AEHR earnings call analysis

NASDAQ:AEHR Q1 2026 Earnings Call Transcript Generated on 6/8/2026 Operator | Conference Operator: Greetings. Welcome to the Air Test Systems Fiscal 2026 First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Jim Byers of Pondell Wilkinson Investor Relations. You may begin. Host\ Thank you, operator. Good afternoon. Welcome to Airtest Systems' first quarter fiscal 2026 financial results conference call. But with me on today's call are Airtest Systems President and Chief Executive Officer, Gane Erickson, and Chief Financial Officer, Chris Yu. Before I turn the call over to Gane and Chris, I'd like to cover a few quick items. This afternoon, right after market close, Airtest issued a press release announcing its first quarter fiscal 2026 results. That release is available on the company's website at air.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the investor relations page of Airtest's website. I'd like to remind everyone that on today's call, management will be making forward-looking statements that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors are discussed in the company's most recent periodic and current reports filed with the SEC and are only valid as of this date, and Airtest Systems undertakes no obligation to update the forward-looking statements. And now with that said, I'd like to turn the conference call over to Gane Erickson, President and CEO. Thanks, Jim.

Gane Erickson | President and Chief Executive Officer

Good afternoon, everyone, and welcome to our first quarter fiscal 2026 earnings conference call. I'll begin with an update on the exciting markets areas targeting for semiconductor test and burn-in with an emphasis on how these markets seem to share a common thread of market growth related to the massive expansion of data center infrastructure and AI. After that, Chris will provide a detailed review of our financial performance. And finally, we'll open up the floor for your questions. Although we started with the typical low first quarter revenue consistent with the last few years, and actually higher on both top and bottom lines in Wall Street analyst consensus, we're pleased with our start to this fiscal year. We had revenue from several market segments and strong momentum in sales and customer engagement, both wafer level and package part test and burn-in of artificial intelligence or AI processors. Again, although we did not provide guidance for the quarter, our first quarter results surpassed analyst consensus estimates for both the top and bottom lines. We saw continued momentum in the qualification and production burden of packaged parts for AI processors, which is fueling sales growth in our new Sonoma ultra-high-power packaged part burden systems and consumables. During the quarter, our lead production customer, a leading hyperscaler, placed multiple follow-on volume production orders for Sonoma systems, requesting shorter lead times to support higher-than-expected volumes as they accelerate the development of their own advanced AI processors. This customer is one of the premier large-scale data center providers and has already outlined plans to expand capacity for this device and introduce new AI processors over the coming year to be tested and burned in on our Sonoma platform at one of the world's leading test houses. We're also collaborating with them on future generations of processors to ensure we can meet their long-term production needs for both package and even wafer-level burn-in. Hyperscalers like Microsoft, Amazon, Google, and Meta are increasingly designing and deploying their own application-specific integrated circuits, or ASICs, for AI processing to meet the unique demands of their massive-scale workloads and gain a competitive advantage. AIR allows customers to perform production burn-in screening, qualification, and reliability testing for GPUs, ai processors cpus and network processors directly in package form our sonoma systems provide what we believe to be the industry's most cost effective solution enabling customers to smoothly move from early reliability testing to full production burn-in and early life failure screening which helps reduce costs improve quality and speed up time to market In the last year, AIR has implemented several enhancements to the Sonoma system to meet qualification and production test and burning requirements across a wide range of AI processor suppliers, test labs, and outsourced assembly and test houses, or OSATs. Major upgrades include increasing power per device to 2,000 watts, boosting parallelism, and adding full automation with a new fully integrated package device handler. Over the last quarter, including a very successful customer open house we held last week at our Fremont, California headquarters, 10 different companies visited AIR to see our next-generation Sonoma system and new features, including a fully automated device handler for completely hands-free operation, which we've installed here at our Fremont facility. Customer feedback regarding these enhancements has been very positive. And we expect these new features to open up new applications and generate additional orders this fiscal year. As I've mentioned before, one of the biggest benefits of our acquisition of