Earnings call transcript Q2 2023

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Operator

Thank you for standing by, and welcome to today's program, the Enovix Corporation Second 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, Charlie Anderson, Senior Vice President of Investor Relations and Corporate Strategy. Please go ahead, sir.

Charlie Anderson

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

and then will we'll and conclude Raj financial call. Q&A After we will operating take review and Farhan highlights the our questions. session, the

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

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

that to the discussion today's could statements to on All currently are refer affect factors financial our and made business, and please future our our Exchange the filings disclosure of available XXXX, July Commission. For based XX, Securities of information with today, results us. in as letter shareholder and

statements will we We can no no by to these required law. assurance that not statements be correct, update give and intend to prove these do duty undertake and except as

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

is measures page on a Relations our find the the You can which our non-GAAP financial reconciliation of posted website. of in to GAAP shareholder letter, measures financial Investor

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

Raj Talluri

will remarks, to I'm special a a high few introduce very After few off for we Thank new going Ahmad, you, you. that, comments. Charlie, Thank I'm then all with everyone, who today. a thank Farhan you, CFO, kick for and have our treat to make joining you today. us going and level

and And vendors. some test GenX of and him how progressing then to remarks Asia next questions. take factory we Marathe, a they're your get today is make machines equipment COO, that, at to in Ajay our show latest I'll closing are before Our video our After you hoping we'll month. our acceptance

second very along we to included had a key that quarter milestones some scale. our very Now, proactive journey first,

we XX,XXX quarter This exceeding sales batteries exceeded XX,XXX First, produced to is going forecast in make that. so the year, made we Fab-X. this we are that last we

non-dilutive Secondly, Malaysia. we delivered secure financing the in on the million for commitment the to $XX funding

year. bit that, little As are going the more lower say a a for that to of little in about CapEx result I'll we a guidance our bit.

Thirdly, order I'm we BrakeFlow-enabled received our purchase actually U.S. super cells that for excited Army. the a for

mass the is the this testament of and production. our our step of and for Now, production critical us reliability a towards a product, volume product, high it's quality great to the

several customers manufacturers, the of report I have I really in now smartphone and Xiaomi, three Four, in key Asia secured happy to them. last that with some visited month. engagements being excited am Lenovo Vivo, super we

in three top are Motorola's number Now, five Xiaomi is global Lenovo brand U.S. the Vivo a the OEMs. and and

them and out have worked I've And individuals lastly, in third more our we introduce to past built closely the to want you. -- the and to of that a with super bring do at I group out and team some leadership Micron I'm excited that Qualcomm,

that with XX. last he'll here company be sitting that I'd note, Ralph everyone stage me to retire last August the On note know leaving effective has and chosen to Schmitt like the let -- on

over commercialization and two at setting career up engine as multiple a tech in Enovix after the a Enovix did companies, recent revisiting CEO his roots of Ralph great years. in the last Now, favor sales

to used of have we to recruited Vice Naraghi; of Dave the his Product to commercial President organization. work continue to I product commercialize Samira our President us his and all In Enovix. world-class at Qualcomm and want for we support Management, Sales, together. -- Vice to where thank who work, This Cech; order talent product Ralph from joined includes some recently

to Ralph? Ralph With going say a that, few let I'm words.

Ralph Schmitt

Raj. you, Thank

and over to amazing for want few thank I including him, I having and for team lucky businesses SunPower the with in been and work part others. and a have Raj you years been with to of and as such the TJ TJ Board leadership an ramping involved me company. Cypress enough for XX

but impacted amazing prospects business been has my team and just I we're positively, never business exciting opportunity the consumer situation run The had long-term demand interesting that I've where frankly, most career, clear have I product in companies, been engaged that But has the I opportunity every in market the and a but world. that insatiable there's an I've has here. involved Enovix of market believe leadership, there's together a pretty think leader for tech I've some the company, in with put

closely health decision point. to but kind this life was to very experienced are known Samira stewards throws Enovix work as to sort and honor a entire base the absolute engagements was Raj, and Dave the mentioned and go-to-market stage, years your to technology second stop progress of to after Dave essentially and established it's difficult and prioritize Raj it next me, none, leave, XX acumen by The and I've second the business for with the founders. So my at things need the sometimes I customer company way the of team Ajay for phase to executive and of talented. are that an

technology customers our basically our due Our and entire properly actually have scaling the it's the the validated and of team. actions companies -- that business, have as audited have sound

part an of it, the be from and So a it's honor continue cheer been I'll to to sidelines.

Raj. So, thanks,

Raj Talluri

you, Thank Ralph.

a proposition trends about remarks talking to value it today. in For bit Enovix little witnessing the my market spend we I'd relates time the today, to of the like as actually mega are

are the a ton made already clear AI. Events being have of investment months, & many memories, platforms performance together processors, in all News the there marry, learned this enabled couple along point -- the image performance driven computing months also there's that high many, wasn't learned few and AI directed high AI. with it sensors, if intelligence, artificial by that cameras, last We've of displays towards in of the Now, home revolutionary past kind that

deliver AI devices of with is But kind it's joined will literally better -- till of the it also in secret a are on bit Enovix. kind launched also battery And little kind to why more of revealed they our much little the the consumer being these that data None end performance really dirty in needs. promise battery. industry. on this revealed And I have want a today that that to a substantiate I of new

a AI deeper. Now, little first, bit let's about talk

to of asked device that budget those in and on of here cloud I operated or true a money lot on smartphone running my and know my latency either applications battery team time issues run so natively a actually area. costs want you device, AI device that's what it versus laptop of if and For these a some a the because Ph.D. the these Vision Computer don't to quite power I did generative needed I've their lot a AI in on who people there's on. cloud, because application test and spent run you

in image to program. generating which top minutes ran stable ran And a diffusion, that when to popular this laptop images, the on very text we XX found life is the produce we Now, we program died.

