ENVX - Earnings call transcript Q1 2024

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Operator

Thank you for standing by and welcome to the Enovix Corporation's First Quarter 2024 Earnings Conference Call. [Operator Instructions]As a reminder, today's program will be recorded.And now, I'd like to introduce your host for today's program, Charlie Anderson, Senior Vice President of Investor Relations and Corporate Strategy. Please go ahead, sir.

Charles Anderson

Thank you. Hello, everyone, and welcome to Enovix Corporation's first quarter 2024 financial results conference call.With us today are President and Chief Executive Officer, Dr. Officer, and Financial Ajay Operating Chief Marathe. Talluri; Farhan Chief Ahmad; Officer, Raj will and an your and provide Raj Farhan overview questions. then take we'll let XXXX shareholder After call.Before after the that we'll session, today. letter released me closed continue, we quarter the you kindly first conclude our market remind Q&A we our website ir.enovix.com. available It's at on our Investor of our website. A replay be will page call available later Relations of this today on the to statements risks and Please uncertainties. note this release that that are contain all press subject the conference forward-looking and shareholder call letter, These results forward-looking on based current expectations from actual and materially statements are a factors. may future due of differ events variety or to

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

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

Investor can Raj the to measures Relations to of Raj? over page in now You find our the is the begin. financial call on reconciliation of measures the our which non-GAAP a GAAP financial posted shareholder turn to letter, website.I'll

Raj Talluri

product comments how progressing recap a we'll the also our recent to turn I'm have going and To to our forecast achievements, to gross recap from for Thank I recent of the due your And positive great we a XXXX. the above off start everyone IoT category. the which it to million, $X.X we thanks outlook. the questions.We're us our today, QX the we financials in favorable performance non-GAAP to against was the of a mix, strong reported and revenue time few revenue first margins and in and format machines history.Second, higher the Farhan a Agility vast and Site to GenX then first, company's delivered start well for SAT the you, in already the the are take joining majority are Charlie, I'll closing which before over is Factory thank of results, Test. completed our today.For Malaysia strategy of line Acceptance is you Acceptance with Testing we and underway our our

first samples result, technology As a our battery track EX-XM of this produce quarter. the we to are on

at the the note Now the GenX same FAT that GenX the and I'll yields stacking, unique already manufacturing it's place. our given process, is laser challenging also complete. picture, battery dicing exact based for and are such that Autoline of Agility portions as in in our is machines.Big XX% on of Line, as for kernels our high nearly manufacturing upwards process volume, great the And a

progress. rigor getting we confident put steps right.Now, customer talk about these amount process are let's qualification GenX we of the can We the into the given scale

smartphones, portion battery the with electronics. largest the and start consumer Let's of market

given with battery the increase see in to engaged the silicon leaders and architecture deeply are We our market performance. value enable they

can testing, I'm which that Fremont to you for now we've for update see EX-XM initial done cover we producing thrilled needs super a the our to previously, EX-XM.And of exactly our have exciting the for with product OEMs is process develop This letter. on what this of and been specific samples to shareholder market, these has then tailored of about with smartphone begun It's in you that's talked we us. work gather the the market. As requirements to

product let's -- qualification these we mean a Now customers and And are customers?Now XXXX kick the samples products eager are mind this slide. really their off products the shortly. out with with to with go where take in does of the look samples launch. quick of EX-XM for will this What these with

Now is the The smartphone for a a for on smartphone of slide what battery leadership basically to what business Enovix. opportunity -- this size billion I'm I showing opens $XX opportunity us. want

If can represent you X.X bar is top X XX% top on which smartphones that units in billion look XXXX. shipped of billion the of all volume. the at the OEMs them The the you slide, see around X

among unit in of smartphones, volume will Now ours. models top of XXX $XX models full an model.So a billion they units average which X.X million X lithium-ion the smartphone X of is Collectively, line or per X. this $X.X TAM this plus take battery billion smartphones, produced means of of

OEMs of the battery these EX-XM of are top smartphone X to of samples X from going us. receive Now