in-cal technology one year ago is that it gives us a front row seat to the future needs of many top AI processor customers, providing us with close insight into the burning requirements. As the only company worldwide that offers both proven wafer-level and package-part burn-in systems for qualification and production burn-in of AI processors, AIR is ideally positioned to assist them regardless of their burn-in method. Consequently, we are experiencing increased interest in our Sonoma high-volume production solution for package-level burn-in, and some of these same customers, as well as other AI processor companies, are approaching us to learn about our production wafer-level burn-in capabilities. This past year, we delivered the world's first production wafer-level burn-in systems for AI processors. Importantly, these systems are installed at one of the largest OSATs worldwide, providing a highly visible showcase to other potential AI customers of our proven solution for high volume testing and burn-in of AI processors in wafer form, thereby strengthening our market position. We anticipate follow-on orders from this innovative AI customer as volumes increase. and other AI processor suppliers have already approached us about the feasibility of wafer-level burn-in of their devices. We're also developing a strategic partnership with this world leading OSAT to provide advanced wafer-level test and burn-in solutions for high-performance computing and AI processors. This joint solution, already in operation at their facility, marks a significant milestone for the industry. By combining AIR's technological leadership with this OSAT's global reach, we can provide unique capabilities to the market. This model offers a complete turnkey solution from design to high-volume production, and several customers have already begun discussions to learn more about our high-volume wafer-level test and burn-in solutions for AI processors. This OSAT and AIR have a long history of innovation together, including the first FOX-NP wafer-level burn-in system installed in an OSAT for high-power silicon photonics wafers. Now the world's first wafer-level test and burn-in of HPC AI products using AIR's FOX-XP systems. And they're also one of the largest installed bases of AIR's Sonoma system for high-power AI and high-performance computing processors. Additionally, this last quarter, we launched an evaluation program with a top-tier AI processor supplier for production wafer-level testing burn-in for one of their high-volume processors. This paid evaluation, which includes a custom high-power wafer pack and the development of a production wafer-level burn-in test program, will feature a comprehensive characterization and correlation plan to validate AIR's Fox XP production systems for wafer-level burden and functional testing of one of this supplier's high-performance, high-power processors on 300-millimeter wafers. We believe this represents a significant step toward adopting wafer-level burden as an alternative to later-stage burden and into future generations of their products. Our Fox XP multi-wafer test and burn-in system is the only production-proven solution for full wafer-level test and burn-in of high-power devices such as AI processors, silicon carbide, and gallium nitride power semiconductors, and silicon photonics integrated circuits. Beyond AI processors, we're seeing signs of increasing demand in other segments we serve, including silicon photonics, hard disk drives, gallium nitride, and silicon carbide semiconductors. We're experiencing ongoing growth in the silicon photonics market driven by the adoption of optical chip-to-chip communication and optical network switching. This quarter, we upgraded another one of our major silicon photonics customers, FoxXPs, to the new higher power configuration, doubling their device test parallelism with up to 3.5 kilowatts of power per wafer in a nine wafer configuration. This latest system shipment includes our fully integrated and automated wafer pack aligner configured for single touchdown test and burning of all devices on their 300-millimeter wafers. We anticipate additional orders and shipments this fiscal year to support their production capacity needs for their optical I.O. silicon photonics integrated circuits. In hard disk drives, AI-driven applications are generating unprecedented amounts of data, creating ever-increasing demand for data storage and driving new read-write technologies for higher-density drives, particularly for data center applications. We're ramping and have shipped multiple Fox CP wafer-level testing burn-in systems integrated with the high-power wafer probe and unique wafer pack high-power contactors to a world-leading supplier of hard disk drives to meet the test, burn-in, and stabilization needs of a new device used in their next-generation read-write heads. This customer is one of the top suppliers of hard disk drives worldwide and has indicated they're planning additional purchases in the near term as this product line grows. Gallium nitride devices are increasingly used for data center power efficiency, solar energy, automotive systems, and electrical infrastructure. Gallium nitride offers a much broader application range than silicon carbide and is