money lot hours, if of for it go you just ran XX cloud, on but costs the Now, on it it to a the cloud. you could run

high not a subscription. resolution you need You There's issues. is as The privacy want.

paid goes use you use down. the because expensive already it, this the for battery you'd like very can't laptop, hardware You the well to problem but is

battery the there's and Edge technology. Edge and where but not industry AI it will going, like in AI want how is breakthrough till we is So happen all the the

actually for We They was of in a noise image ago, the a released up application, out. the and for had application AI-powered low few then and And Adobe a always terms noise better was which noise noise the a standard when clearing light, AI-powered by tried much you're times great a filter another a filter in take you Adobe Lightroom. shooting picture an lot to popular had is I where a noise. amazed happens filter. processing filter of try Adobe filter. in noise you months how photography

able to are that look AI this filter it we at It's to these actually and better to coming. of you the noise you much battery and I encourage all data. out innovations see blog can check that great I've this it filter measured on a really needed the AI and enovix.com/ai battery ran so a can you we that more be when times realize the world why needs draw, pretty But battery. XX compelling written

in very some Now, products and let's market. that's great mixed another talk to reality had application about becoming be We the reality mixed announced popular. soon

Now I like another go -- it. you details I'd to to to more I'd encourage on like blog that's you also much at into this read enovix.com.

reality processes, always level, true in really are But in we've mean, sensors, kept is in but at advances memory, that very has mixed amazing, technologies seen cases enabling tremendous a not advances now the devices tremendous displays, high we've I having camera ramped used unfortunately battery up. pace.

a the interest And them visited know into the to and actually customers me was I way level solidified customers saw all of is into with about battery to we Enovix from and they was these to I Edge see I them point advanced phones, I the this was to as amazing Asia them in because can AI on Now, and there when into recently was devices. that asked moves I also laptops talked actually visiting start farther and some this? wearable that battery working for

battery used better hard support used You just the them need cases. it's next very to with current a the generation because cases,

is, model for our devices technology actually that? deliver we and this for why that battery is also lot these battery I has this convinced is to on right who battery density we the who think the no with barrier performance, times an get performance you questions visited our makes even battery -- the the the margins. get strong in to one the I provide believe question that the many in longer breakthrough come The investors that are you'll will many that new get increased all when will opportunity. out asked Enovix because premium of a the with not I command how truly their that business months, is the I'm now Now, more a do and we assumes when the have premium And energy one customers. price last supplier Enovix Actually, I this of delivering

processors phones of different not Over is we to phones I've experience watched price seen thing and $XX my what phones with user to cameras, it I could phones Phones And in memories. sell same audio. the XX-year I got experienced into this career more a user did from from user. and better and life. semiconductors, play video, my end as and delivered GPS, they end could value the could $XX, that do that the cameras that go Now, more in more do they displays the past experience. because processor provided built-in

we we deliver the pay energy premium our technology products premium much as take which similarly, in will users to into end be and believe things, density our other realize. Enovix, the for among a in the At rate, able is which cycles, compelling able we be performance, in will charge value to the customers more will safety, market, increase that

a and done a better better of are, needs get Much battery, they my simply we parameters themselves they and better. I've are, what what time a with put, spent customers their and they make win career, and we can when understanding key lot make the provide win, we the I premium like throughout product understanding

deliver that really in excited understand customers fact different to with our to architect super in all great we battery actually phone mentioned start help able to advance computers. are now OEMs the we will I with was I us while the wearables continuing This ways design-ins programs and establishing collaboration As before, the the we're value. leading IoT to by in need the and

few introduce With Farhan, things? a that, say Farhan I'd CFO, like our like would new to Ahmad. you to

Farhan Ahmad

Thanks, Raj.

energy that thrilled warm for density really at And to to attracted would its here far. leading team highly Enovix welcome that was and like so team by excellence. be technology that received the differentiated Enovix has industry, thank I Enovix. a record I'm strong track the the I of entire operational I've a to across delivers

Raj I increasingly the a deliver and can market I'm with premium story the strong looking investors and Raj is addressable sharing also breakthrough can to And The forward And command said, profile. here like, help of make opportunity for growth this touch strongly connecting the margin great you. all believe innovation think a with Enovix to differentiated we margins. careful and silicon to deliver price large; will with delivers products. mindset aim that the it attractive of a shareholder I at highly compelling. business level, on be that investments I and into is steward guidance, cash grow to Enovix a strong high but

With that, to I'll turn Raj. it back

Raj Talluri

Thank you, work Farhan. again. great It's you with to

live We're As Ajay us is to Asia I going to mentioned it update accept going -- an going that is join from we'll But to join how GenX is Asia. give as getting this earlier from us Autoline give us for ready and us stream Asia. see testing. on works. today, to going factory actually Ajay He and from He's our Ajay?

Ajay Marathe

I hear me can Raj. okay. you, guys you hope Thank

here. suppliers. exciting here at our of sitting time one I'm It's

you equipment. the lot As can background, there's in a see of

in we're a now lot for show You're you can you confidence GenX where want personally have have what is with on made have now. What you working of reported, line a doing? we but a right of heard, this here am the lot hopefully for you have Why as I'm made GenX have can reason equipment, yourself there's the equipment. it. I of on it I energy, have and is so morning, get excited? we in which see progress wondering, what we talking progress same that on, built the the terms it to been equipment? Six I

Okay.