So that $X.X actually smartphone of here. TAM battery is billion represented

to part interest the with So shape, we're OEMs relationship for extended to progress with started can the priority as of largest company course was customer a I our last see me the with something in that market on conversations of the formalizing great last market.Now year year. battery as you the has the leaders, them making the joined we about focus over when

other agreement plan pleased going to expressed this beyond. company are development have first sampling development who a to is out company in progression the today with we XXXX top exciting last technology customers OEM to in interest by happened -- first to sample in be are technology desire of smartphone market into our products similar this technology the from very months. to -- and To and mutual What a that to relationship I reflects am us the coming hands, quarter.And who also agreement our announce volume. collaboration and we also a are see end, EX-XM with our both Some users' the with that who has bring X really our and with from

later EX-XM, 'XX, this to year further straightforward. Our in 'XX. SKUs very for launches from then in a ramp product with of samples this We production our begin goal customers, is with that of battery handful in differentiate group EX-XM a

cycle a bit sampling that is is this we out our which company battery. important density improvements because plan are this, quarter of we increased are advancements to plan to current life. before. applications that this fast EX-XM, and generation shipping the is the where on slide. And AI increased from be the Enovix I technology all technology cells will there highlighted let's the of is the leading the the the OEMs, to of density higher secular this charge made for But both quite in sample new may We've be leading next We for the smartphone, EX-X shown coming As life we the to the needs a and and bring charge the the a which few what in up comparable all slide applications.So year. you cellphone we our demand energy smartphone these were last capacity have we is EX-XM there EX-XM, We've only demand which in energy and all fast, capability. that is on differentiated into market continue energy capability to make year. AI our on we've density companies, higher on-device to second batteries technology with cycle battery can after this sampling smartphone for keep products market.Now market. that increased help generation very important past, to with every particularly recap to

while, so charge teams where vectors, and these like move all started levels on. energy a reason bring for of R&D device higher It's and highest win TAM -- has for like density, EX-XM, quickly plan other of with computing. life, make the have $XX faster our X further keep Our the on of safety. smartphone Highest over smartphone density, There consumer is already needs the on-device them very of working to to this of it and it are battery our markets. you bar high, we smartphone Once leading charge is higher we in on. that the so sample this parts improvements time. battery the will X rate, we demands market, energy EX-XM a all to the cycle in to people market, gives charge is in they another IoT view you those is XXXX. batteries.The billion a in carry fast entitlement battery all us namely a to AI large And The

Qualcomm. the Qualcomm, are When Snapdragon is very So I all mobile us. when at sell at we these OEMs leading logos thing phone the produce be actually the IoT a IoT the to businesses in able tablets computers. battery other that of but meets these in for not was markets entitlements smartphone and after a of the into saw and we some I anyone, who business, quickly, same it lost were customers the that.Now actually of previous also significant built some should wearables we saw logos same of slide requirements, are you This on the markets like are

they this proof IoT us once a so smartphone smartphones and only customer, are inroads is, other into -- with for point, we it to our also qualify EX-XM smart we not our make for So are of watches are positive customers. strategy but takes on.To sample, qualifying we continuing also multiple

higher density advantage EX-XM. EX-XM targeted high OEMs XM and energy our we with of with with that higher and our a and commercial opportunities products few We density selectively batteries. IoT Presently, that 'XX battery and product for high-volume where engage design of both and in battery on -- higher markets performance 'XX better is XM leading focused select are density launches for -- applying philosophy take opportunities progress energy team the vertical are

as we of FabX milestones really production in meaningful the EX-XM progress samples as going our this out So quarter approaching here.Now get some to we're forward, key begins look customers. we and some

to this IoT Now EX-XM at going be 'XX some when from our Line customers shown QX let's sampling smartphone first the slide our we're strategy. We've to and take before. our some a batteries of customers. also Agility look is scale-up

when to will 'XX, generation battery.Now goal that that, smartphones people time is of XXXX, more and IoT we And to qualify multiple expect with take launch 'XX. to QX battery. and for customers that In next 'XX and of the sample to EX-XM EX-XM, also the -- some is the more launch our production expect get our FabX ready our takes the production. of half Second we in to

Now what years? the to look shown haven't These that get customers multiple does slides launching we like before. are we with multiple scale products in coming when

this -- Our production about line R&D the a is smartphone economics. slide unit

increase our What performance, we products batteries energy expect finding in higher Our team to density the we're What And we lines years. will to $XX better targeting of work is been has be the we million payback to that reduce XX% the in at we be the density per higher line CapEx X are better.At help our out cost ASP the a of manufacturing the because cash each to very in busy R&D point, lines.Now to hour. range that them have now the the as is gross producing has that the is estimate get there targeting experiments margin of done throughput with $XXX produce each these to much and the line to customers higher differentiate that does able plus, capability of because per opportunity we the be also want battery revenue be are million. X,XXX be the of we and to energy with the units year.

