Earnings call transcript Q1 2023

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Operator

Thank you for standing by. And welcome to today's program the Enovix Corporation First Quarter 2023 Earnings Call. After the presentation, there will be a Q&A session featuring Enovix management.

With that, I'd like to turn it over to your host for today's program, Charles Anderson, Senior Vice President of Investor Relations and Corporate Strategy. Please go ahead, sir.

Charles Anderson

you. Thank welcome first and results XXXX Enovix call. conference to everyone quarter Corporation's financial Hello, are Chief President today, us With and Executive Dr. Officer, and Chief Talluri, Officer, Schmitt. Financial Steffen Chief Marathe Pietzke, Ralph Commercial Raj Officer, Chief Officer, Ajay Operating

will questions. the your Raj will the we'll After an then Q&A overview we give take conclude session call. and

ir.enovix.com. XXXX this available let the market after call me continue, that on we available on letter website remind you later of website. we the page today. shareholder It's A released will be Before investor kindly our video of our at first replay quarter today closed our relations

on Please contain current differ may from letter, forward-looking shareholder risks of expectations press actual all are materially or results future that variety this based subject a to call forward-looking note due our that statements factors. These to and and release the uncertainties. events and are statements

and to today, letter discussion factors All financial that could affect Exchange of and are filings today's our shareholder future our in Commission. statements refer made business, results and the Securities disclosure as For April please with our of the be duty XXXX and intend except information currently available to no assurance law. do to we XX, as to no that update the by based these and will required prove We undertake can not statements us. on give correct, statements

are we During non-GAAP in prepared not which with also accordance this Accepted measures will Principles. call, financial Generally Accounting discuss

financial reconciliation GAAP shareholder financial of measures a in find the letter. the can to our You measures non-GAAP

will begin. Raj Raj? to turn over call to I now the

Raj Talluri

you everyone for you, our thank today. joining Thank Charlie, call and

been a quarter. of executing We we hit key milestones really you to communicate a I'm lot delighted to Enovix, at did are well. quarter. it's solid this And that

batteries batteries Firstly, we Fremont. Fab-X that forecast in talked XXXX of This is we in last about ahead of our time. produced here XX,XXX our

for both completed design qualifying our for will orders also the use two agility customers and we Now a two auto sampling And schedule. ahead of We completed their auto we gen did the our this line, gen line. of also the approval which products. purchase rigorous we line, high-volume for

a our fab this Malaysia Now two. we also in And did of ahead schedule. also chose we for site

excited there hired XX tell that engineers we I'm already and line. you super of see production team for a non-dilutive leadership and a to also we Now our first financing path

as Now presentation. through moment, I'll on a we expand the in that go

to excited after We auto Gen the our closed X closed. Then by million we & X, a intended convertible quarter, did offering which to lines. debenture, that that super $XXX.X our X shareholders, minimum dilution we at is very fund

Lastly, this associations. quarter, from we scale. of made we people are that now joined teams I previous leadership by additions up excited strong really And believe our a totally set number very to some our

that in the impact that are hired progress strong our Now people we also with making. seeing R&D of we all already the the programs we manufacturing and are have in

two Now today. and questions format-wise, Q&A to into then, hop we'll really have. you wanted I any And cover answer topics

going received here, three to questions things. get number of two last in Firstly, I'm that the about been And I months those. I've most

volume The I've produce to our be we of is, many question X and first Gen millions do times batteries will we'll able successful was received do why that and be believe line high that manufacturing.

of Given line. had Gen production that we early missteps some X our

that about talk to going now. I'm So

I'll to from inherent few And And why tremendous chips. minutes. that, months, conclusion they in making we've and Enovix a have I after tell Ajay at looking Now, And tell actually come the some advantages scale. that both semiconductor about Ajay I've manufacturing been can a for many, process, here these absolutely been drawing here I And to you can even in have five. has you little industry. here many three over experience decades and

wafer machines you assembly chips, to process. if expensive which where wafers. there's is we The use there's make really make the semiconductors, front-end process process and a is the very the Then process, very the where manufacturing and is which look in backend test. you backend two there front-end Now, fabrication, are process processes, a at complicated basically

Here, you and and sub-micron is take dyes, small in into dyes put forgiving. you small pieces, actually the backend the is package. more a them The process lot deep and in a a cut manufacturing, then front-end the

digit mechanical which tolerances we actually microns. are to single to Here, have the do in

battery, semiconductor anodes electrolytes Now, the makes how semiconductor front-end of to cathodes, that similar on. so Enovix are the go and process is if materials of you the apply the the and manufacturing to that batteries, manufacturing the these analogy into the very and

in Now, we apply mechanical suppliers constraint. semiconductors. in And buy actually in the What stack rolls the them we we then best laser we Enovix, is of come at they with backend is pattern coated the them, process from don't do similar world, electrodes. them, to manufacture really big those, that

have Now XX to make these to we machines which design the range. have manufacturing this microns tolerances tolerances in to there's is the difference, the big which execute we our one to batteries, and

mentioned, microns these backend in range. typically I semiconductors, As in five the

to is long kind order to saying do This scale. absolutely, and it's we'll an a we'll that's tolerancing. mechanical way at of why and is problem in manufacture be Ajay of I this, be So magnitude able of simpler believe able

you're what is in operational you're from seeing proof the Now, that improvements that of us. the seeing