in right? So go laser battery that's of but important first let's equipment. So in steps done to the I'm three in or first now you going steps four one other what making, right patterning, the show is

two line, the And what which stacker, call of speak. we'll equipment, right puts step. stacker, is in and the the have I end important you of have here all electrodes the next we five pattern these are what now mid-stack these seven them of so laser stacker stacking we them we mode rolls, them a debug show Here doing takes on as on the

becoming machine can see you real. more is So more this and

mode. And soon will be debug in the

machines line XX, UPH, can You very people and has as well this content working making some and here are made from UPH equipment; or for of in we in access see as machine, the overhead it. shift stuff, X the this in little transportation of year. per between to in is the XX these running high million rated machine and size on. speed labor kind Roughly a very batteries that That's the XX

machines very low what built high produce these sure touch with metrology yield. very of a inline we Each making a human is at is

attaching are as it. oxide the next side cathode aluminum think the equipment parts This insulates moving. debug The of in AO to wanted Print, the I really you basically which I on step very of the the here, glimpse and is a It's anode. mode cycling show cells, important can in the see, you film

is offset need. what step to this of to making is measure or that's next within what tolerance the cathode -- the the constraint right anode equipment The the attach. AO sure we Then is here of called the

see it again to So you open now it's can we're going cycling.

show can low again, motors, to or high it's linear next the the is mode. the can step human process. see and baking granite constraint block, The want is attach And inline UPH very this curing. the in see You all you very and metrology, inline built I with debug -- touch, of you

material precise into again which constraint pieces a supplier, has what's this machine. get which card very this on this side, the a basically one other highly our machine, to going battery this the to know, attached see and right card, placement, glue inside now on rolls the then attaches from very side, accurate, we you and it. is And that -- in second, metrology. most you As attaches goes can highly are inline important docks film of here, attach, This a are the constraints

So constraint attach is the tool. this

which show again, again, to last very for is exciting us. one you the I And want

weren't Here, been we tool, problem. on which the see but side speed, the can We're Insert we other completes and the much clips Busbar the of has issues to learning that. GenX why This Busbar GenX has higher in basically from again do a Insert had, able cycling cell. takes the the speed. have of the tool, care high from that is which a a very the been going at machine, -- basically Busbar it This inserts we

test now, it's you factory this a announced is Penang this, and ships And again, after equipment most view acceptance mode it's called where -- our acceptance a ready is to the this -- in equipment Factory today in all Park. the debug the -- this ready site what equipment show will -- Science test. process. in panoramic it procurement goes for step for Malaysia and completely in at So important have a we the

the that you equipment. It's wanted the just gives that's with on what's to to come show I'm for who get, this me and working So do this time glimpse. going confidence actually equipment is people live GenX the was here a This here anyhow me good spending real. for to the since idea

Okay.

to over So Raj. you,

Raj Talluri

Ajay. you, Thank

acceptance factory ago, a up you that gave they're machines them now of is on And We've see real. I glimpse and can face a been in and there. you hope We're was hard actually you that these see there the we time it, I shared super small to have that useful can working but the team's Ajay's last build excitement you. all building the and for I track. the of all and excitement went up face month

forward make scale. to to continue more and are updates journey you we super as we our looking excited giving So by that to

Now, about to I our want outlook. talk

approximately the quarter we will units For our are third XXXX, we that forecasting Fab-X. XX,XXX produce from

year as the also have products make customers that commercial the of many from small support cells as launches qualifications the our of to to for plan in the is and the customers, designed of Our rest needed Fab-X.

But opportunities safe to and other on cells and technology provide and customers. across with that's value have us a want BrakeFlow, very, we come building higher from also focus that recently to Army and value U.S. we've important larger to come that very batteries projects the higher

in U.S. the put nearly they're the pre-production to is early that for predominantly what these of millions this we their come. why making in a these noted first Army happen hope on things are going of in will cells to by QX. multiple just for years significant into vast prototypes cell, this of size we business super But dollars And the are Now, of are total pre-production a excited we in year that be this $XXX,XXX tens order that's And our is working step the very we Fab-X. in opportunity.

cash about Now, let's talk our used.

of we now full full-year a obtaining YBS realize trans this the $XXX funding; they're from year entered CapEx just million our and first that million to from manufacturing and $XXX talked next $XX to the the of Malaysia $XX million. assembly the OCBC Autoline -- XXXX, the year. mainly For towards million transaction GenX And forecast going benefit with the our This YBS some the YBS they're At our to one cash of financing high Bank. is into agreement with lowering of level, YBS because from about. Malaysia the used Ajay they're are a $XXX is -- subcontractor. we'll due We’ve and guidance more to lower transaction million

for the to in volume we have hired Fremont. are here training that as and of is our the and Malaysia Malaysia, Fab-X strong members come our in in We facilitation Now, of team undergone a team Fab-X lot in high closing, preparing on underway. products equipment

of Now, we forward on updating over to looking are really the rest year. the progress the

open With Operator? me any let questions. for that, up

Operator

being note this Please the recorded. call is We'll now begin that session. Q&A

voted questions, most the to registration. go highly by call live the submitted questions read we call this of ahead going Before we're to shareholders two during

XXX,XXX for made end is of for out testing this first and the produced percentage percentage is question is, what year, being batteries use? The what

Raj Talluri

as is products another these go Yes, XX,XXX When we -- into absolutely. we basically out new next in guiding When we quarter. next batteries will that to these testing mentioned, into make for year. I are come our the customers batteries

for Some year. we the products of part by of expect later them are launch to used our customers

And some actually customers the that make for of the build comfortable to inventory need for what for percentage have It's really say hard they enough go to the go those when us to part year, that some had customers the we U.S. products to we now actually later resources we to is we've making we that to our production, supply. sure are the opportunities is that that coming with for Army. support much opportunities Honestly, what going way, particularly production, of for so large can percentage sure that and sales our also are on testing. the new focusing

Operator

The that second question they'll is a happen to batteries? what a qualifying locking use be to customer for announce contract needs Enovix to

Raj Talluri

you're Yes. do that. to I that? close to Actually know want Ralph, take you pretty