scale of So a very into manufacturing. here exciting get future we as

progress, as tremendous we you long-term business. very we making As see, path can clear this very have we're scale financials attractive a and and a

accelerating progress identify our our footprint to our the this none global our in efficiencies scale to we from team reducing of team additional teams to and our taking operations cycle now in readying we our are Korea this take times would team the coding teams, advantage be R&D as our of advantage Malaysia, without -- on possible engineering India the our Now global of capability.Based global success to improving the of teams. of global footprint, FabX this plans in and collective manufacturing

more turn by This year-end. by to is significantly to our more Our by reduce this out path profitability.With than to needs and our accelerates to cost going our $XX annualized Farhan. plan capital X/X than million over it or reduced that, fixed now I'm

Farhan Ahmad

letter. financials the the Raj.All the shareholder Thanks, in quarterly relevant are in report

we a a delivered my our Non-GAAP with $X.X So the also our the we QX, level ahead and guidance. I'll better million And EPS penny the of provide came kind guidance. $X.XX of margin, positive Raj non-GAAP -- at million, and keep at our gross We cash a of the $XXX of million, comments in a of was EBITDA at equivalents. quarter came as first outlook.For revenue non-GAAP ended loss which loss, of of $XX.X then better mentioned. EBITDA The midpoint had than expectations. high in than midpoint the

we CapEx us the balance strong with million was $XX it provides reductions QX, the For sheet $XX remains operation.Our in strong. used liquidity mentioned, million, that XXXX. into and And about Raj

we reminder, usage the equipment of it we development. to accelerated a As converted FabX for product for our as depreciation

in then now see half our reduce see depreciation. as in of $XX.X expense we our QX, back year accelerated in of of Raj that you had should we mentioned.And a won't return to about for million QX, in level So expect occur R&D the and depreciation geographies and This reduction had we expenses into a in to normalized QX.And spending and guidance. the XXXX operating high-cost expenses as

$X XXXX, $XX revenue a forecast million of of an quarter million to we loss to and loss $XX second the non-GAAP million and $X.XX between to adjusted $X.XX. million EBITDA $X For EPS of

we on the last seasonally As QX the we strong of I'll be level year, half turn to that, Raj. QX low and call, year.With highlighted expect now tends last have to for the in growth we that from acquired battery the business revenue back the quarter

Raj Talluri

in planning August plan scheduling have Thank Customer getting very our visits On about our and are in We're out a with our of share see, it Farhan.As of the grow we a begin we opening all very the a key details to to high, have more summer. constitutions, our very have is Malaysia note, the a begin continue you, number middle And event. to our to customers. of over samples in us we customers. door stronger. should and you as relationships EX-XM quarter in we that production busy be grand timeframe.We'll customers, later ahead the exciting FabX Malaysia investors of to on; factory enthusiasm of can very,

it this showcase We there are Malaysia Operator? there we that, in and the excited very be now. to go questions what recently, awesome to will really customers investors.With team was to it's and facility. can it our done, I to phenomenal showcase and has

Operator

Mark recorded. Instructions] Our call from William question Please is [Operator note this being first will of Shooter Blair. come

Mark Shooter

is This for that's for Jed the great Mark Congrats news, Dorsheimer. surprise JDA, on us. on a nice

to launch. time PO when on that know give But target line? that the any see for you I a them, that to is of does XXXX indication Speaking you'll achieve need

Raj Talluri

long The question POs I've on launch the before couple PO In electronics, Yes. months this production. is for a in for are in been XXXX. consumer typically, the -- a typically placed the business time, of POs

some all and to through I'd go all rounds PVT, And that say launch from samples they we're they in qualify give the give to going going some actually battery samples couple phone. then a decide then phone need really months they get the launch that then They're we're going size the the we depends them we more time. phone before a into tests within exact to to give phone the to EVT, then them when the closer now, then us them and when so passes And the it of upon from that's size, to actually get go once model, PO.So -- these gets need where exact it that of feedback. production, And samples. qualification

to So I the I'd Early say so -- second second half mean, of probably. next like year. much half

Mark Shooter

they follow-up, different one right? these I'll all of though seems customers, is have another so land-and-expand the you're many for as tiers using model a And performance. here it -- ask with Do

get there trial do -- -- the form end with the models a as can that you of by you in multiple is think in be looking is top-tier you into do or think you the XXXX this to customer So customer?