set for significant growth in the next decade. Our lead production customer is a leading automotive semiconductor supplier and a key player in the GaN power semiconductor market. And we have multiple new engagements with other potential GaN customers in progress. We're currently in design and development of a large number of wafer packs for new device designs targeted for high volume manufacturing on our Fox XP systems. Although silicon carbide growth is expected to be weighted toward the second half of the year, we continue to see opportunities for upgrades, wafer packs, and capacity expansion as that market recovers. Demand for silicon carbide remains heavily driven by battery electric vehicles, but silicon carbide devices are also gaining traction in other markets, including power infrastructure, solar, and various industrial applications. Late in last fiscal year, we shipped our first 18 wafer high voltage Fox XP system, extending beyond our previous nine wafer capability to test and burden 100% of the EV inverter devices on six or eight inch wafers in a single path with up to plus or minus 2000 volt test and stress conditions at high temperature. We believe we're well positioned in this market with a large customer base and industry leading solutions for wafer level burden. I also want to give a quick update on the flash memory wafer level burden benchmark we've discussed earlier. This benchmark is ongoing, and we've now begun testing with our new fine-pitch wafer pack that can meet the finer pitches and higher pin count costs more cost-effectively for flash memory, but also can be applicable for DRAM and even AI processors if they require fine-pitch wafer probing. This is the first wafer pack full wafer contactor demonstrating this capability. The benchmark has gone slower than expected with some challenges with the test system bring-up, but appears to show positive results of the new wafer pack, our ability to do an 18-wafer test cell, and using our full automated wafer handler and wafer pack aligner for the 300-millimeter NAND flash wafers. Interestingly, the market for NAND flash is in a state of flux. with earlier announced transition to hybrid bonding technologies for higher-density NAND flash on 300-millimeter wafers, driving new requirements for higher parallelism and higher power, to now a push for high-bandwidth flash, or HBF, which drives very different requirements in terms of test system capabilities. This is exciting news for AIR, as both are driving power requirements up substantially, which is right in our wheelhouse. High-bandwidth flash, or HPF, is an emerging technology developed by two of the flash market leaders and aims to provide a massive capacity memory tier for AI workloads by combining the DRAM high-bandwidth memory, or HBM-like packaging, with 3D NAND flash. This innovation is said to offer 8 to 16 times the capacity of HBM DRAM at a similar cost. delivering comparable bandwidth to dramatically accelerate AI inference and process larger models more efficiently while using less power than traditional DRAM. We're working with one of these lead customers on the now newer tester requirements to provide them with a proposal to meet even these newer, higher performance and higher power requirements within our Fox XP 18 wafer test and burn-in system infrastructure. We expect to have yet another update out at next quarter's earnings call. The rapid advancement of generative artificial intelligence and the accelerating electrification of transportation and global infrastructure represent two of the most significant macro trends impacting the semiconductor industry today. These transformative forces are driving enormous growth in semiconductor demand while fundamentally increasing the performance, reliability, safety, and security requirements of these devices across computing and data infrastructure, telecommunications networks, hard disk drive and solid state storage solutions, electric vehicles, charging systems, and renewable energy generation. As these applications operate at ever higher power levels and in increasingly mission-critical environments, the need for comprehensive tests in burn-in has become more essential than ever. Semiconductor manufacturers are turning to advanced wafer-level and package-level burn-in systems to screen for early life failures, validate long-term reliability, and ensure consistent performance under extreme electrical and thermal stress. This growing emphasis on reliability testing reflects a fundamental shift in the industry. from simply achieving functionality to guaranteeing dependable operation throughout a product's lifetime, a requirement that continues to expand alongside the scale and complexity of next-generation semiconductor devices. To conclude, we're excited about the year ahead and believe nearly all of our served markets will see order growth in the fiscal year, with silicon carbide growth expected to strengthen further into fiscal 2027. Although we remain cautious due to ongoing tariff-related uncertainty and are not yet reinstating formal guidance, we're confident in the broad-based growth opportunities ahead across AI and our other markets. With that, let me turn it over to Chris, and then we'll open up the lines for questions.

