAX and and reserve limit and legacy charge product high-value steps to its has products. to related configurations. burn-in

for to profit fiscal profit of sales, XX% XXXX. XX% of net or $XX.X was million $X.X or million in net fiscal compared Gross sales XXXX of gross

write-down of Excluding fiscal be the the in impact XX%. the XXXX $XXX,XXX gross quarter, third margin charges in inventory would taken

margin and the to percentage impact mix. in the a gross change Excluding prior costs impacting lower as revenue from of levels due the the of sales decrease year inventory a is overhead product in write-down,

XXXX, XX% revenues accounted to to XX% compared revenues XX% FY service burn-in XX% revenues for of XXXX. burn-in of accounted revenues compared XXXX. in of FY XX% to XXXX. accounted for level in Packaged of FY compared revenues Wafer of in revenues revenues for parts XXXX, XXXX, revenues in FY in FY revenues in FY XX% of Customer

to included QX. related our to expenses fiscal operating XXXX. $XXX,XXX million $XX.X were of XXXX $XX.X charges compares restructuring This reduction of fiscal for expenses million in in workforce and announced Operating approximately

Excluding year. operating charges, expenses increased prior from of impact the $XXX,XXX restructuring the

expenses fiscal million $X.X in increase in compared SG&A to increase R&D in Corporate due associated fiscal fiscal the were an Marketing million primarily reported The VP of fiscal prior Sales of from with XXXX, XXXX. million the of year XXXX. flat Executive and $XXX,XXX expenses, addition is $X.X employment-related $X.X an the the from SG&A and to Controller. in increase was in XXXX,

Turning balance to sheet quarter. fourth the the for

fourth of in XXXX, Our of of at $X.X repayment at at on revenues. May sequential reflects impact XXXX and million were the cash to million our collections and equivalents QX $X.X preceding for cash our end Aehr the maturity million quarter $XX.X quarter. The cash position note XX, decrease the the compared

As revenues interest compared we in the end million, quarter. QX $X.X receivables XXXX. prior in noted in increase is call, to preceding to repayment The compared the with expense over due the $XXX,XXX at end. QX in our receivable savings million of XXXX the at in we quarter $X.X per note, of primarily Cash was expect sequential quarter increase to

at to compared preceding the preceding and Customer to long-term $X.X $X.X quarter XX was end. and were $X.X deposits at was revenue, and the quarter equipment million, $XXX,XXX deferred Inventories May the million million $X quarter preceding million, compared compared million, at Property $X.X end. end. short-term to at

the backlog of Bookings in $X.X as quarter Included $X.X XXXX. million XXXX the bookings XXXX $X.X in multiple million million were of orders May FOX-NP DiePak was systems, preceding orders. XX, May fourth and compares the backlog XX, $X.X FOX-XP, at and WaferPak totaled for This at QX and to million. end FOX-CP and quarter well at as

Now turning fiscal our outlook for XXXX.

May XXXX profitable the XX% of and for XX% year year-over-year we year. XXXX, million million, be $XX to fiscal between to represents be expect For $XX and revenue between growth fiscal ending XX, full-year which the total and

a fiscal for We expect first by pickup the three to slow quarter, quarters. in following a followed see momentum

level upon for singulated based is wafer and forecast burn-in. and solutions our and Our customer FOX die modular test to commitments

part market. packaged recovery our an for burn-in assuming market are We slow overall

significant and such, FOX-XP part customers for a our burn-in we from on business remain lower of both to FOX current with packaged opportunities including contribution our fiscal our margin revenue key CP and As that we anticipating XXXX for year. are customers introduced sold fiscal and this amount focused systems products, new not

This prepared our remarks. concludes

ready now please take Operator, go are ahead. We questions. to your

Operator

with Instructions] [Operator We you. from will question Christian first Schwab take Craig-Hallum. our Thank

open please Mr. just in be Schwab, will Your go line a ahead. moment.

Tyler Burmeister

behalf of Thanks questions Christian. couple ask This of is Hi. on Tyler us here. letting for a

Gayn Erickson

Hey, Tyler.