Raj Talluri

that closed Yes. working ones. of my in we multiple, there, them. experience one them, said, are just JDA one Typically, one I've JDA I of I multiple with like But I think happens is what are understand you in sampling battery see goes.You sure multiple Again, We've where from team one And for of the model, smartphones they're development a the now vendors done they what in a before makes with battery is agreement in customers. and we companies the there in how evaluation put model, a put that they the what is with of you comfortable with the it they that is chosen other battery is. become that platform.

by fast multiple models you you're once the qualified you with is model. it battery size So based which in into And life for once moves a starts for customer, make in are my across of that launching the But the and one density model, -- quickly geography for different energy they're you tiers. people experiences optimize a that shape typically the model. cycle model the charge, on again, and

is So come much shorter and the once should in, we that get faster my qualification expectation next model cycle. much, much

Operator

from Rusch question next Our be of will Oppenheimer. Colin

Colin Rusch

through you've and at equipment positive starting any sort ratio. out movement or installed? as about kind you've a gotten talked the As talk of of done XX% everything acceptance and installed gone testing roughly incremental you everything about you've and testing the surprises yield through Can

Raj Talluri

one. let here. that Yes. I'll Ajay handle He's

Ajay Marathe

have runs, no to question. course, saying, different just No, We FAT, Sure. not the process, pretty several also right? been go Colin, quality of through UPH, critical as but times parameters, rigorous right? is up surprises. the So marathon and good we the yield,

and through Test. the and all then quite yields, in surprises. FAT. where positive FAT speaking, that yields There'll the FAT cycles will how and no expecting what much Agility the more equipment -- the on We particularly we some.So for pretty side. to run exactly generally are expected at done, Only we continue has I'm is and that getting about are SAT, Acceptance do But most performed excited that's be high the have fine-tuning we are Site we

Colin Rusch

intimate that you And the engagement, and are talk performance cadence bigger performance future changing are I'm the sure, of about a the phone as the become guys And bit how of functionality? little the the generative see with customer these then AI specs, phones? getting very of and of more Raj, for you customers some part that's with to what demanding can much they're and obviously, a phones quickly. quickly deeper growth these start all changing we

Raj Talluri

want for higher customers in and higher higher noticing density of asking and batteries Yes. for X,XXX higher. is they're capacity more What that and And -- milliamp with energy higher secondly, we're terms one. hours

is the different we think energy on. that the they and many apps, the need reality crazy. time -- with larger so like many, unfortunate the the hasn't just that's And all I start think when it, up DALL-E I and using actually battery. for why that the from reason energy showing versus for I time years. on to consumption quickly really now battery charge up that YouTube timing good come density indication shapes.But is simply want battery, more ability offer last the it are they battery our is and that some because great data showed a these is ChatGPT higher now and and batteries And really GenAI's versus customers is kept the when industry is when a they we Clear this density,

Operator

Bill from question be of Peterson JPMorgan. Our next will

William Peterson

launch presumably year. of 'XX? That's to crux you what's the the of are mentioned of the year year. customers upside with to others the this receive revenue in shareholder that the have thing? you're mentioned smartphone there separate Is customer agreement XXXX one really, OEMs these X or relation question. of is, you rest are question? sampling or part samples this smartphone next products working question second of the of for or and in the Is leading potential you with more first the generation the of the a like launches actually technology on in But X really then that the next a extent section terms And is development letter, In X

Raj Talluri

work. to one the that we're speak how another from of I experience -- so I'll we're mean another on working Typically, mentioned in things my and we typically one. it smartphones, then one OEMs top with, Yes. these sampling

of that X planned. X like top we are sample again, will far the And conversations so we these going. So have

then their can asking keep us out. for and decide So they may get may may faster. -- us they what to these qualify people go decide it's some is put faster in as particular we more more customers And a qualification because happens samples phone,

bit be may customers Some a later. little

to limited hard exactly many it's year.But we got realize also will capacity. in you to So be how production have tell next

So how to with that little modulate have many we we sell to. bit a can

It And go. be I could just more than possible so on how the X. depends qualifications it think it's

William Peterson

Yes. of And my to follow-up is related actually kind that.