Chris Yu | Chief Financial Officer

Thank you, Gabe, and good afternoon, everyone. Looking at our Q1 performance results, exceeded analysts' expectations for both revenue and profit. First quarter revenue was $11 million, a $16 million decrease from $13.1 million in the same period last year. It is important to note that last year Q1 benefited from a very strong consumables revenue quarter, which makes direct comparisons challenging. This quarter's revenue was primarily driven by demand for our FOX CP and XP products. In Q1, we shipped multiple Fox CP single wafer production tests and burning systems, featuring an integrated high-power wafer probe for new high-volume application involving burning and stabilization of new devices for our lead customer in the hard disk drive industry. Contacted revenues, which include wafer packs for wafer-level burning business and BIMs and BIPs for our packaged part burning business, totaled $2.6 million and made up 24% of our total revenue in the first quarter, significantly lower than $12.1 million or 92% of the previous year's first quarter revenue. As we have discussed in the past, this consumable business is ongoing even when customers are not purchasing capital equipment for expansion. We feel that this revenue will continue to grow both in terms of absolute value but also as a percentage of our overall revenue over time. Non-gap gross margin for the first quarter was 37.5%, down from the 54.7% year-over-year. The decline in non-gap gross margin was mainly due to lower sales volume and a less favorable product mix compared to a previous year, which included a higher volume of higher margin wafer packs. Also, our product ship this quarter included lower margin probers and an automated aligner. both manufactured by third parties and sold as part of our overall product offerings. Non-GAAP operating expenses in the first quarter were $5.9 million, an 8% increase from $4.5 million built in last year. Our operating expenses increased due to high research and development expenses for our ongoing project, and we continue to invest resources and efforts to support AI engineering initiatives and the memory project. As we previously announced, We successfully closed the in-cow facility on May 30, 2025, and completed the consolidation of personnel and manufacturing into a three-month facility at the end of fiscal year 2025. In connection with the facility consolidation, we eliminated a small number of headcount due to redundancy in our global supply chain and incurred a one-time restructuring charge of $219,000 in our fiscal first quarter. In the first fiscal quarter of 2026, we received $1.3 million of employee retention credit from the press for eligible businesses affected by the COVID-19 pandemic. We reported this cash credit minus the professional fee to process the refund in other income on our income statement. In Q1, we recorded an income tax benefit of $0.8 million and a productive tax rate of 26.5%. Noncadent income for the first quarter, which includes the impact of stock-based compensation, action-related investment and return charges, was $22 million, or $0.01 per bill of the share, compared to $2.3 million, or $0.07 per bill of the share, first quarter of fiscal 24-5. The consensus on the income for the first quarter of fiscal 24-5 was even. Our patent lock at the end of the year was $15.5 million. With $2 million in bookings received in the first five weeks of the second quarter of fiscal year 2026, our effective ad lock now totals $17.5 million. Turning to our cash flows and balance sheet. During fiscal year, we used $0.3 million in operating cash flows. We ended the quarter with $24.7 million in cash, cash equivalents and restricted cash, compared to 26.5 million at the end of Q4, mainly due to the final 1.4 million payment for facility renovation. In total, we have spent 6.3 million on remodeling our manufacturing facility. With the renovation now complete, we have significantly upgraded our manufacturing floor, customer and application test labs, and clean room space for wafer pack, full wafer contactors. Improvements increase our power and water cooling capacity enabling us to manufacture all of our FoxWave-level burning products and packaged part burning products, including Sonoma, Tahoe, and Backhoe products on a single floor. We are very excited about this renovation as it was specifically designed to enable us to manufacture more high-power systems for AI configuration. We believe investment in this facility renovation has increased our overall manufacturing capacity by at least five times, depending on the current product configuration and we are more ready than ever to support the growth of our customers. We celebrated these upgrades with a customer open house that was well attended and received very positively. Over the past quarter, we hosted many package-targeting, buffer-level running customers who had the opportunity to see our expanded capabilities firsthand. Importantly, we do not expect and anticipate additional capital expenditures for facility expansion in the near future. We have no doubt and continue to invest our excess cash in money market funds. As Kay mentioned, we started the year by withholding formal guidance due to the ongoing tariff related uncertainty. Since we remain cautious, we'll continue with that approach for now. However, looking ahead, we're confident in our base growth opportunities across AI and our other markets. Lastly, look at the investor relations calendar. EdTech will meet with investors at the 17th annual CEO Summit in Phoenix tomorrow, Tuesday, October 7th. This following month, we will participate in the Big Hal on the 16th annual Alpha Conference in New York on Tuesday, November 18th. And on Tuesday, December 16th, we will return to New York City to attend the NYC CEO Summit. We hope to see some of the EdTech conferences. This concludes our prepared remarks. We're now ready to take your questions. Operator, please go ahead.