Tyler Burmeister

Hi, guys.

year-over-year was that's products more where specifically growth? customers expected be going us guys this next if you applications to some or obviously you can can color, maybe year, So hoping, driving XX% comment on first I look what you as give or

Gayn Erickson

of in percentage are and good that confident be a it is WaferPaks. from current their actually repeat their contactors, coming the burn-in orders of forecasts DiePak systems, level customers wafer we primarily or current and whether Well, FOX

yet. So amount revenue we won to our are anticipating have that a sales of not significant we not from having come

full in a funnel we physically markets. and opportunities benchmarks to that, are customers actually related we with the some building and today in new said Having customers have multiple of engaged new

photonics you if more turned hearing into us wave a markets area. photonics again the us really photonics of one calls going on script, the markets. transceivers will, on and hot and semiconductor-related As big including and over in for so as and singulated silicon silicon as wafer into kept that, die and certainly Subsystems well is back call sensors for photonic it's transceiver lasers, over that modules and we're getting I look you my and really and

Other silicon new voltage areas engaged but couple in customers of a the been around low going that that's are blend, sort space pretty that's of we and on. handful semiconductor. new areas, very for with different losses. current allows a the on high is a automotive – but of Arguably, while, a And things one the trend a this acute with is process carbide Silicon is very carbide semiconductor automotive. it's

you electric space subsystems that if and volumes look announcements the companies of their of vehicles of it things are different the And vehicles. of are and for the electric other go the and are are all that switches driving the that, all some at of application selling power electric into Teslas public the world vehicles that

density. and wafers density carbide, a semiconductor of order some were the than magnitude Standard article of more, for just wafers this and arsenide silicon there's power application, a folks they when defect traditional really market much defect money lot referencing a processes, so of with gallium or We're making as and so with not CMOS, silicon are themselves in the where discussing bipolar lot high investments XXx lunch so than actually that suited on have today research had even in an and higher area. more I

of business inch square the and every reliability have might build, like a in of is and recent for defects, What conference they that that of the it to company that's us means semiconductor one that test to your number the XXx in that a players, Silicon big and infant the of Carbide companies is big up attending, something do automotive were one saying, need we mortality the because you guys to talked atrocious. audience of guys, stood the rate

in key need right think devices, going that But level engaged at them. a a some play to We really to good to market. I We the because devices of we're we of get to be part silicon couple customers that a that's there's do with us, type testing automotive now. products these out spot the able carbide are for for wafer be could multi-wafer things differentiation that

The historically talking business. engaged we about XD, that Unlike and XD still summer to be next bigger are programs started mean, are multiple was daily that's thought our have a counting lot of last This out talked and less. lot year that But sensing still engaged a we've much that in. about, we we're area fall, year that market things that when in. we this we this a the year, an summer, portion meetings – going actively that on I in play programs, we we're

those know areas but of So, I that's, of we're critically customers, important see we in. ourselves to the think, some a we that sample

Tyler Burmeister

thinking first this, equally color. as next and And weighted? some half for there's apologize you expect we far great and should have give there? roughly a a comment on about I That's might I but second color Thanks. if half. missed be Any that be as take to year Or then would second

Gayn Erickson

demand, were production meet We quarter to very to that alluded in, actually engaged had actually of early to a get customers pounding to on samples the good had had the quite ramp. it. their good a some and QX. Ken we The early in products we're think, us – frankly, them in quarter out I customer Yes,

the that So additional purchase the for and that to had pulled are in shipments NPs planning they FOX-CPs in some here. into as shipments know head we customers QX. We on to systems we year

capital to of guess I in probably of bit doldrums. the we're I a lot softest a investors, up the space QX I emphasize, relatively equipment of other was semiconductor in lot I I cycle a the the a speaking, is year think one right throughout thing with now. and in now semicon, So know want CEOs; pick actually continue of right our is the And quarter year. mean, I middle to and the talking downturn sitting

if now to the a think that at to numbers. you, market up our semiconductor all we products all I'll and customers them and moving can we're and day get don't about right engagements that. it they're these as And anticipating to as tell in We're lot turnaround wake big some meet every about fast market. are new not with The they

we're the us in the were this would are customers come we this market market see upside. and hit to to base actually year. If to hear we level our from base with as But our order that to even CEO back business increase, for to going needs installed numbers that not turnaround