understand assume future. for the I And going can system existing cadence you have is consider that it, to million to think, X,XXX, what more think guess million the UPH, infer time line that for a the we I to this line year? Just volumes I X,XXX related, trying which when more that's for presume of year next frame? and support foreseeable of this clip do 'XX in you per about line, high-volume should this this at sort to guess I mean, would your the you're So putting is CapEx should more lines X or year, I'm units for the units? kind just $XX still which up at how we like I assume into Or point XX if million do then think your already

Raj Talluri

handle -- So first the and line. second the of Ajay I'll I'll talk part part, second about let

Ajay Marathe

Sure.

very adapted cell as larger universal cell to line, as which the is can size, a The said, reminder first to size. as is, a smaller it the quickly line, we be just

been about that. So we have talking

can you So UPH. expect X,XXX

first how line both are should million on this you we model is roughly it.From is at second things it as is year the which line for batteries line also onwards X,XXX a HVM marathon underway, clocked have what FAT, with is happening. We X,XXX, with so X.X the runs know, FAT --

We up the are speeding line.

removing of the some bottlenecks. are We

that's the what condensed, be we reduce at and thing. looking Raj exactly behaving up And also X,XXX And be in is earlier cost We his can line the combined terms about to are as how to go where talked getting of type machine what presentation. can are in of X,XXX. that

Raj Talluri

Yes.

a the color and to so on. bit second little add line to So

the the there then are we first want there's think formation that first the in this actually is thing is such but pouch looking I zone out the now at putting capacity from qualification? stay need way Which to we in.So earlier, these lead be at these coming is in? part Each I into? parts What's amount the customers we right? the -- the at is which sure and we the have same I has of parts as that getting a back is do is the which to capacity so figure then is the of are one like of different the we is year. time a demand? not do Micron is what the and -- through coming thing, a experience are a mention and there's make end. to ramps How models stacking ordered dicing building customer of that procurement, put sync we many Then How into work, that which different and of lead shaping? and out really where exciting with which we it for really a right to on. How can lines the later figure place have that in have into what piece of we a a it lasers, the work deeper manufacturing, line there's to monolithic as tuned with that time, So going? order the And line qualifications.So deeper a that customer be gotten time of the balance then a line lot is what

William Peterson

high-level and CapEx to for about to think speak Farhan maybe year? how thoughts year this next into Can

Farhan Ahmad

will shapes will So no it's It's up We go. we for on flexible line. and year, just into want the yes, lines. we first probably guide before, as the then too we qualifications flexibility. next from flexible. related to early. like order look this We and have And it to change what that, together demand how don't CapEx maintain tied CapEx for with the based -- the year, how just be because said this will And be

Raj Talluri

Yes.

is, other mentioned, come cost reduce with have a line. way Ajay to thing The I as I team think up and his the

sure So a so is we in there. to we need make because And right universal knew order the right the one way. the we first to line, things what we wanted do

on. We flexibility. of lower gives it cost as and have line down narrow that is can on after, that going But window the second the we so need the on throughput, That shapes that we're higher smartphones to change. gives us us

Farhan Ahmad

question. will I your thing, add just Bill, one to And Yes.

In will a you terms won't because not The time reductions XXXX, or all obviously, be then. was frame, that. about in line cost thinking there $XX million. And lot be the expensive should the line, than will but completed as first closer million, of XXXX think cost projects of this that the more year, be $XX the to would be it order, quite if it by of

Operator

next of question from Our Cantor. comes Derek Soderberg

Derek Soderberg

Yes.

just question a I've on the So shareholder -- got letter.

you pass before first produced talking with the battery sort equipment. about cell Do customers qualification samples. the still need were the internal shipping where what to curious SAT you start SAT side to else to associated is the FAT a I'm in quarter guys of and X Agility you have do April, shipping Line, ship you internal scenario or smartphone beyond I'm for You on samples just get this the it wondering once you're the battery samples. ready to samples.