Fab-X X we're on continue You can the how to milestones all XXXXs and key see and also running. Gen of And the hitting produce we're getting up batteries. executing on

so automation Now to adding that and X speed we handle compared about can once. all Gen X tasks is Gen really at speed, more parallelism, adding and

it how compared it and of video the a illustrate encourage at I'm to point works. short Gen you feel take presenting like that a what but where you to that this side-by-side video Ajay To there's make looks a all Ajay X, Gen give Gen on a that. describes does here. to we in X work you look trying I letter link really X a received. And click shareholder shows that Gen how for these It's of machines. made and And the to you the X video, short all please

what that advantage compared batteries Enovix semiconductors. Now, have this to is

One quarter for since of can understand. produce at is density much in here capacity cycle batteries we Enovix important last moments very higher This been to having our the better process. I've the manufacturing actually is and life aha that the without realizing me with to longer change

to a in experience lithography machines brand are most higher hundreds that and these wanted say other. again, And my of new to high-density processor the machines to in not millions Now deep from of dollars. one you performance pretty buy make memory, let's go a or sub-micron time have semiconductors, you cost much the process of

really the fab house of machines. sometimes upgraded rebuilt these and kind be And to has to

those not facilities we energy our new What that in make completely manufacturing make exact better build advances that advances we same better can making we manufacturing time density. in we in cathodes, manufacturing make we sourcing like silicon-based energy machines advances in better experiments them working and batteries building with We we have, them. to scales. the getting since find Enovix footprint as density, is building akin improve In they're other words, It's better electrochemistry, totally lines new as are we batteries. manufacturer, and on electrolytes, chemists are electrodes, have every to higher electro which make anodes, use backend we at the you are to our to the want

manufacture This advantage the is we for huge a fundamentally a way batteries.

So that this business in the run. will is long I what believe make profitable ultimately very

you about talk major to second to I is wanted topic the Now, out. built capacity

investors to that to that get raise we I our Now gotten I build the we need we've last quarter. multiple of questions lot a talk capacity. mentioned over have options this to the on last will or build, financing as money time

that. we Now towards are executing now

LOI This a non-binding has Science backend high-volume very we staff we line. lines International four lines to our an This semiconductor to that use quarter on in to house similar partner dedicated a a Penang us Park assembly intent is giving Malaysia. LOI existing or to subcontractor. YBS our building letter would in manufacturing how working manufacturing YBS personnel got space of from This with up

of auto addition our Now, in purchase a subject investment some to YBS, with local working to in X is Enovix. this, a syndicate This banks from significant to line. commitment Gen make is

I plus million XX we while the with share fund negotiating financing dollars are least are all what you the details, can of to line. is Now, at non-dilutive that seeking we first

earlier, date with last $XXX funding as encouraged we is million I Securing gave this are not from elevate Now, forecast I now this by the full to us we have said time. year would the funding, yet. CapEx you all very spending them. But discussions secured

call. quarterly on Now we'll this provide next update in an you for the

senior convertible closed Now the Gen lines beyond to of us X we capital offering notes. CapEx, gives the the million that the the we need X X, private That recently & X. make auto $XXX.X funding,

are up need. set we to that words, build able terms other now we in be Malaysia auto in CapEx four lines of in So to

with Now, close with a outlook, let remarks me few here. our

to year time, XX,XXX XXX,XXX cells expect For the to mentioned XXXX, produce quarter. including we second I the continue in last full that of cells

be Now once based this again, tends on episodic at revenue milestones. we're not point, and forecasting because this any to service

transaction, get want next do in as to to addition in this from half to on half spend cash our plan reiterate efficiently. efforts running We of the revise I CapEx more million to visibility the more the a call $XXX internally YBS from Now, company. full lot our and we of operationally own guidance guidance operate quarterly

for start. time off scale hitting last to we in set Malaysia. all We're I making Fab-X Fab-X, ourselves the you, our In in improvements fast and that journey milestones closing, to we're communicated a in to we're substantial

our build are capacity working outs our our to fund and cash dilution. protecting limiting while We

hard our the actually along really us are quarter, for supporting investors Enovix efforts. who thank work employees to I want in their Now this with the all

the more achieve product have year that us. joined when I a than confident shareholder we I of front the I'm right we our to the today goals team value. have even Now busy and right But enhance was and in

turn will that, With Q&A. I to it

Operator

that being begin now call Please the [Operator will session. this Q&A We recorded. Instructions]. is note

comes JPMorgan. Our Bill from from first question Peterson

Bill Peterson

my customers. Yes. was the last it, you don't it I to like and fourth I XX recall was look the but quarter Hi, in even thanks you stated if XXX I in year. noticed of question. third said sample quarter what you back number for the taking or

of of you of many I your how post, based two you on expect this later finished? customers So ready guess many will how have waiting guess qualification qualified And you I How qualified? to guess year? the line that, be for be before I many