Ralph Schmitt

Yes. Raj. Thanks,

So produce. Raj we're batteries -- to customers how where second announce building some early. expecting amount of well amount customers Most customers lower going I cells them not. the say, some that market volume and they're we described very I products, of our we're half products products releases some some this now year in And with of right will the can using based will the us should to of on allow think

they will do products that not how exactly publicly have But they for unclear what either timeframe. available many until or it's these and sale. So available

that should year. coming be later this And so

Operator

moment to We'll Please question queue. the answered now they're pause now the order the will in assemble ask queue. go most. one be and received. to one at We'll question a follow-up Questions

comes Derek first question from Cantor. Soderberg from Our

Derek Soderberg

start proof left that talk how thanks some can you. the do Yes. on and you the wanted compared the have about challenges not the many curious then are Farhan with new of of I'm you Can Like do my of proof to that unique Ajay, passed proof of I congrats risk sort understand of concepts for associated taking that questions of you under guys, factory of testing? complete? to meet the Hey to what's requirements some role. that? concepts concepts? factory testing And the us the the equipment parts acceptance with acceptance help

Ajay Marathe

absolutely. Sure,

actually equipment. most XX different pieces plus XX So of -- after of ran have concepts learning call All we them pretty than proofs on XX, run of more one, two cycles. it good

of yesterday, come completed. the in then which there back couple redesigned of which them at were in the I Some do design were looked actually get and examples, like a redesign are mode, which

To required do proofs further say concepts, acceptance would factory of complete. I is the actually XX before under are test

And we Most we now. and so, ones came yes, expectations. the or the ran actually are of completed that's right where redo two back had are One the design. important through to and

Derek Soderberg

it. some It some and some Is see these need to as might that large some of you with best with said the the the only is for guys enable these case? of customers of who about of you to you've it. and some can Thanks. that the capacity the And as you're are XX% stuff and requests go some wanted follow-up, to of XX% that the more laptops of you sad AR/VR Just saying ones that five, you applications? cells. applications. inbound applications case are ask to these some these a potentially getting? Got And times of seven my bit battery AI Ralph, like six, more seems applications battery wishes but Got using potentially the or

Raj Talluri

take that. Yes, I can

compelling number up. the make to that I to example. able are I customers keep wanted give battery applications the So technology so you that that one, were now not in that is an are coming think I'll want people points realizing current

using use back some you the you filter, no noise possible. almost you filter. do go of just you see there's impossible filter AI and mean, kind using what's because to noise -- back If to it's going noise like the Lightroom traditional I

also runs on smartphones. way, And by the Lightroom

that get it, So start will going using see you to back. you no there's same used it, the problem when you

data this application. that very AI this is of I've has an when what the doing actually is mean, consumed early run I is, first I So battery much how stages. there know actually put time probably is what, the anybody it's you that out

customers batteries I mentioned, one going think A) destroyed. is gets it's be more our So more buy and fatter, they the in of becomes form think but like as they're happen two It that, ways. going do batteries, factor that. to the to it's also bigger, -- problem you That don't going realizing heavier, to to with so I want

So we can form an more advantage provide that have keep factor, and we density reduce and them help them increased or form that's energy energy factor when same provide the but same the provide either energy.

applications we can So that because it's going would more I say a say down. needed, hard but what are two be definitely it's many one just happening to of that the coming of different than but in expected ways, exactly how batteries it's be to more lot

Operator

from comes Colin question Rusch Oppenheimer. next The from

Colin Rusch

your revenue into you around much, market? depth customers as potentially standard strategy Thanks that to the standard the rolling so speak of gain that the ramp customer out the Can interest and impacts guys. cell of out how at look cell some

Raj Talluri

ahead. Go

Ralph Schmitt

Yes.

trying unusual we're in we applications go-to-market. see we've IoT some in -- many we in the to enough that of the that interest other marketplace we the had as to viable cell, and what to customer battery cell, but segments pouch is different see standard across that So way see replicate it's today, a very a

to a afford Typically, it's can't able cell or what that that, you smaller general a be drive like when usually custom size. customers do see availability you

quite et cetera. will the in that that on sizes, a see we're of So this uptake future will others cell we're be seeing standard And of you bit putting there. out different

Colin Rusch

-- on then And the Okay.

Raj Talluri

-- maybe Yes,

Colin Rusch

ahead. Go

Raj Talluri

of where when more called you don't ran go a adjust they want a lot they're go willing battery unless in cell that, to out volume, like can I the for custom the not through the what at I've is business, number What you units. to size you to out just to volume I'm watch, horizontal business seen -- them. of into customer a we the Qualcomm, they cell perfect more the energy going very we or a It's eke they to have add really very business IoT buy maximum willing get people the to smartphone make people the distributor, going know a small application a would something to accommodate amount happens a high standard buy I whereas a when but a bit put are when form color. similar have like factor large to when little was from vertical

we to found will a I should as announcement what try volume general may to DSPs with to energy and processors we felt really opportunity I as for I popular cell. all but higher cell. thing that back more end well, per think get and give a was. opportunity, to more their the and may and much a volume ask there is strategy have custom in did one kind batteries, And and but from or come other those That's products to so people make customers socket hadn't moving high strategy on. do availability been up done use support great that. semiconductors product actually they those us still And I in this is it's people of we what So them smaller

Colin Rusch

we're side. so Can it's the of on Thanks now oil chain, gas those you customers and like of with guys chains then XXXX? some the and whether talk supply and into or even a engaging preparing how the Okay. you on get procurements for capital material XXXX much. looks silicon little those side with dislocation, And your what ramp material and as potentially steep supply through some some a about bit are seeing