Raj Talluri

absolutely. Yes,

But like One meets the right, it meets and that there is is the making fast make on. on. so testing is requirements, the of it SAT meets goes the of safety cycle are then so X of consumer -- look, there through it the all qualification testing aspects the So it and it the sure and FAT, all working to aspect safe and machines qualification. the life and of battery charge is performance sure

that what doing don't customers we when batteries want all are when fully we how actually into to able because how see now don't batteries being to side once because you the test test you we So will customer that, are tested ship they been want now test me parallel. would without this Enovix. do And do test it.So in get like surprise the is you is at customers want that's that is really which any to ship the they it interesting of it, what's to for the test the we criteria to

now we all samples after Once need line, early the got are make they them. without would go all go of like that, the testing to how first everything them good and we manufacturing So but tests can from they is had through sure test. that they exactly test main we've the

Derek Soderberg

customer talk the could signing little curious your criteria felt that. And if deal. that, technology? if And you curious a had of to on could was the it guys. sort share you with with side for some reasons someday battery then comfortable on a about OEM follow-up, do you Curious something were there's development production? then they more I'm the What as for this for or were to hit that info or technology bit funding what were with with finally today? some think reasons production potential you time a you it working provide more specific just Was Just certain my to if that sign guys agreement production the

Raj Talluri

absolutely. Yes,

now, phone them early models.Because the and every you I it we obvious They're give of in They don't that of to phone. they our the actually samples want differently, most batteries, like have these gave remember, many We even in get. outside. the not different customers viability small well how they're it are testing. the is they about came these I samples. us mentioned themselves and of battery Fremont so of take which to something them. what customers saw we the before. visited and that testing manufacture through They us convince So to They with in and gone use testing they stages from right? work would of and And got at their to see think battery line, customers from many just and able came these closely Fremont battery one a that's works optimize further People felt the slap slightly manufacturing the of then

will work customers at So customers. fit fast to they share does temperatures other and with these fast done it this use what do figure know-how super different we they do they battery.What kind information lot phones And shape happen they how how that and do are because algorithm size them with and that battery they to of what when do how allows I expect much the that now that's looking did proprietary how it's does to is us our at keep actual and we're similar charge, agreement a building works, things in they density exciting specifications. at. different all something they can use? use customize to energy And So use? so out it charge, And what particular the that actually of there's they their

Operator

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

Ananda Baruah

really But coming about I about how are methods follow-up. CapEx the think have line with some like see. have I Congratulations thinking a on guess with? walk capital, we raise the Raj, by capital progress. how guess, the context I And through quick year, you can It's to sticking how should raising capital? And guess, you to various like years. I about timing? per you're to Farhan great think that gave just what And in

Raj Talluri

answer the question, second Yes, didn't I I the part. previous think

customers, As these to them to from the see we clearly agreements the we actually are discuss us level. with get what getting offers can they next financially with do to

And we're So about talking are those conversations also some also governments to happening. that.

progress batteries. on add to happening our now I'll So Farhan let those as color make more more are But it. we yes,

Farhan Ahmad

Yes.

a terms have think us have the up. to once other and in of needed, if in the batteries. I have to be to funding the the we bag bring asking mentioned, customers factories, a buy pay So ready make to them as successful we customers even don't challenge side expressed desire the going And on without the and make Raj big it's the that qualifications for the lines,

happening. are conversations those So

wealth now, can would that to runway. And is a Board capital consider are have funding.Where talking We capital. if right price taken a reduce of to that actions like things it's further our long with that the we see also close to and have consider more level not the we the support have feel at we sovereign funds that stock to get like anywhere we it's I And the any fairly where raising here. cost, we like to can don't also

very structure. made dramatic cuts our We cost have to

to runway so need raise we before we capital. And have long can

Ananda Baruah

the of And sort could yes, this clarification I mean, sneak guys, -- there in it and are is, you I thought XX% maybe in. the you is yields yields of this time. still in with -- at end that. there just the some track that prepared point And the high follow-up is mention for on quick by Farhan, remarks, for Ajay guess of in. could you thought Ajay, sneak of But year XX% on then yes, is

Ajay Marathe

that to I question would at mentioned of and up where proud because we're FAT, of terms knew I that like earlier. are somebody ask catch in we quite

we only -- front least in are have, laser of where typically the a Some stacking amount even when that shot FAT, in parameters GenX, more is of very not And FAT, confident good have than obviously, And were process, that it, tricky processes that and of the is good, did some that's lost we which first yield. to of we closer the the feel we in X.X, as looking CPKs. now dicing you the end. we where CTQs at X.X very we XX

people gets that actually close processes right?So yield operations for about is you anything said, again, are in we see XX%. that's I upwards of who those -- pretty excited XX% when So guy alone, like that, to

right where are now. that's we So

We will only the get year. end better. And we're very confident about what we by talked about the of yields