Operator | Conference Operator

Thank you. At this time, we'll be conducting our question and answer session. If you would like to ask a question, please press the star 1 on your telephone keypad. Confirmation tone will indicate your lives in the question you give. You may press star two if you would like to remove your action from the give. For participants using secret equipment, it may be necessary to pick up their handset before pressing the stop keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. Please continue to hold while we adjust some sound tech issues.

One moment. Operator | Conference Operator

Thank you for standing by. This is the operator once again. Christian Schwab, your line is live.

Please go ahead. Great. Christian Schwab | Analyst

That sounds like a much better connection. So, Gain, you know, as we kind of get into the second half of the year and kind of these more open-ended growth opportunities in AI that you've talked about in particular, you know, when do you think we'll see a material improvement in bookings to drive revenue down the road?

Gane Erickson | President and Chief Executive Officer

Well, that sounds an awful lot like guidance again here, but so what we believe and what we've tried to communicate in our previous calls as well is that, you know, our lead, our first AI way for low-earning production customer, we anticipate that they will need additional capacity that would be both bookings and revenue for this year, and That could be more than last year, and we won't put a top on that. So, you know, the question is timing of that. We're not sitting on an order. We didn't get it yet and just put it in our pocket. But as that order comes in, we typically will announce those within, you know, a couple of business days or so. What we are seeing is additional wafer-level customer engagements. It's pretty interesting that kind of span from, processors and asics and I'm sorry okay hold on that was a person can you hear me okay oh wow all right I can hear you again okay All right. So I'll assume that Christian is on mute or something that he can hear me as well. So we're seeing it across several different groups from hyperscalers, AI processors, kind of across the board. And it's interesting. We had direct people that have come in saying that's what they're interested in. We have people that are talking to us about Sonoma because their current customer is already doing qualifications and are looking to do burn-in for the first time and are looking at either package and also now exploring the wafer-level side of things. So these generally do take some time, and, you know, so I would – Probably guess these tend to be more second half, this being the second fiscal quarter of fiscal 26 for us. But, you know, at this point, we're just scrambling as fast as we can to address all the requests and requirements and keeping our head down to focus on them. On the package part, same thing, both additional quals and additional processes that are being put on our system and its enhancements to the Sonoma. as well as we've got customer interest to do additional production customers, you know, with and without the fully automated integration of the pick-and-place handler that bolts right onto the front of Sonoma. So I think it's ongoing and very interesting, and we're just really happy to have this number of engaged and active customers. Operator, can you hear us?

Operator | Conference Operator

Yes, I can hear you. And are you ready for the next question?

Gane Erickson | President and Chief Executive Officer

Yeah. Christian, do you have any other questions?

Operator | Conference Operator

It seems a little rough this time. We have a question coming from Christian Schwab. Christian, your line is live. Go ahead, please.

Christian Schwab | Analyst

Sorry about that, Gane. I was telling you I could hear you, but it wasn't working either. So we have, you know, a few customers here currently. You talked about, you know, a bunch of more customers coming in there. As we look to the end of your fiscal year, do you have a target number of customers that you think you'll be in the process of shipping to by then or shipping to fairly shortly afterwards?