Raj Talluri

sampling absolutely. about qualification. question Yes, and customers The and customers is

I he's closest is on Ralph think call this. to the and

if want Ralph to that. you So take

Ralph Schmitt

the question. Thank you for

bigger technology. product and our even at customers a So the of yes, we've acceleration evaluating looking number of seen the

release last the the We the for them, have both quarters seeing exactly in into as quarters that asked in back put But haven't and we're laid this take those million. numerous half funnel till shipping category to in you how the the in now you out start year qualifications the our as we we'll we've been $XXX market the exact in has are schedule numbers with are that we them. of thought on All qualification active our done. still and over the few increased Bill. about products saw But cells design customers batteries

Bill Peterson

questions X great new can flow, revenue? And for I when EX-X. somewhat ultimately, thanks as those Fab-X? Fab question up do Or volume And production mentioned and think similar the When their guess but high for follow when EX And of such customers did qualification? My these through send you X.X, related and two? do move is questions, most get to products to guess, product type Okay, prior I importantly, development, I to then related intercepts? and qualified don't that. to

Raj Talluri

I sure. Yes, about can that. talk

recipes We're life EX-X, or on. to opening on of manufacturing technology improve cycle our really energy on EX-X process and of may density that continue or I process density to the not those target can may in EX-X.X. you know, As technologies our with, continue my improve remarks, improve strategy mentioned, we our exciting, are as energy and EX-X.X, all some so it's and actually various that

end sample year, expect towards Malaysia. in the the all run in of we We to those our expect factories to and

next April, towards factory, into Malaysia in volume high the end and of manufacture mentioned, as like year. get I will samples produce the year,

Malaysia make technology; our run to through, we we continue in will our will progress them We process run factory. as

and where, allowing And as sampling into now. in brake very excited Enovix It's phenomenal not flow outlined just thermal battery more as great and into brake flow flow batteries, And make technology piece by the technology are these runaway, flow. by I'm And paramount when safety for put flow, has, is importance. fact, energy safety batteries. we that batteries density is with of to really brake a in integrated a go Malaysia provides you brake that brake will help we more

Operator

Rusch Our next Please question comes from go from Colin ahead. Oppenheimer.

Colin Rusch

much, so guys. Thanks

are engagement you've needs the or Can and You as gone current meet last that from product to four activity? to speak those being able and the you’re months specificity on the you roadmap the separate customer so? to adequacy through design needs of incremental gain

Raj Talluri

here, was shipped micron I few at Yes. I on. got of will density customers, as found will I've them, anything comment thing many, spending time have a energy ask that customers technology same as solid and I've One to the I feedback we're you comments. today. make know, on that again, lot it. as this when so years lot and the that been a battery and and visited have many guys a are we to, And is I talking he more from is it of superior and Ralph because than customers more I many the closer higher TI to produces and I've Qualcomm just now for they

are Now who's we are before, a Samira, Products, reporting to is the getting actually specific. more hired me. that who I people, Qualcomm to of used mention at lot work more we requirements Head the actually did hired

charged to, is are voltage team, at? customers and charged, get along the is the that able example, more meet she's What battery used Ralph Now different with what requirements charging? his on it for are waveforms precise how the to and

density phones. the shape batteries versus energy the specific off, Cycle size and fit in versus getting life trade versus more on of that computers wearables

add more product are specific do? much us that detailed, to Ralph, getting please it, helping more you stronger lot want do roadmap. to So is drive we requirements a really a

Ralph Schmitt

Yes.

that has what really say our products. wearable is be the but targeted think have to meant IoT is well, I you we're that we covered space in I'll the current line that it the expectation been technology the towards running and

And way well so the aligned we're very that, very, we're path. because down with

market requirements. and market mobile mentioned, we aligned almost as in at we've multiple, well requirements. engaged still are the needs customers in of to of move things we after forward The stages. this other to same were and or continue been their have those point needs those Raj strategy add that production very markets And each to slightly years in well better frankly with address and Wearables laptops for different kind laptop, those it's as and But that. both we're their the with the close mobile stage, just change

Raj Talluri

we're get of Maybe lot batteries little now a more really that I of The testing. hundreds now will able to batteries too, to they're feedback more a better fact us from they that give helping have and that. bit much add hundreds running us is sample they're because --

much much, is stronger. the -- So just more feedback much

to be sample to now customers. important so and able batteries it's So make these

Colin Rusch

of suppliers. just at And ecosystem then Excellent. the equipment looking

you that. playing start can opportunity second you CapEx you're much lines and two about suppliers, optimization, talk for things reduction, As for how seeing like four,

-- shortening So your timeframe the equipment? the that install and on ramp there's that and de-risking

Raj Talluri

Yes.