Tyler Burmeister

for me. That's great. All Thanks, right. all guys. That's

Gayn Erickson

right. All

Kenneth Spink

Tyler. Thanks,

Operator

We'll our question next take from with Kevin H.C.W. Dede

will opened sir. line just a Your go moment. ahead, be Please in

Kevin Dede

so are out Gayn. apologies. Hi. the you got of a of there's Good doing? listen, I office, noise. afternoon, How background Hey I lot kicked

Gayn Erickson

Okay.

Kevin Dede

you've talking silicon Gayn, photonics been and XG. Listen, about

you that if that critical. could and if just I see what devices bit tell a mission meeting telling thought more more little think and extra those are you customers you maybe equipment you. us deeper all little why a your dive in It's color you that test I level provides. on burn-in your just of provide this move bit could

Gayn Erickson

in got you that's here. other folks call. up, to it's And Actually, That's that a very good if Okay. will, good I is because breathe live a point, to and we've in. think good tee for

the backbone in mean? is more what the general, into does that data centers. are the are and the in So people And of Internet think deeply it fiber space optic so, what for moving silicon that of driving communications photonics,

disk and the a and rack between between of servers So the within within only big get data and not to within the push drives servers between data but servers ultimately the centers, centers the

transceiver, was fold fiber for the that fact, step. been The in back is one if go transceivers with As pyramid, increases each XX everybody in challenge the you storm optic XXXX headwinds when the will, change a you The down was component. timeline the of has transceiver market that talking for is a about time challenge a have fiber transceiver, was too expensive. might at going say fiber $XXX just what XXX-gig up XX-gig to that's optic been the a or a how world, a

the get And transceivers optic going infrastructure no fiber of house never could your to to a for so our in because one's homes. $XXX putting pair be

The structure it and the could – vision by modulators, transceiver the physical folks into structures have everything silicon-based RF has a top including replace that our and attach directly. you subsystems plus there, on that a out logic of that if several of are allow some materials those all it, customers a bill all laser that then it of demodulators and of all that a of create $XXX to on make would up [indiscernible]

space You Moore's use able been the a you create has if wafer to bring a that scale a the to could to of Law never silicon in really chip, entire and will, subsystem scale. single

at hand, things of factories that these So or at $XXX devices coming silicon or points so. have photonics $XX instead building with of in – $XXX or having are companies by at piece, cost sales introduced entry $XXX in a

they saying it's don't to lower to a can these are to It people industry it forecasters because demand get if be really if be the happen folks lot market for devastating to of in that for actually points. scrambling and fulfill all price going to hard you it, the is there's

so tees things many a elastic up, why right, All silicon is that it see photonics? that deal? like are that. big that don't Why You

that it need what nitride sitting themselves What's the aging. interesting you wafer, the on for physical structure to is such the and when of wafers have gallium lasers two these as industry the to arsenide been that move lasers decades, gallium transceivers are refers the okay,

get not bias XX settle be of do XX, actually will If it. you the them to to out power And period will XX, and in power transceivers do that, able be output hours, change. devices able at never if the to it a you'll bin for high high-speed of you

the an lasers. those industry So does entire of process aging

When Now, the lasers there and that traditionally, onto burn-in to picked are equipment hand the hand than done wafer other wafer, laser done or in those of transceivers. and structure racks placed the for singulated discreetly into are that placed at that other put then you they're no is by level. die you

and put you infrastructure, the do it's have it system, mechanicals. yield other expensive of in the the you then If extremely loss

our So of been the ability is actually X-inch an X-inch, an age XX-inch it form those for a lasers told the customers market. wafer, capability by we've silicon to wafer, that entire or a photonics in enabling whether be

our insertion, the effective it on in wafers silicon of to big products the XX single one have ability up FOX to be all test make of wafer So, that cost in devices parallel those to and to that's die, able a test all a photonics deal.