Raj Talluri

battery Are materials? -- you talking about talking You're about

Colin Rusch

Yes, materials. exactly. and anode cathode Both

Raj Talluri

a a company lot been lot with the saw better was I -- on better Yes. of I've going And Australia recently. lot got battery to time super anode last we are in suppliers fortunate announcement found out I now England of there's spend cathode. in with a or of actually, or for lot a who a in I and exciting. silicon I've innovation coming and there's a month we the of people And that company saying, a mean, it's number the material coming two. is up of recently, us got what

chains the is cathodes and and on more material there. bit lot more innovation diversifying the little both a a production in So going supply of anodes

better lot the because opportunity tremendous take into those see, quite for advantage of but spaces which and capability. and in life, fast we because provide density, going of advantage all us that are EV in of higher Of for and architecture take us, cycle course, best it's energy much a suited bit use people that a much investment battery our charge huge able better to much those that's are anodes and their of cathodes,

helping it's our think diversity helps because not to us exciting suppliers and time us are I supply too. cost in So of we the goods with multiple also chain us that and is really the for work of able

Colin Rusch

Okay. I've them guys. couple Thanks, offline. but a got follow-up take questions, I'll

Raj Talluri

Thank Colin. you,

Operator

next Peterson comes from Bill from Our question JPMorgan.

Bill Peterson

what role form team the Fab-X. as we batteries things retirement. these understanding looking volume of the I guess are the and the welcome good in smartphones Hi, question you these term -- on these set? should think And custom for good is standardize these do have Farhan, -- large with I luck to pricing you Ralph, purchase could are be luck parts? good to to nice announcements. check track for I'd to I and you engagements. smartphone wanted mean, a factors? parts, get Yes. or agreements My mean I with like is afternoon new better first your to and on are by in see in

Raj Talluri

of that. Yes, a questions lot in

be will products sense battery is every products specific maker's smartphone in smartphone most size. custom that, a the Firstly,

enough to but other close specific. the Now ones,

phones. opportunity area that of and foldable phones seeing actually in called lot key we areas One is an a are flip the of

in As you People the different at much larger might multiple this you can one. use. recall, category love that. And at same in very has the People XG, that display AI China applications become you that particularly popular can run form you different because the can same advantages at a provides time. applications have it just With factor. time, open, a windows running now different love

gives display. gives but twice you you display. device, a flip pocket in the you with that compromising put regular can smaller A without on Now size a that device fold your

such big are popular. factors very a need form that support the both side. one display, Then the to is problem So though each on you battery

the and met them and of the battery Enovix two replace battery we two battery least folds those side. at batteries one in now advantage needs Enovix is I and on telling what one the battery A one it's possible The the needs to hey, back technology each on front batteries. when typically the customers in fold flip were was, middle. take me So with one have

really can you top example. for flip now thin where is actually So a phone the have

much if fold the with Now twice regular and a if it, thinner, have today a smaller foldable of when fold that phone phone. phone. foldable much The you a problem or thickness is it's can it's you --

can phone. or factor phone two actually that the a thinner You foldable same Enovix form can one that put battery from as now regular batteries make

where one that's of So are using. customers example

When that make working with is, of battery would what familiar like size which terms we So memory, typically they they on years. charge do to the an very first launch? does we Which a it? they it's do I'm typically When we give to What demonstration? of to? happen them over engagement discharge many process last a samples? processor, kind How do do What do engagements they need with with In it form the many, timeframe way works factor? the are it? the this need? will connects is How

path they're the technology used how So the super be also can gone and that so I've make same on of wearables, the going them wearables customers of all exciting also before. super battery all also in and to notebooks. make And see exciting these some same

brush all it's us them. opportunity kind -- a of it's a So for broad of strokes across

Bill Peterson

about see to that mentioned there. Great. asking your lot that. prices, investors you that a Nice interest achieve Also you how to there's mentioned confidence your about the of -- get ability premium to guess and I

investors Asia. in structure Another cost vis-à-vis think competitors to thing about we hear your how is also from

should guess how we does maybe importantly, close with I high increasing throughput costs, opportunities as the structure down order cost set, driving $XX today, compare the what the And So material current aligned as competitors? the how volume have in like think your throughput, about do to and of high around more well that the current current GenX million material current line to gap today? you optimization with competitors terms volume in

Raj Talluri

Yes, absolutely.

investor material is So times even like XX% of and cathodes, happy And the higher it cost making through I answered a again. on. so question in or a on are electrolytes, anodes, of this battery these calls. cost go majority cost. is to Typically, I'm the couple separators

our currently when structure want it to where it like be build cost be, Now probably where it even is and line. one be not we should clearly won't we

really very, tens So we purchase scale to build where And you to to very get of finding the millions part the get that. agreements the cost are have the those competitive. in batteries material is

down. building Now chain got as Ajay are team, hired we is that procurement strong a this people supply terrific and start our cost he's his very material and factory, chain he also and team, some supply getting

is whole material I as I make now sense, costs we in as And we want a comment the and the competition, that seeing volume, so mentioned the material the in stack. are come more to lot down, will ramping

to to these we multi-source So of able cost dual even get or source the in some down. are

of other have cost cost we And out the further a machinery itself. Ajay of what The work aspects the of reduce. his is and one team done figuring machines lot the in can

about a line, batteries or is we small the batteries are this from bigger it very can sense to universal For that line much make in example, it's watch batteries. when first line smartphone which laptop we the building, talked

we variability lines battery, all variation XX% that to in battery have very very the side progress making make needs line to wins it big. comes able be are with we will cost the our of not the could It the to of be way from optimize as to design big a may customers, go But as so down, that. small but maybe

So that smartphone for we cells, line. can support example, on the all

throughput could And watch the run another cells. higher much line and support

throughput, how very that also So to and to be we business lines going that to are as margin in lines in the in optimize and we it's down. terms get long-term we middle get the costs optimistic of line to terms optimized material gross scale the more very of healthy how products. get and I'm as of line of cost more end and

Bill Peterson

Farhan best for Thanks insights Ralph. sharing wishes and and to Yes.