Let me on He's comment here. ask to right Ajay that.

Ajay Marathe

Okay.

the for qualification up XXX,XXX lot of factory, So well localize the will you that have if operation chain, QX, we here up batteries. just really in up lined equipment qualifying lined sources, qualification that's for that set have good yet then second through we doing But value a we as big indeed. we now. mindset, chain ramp, higher in rather value the equipment, volume going QX, under have start of are we we which And just Malaysia mentioned semiconductor lot which bringing a as again, third process. Fab-X are Equipment, there. right we what second, forward the as a we you is, than a very on a we as be relying in as. of But even rigorous battery list will for actually, going go in question production, we into our sources Actually, Malaysia, and high-volume

works. both So in are

Operator

Our next Derek question go Cantor. comes from ahead. Please Soderberg from

Derek Soderberg

this funding does But a you lines, guys to in certain customer less production negotiations Raj one's you. forward Ralph. or the with not or move to curious having Maybe now that wanted four otherwise with place, whether I'm have? have place in for more timeframe start for allow certain for or orders wouldn't that

Raj Talluri

I on line agility November, been it the November, critical getting and December, always samples them, to able has customer say, mentioned, samples in them And you I path again, the we that late then able the path. sample of then to yes, from think of right we in is that, dimensions, for qualification test will orders feedback and the them to that's through have we manufacture looks process And mean, get in and as 'XX. manufacturing been, line those coming will. high-volume really go in if when our enough this what our in And of through April. what's from be we And to been to customers. 'XX year, getting will has product, products it I qualify, actually right, go the good them getting batteries, to our to expect be the sizes

and be for anything getting place sense, timeline that rather order we've ready, we really that's in sure things. of make that to meet So the out. we laid to timeline capital will This funding that accelerate natural the the else, the have the in that is to, fundraise, us and are than

Derek Soderberg

battery out an put agreement Got manufacturing lines, you a you margin how up update up as helpful. on us your then of And we have if about wondering with range That's gross should can follow four think got for the longer-term partner, estimates to outlook. it. Steffen, production guys you've my

Steffen Pietzke

think think profitable thanks XX% aiming outlook, Derek, still We business, high question. really for. long changed So, that for the we has what the range it are don't we on is

Raj Talluri

Yes.

Just as again, I coming we last sourcing in top the color. because I XX% it's we cost the to are XX% But Sohan materials, to that. this add a that Ajay as add think little a that place, battery, is of get question local manufacturing more time, of The cost down little down. that as to I cost the that's will we of piece The bring quite important with a in color costs constraint mentioned it we I to scale, we to want add it. mentioned, worth actually get get of And think mentioning to and making see batteries, I actually to. this bit understand. multi is Malaysia of millions and in on capability small often

very factories for another mentioned, for seen everyone backend I to important Because my building And test talk and the XX long the we amortize can run of is we're thing as machines people as think backend batteries like the test and time. is see, will it over those because that I for I've last quite even. millions years

scale. So that. And just our be a really it's changing Steffen of important to outlook will question It's on business. said, profitable we're to as that this understand getting a not

Operator

go next Our Cowen. comes Please Gabe ahead. from question from Daoud

Gabe Daoud

Thanks phone batteries. maybe so and for the to just all remarks back laptop the going far, mobile

the the next of is and shareholder this for side wearable or majority go-to-market IoT the letter, the year strategy year market. and You in noted focus on

in laptop are think when larger first tech where could phone batteries? we and had curious revenue and requirements. roadmap us we expect could being life by cycle higher just And batteries remind I generated terms just maybe life, So the of phone you on the laptop cycle mobile

Raj Talluri

Yes.

that phones thing out, make, end the form the small I is, think the factor, in in batteries from timeline, fit the we is of the or right which current we don't here the samples really factor, make we line into get they ones, because to I will remember big agility laid important which this year fit our IoT in the So space. laptops, and ones most form

us high-volume phones start to these And revenue capability next the more will And year. and on, again next the take are we to to we 'XX applications, sampling -- be kind we their our and the so batteries that year, make in validation for laptops, own and expect to by is of them year, end get product takes phones laptops, that of the customers the through time from this from their that qualification in lines. actually in specific will get when make form of those starts and that our validating and the own it April see in because then get As and will right that's customers. actually and batteries end process

continue latest will that Now intersect will have will we 'XX, we density, naturally in improve to and improve production. to get technology they energy cycle continue with when we our life to the