are to an CFO highly the in both contested, these interested it's XXX pads tester, level have differentiated that and to our wafer And power in per for when wafer, solution, of millimeter. allows these thermal the have we capability in say, a of remove side level they immediately thousands entire across a what to contact at one up we small lasers watts us to contractor companies, introduced that the that to or of of a the CEO because proprietary unique

And so if we're you anyone send actually if gangbusters about we're knows that talking to, my happen name. of is FOX system, hears know way, customer please why kind the that, any we're someone traction. By in as to getting not going it,

that to our we retooling go been that. after marketing We've ensure can conferences. folks sales of and kind we've been attending So

conference Just we a at recently, in were Germany.

customer I It's very meetings. think interesting we add dozen up to, a I or don't a know, dozen space. half different

it required require applications. really the and is it So although requirement, aging of burn-in aging those lasers we burn-in, call in is –

telecom quality of On One that, to be expectations are and that do comment. the mortality market other devices going spaces. and of infant unacceptable completely the data have into rates top these

to the have they're while or infant have structure itself even How in the a and also would So ability some the physical long-term initial higher mortalities aging, cases the to quality either do? or I the reliability. of to them semiconductors we bonding with laser doing allow weed out associated

Kevin Dede

I you I if but What potential you view was I think you that level fast if same many sort opportunity boat? try out us, miss don't to? they are you did can so get is? do the the there? of wondering are you How up to How the guys before do How thought there are the there, could XG, customers many you size ask market. you aren't think top great, to tell the think that on do moving talking

Gayn Erickson

I'll too. question, give a half customers. think we're type with a I We time Yes. photonic good over actually information hide engaged a dozen you some, last stated, photonics some That's silicon and specifically I'll

of over not classes, There space. playing are customers into are are engagements XX So classes, half a types the of this that photonics different few related. actually

that of our folks. There system. those raw sell semiconductors that lasers. whole target. the are that themselves. That are is That that a least and sweet the the the the engaged guys. sell target really There sell That's spot. folks folks with at And a with us. isn't we're people And on lasers semiconductors just for engaged we're They're put the three

in out then less, are for soothsayers of photonics the so a little dozen or And related that. dozen a I that depending space, there underneath who kind of the buying the think in space, people silicon sub-suppliers if you probably maybe there's another on range. but maybe all

ones being companies the of even acquired. hundreds are and not there's there, out So small

couple someone handful ago. of of couple, a folks. years up few a picked Cisco a picked seen, Intel you've As up

too. of are the – turning into So little there's some guys guys big some

than companies us, to I two, our cases, of kind looks could to of more one, be XX. that what it some For systems. production we're like. reasonable three big In mean, see for it's watching own

So of to we're watching see. kind

one that test and get aging doing would do thing how holding that been the single burn-in out side them of while nobody's successfully The down, single one is pretty and is and a of like is but market to The is able things. around maturity them every test for of of up been to the that every to haven't one it's to it. figured – laser times they come avoid

will think it the in more know, Is type million? it. it or just put space, our the trying example. number? than kind for burn-in $XXX from it over Is be million I on Can to Vernon a look we're of How don't you $XXX pure that? space? it So a it's of space, contractors that that arms with million $XX

it another is in it where XG with if wildcard XG. it. XXXx, telecom a But will, of backed The because transceivers folks datacom, the is side really which the kind datacom a of numbers. XXx, more will, the point of point are Most on is focusing if on telecom out to are the these you than all to centers big are all the XXXXx from planes the data you the, begin

long version tends a XG a disk a a expensive of photonics maybe – silicon be The one between more to drive. server and haul tends the than infrastructure

these So areas even are burn-in. all of longer a very that cost or burn-in, can effectively we XX-hour with

Kevin Dede

Thanks, Okay. Gayn.