Gane Erickson | President and Chief Executive Officer

That's a good question in terms of targets. Actually, we do have some discrete quantity targets. In fact, some of the KBOs, which are the bonus structures for our officers, are based upon not only numbers but specific targeted AI customers. We're really given a lot of insight, but I would say in plural for additional package part and also for wafer level. At this point, we're not really limiting ourselves, but we're just trying to be cautious about oversetting expectations either in terms of the timeline of it. One of the things that was interesting that really came to fruition, and I apologize if I said this before on the last call, is I'm starting to also understand a couple of things going on. One of them that was kind of new is there are many of the ASIC suppliers in particular, and there's some evidence within the you know, the GPU or just the processor suppliers themselves, they don't do a production burn-in like you think about it, like using one of our tools. They're doing it at system level, like as in the rack. So these processors are getting all the way to the end, and then they're simply running them in rack form, sometimes at elevated temperatures and sometimes not, to try and get, you know, the first seven days of failures out of them, which is so inefficient and uses a ton of power. And, you know, there's only so many processors per rack, if you will. And so I was sort of surprised at some of this. You know, some of the test vectors that we're getting from customers are not, this is on a production tool today. This is just an HTAL, which is like a qualification vector instead of a production vector. And that's because they weren't doing production yet. so you know you know you're really at the leading edge of this um but one thing is really clear from the data we've seen so far the devices are failing we do see the failures in the burn-in so they're absolutely able to screen them using our tools at wafer and production and so you know that creates the leading edge of this market and why we're so excited about it's really easy i mean obviously Every single call you get on, your CEOs are talking about how they're using AI one way or the other. But this is really happening to us. I mean, it was 40% of our business last year from zero. We think it's going to grow, both package and wafer level, this year. And, you know, we're still seeing the other businesses grow as well. So we're really glad to have gotten the facility upgrade, you know, behind us. There's a lot of work to get that there. Now we have the capacity to be able to ship so many more systems, particularly the high-power ones. And if you come on our floor right now, you'll see AI wafer-level burning systems right next to Sonoma systems being built today. So, you know, I think that we believe that we have the opportunity to capture, you know, multiple customers in both package and wafer levels.

Christian Schwab | Analyst

And then my last question, Gain, is, you know, last call you were quite enthusiastic about the TAM for, you know, AI-driven products for you to be three to five times bigger than silicon carbide. And is there a timeframe that we should be thinking about that, you know, becomes evident? Again, I kind of asked it on the backlog question, but I'll ask it again more directly. You know, are we going to see material orders from, you know, one or two customers, you know, this fiscal year? Or is that something that it's just too early to know? But, yeah, you can feel confident it's going to come. How should we be thinking about that?

Gane Erickson | President and Chief Executive Officer

I feel the latter is the easy out to say that I'm confident they'll come. I think timing it can both be, you know, a lot more guidance than we're providing right now. But there's also just some of these evaluations as we prove it, the customers can actually start contemplating how many and when they would want to install them. You know, the new evaluation, I think we already alluded to it, it's for a processor that is expected to go into volume production at the end of next year or in the second half of next year. So, you know, tools would be needed to be going in in that timeline. So, you know, if you just – we do fiscal years through, in this case, fiscal 26 is through May of 26. If you talk about calendar 26 – there's a lot of opportunities in play that need to play out that would be production for both wafer level as well as package. So it's not that far away. I mean, even something that seems like is a one year away in our space, there's a lot of work that needs to be done to actually ramp a customer to be one year out. And so, um, we'll keep, uh, you know, we'll keep focused on this thing as we get a little closer, we'd hope to give you answers. Um, To be candid, this will probably feel like, you know, you'll hear enthusiasm and we think we're winning and, you know, the customer has gotten good results. Those will be early indicators. And then, you know, we're going to surprise everyone with a large production order, not unlike what happened with the first wafer level system, except for some of these customers are just significantly bigger.

Christian Schwab | Analyst

Great. Thank you.