Gabe Daoud

Thanks, Raj. helpful. That's

maybe, Okay. just And just or I want to then, correctly. if thinking about we could I'm sure timing the say, makes

two Malaysia begins to auto arrive line Gen in in this So November year.

production So lines guess, by twos or the started XQ Fab that And should we still 'XX X about then a is acceptance, four quarter expecting thinking is be taking factory with ramp. in maybe how 'XX. XQ I

Raj Talluri

mentioned will line. I that the know that's line I way that be is, we there. And ordered the one

one of ordered line said, one pieces, ordered first we the part you that but we actually two As twice. line

with to us Malaysia Malaysia samples that batteries. the in to get which what The And line November, Malaysia line, agility the agility same go So called happens the to sized in too. year, sample April Meanwhile, come will custom Fremont out in such December. our the next the stuff out way line. will customers will to be parallelly. we'll And is here build build happens help here Malaysia a able

line committed on 'XX. building Now we through only one

the customer the when that. the and match when And have pull in. And qualifications on the the into we is But build those come now better most demand manufacturing see progress, visibility that thing we CapEx to the out. better important in supply demand. to more, sorted ability the we'll and have customer will as build stuff running and as company the trigger have to right We we a

and is Now we them. run Malaysia, the that to have one host facilitation four thing make the YBS ability sure that has with Ajay and all doing has done to in are team lines that the the facility

talked one so have exactly, much more we need to that. please and But than pull commitments ready our suppliers making we line And and be for that, set-up. the So probably on we'll we hey, also we're not any when will trigger it.

Operator

Our comes from from Piper Sandler. next question Alex Potter

Alex Potter

of to million So how I some But Malaysia, between Malaysia. nuance exactly in XX is and question, shareholder I had you what and here a aggregate ramp, year from batteries long it in “unit” Fab-X that XX regardless scaled fully in the takes coming million there today, know guess once mentioned we're out in up is. of about I per letter the

and divide by million it's per right, between that cells almost you XX cells If four, line. million X.X

could I those for it be cells, expectations historically first I are big upward this output but So semantics. line an that your saw like me, adjustment I small that numbers, am to versus Is correct said. incorrectly? because per reading seemed there know or you when are versus what cells,

Raj Talluri

let to want I Ajay, answer you that.

Ajay Marathe

and observation pretty have in can Because wide small customers, multiple done the calculations, direct do of first. will -- first what the form terms cases the with is many are engagements are large, is words, me lines good we both, factor. the more way our small be we so towards, designing In on and able to corner just be the line. but other line universal line for first Again, Yes. good you let

But per will why narrower So a of lot a letter million is onwards bit when investor the for and per to said, batteries second give the Raj be first line. dimensions between the therefore window which we line. of that line million little have optimized capacity will capacity towards in more XX.X up line, on highly X.X

I on how That's the we you stated. So look and will you to supply That's just the you at that the required the for match of would again, the demand, to lines get how demand. number it. how volume depending -- can

Alex Potter

maybe helpful. $XX multiply comfortable in very ASPs take numbers, that, by for numbers in question that $X those capacity battery I've I revenue if for unit a the neighborhood this, that. extent XXX capacity those to translate unit of is about out maybe and into always I That's like range unit something it the historically follow $X and a or of right, assume don't Okay. And you're size know of get then up that then I wearable to something the to the revenue wanted if those $X, to Could the and know that -- ballpark? cell phone million, $XX million to you of take annual and XXX FabXX, talking

Raj Talluri

That's a first depends just Again, on good but much good sell it we order a Yes. approximation. how order first approximation. that's ones which

Operator

next Gus Our question from Capital comes Richard from Northland Markets. Please go ahead.

Gus Richard

before to run one What Thanks have to commits production? customers of rate manufacturing in your taking questions. hit you my for Yes. do

Raj Talluri

rate, as I decides. the mean, simple that that's only it's not that factor run not

the big comfortable that going and lot Ralph sampling small see are remind from our think our actually a with let that me that little this into and year to next I is customers a cells year. cells, them and today most are production for -- is we customers thing be important revenue There's able bit. we'll of

So in have the producing. samples The enough what that their enough ramping they have and sense, customers comfortable are actually can that production them start with already meet demand product. we to give that show as was backlog to enough going inventory key we who we're we

we goes volume units. don't be if next the of product, depends clearly units, But we product year. of to able aim millions on the to have the it Now, produce of this in year, the millions capacity

comfortable. more then are customers think I So

volume large So customers more are comfortable.