everybody would of in, is So I'm fit on and more other that. really I point stations you a you've if micro about talking in chips got arsenide mean, that XG lot is your versus gallium hand wondering base think photonics and a silicon maybe

Gayn Erickson

certainly of a there's on understand burn-in bit out is folks good solutions side of that are things. quality reliability infrastructure things, a And of those all and RF rising it, being based needs there spent is microwave going think transceivers the the trying But I’ve lot a and bit space. anything the more side themselves, bunch us. tide a it's in ships. there of to been on little not, XG there's for for XG to related a and and money But, it other the have as to that logic other there. things. that transceivers mostly of into We there's processor I lumping related we

Kevin Dede

if Yes, or things, I two no, may. one other

I again, Before go I the start off call. into XG had this of overarching question the

I to on right, consumable, then – you I'm in your the on consumables offer in and package, the to hardware? a your die all Given maybe a wafer And have wondering flexibility spending scenario, so to migrates. change if as service new versus customers test that technology you'll particular WaferPak a have you flexible those DiePak, their their a or consumables coming narrative flexible guess for products their a

Gayn Erickson

but again. we'll some for last not get a back then chance go and questions, let maybe come now, Kevin, And these don't your other me that ahead like let's I call right. that All folks one and

buying high working all buy and are which qualifications, us few right it that might customers They're in their is couple which process. many do they'll how one's trying in might then a better be a a the from in one. is quantity one's determine to WaferPaks now runner, of the designs these cases, of So that. They small and have out different figure DiePaks to versions to handful going be

cases, the or XD, a look later with not now, product year have they later, and okay. WaferPaks if months, their We that's silicon many come their all know one customers. that's one one XX months, to devices, We're obsolete although a XX, only as already would from half XX photonics XD the DiePaks us, years in those One few they product. six engaged in sensors, one actually you would need useful, be the these And the in at itself that's and months. out, in tester continue new

system that original a piece, And look be range and a of NP test buy in so, $X.X a be the ASP the maybe number $X.X WaferPaks they the a a might scale costs. system million then million were And $X the cycle you use the few customer year equivalent another to for as system to consumables over might or where five-year an might full the NP cycle, might of if decade. from million life large at or itself say, of

of actual consumable Xx value the life over the the initial maybe so, the is And sale.

Kevin Dede

on for it much, Apologies very Yes, helps the Thank entertaining It Thanks for you all tremendously. dragging call. questions. my Gayn. does.

Gayn Erickson

All good.

Operator

We'll take Larry Chlebina. question next our from

Larry. will a be moment, Your just opened in line

Larry Chlebina

Good afternoon.

Gayn Erickson

Larry. Hi,

Larry Chlebina

was board. I the test products across during – testing, basically you the as as verification and your cost by well or reliability updated FOX-P functionally the and state website, that reduce

You smaller tests a XX cost system. with is lower versus traditional achieved also XP the referring that at to presentation a said in this the footprint. I'm you're assuming

take particularly that's get you're benefit, packages cost of for both, you are stacked If of benefit heterogeneous advantage to involving that testing of in infant XX end there pipeline volume would that semiconductor reliability test the have, out in particularly, the this the while and that the any mortality? doing high dies the or correct, way applications

Gayn Erickson

Okay.

Larry. in memory being so flash flash, while There's traditional test And memory. a devices example, it's certain to that mix, more they're order or NAND to burn burnt-in for NOR them are or probably testing in, letting themselves the

extended will functionally in. run of you the a stresses, to at elevated stress creates burn if device burn-in, temperatures and The an period and for test the voltages, time what is that's and devices them to

a along the we case, devices them other good bad customer the into diode. an upon at to will are laser device is for the the and testing that that are the note functionality from functionally example, There where is for a really X-hour example. failed X.X hours In lasers failure way simple, that pretty burn-in,

of the throughout we a a precise the that voltage and a state. And And functional able failure. controlled create so is that or cycle, temperature, parametrics for current power power monitoring the testing that, high the and is are very precision it to be driver accurately the very whether –

diode but other you test during these on it's of devices. as failed. Now, a that can And see will that functional failure laser exciting, a had it the some note for not we

it actually mixed there. You in

do, happen You big know means word a you folks don't. little that what and a talked for that on. a bit days but I what's lot these going of about I It's to know heterogeneous.