Raj Talluri

you, Bill. Thank

Ralph Schmitt

Thank you.

Operator

Gianarikas next Canaccord. Our question from comes from George

George Gianarikas

for taking questions. thanks Hey my everyone

EV opportunity of structure batteries in First on mentioned the that maybe based new charging specifically focus release that's -- of you to on anything the hap the with building. you're happening fast the

would any So appreciated. Thank you. update that be

Raj Talluri

Yes.

working be year. end area. them benefit we're like making of of that architecture are able and working in with milestones I they and able with put have any OEMs and time, EV what a but as in some I'm we don't would that mentioned, -- of material quantify I further samples. are them fast we the charge have progress the our that get before in the now As can terms moving the to And mentioned I in today, steady to as we'll our fast is charging. couple to last We It's we of more optimistic new stacks share architecture how data we give

George Gianarikas

capital for be requirements Can needs focus the capital And lowered just structure, year. as XX us for you. looks XX-month of sort what Thanks. follow-up, to will the you period? you like maybe your remind XXXX on the a you and over this to Thank what

Raj Talluri

in take Okay. going the I'm get Farhan first CFO. to call his

Farhan Ahmad

we CapEx things year. are I next that you going needs So on not is can but of for a we yes, year, guiding have next what tell to lot

be the Autoline. will GenX completing We

agility in. coming the line have also also We

guiding to year CapEx be in So will CapEx. higher not this but

year, be till wait end and to the probably then able of have to more. share we'll You

Operator

Potter Sandler. question next from comes Alex Piper Our from

Alex Potter

guys. Thanks, Great.

additional started know running numbers initially So specific the they you've you terms are a maybe cost on having first if from like of up you'll conversations focused high And I specify I you're and thinking in and about maybe expect you can't as start have contemplating Malaysia. specific then at I maybe when I wondering your in But like that in lines? you'll fine you will And cost begun what a will that. start put have here, quick of can exactly I'm lines lines and sort customers said, line to just when dedicated getting in how lines one. a customer number about building volume there, Malaysia, follow-up those and the those lines know mind, qualitatively, deliveries that maybe know dollar that? on those don't with maybe on but building you custom when point well least as but much agility

Raj Talluri

Yes.

talked we think about I this So before.

factors, So we customers are mean mainly, we -- in I now our smartphones. right? have form multiple customers in

to we have each we and the We optimize those. have watches, in of line laptops, customers in for have customers

a things like for machines, that can there's more backend. at different Now the remember, multiple are that optimize lines line, working the zones as buffering Ajay line zones. are that of on which other of Then maybe are you of laser to about stuff. ones one That's talk models. some now some again, mentioned, multiple you when Like and the we got we has do constraints the the thing zones

that. in So amount terms of the at financially all we optimization where same flexibility satisfying three most out But all markets. not we just are the leave of of also these we optimal terms lines of now in are for time, of to figure universal right us making trying for

mentioned rest our when and which assured, lead which conversations those -- but you we answer the so precise have -- we and are have as mean, are it's better term I along. I we'll for which more months, having going. a on. get wish suppliers sooner, year I when But we you'll all get where later think long we of on I think had I with that's so visibility you, the goes

Alex Potter

new in to these Okay. options. a will of for maybe lines pay multiple follow-up will that, that different there's of how be just terms financed, then lines know and And those I who sort

have your that, these for will be be might There dilution several initial new with in have the already it. regarding how for get beyond are discussions lines help to pay could with how those associated lines concessions funding arranged associated customers along that planned? that you with you or price You far

Raj Talluri

Yes.

mentioned I when for job options raise. So in three us the are that there I first took go capital

able factories us into to we where favorable put countries that going were the we and and people And The there, from to are as and first us countries funding our bring options because there's can you want there those today, on want that. provide to see to deliver get ability technology the one the jobs. be was clearly there Asian announcement

on that raising second capital, help we've with the year. the work us and The convert earlier one arises capitalized in that I mentioned the and company markets was we've capital whenever we opportunity the will and and done

one lines. guess arounds one we things the time, company third would YBS, and because our recent margin most like with of to capitalized come some The more three of on. have some decisions fund to associated have with And we mentioned I've don't will honestly I is at some those and that that as the I the with runway. mentioned, are this All make so have customers price with and we open

now for and get is figure to here to going stuff. next CapEx the optimal Farhan So out he right the the path

Farhan Ahmad

Okay.

forward working you. looking Sounds I'm job. Thanks very with easy to and Thanks. a welcome. like perfectly much

Alex Potter

you. Thank nice. So

Operator

[Operator Instructions].

comes Gabe Our question from Cowen. next from Daoud

Gabe Daoud

comment that was taking today? Is the any Hey, you there you I progress an for was announced MOU the us give program? maybe that could Thanks last thanks, update on November everyone. time. on hoping Raj; notable for could smartwatch

Raj Talluri

Yes. comment I Ralph guess on that. maybe can

involved in he the think MOU. was I

Ralph Schmitt

Yes.

technology customers been smartwatch, moving of see from necessarily progressing volume sort some process platforms wasn't And our just ongoing next likely for it either us. But into it's year, most We we a production XXXX to. perspective. early that as should along of XXXX expected outcome or multiple product. an the qualifying there we have have where it it's specifically And progress using forward. the made but in for So

Raj Talluri

from our about, of a Yes. One that in products customers MOU from Asia after is many, is it's comment technology that with volume amount tremendous I'll talked one that thing opportunities. back large recently, just interest many we clearly and coming make but Gabe

qualifications that's and just to get So satisfy done the to demand the up. we have coming build our factories

Gabe Daoud

guys. this got a XQ follow-up, you know it, I and And helpful. $XX,XXX I'm it. disclosed quick $X little but a XX,XXX doesn't in -- in for then implies cells today, That's previously revenue, Thanks, the the there? cells. what's driving curious, versus generated small Great. it maybe and matter what's delta probably over Got if ASP an $X helpful. ship That's just just the you

Raj Talluri

samples our and charge sometimes I products actually forward. cells that for into because -- move and customers are test like and before, then we mentioned validate sampling them we'd to for we will use are going don't

samples. Sometimes we charge lot a for

not the can't probably answer. divide revenue number, an the is qualifications, but is number, you can way just accurate get and you a the by stage good really ASP. you customer a this and production and early this calculate time ASPs, so good tell that's This that's And -- multiply so That's wouldn't revenue much to units though. take give not an I

Gabe Daoud

Okay.