XXs depends the upon millions, So to If product, rate rate the XXXXs, is it it's have capability. particular ready today. right? that the If we in product of really run are need of we a the run

kind that's like at look of how it. So I

to variable putting are say, the in, that we it what, they Right? is, And this. the and give two them with go able other need to test form okay, in I can Those the in right variables. shape it to the we be factor big the think product that they're know should you battery

Gus Richard

it. got first can jump for I what's I going half. the It's produce to pretty second you to happen? in batteries. Could do Okay, XXk half, numbers just volume And add And a so, two needs can together. batteries, accelerate if XXXk what then, you on talk big year, the about full just that you can the

Raj Talluri

have I'll on it lives Yes. He comment Ajay day. every that.

Ajay Marathe

in quarter we the did you the to mostly Again, is that of as driven steep. ramp right? Absolutely. And, And we to doing that confidence XX,XXX, things, very yes, pretty we saw is the QX in a going we're ramp couple are The ramp in in do get QX, the question. are we'll XX,XXX already. good saying is

One yields. the And in improvements I making about can of while yields detail which points really yields. their we is us. say significant talk proof nobody yields throughout don't the in is the announces our And sort year. we All it is are behind are

about half. So us that gives one. second That's the confidence

is us. progress is are bit day between So after the equipment equipment, things And getting predictable. more the good, making though little those of giving solid failures right? mean Second is after time uptime, day, which we what essentially, is and day a both

assumptions now of are XXX,XXX. our going are We feel the the that very strong between and accurate. fairly we So do end very, actually year. to And

Operator

Our question comes from Gianarikas from George Canaccord. next

George Gianarikas

you've January be the that and my red, just in talked that TJ like taking were about about they progress to slot the if question. slides any you. here for presented any yellows reds, those I'd of I to line insert, those those fill. issues Thanks fixed included yellows terms to like Gen-X, see And in Gen-X made to a green yellow update for ask greens? curious going from on some of that Thank that everyone. and to I'm in red and turning there's Hey, needed had [indiscernible]

Raj Talluri

question. someone Yes. when I equipment, the because I I'll those. made almost why we for that everything those. order mean, said high-level to progress back we're were at made on reason the approval And each of fact, me was actually day Gen-X color. progress get looking presentation in you solid to that track in other asked on to the was we We a make that's give And the a the significant purchase there. able And

I those really able to his mean, the and hard, in, most has all team issues. has with worked clearly, so think, solve brought I And the experience, of team we're Ajay he

So that. about anything you to want feel pretty Ajay, add? we else confident

Ajay Marathe

Yes.

you way the is, of test what that, a time, motion, POC, introduced in in right? give quickly, very we proofs until of that POCs, whole dozen January update. Just we're were are confident? are we What lot causes several literally making kind of called third us real solving the was feeling a in concept, I of root there from can which doing upwards X, January meeting, the we're stopping from POCs, all three last the progress? we We more yesterday, January, building way Are

POCs confirm Most doing showing us to we're that met. assumed expecting, all whatever well all those are are UPH the extremely being are that we

and as step next in way rigorous cycle, we cetera, So approving a mentioned. the progress. of that's It's step, the et next Raj approval that how pretty

feeling pretty we're good after the POCs. So

George Gianarikas

noticed to was you next it? the about Is Thank them And and slightly into revenue that I then, because engaged two think That sequentially. moved down your the have you opportunities these opportunities. funnel, way is have that -- that is you. silos right of that Is engaged question active in just one designs? on

Raj Talluri

to want you that? my kind of That's take cover. but Ralph, can understanding Ralph Yes.

Ralph Schmitt

front-end Really, want exactly state. them to to get more to a new question. into was the that's of then, part. to happen think for simplest that what the for and faster funnel, to we're than And order real you these customers Thanks that in the And engaged revenue it customers design about active that trying is getting progress us the way moving wins. into

Operator

Our next Markets. question comes Capital from Ananda Baruah from Loop

Ananda Baruah

Yes.

us Just around or through I particular and updates, a that any getting, you Gen-X nature? metrics to couple anything of if the to you be be on getting kind I have the Thanks. of sort and I up? follow them equipment of the first up, guess processing year quick will lines updates mobility is way a And any then, stood could, on on giving want through, delivery,

Raj Talluri

Yes.

as continue that stages in will the meetings, where in We you and forward give these is. we updates to different move

be when believe. us milestone I factory acceptance site big next up And like will site. test, August, is to the after in delivered actually the which it that, acceptance think I for our come then we'll have

are we'll saw progress. the time. both our so teams far, the being So exciting here, updates milestones. newest video one of are on even to we by give all those made And the And one see the this you come the with team. pretty it's working, But pleased suppliers very I our progress I Gen-X visiting, Ajay, see and of a yesterday, machines, our

Ananda Baruah

That's follow what just us helpful. you like question to starting asked and Thanks. get to we'll forward And sure incremental orders as okay, incremental But to about all the guess move we And place. Malaysia, to get at look I I about forward some that. in think like, equipment. you then, purchase how the Raj. plans like the just capacity? point, of got would know that. like Awesome, we Yes, up capacity you're waiting sort plans, for start getting in funding I'm incremental is,

help anything around be grateful. can context that, you So wise with out will us Thanks.