memory Folks with system that subsystem, core – system logic TSMC, in mixed for to associated particular package. a with the in applications like guys chip XG, have get the Qualcomm's, things in that like type realized or signal a where devices, an a them there's to Intel, order into these going big are on new along RF, and a

no They're semiconductor of carbide their They their might or management RF, of structure in get one power their for silicon gallium integration silicon-based ICs. able be longer a arsenide bipolar for level using process. that to all processors, for type a a

So we're and seeing modules. more more

via call a or semiconductor. people via that, wire through bonding, different I'll are – where package two same create semiconductors silicon you three into mixing it if to the will or

balls it's sitting chip, at bottom. the there. It's on got look You the

You five, think four, chips chip. its it. of six it one three, In might reality, be inside

it turns inside percent out carbide you $XX processor. take silicon the a associated with the Well, of you of chip a carbide, problem a failing silicon couple be microprocessor alongside density this $X, to because a might little if carbide a a of out have at and rate might defect going of rate. $X And failure failure have that chip put take silicon you're

but trade industry, all the of BiTS all if this in, to The burnt shows to in single allows all we're if together. be now quality-level the in it burn different so a can buzz, And Test is these or whole SEMICON or have package. or levels. West the ITC to go discussions at technology or different, things packaging the you it, okay, they of even I mixing great, us integrate those went do to devices around, Southwest different And we

needs to at at XXXC industry automotive be or XXXC. for Flash in that it an application to this microprocessor knows XXC. a always processor I example. a dies burn-in to use The burnt memory

the the the in same that it's cannot and at processor at you a you a time, problem. So memory same the burn-in if have temperature flash is, package

to – to test CP, that, our happen, shine. is really So die And wafer NP device one reliability out things products which level. that devices or XP, the the our as our that's and flash of only they FOX had at either exists is people we that where need state simulated the the for FOX-XP, with – that anticipated products with saw as move these

industry IC, rising draw tide a a broad us, so non-uniform, homogenous not And but company. a going package of mix ICs heterogeneous towards which is IC, the the single strokes this a in is mix, a this for for of a

much before the engaged where We're that. that with testing module a failing of that and module. for is wafer they huge yield lot products to use to them causing a into put customers level in our gets is loss are see do we cheaper several it IC IC that a them and So it’s of burn-in one

Larry Chlebina

high-volume or on in working you’re application. Where I know XPs. to numerous Then on Okay. load that? would animation be the good. stand That small was That you DiePaks for WaferPaks

Gayn Erickson

still engaged are some We in programs.

are announcements of applications. made along valuable public very we applications but where have to do some level really a those high-volume that automation not respect with higher believe any lines, We there anything in is

under that. that would fully encourage turnkey they're any we would so for be to to customers And about us a hear happy if in multi to non-disclosures conversation have for please a are out and application interested burn-in listening way contact we that lights

Sorry, Larry.

Larry Chlebina

one. quick that at anything Is that last One I horizon? your all? didn't fine. on That's Is OEM forecast news business? on the in hear any chamber

Gayn Erickson

color give our put they little think that more we in didn't actually remarks. and forgot, in prepared out. put I that bit you a me Let

some along, For those folks a that acquired. our had think have actually not during going actually last customer I was year. was able followed who to acquired been I'm just we do – they've of interpret business with OEM they've names, that, but to the

not acquiring move end I've the with the solutions, to to our their as would customer. to high-power conversations we direct assure sign We planning that we and actually said management keep us of selling only them. them because they we those chambers to but the to a document forward guarantee, that it personally acquired that company the would in was had talked to have are not had acquired it that use continue only and company important and they them they

application our out and current they materials there be business. sales we be similar our that. upside forecast. anticipating to that currently it forecast couldn't need particular of is for expectation as substantial, Having would in we're orders all doesn't that equipment might said to that that that, mean So that That not or current our ones, get

Larry Chlebina

Okay.

is it's your getting certainly forecast in and not them. So

Gayn Erickson

that. it say Yes, longer a to just lot takes

Larry. Thanks, Okay.