Raj Talluri

good We about even that's feel our very I ASPs I'm value more encouraged we before. would because than and the provide, now something

Operator

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

Ananda Baruah

yes, And the for Appreciate it. taking thanks questions. Hey Farhan, guys, welcome.

how see Yes. and Looking Ralph, with Ajay, you forward Hey, to Raj you. Really to working you, sorry enjoyed you? are with working go.

that between give the anything you follow-up. sort earnings then in you sorts there have update and a is could might milestones of expect expecting between us things production Just a and timeframe to calls product real from we we expect going -- have quickly, it project is with now you're to just getting initial and -- Fab-X, Is couple, April it should and GenX, is quick certain If of those I what I from be it guess, the you? the out? Raj, regards still on

Raj Talluri

to when factory still, we Yes. to And you hope still And that our done. confidence And is is Malaysia we Ajay there line from big gentle acceptance mid-April in I date the that's and next to that till the month. an milestone -- feels give we able to customers. next send is samples our on in absolutely, can out get update

got into Then done. the we facility now and contract that milestones line we I see comes And have think equipment when milestones we'll on goes when the have in, Malaysia agility that. our you'll then

I we be good see. of to that. people site to That report as the a lots and year and have think exciting by. really Yes, have We all needs goes would

Ananda Baruah

need All about we Is this that right. year quick that aspirations how as through you And just still is follow-up, year? Awesome. for the That's sample Thanks. have still something goal to getting And -- a -- should this I also EV then think you MOUs you made occur? think an in in EV EV actually MOUs helpful. mind? is for I to about move conversation that do necessary battery that's know

Raj Talluri

-- Yes. our challenge came army I opportunity then the have. and the I making general number opportunity opportunities This that we think absolutely the is mean, that the availability mean, of cells. the I is that right goal. we progress, of the good now up, EV honestly, is announced

We have customers those things. qualifying

we but have that fashion, so. for of goal, balance got up Malaysia the line all in coming the we profitable most just right things those We really kind all have of That's sequencing is question the a the to time so the now absolutely company. going it's on stuff

Operator

from Sean Sean. will allow Our next to Janney. comes unmute, question Star X, from Milligan you

Sean Milligan

a you think additional I we and Hey I about first some that in How it about think quarter, get how come one do we question XXXX, production What's orders. one a to to -- XXXX? terms is, guys, this see once thanks Autoline for taking of like first is pace the how about a how at add every six pace Fab-X -- ramp per guess months? us can for in guess think ability my lines should and question. running GenX to realistic start

Raj Talluri

to and -- mentioned optimize customer get build to we spending before, could that good them because as that's most amount Yes. of wanted for a -- can. if that's But so could margin we want for mean, And universal we Look, the we very strategy I we we not we as quickly lines the as each line are all where four the product. we buy, we I the build of customer. opportunity,

long the are get can issues, on are pole working we feverishly so those. on We working lead what

line how on working line so that each the lesser. even to more subsequent are net optimize We cost

are do able you XXXX all to to through hope are that give to in we year and by those goes things as how So on XXXX. be we color and working plan more I in a

time. mentioned have at I So don't more I details this much last point, than what

Sean Milligan

plus out, -- lines since with line, how covers then, $XXX the ultimately YBS many the you fit first million about in you announcement And you facility facility? is the think can basically the that Okay. the that talk can

Raj Talluri

elasticity, four facility lines. dry sure itself stuff And we the space facilitating that hold is of That super for exciting. Yes. facility and of four has in kind can all we making lines. -- are are room up And terms to that

out that worked we So and we got got going line first the in.

trying of we out Now we're sequencing to next can. just the figure as profitably as few the lines

Operator

next X. Our Gus Markets. Capital Northland to from Gus comes unmute, question Star from Richard

Gus Richard

a for and those YBS are Yes. question. have taking little terms? talked down my been Thanks where with this about point? you nailed You commercial bit you talk about Can at

Raj Talluri

agreement. signed We supply the manufacturing Yes.

that, the us, uplift it's think how of on. and terms puts that them, nailed comes exactly by in and it in I there by signed all so So and what down, terms is the signed

signed. between are terms us So YBS and the

Gus Richard

of And I be produce samples to the customers? still to up that. make sure year-end lines November or then just for be agility able want in this running and year to Appreciate and Okay. by expected

Raj Talluri

that. Yes. by have That's believe Yes. We still year-end on track. we'll

really. lines two on building are we So

the line line; the are We agility of also the building building we're GenX. one

Gus Richard

X Right, the right. per throughputs line rated year. And one of units million GenX,

Raj Talluri

of X are batteries; million Yes. point bigger but million XX round the numbers. something, the of small nine batteries roughly

Ajay Marathe

the bit line, optimization. Raj, right? just first is So little universal a line to on -- the given UPH clarify a we've This up

million So of any build this will kind. line batteries first universal X

Raj Talluri

That's correct. the Ajay. for Thank you That's correct. clarification, for Thanks that.