Raj Talluri

I high mean, experience in manufacturing of lot I as businesses. Yes. have a mentioned, I volume

are demand lot planning out, are important demand it most or way, your and of supply is little too equipment, customers, tied have side a demand, sure you lot takes line the which too the to and with the So, don't of make lead lot takes once supply and times planning the of thing facilitation. the the by long the when much planning, what supply and a order we and a in

both complex lot have a it's experience and a I of problem, running Ajay this. So

secured the way we that to as to them. this we first, So sure we make the funds buy the have going to need we're capability them do is,

we and And both customers. get And they thing And start up to those look how lines as our like the first shows running. site, for the our I then and Second done now suppliers sampling then, the partner. come. with to we to secured our of the give we And up set heads need in when we the middle facilitation the and getting four said, we And both we will And continue our to the we'll demand machines up. of years, see in to we machines. and the are optimize the couple will we side beyond as progress on continue stage, four to now. customer to expand next that are

Operator

Instructions]. [Operator

from Our Cohodes Marc, next question open. Feel Marc from is line come Alder to unmute. will free Lane. your

Marc Cohodes

than guys So gives guys constantly you the you more incremental a speed? these What three you months, Raj, confident. that actually you've impossible, more can in months. at everyone and it's do, there manufacture more sounding it's are been batteries little hard fly sky. Ajay hears five confidence But for and Because the to

So that what confidence? one. you that happened has gives exactly question That's

is, going products? to building ship you are actually Thank batteries two these guys commercially question for And start when inventory you. to new for

Raj Talluri

for question, you Thank that Yes. Marc.

mean, need making an stringent what's have that a make the is I It kind nothing backend The are people committing to master we more the time than the manufacturing. there. reason way of call. that Firstly, tolerances done last to XX,XXX. And can XXXX, then, next Enovix really And manufactures we many as increasingly the have is in went semiconductor progress test do. And see to assembly like I quarter. to something few done confident, is think I I batteries number And it. producing And we're getting we of of to technology chips. backend the to things over less is the to of more and really XX,XXX batteries, we in of technology that you we mentioned the XXXX here is mentioned, and we from which the the spend more are because almost couple now in magnitude even quarters. order we're

we batteries are in So that. progress making as we learn producing

mechanisms of need this and understanding to actual do. tolerances that which the to produce machines the the they and Our

times? I that in these those where running, experiments and and Gen-X we when to lose a confidence. make a at the experiments did yield? two all proof-of-concept are that did wrong we throughput? really the confident Where give those it, with think we we where lot of Where machine went been did lose experiments what targeted created we proved And sure thirdly, Fab-X, are things that up us happen And out did don't lose those we target now. we've

We not capable picked paying we who new actually producing of of like this. upfront. set And them all machines a money are very are suppliers the

And the only come up the yields first of comes lot the we different to as we side, skin milestones So because there's approval, that use there's then in on and that. game money as a machine their pay we the XX% incrementally on paid up. check and throughput the

sure this helped actually process, ordering the that followed well-known we And right make process machines. that us the EPR we're

those confidence us So get all give done. fairly lot we can and we that things of this a feel strongly

support this doing they year. sure through And if you of building, the be we to consumer second that you your their to customers, when is to have make as able start we're successful, them. for what to product in the now giving want inventory, question kind know supply And are we units kind markets, of as electronics that's

batteries want to really reasonable selling customers a start that the be of with be products We We of make. with building lot not well. customer don't inventory. or batteries. wants we we are also our a not supply level of the healthy to But middle, able suddenly the the course in we're want bottleneck sampling them be If to

you So machines. and handling responsibility seriously else it's the comment that. to Ajay we a on take we're anything want

Ajay Marathe

Just very guy, only matters. I'm I that thing the alluded feel data but Gen-X, is think personal, quickly operations I the confident, to on Raj my how just it, from an

these so us told the what machines, confidence, But in personally that time of that them suppliers, backend with to suppliers, we is methodology is is myself. gives confidence. earlier. upswing spend have the the what of I uptime visited of using all we them. And type That confidence. tolerances, you the are Look is who I all And ramp all a they're Raj Gen-Xone are exactly build are the the Looked as is that ramp giving of the producing, -- these each the POCs, good this yield us semiconductor of more now making Gen-X, et seeing So the these through technology, the cetera. as of said, POCs giving at about us machine.

Operator

from comes Please question from go next Milligan Sean ahead. Our Janney.

Sean Milligan

more lot you what ability YBS's there? that can the they're a I a be came is But get And YBS And bit semi-processing. that how execute to confidence of a background in on on what about? asked it touch little backend to who know I on is Raj, First, touched you lot used relationship maybe earlier, and kind in and so, about kind gives of financing? you

Raj Talluri

Yes.