Operator

question of Capital Gus Richard Markets. next Northland from Our comes

Auguste Richard

send samples in to you'll wait will FabX Just curious how FabX samples have QX? on from out start can ramp? that until sending to of when to QX customers you Will that or quickly and start

Ajay Marathe

FabX. it No, definitely will be from QX

said, done. finishing We to are up gearing the up like FATs I

going are customers in QX. the QX. samples to to that talked same in the SAT we But finish Raj We here definitely up going and have about Farhan

Raj Talluri

Yes.

to bit color. just add So little a more

making samples of We now EX-XM here. this are

So out first. those customers will to go the

they samples they tests some start And them also those testing, then more And of us so feedback testing building we'll send and out and come to tested, the give from in Meanwhile, that start we'd those on our some start we're on. Penang, so they'll going also all hey, side. this as tested. And like doing and that do we'll QX.

Ajay Marathe

quick a me. clarification. Farhan Just reminded

is out So to FabX going still happening go in been testing, what are to right, out, first, is the early batteries, will all we that relevant that to fully talking the QX, after here have of But going happen. out pointed batteries safety that's after in customer confirming customers about, and Raj tested everything QX, the be which as to QX. we

Auguste Richard

able significant out QX And you're to to point? customers of sort ship Was portion and a you're this that sampling customers what's revenue? of of the then that volume at Fremont still

Raj Talluri

and not can volumes. guys mainly you hundreds we line But line volume These make are -- have know, No, as an with don't R&D we big which ship a manufacturing don't no. high a are samples. manufacturing machines These our we have of Line, because samples. We some mentioned, the there mainly to Like here. and But samples which, lot Agility I are from they're FAT almost okay. excited. in testing ultimately, make Penang. The we're want customers done sure as it's super for all is have

samples a from in So short getting order, there. we'll be

Operator

from from Gianarikas comes Canaccord. George question next Our

George Gianarikas

like us you materials-related update happening can your with companies GroupXX. conversations, what's if Wondering on

help Specifically, bring debate the if the material. still us cells better quantify -- their understand marketplace. those seems active to cell -- using There using an performance you be to you conventional relative can more with improvement in construction to

Raj Talluri

battery a kind using mean I have Yes. company, and material that makes. agnostic also graphite Routejade of Luckily, we we materials. now look, a different are we are

Everything also that this So able amount of seen you that, if we out some with how silicon swells X% the have we up. to of are put we batteries can can -- between on more any and X%, newer figure to than put battery those improve we top that.

that can focused know a energy we And silicon only at of increases that the meaningfully Enovix people allow the So in on. what amount we are of actually silicon. that's battery to is I use reasonable actually density. we that architecture more active XXX% are architecture.And use And any

are kinds test silicon fast different of them, density, out, we use the the need cycle absolutely the have kinds we different them, of all as they energy charge high different longer silicon. come Enovix to So of and so of architecture constrain to But to kind materials on. fade, like life, and feel get happy properties we swelling

Operator

Our next of Ben question comes Piper Sandler. from Johnson

Benjamin Johnson

this a have moment. question don't at I

Operator

from Chris B. of Souther question next Riley. Our comes

Christopher Souther

just Can for here. here? customers kind more we're It X-year learning change process pricing and manufacturing evolving through it We've the decision-making Does makes process than it to to less economics finance sense you how the the that where payback you on more like where make to future attractive getting strategy or seems more that confident we're lines. potentially finance? talked about of about financing approach walk is yourselves potentially customers

Farhan Ahmad

on Yes. project whether not. also of Look, in talked customer that's financing definitely take to Asian or We've options. banks financing a consideration big to terms

agreements we very a financing. to choice if economics think with for that think I So have I attractive, us will on demand project for and be difficult are financing -- don't confirmed it signed get a

think the on what's road or it's what take we think go And assuming given the justified density.If we pricing is customer driving the get right? economics. premium, performance we are in we be our superior I pieces give EX-XM, and the far that towards with to have getting get and to like And there think also when financing, energy the And model, Ajay it, at model, that. fundamentally the understand project are just really I that's that really see that described the with financial you that to sort important we look we and we only execute for we able map along you I differentiated financing that. performance it.So depend it that some targeting, at whether I thing will look so game anything out any on customers of pricing on cost competitors all town, from can to the think And that's is all reductions that the of batteries. to know already it's is the really we have we unmatched will for to which to our high-end execute and And