Larry Chlebina

Thank you.

Operator

We'll take from [Charles next Doe]. our question

open just will a Mr. go be Your Doe, in ahead. line moment.

Unidentified Analyst

to of for consumables the you percentage couple a comment revenue XXXX? be from Can Yes, expect XXXX questions. versus of fiscal you on

Gayn Erickson

similar Okay. it revenue to And year. our we I'll XX%, what, of this expect right was if consumables for over not tell so you be there. our higher business, XXXX a about third

Unidentified Analyst

the of expect NPs percentage the and What you of do in purchase to Okay. FOX-XP? FOX-CPs result

Gayn Erickson

filled in an started percentage and XPs over high – a and expect own the also customers with of with I NP customers we in some XP NPs. cases had time, then to

I is for CP application is where think test a the shorter. CPs are with wafer a single much times The mix.

you XPs the if So you then and up wafers whereas to to time run load, a XX and allow NPs them. at will the

And The alignment between it's aligner typical for in hour that sometimes that effective what burn-ins, application WaferPak devices is shared offline because our days. the multiple cost extremely a that be done can the have is we blade. of call

the XP NP a X has in wafers. in have and would blades blades, that So XX an machine, XX X which wafers can handle

you minutes. blades, hour, an An than are even makes short, offline XX applications shorter could even tens really feed say, that sense will. XX, And the times two or that. and under where maybe if in but time there that in If aligner maybe are test like, under of hours, probably

a Our fully contractor. FOX-CP comes turnkey solution the automatic wafer as us, with prober, including integrated, with fully a and

the up You to across will full a in, all wafer. wafers button it a set and it of will it, of run and wafers come those hit and product put walk XX you you away step you through

tested that step five on to it have wafer. And at that wafers them. though across are that even now XX,XXX right XX,XXX testing have a may steps time, we're We take being or devices XX,XXX

wafer. one And with better short a That's for test application is times, the CP that.

buy XX XX needs somebody will. CPs with then So, if the wafers. you probers, would XX They

solution. on But can CP a be more. cost if cost a per effective are from And is wafer so test a the capital the lower, more times cost it

So have that's XP necessarily natural a customers aren't for and an so fit with both, okay and CP us. customer we

Unidentified Analyst

for products year fiscal for outlook XXXX? the What's new

Gayn Erickson

We have major programs. that handful throughout products and we'll even programs there's introducing and major the two, what for be enhancements of I our would always call a year,

our committed for very to One and is differentiator it's of the things a that us a we're as think company platforms. I

able to we're take. So

the an would a you program, long. was example FOX-P at the the albeit six NP If major a CP an months of NP, entire about be program considered or family, look

to more our sleeve. solutions respect to and software to burn-in segments. this packaged and into but point repackaging modules, can a particular within And differentiated family new reusing in the things. to the we're do market any so case with we new By of and – create create blades, things, either our detail blades probably up want electronics address able or don't adaptation we're the FOX-P channel by roadmaps, part support all would creating we our have that And mechanical those our new go things new infrastructure some

Unidentified Analyst

I more questions. Thanks. no have

Gayn Erickson

welcome. You're

Operator

StoryTrading. We Ben Rabizadeh have with in one queue, more questioner

a moment, line Your opened in Ben. will just be

Jim Byers

made And individuals each is, the folks out we the star, on a being right. had on in two last just the and deal line, difficulty. mute to and had reason of of ones try connect in we calls, big All though And seem it off it I and just make But if seems your think Ben, hit star to mute, even the ahead. phone's and mute then to work, take doesn't was, one it sense, believe. trick I go on

Ben Rabizadeh

Gayn. my quarter. Hi, Great taking Thanks for call.

quick gross How's questions. the The at margin, there that Just the a About same? XX.X%. improvement couple year? looking for fiscal great

Gayn Erickson

little a Yes, better.