Gus Richard

Thanks Yes. That's me. the clarification. for for it

Raj Talluri

Gus. you, Thank

Operator

Souther Chris question B. Riley. from Next -- our next from comes

Chris Souther

XXX,XXX quarter. thanks the the Hey, full-year in XXX,XXX here. or in targeting there line of over any the XX,XXX still Just for? target Are you'd there from taking target? significant quarter second phone expectation the still would we few ahead any question acceleration my targeting does the we some of the need is for Fab-X on year? hit larger laptop that we're things next the in change for production Maybe And batteries came the of specific this third that's if are months from looking agility what the call out to

Raj Talluri

value We Yes, the point you this we do to done have the absolutely manufacturing laptops and for team that at these and do was absolutely, phenomenal -- we now job. both what these opportunities But and great We asked, and from have you goal. if XXX,XXX for is the a Ajay with question. on larger the other know, going we EV batteries if way the cells about make that's the army stuff. higher question his areas, wanted for as can those as

fab The getting one coming. agility line is are few We a and here. only we ones other have

the to how ones, the want based right work year. agility the to what fab in more But here comes and So problem you have on a we good want line the update the it's how we have make on, we quickly on the build are have we sure to rest we optimize that going exactly and opportunities to to do mix to we ones. for of

Chris Souther

Got it.

later in are as kind where PXK design stages the you design how milestones. some provide metrics those Okay. the on some $XXX that laptop customer go side, customer and of down on some million Makes then January see accounts X the wins to active in tracking back the PXXK, color And presentation. provided If any larger the wanted you're the phone we for as breaking think on I of could engagement. I we far customer plan appreciate and to towards those XXXX moving sense. you of funnel you by just of

Raj Talluri

take that? to want Ralph, Yes. you

Ralph Schmitt

Yes.

of but So that well. some we haven't really the very milestones graph shown memorized that you again,

this of the as into what get of real yes, of kind which till early stages out units and next the and how fab was happens later from the again units we into So sort path high getting customers year we're many PXK, QS to revenue XXX, on well. that's more. then of year volume, or based moving we very And is is called production X,XXX which are sort sampling which that

product opportunity, coming these the the bunch the of is so inventory for as have which much opportunities of product, little is well a got got we the keep that the that because put we're some we've of funnel, customer the of our together all mix of stacked Raj spent in funnel right we front It's progressing launches you're has end up moving a even honestly, funnel. we amount pointed on, we've forward. of time getting of of as increasing matter a ship new But with of customers which less in opportunities that new So we've not why and out, getting right units pipeline. plenty us us build seeing bit

Chris Souther

guys. year. details. the appreciate Yes, Thanks retirement congrats on I your

Ralph Schmitt

Thank Yes. you.

Operator

from to Tim will from Our Tim. next allow X, comes Hutton. unmute, EF Star question Moore

Tim Moore

been weight their roughly Thanks. And appreciate seeing tonight just know technology to couple amp accelerate. lift and from you're wide more is, by it compared going the Yes. through line your more appreciate that. marketing or U.S. question the range amp is customers batteries if the on maybe to than hour that innovating more the hours? but equipment energy prospects lift right in video My by Are and starting the you main insightful. is clearly density envelope last walkthrough XX% even the to months really customers Army awareness just the accelerating was pushing I'm I is you they've for wondering for a whatever offerings, shine that's using. previously or capacity, and

Raj Talluri

appreciate providing is that more Yes. see I they mean, density, battery. fact more new customers we and energy by absolutely. that coming need much really this the the that The truly applications driven are again

headset, you mean, mean, in I I new hours. the get that of could blog, we can what's just battery for think life. that six two-hour or is my hours wrote example, you classic if eight hours, if beautiful I Apple four see it'd happening. a reality mixed be see to I

the across that board. seeing are we So

the Edge, moves And as more into also the AI more of from immediacy. Cloud the just you because and need

density energy is the So appreciated. totally

them engagement factor, the next batteries, the of them, I the you where lot a the to they're parameters gaining different battery, customer joined use for are form with we think which how have moving is also more to shall have they're testing as a programs in example. our say for appreciation over our putting the level optimize I we various

provide density. need We to energy

life. need We to also provide cycle

the quickly. We to charge also really need ability to provide

also discharge to different to the into the We get fast provide need charge heat at and voltages. ability

moving able to into just how work next the that the are we interacts battery back with able fascinating to to product it are closely OS. where how interacts roadmap. It's the roll see. our how them the engagement customer the fits we the it processor, So on just we with to of And framework, a level really in are now with

So our to these technology, with next-generation is be density, addition providing come higher when technology. out the batteries, all optimized which even energy they'll really they next-generation the transition different to requirements the more in of

Ralph Schmitt

more Just -- add a little

Tim Moore

Thanks. That's -- really

Ralph Schmitt

and sight what release more -- we being and involvement to aggressive some of customers it the this seeing out enable need say, has was allowing in talk for lose these this all the of in can't think the making quarterly exists I I day -- as with Raj's much as the and involved. in being the do with actually absolute of just out goes mostly about going points shouldn't that features this they with to phone they China uplift is, being technology Raj sort customers was been announced of them because need existing ones there. as far us They're to that just mobile to

make pushing reality today. So they mobile are want hard in to and us that a platforms mostly and to partner with very

Raj Talluri

for you you, that highlight. Thank Ralph. Thank Yes.

Tim Moore

color. That's remaining later Thanks. for today. a questions And terrific offline Yes. my save I'll

Operator

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

Raj Talluri

everybody us, all and questions. quarter. Really listening thank your you to exciting great Thank times Yes. for you and for

of you. speaking you next Thank to again forward quarter. Looking with all

Enovix (ENVX) 26 Jul 232023 Q2 Earnings call transcript