Malaysia, a Micron Look, So if manufacturers. -- we at SSDs. And mean, that experience test you there's Asia, assembly of came I Malaysia think a an contract last look decades has in factory I from Ajay built of of and things. of I lot Southeast couple the in on

they the have the feel be them we And And will So to who they a visited many capability. ecosystem. connections of well. that company, here, YBS again, top have them, that they good in track strong has solid they we very And strongly tier to and the We understand successful. and Malaysia. for and they're it Ajay got OEMs. people are key and actually And we do understand talk record a came that manufacturing people the supplying,

done. And in a so, world. of very get obvious it's will in on we time lot But spent everybody done, who doesn't And good to live what and our everything that that's based of the not Southeast experience, this we've I something feel part that Asia.

can So a a often will maybe more we But I goes there that that lot because good little than me. feel done. bit get come he

Ajay Marathe

Yes, sure.

know actually, runs. and in the [indiscernible] is said, So you CEO sub-contracting as time. manufacturing, business. company for exactly a team now, the there, are known which some I've backend They indeed, I quite the YBS

the even constraints, of good we would exactly need some kind very in things. I've time to is have previous that a in actually, So as some uniqueness them that. about They They're been the for they my at other -- have talent of life. mechanical supply as really localize in studying few our good them

cost I localize will That them where be I make cost, next and reduced. I my to get when is total can where door. So will them right cheapest,

battery. going that various So into contract manufacturer, YBS our brings also a lot ecosystem more of value components than a being us to go help with they're the just

Sean Milligan

relates Okay, feedback. of I clarify then, the great. just X, Gen-X Raj, to wanted X, follow be, X, up it Noted. line something great you to those. would just kind earlier, and execution That's my on said And

the in Were the up that that that. those Obviously, ordered with about pipeline more line or of think delivered that those demand. by were mentioned next previously You being robust. end or Malaysia conversation I to talked you by you there looking have year, is

to making needs just So just lines those really optimize demand lining is the funnel fill that to wearables line all clarify, up, I or filling have margins one wanted that to is come in? to it

Raj Talluri

we in that's if saying what more them again, we not will I'm mean, sense, of do if business out kind matching general, just a saying, of next that. won't I'm most supply make the a I get Yes. we I'm do what to demand year, that. that's all trigger want which just happen, guy. makes and is pull

They way IoT qualifying So our it smartphones. have qualifying in variables. look we is, qualifying They're in product are it are laptops. I They're in the qualifying them various at in that them customers devices. actually

right want pull a on when And line, you we kind of the sure trigger that batteries right the customer. make trigger the produce to on right the line. pulling And the you're for

And the not all which clear come of beginning be this will not will first all me one next? to absolutely come. This timeframe So is it's what in it it. year. one, will which It's

huge. But right As for of want demand. the I about you supply And and company. kind right just make we the we build the for is the at batteries at thing time that guys right the sure that's margin to know talking demand total one matching was where in makes money that the

Operator

from Moore EF next question Hutton. And our comes from Chip

Chip Moore

on like recent incentives financing Actually wanted to things based around the in their probably I your quickly. around equipment that. orders. revising next we should tax fairly sounds and real like, the imagine soon. go back quarter them CapEx discussions localized and commentary And YBS And helped to financing seeing expect something

be, more would [indiscernible] type Thanks. similar anything in in interest any there, up mind to conversations? of then have follow So curious my seen and just bear you

Raj Talluri

progress. think go on Yes. going that a thought no our feeling talked through YBS public and I I would approval concern my prepared question making for process how how on, good they're didn't we about them fully in It's well, we they so they're need the through, going we side. are hear cause it's like to the was it like constantly, And said, to company. it remarks, but And I financing.

contact close with We them. are in

going We going right to make the through done just right. through diligence, the due it's and step sure we're all are

we we've markets, and lot customers, these also the to I that. parties, a like still we do want we other there next about interest and we was of options explore point interest reiterate of and There capital batteries is that's about lines once And this there to have able this them. supply, is scale so are now. four that that gets comment and from we this the like before, mentioned from will talked all is were on, begin I And we accomplish be YBS, I pick of were for where we'll what other the we one opportunistic one, they about thought surety with as we to And And this which want best that need comment should at worked all that. made one out. I is

would quarter. continuing what you to execute guys, I just I'm So last to told I

Operator

this I'd With for to closing over at There remarks. no it Talluri are that, to like turn Raj time. questions further

Raj Talluri

we to our we what work to you. of and and thank a all at of us joining I to this couple do. investors for us Enovix. well quarter just in allow support to Thank the partners ahead trying and really to are want all We've great the this minutes lot to team of executing take appreciate really you but really for do a Phenomenal Yes. all of committed and questions. are done

Enovix (ENVX) 26 Apr 232023 Q1 Earnings call transcript