Ben Rabizadeh

– of are the great. that range? And Okay, would that anticipating be customers that you that or beyond million, million any new including guidance is in $XX upside to $XX

Gayn Erickson

a got customers. of It's number conservative new

are have lot We to plan. more add that needed than to a ability the hit

they ago, anticipated million was that lead a we one driving significant some have $XX-plus we're a it's there We need not So some have don't I out had one-year our fairly followed with had major, major that does to there's program of that come no to I miracle folks need contrast us. it. by in. business. had customers mean, in But – a big say customers that would customers

that and lot have critical revenue, base a significant in out not that are quite of been installed that that. there. that well going to of win not very they programs about had visible, into had high do has so no a a later particular very to been couple out devastating had at known, although later, amount we're We And months get we got we it some call the competence. has of customer of have do sooner companies a month or we pushed That with that

new I'd pretty this is risk perspective, plan. a a So customer low from say

Ben Rabizadeh

what's that out somewhere question. And targeting have there but been Okay, with last that per year What's products This may you're else, size market great. revenue? potential covered the current you're the just annual market offering? in

Gayn Erickson

around our broader mean in the the trying will, to of that's were have is traditional there. been part Yes, market out the a there, somewhere good that any you get on point. packaged at – burn-in estimates part have out slowdown, the packaged burn-in, because probably of folks We I logic side the things consumables, if very arms $XX overall annually logic $XXX to that the million without okay. million

wafer the in products, people our there's the level we out go level a some there – and cases, look lot call, figure FOX what and out. not to of just On that

maybe little similar down a year list bottoms-up it's if smaller, see depends the we times, at but do markets. the it of and based look the you And talked size, at a out. we customers, upon we of the maybe about a So plays about test that bit markets anticipated it the kind before, on the ran how kind

interesting that's there's a it. consumable of thing that one And is side

are burn-in over $XXX logic $XXX part boards, side, the – times part called the BIBs on annually I packaged On where for there the $XXX million packaged Xx. – mean, it what we estimate burn-in, at burn-in are million, on $XXX the million, was testers, in a million

because as and us but will than years' larger base the the the on consumable pace, business be the push got out order you business. today installed of business consumables the worth also the is for pushing the we're consumable you've so same industry years, will of consumables, consumable ones the grow, that five testers, absolutely five – buying years we're kind the market and if the three in think tester this magnitude We business years, of four

And exceed case based this share that's base why kind in solutions. unique of consumable simply installed for we a conservatively business will our captive XX%, market with our state relatively that just just products upon, of

Ben Rabizadeh

quarter. guys. you, Thank right. Good All

Gayn Erickson

You're welcome.

Operator

back call further management. would I'd the questions there no time. are like this turn at over It to to appear

Jim Byers

really exactly. release I [not appreciate sure it went We did member is Board out add All thing a Board of Directors. welcome Aehr I new after] to did want put one press we Oliphant if our out Directors, in and on it. of up. call, just Test's a believe We wanted bring right, we to she and Hey, to today Laura this to listening and more

us background side years wafer, us She probing process Test many to a in Intel to known side of and She a of many She that was management number Capital comes backgrounds someone has Aehr through well engineer house experience. years great She a of test, at with wealth and is here Intel cards, as is probe the got years. M&A there. on of environment. up at for things the the for the spent

Company. has want us to proud she great our to practical, just I to great have our So join a that relevant to wealth we add information welcome her be will think Board. to a We're and of Board her

host if appreciate So a by come with Silicon the on you to unless, quarter. products that, everybody Valley. things next happen of and us Valley. be you and in near you and and very love you working in we're always, in. about much Thank some have our We'd anywhere call show calling the you will you the here give and I some technology always to catch as And

Operator

your In dialing and for participating. will you for today's conclude event in Thank that call. conference that you participation. all Thank

disconnect your now may You line.

Aehr Test Systems (AEHR) 18 Jul 192019 Q4 Earnings call transcript