Operator

question comes from Sean Milligan next Janney. Our of

Sean Milligan

XX-month of kind But so smartphone already last addressed samples the a think hopped you're about I you X- to the X this. XQ. to in I late, press call, on qualification talked X a to little sorry And for starting of you time release, the if customers. I saw in deliver on line

the about of sample? not? whole samples or curious that that's from how happening on sort you time delivery go if qual and to could is that may guess, in that final time Just the, Like first X- them line comment concurrently do I if to XX-month that and sample, the like we time of think of iterations qualification

Raj Talluri

look, Yes. those some we now -- Fremont. will And soon. samples able sending to we I them from deliver be mean, are

As I producing said, we're them.

The some feel customers You for from But they call line process. on. a high-volume agility our from they'll Malaysia I with in want so does ultimately, saw from testing do them, to the what the our start will our batteries. EX-XM our so get it of -- shareholder of and letter samples some really manufacturing pictures mean,

XQ, So so we when we the that we in shipping next produce one, start in XQ, produce is mentioned we first one.

has year is time and not this but make saying see shipping start so, productions XXX% so those It was when batteries. that samples, with you takes safe can on. been why expect typically next my them latter right?That's sooner? of is -- very Battery it's be I few that's summer months think XX to I experience when want X what careful. a hope of to from sure something because they're that people So we do to will customers we happen.Now half

in their teams, the but we -- launch. products by get qualified it's faster. it's next come technology we their that's for system. So first once qualified by can the there, products, and sourcing much next The mentioned, Like I are teams,

XX the one takes is that to first So months. the XX one

Sean Milligan

volumes of to be that trying kind so with the -- sales you with would first of have like the So it phones next just serve sorry, would idea 'XX customers, and second main the smartphone half understand that like half next half year inventory XXXX launch? you year of in be to is in season, like or building like you their more the would maybe the commercial would that hope of second

Raj Talluri

what Our target second half phones have year. is we're to of them in in working yes. That's next towards,

Operator

Our next question comes from Tim Moore Hutton. of EF

Timothy Moore

to wondering color you little on volume applying customers? in you And customers hurdles detail really you share your XXXX coming beyond. other come to words, agreement future more bit across do that about other top with maybe what capacity you you that's evaluate I'm go prioritizing the how how smartphone might from your allocating proposals the development be In question could be a is going for X inked in desk that and my based on capacity OEM, and now first on if

Raj Talluri

right? this this This is is happens think not the -- early all stages, mean I I time.

one upon are get we much So year to It's it'll customers. will about the too or customer a little one and we early model models really each of really customer It part how at next customers which on. at prioritizing talk depend rest and goes. phone upon multiple of how how models on which and And prioritized. early year this so goes depend and

Timothy Moore

How maybe other of was Is late for in And the going October? one in quarters? depreciation already statement strategic think you accelerated should the and next I wondering, addressed. up acquisition questions occur rest the operational for just were few probably that just all year. financial until income about the to lap R&D my showing question the we

Farhan Ahmad

No.

did Fremont cell as we for are restructuring to and associated going Fremont, So accelerated was plans we the in announced to stop in high-volume to reminder, that small the the just with depreciation, production activities manufacturing a move that the where Malaysia. we

time, Fremont. taken accelerated depreciation So that had really at we in

would so a had be X-quarter we said And QX it that over so and QX. period,

because in the expenses. rate, $XX.X will And level, like were we answer decline baseline. be expenses, we should question? million -- decline in you disclosed will And million, around QX from that in operating start. repeat the today.Does take and we So we that's not a then that should your level that kind and of that you $XX.X basically, And further a QX, should announced that of we QX.So run R&D actions -- where for that your the that similar after included subtract R&D you gives -- probably

Timothy Moore

but quarters, want I double and it factor try in does. Yes, to just it the last I thought check extra cost X to would savings.

that everything. clarifies So

Operator

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

Raj Talluri

for Thank and in. everyone, Yes. you, questions, for tuning your you thank

wrap, we May Before have we'll Monday, that stream channel of a Anything our on YouTube want on to highlight I X. Me live Ask

should submit great to If your your what and question feel look and questions forward we free didn't thank you once get to for next be a dialogue, answered again. week, today, please

Enovix (ENVX) 1 May 242024 Q1 Earnings call transcript