No other questions. Thank you. Operator | Conference Operator

Thanks, Christian. Thank you. Your next question is coming from Jed Dorsheimer. Jed, your line is live.

Please go ahead. Mark Shooter | Analyst

Hey, Gabe. You have Mark Shooter on for Jed Dorsheimer. Hey, Mark. Congrats on the success for this quarter and the announcements for the AI customers, and that's great. Can you give us a little color? How should we think about the engagement in the qualification cycle for these customers? Do you need a new product cycle to occur? Do you need to slide in between Blackwell and Rubin? And if you can give us a little bit of what's it like in the room with the customers. Is the tenor of these as risk aversion, or is the overwhelming demand spur some willingness to try a new equipment like AIR?

Gane Erickson | President and Chief Executive Officer

Oh, that's actually, there's a lot in there. Those are good ones. All right, so let me talk about sort of the qualification process. So, so far in the engagements that we've had so far, we don't need a new product. So we are doing some things depending on the pitch of their probe cards, which we call our wafer packs. We may need to do some things specifically for that. We have some design for testability features that we have been touting to our customer base that allow them very short lead time, high volume, low cost wafer packs. We can also supply them at higher cost and a little bit longer lead time. if they don't hit those DFT targets. We've got some of both. And so, like, one of the engagements, we made a conversation related to them about their pitch of their devices. And we're like, wow, you know, you happen to choose a pitch on these so many pins. That's driving the cost of your wafer pack-up. And they're like, well, why didn't you tell me before? And they kind of joke because they hadn't talked to us before. And they're like, well, this will be no problem to cut in for our next generation, but we're just going to have to live with it on the current one. so you know they're they're engaged with us in kind of a roll up the sleeves working the qualification in some cases is just validating that we can do the same type of dft and power delivery as we've done with the other processors on their devices i think customers i get it they're they're kind of like it's hard to imagine that we can really pull this off you know if they haven't seen it with their own eyes and so we're just showing it and demonstrating it to them somewhat like what we ended up doing with the first silicon carbide customers. And then at some point, people get it. Now, one thing that also seems to be going on is, you know, these are pretty visible. I already said that these systems are sitting at an OSAT, and there aren't that many of them, okay? So especially not that many of the biggest, right? There's a lot of people out there that are aware of the success of this. And even though the analysts and all are still trying to figure out everything, there's a lot of people that have pretty intimate knowledge and seem to know what's happening. And so they're like, can you do – can I do it that way too? So they're leaning in. So it's a little less of, you know, complete disbelief, can you do it, but more of can you prove it for me. Now, from a timing perspective, it's, you know, just typical of the industry – Normally, when people are buying test equipment, like semiconductor test equipment like ours, you do it at some disconnect. Either you're putting a new fab in, if you're an IBM, or it's with some new product. Or if just simply the volume is growing so fast that you want to buy a tool that has more output per dollar or so. So in this case, you know, outside of one supplier, everybody is using TSMC today, and eventually Tesla will be using the Samsung stuff. But it's not like there's a new fab, although there are new fabs coming online. People are just getting access to those TSMC wafers and then want to be able to test them. And they either do it in a package for Vernon on something like Sonoma or a system-level test or off-lead all the way back at the RAC. So customers are engaging because they need to buy capacity for these new products and for new things coming out. So it is a fair way of looking at it to look at the intercept between product A to product B. That's at least what's been communicated to us with this latest one we just announced. And similarly, our first customer intercepted us with their transition to a newer device. We announced that a year ago. So that's pretty typical, and sometimes that's the gating item of their timing, and sometimes that's fast or slow, but it's sort of you need to time it with that. Just the tenor, the tone. So, you know, if you guys, people that have followed us understand that, you know, our value proposition, our pitch, if you will, is that semiconductors are growing, you know, extremely high. So, you know, within... It took 40 years to get to 500 billion. It's going to take less than 10 to double that. Much of that is driven by either directly AI or all of the pieces surrounding all of the explosive data center growth. What's happening is these devices are not more reliable for multiple reasons. The smaller and smaller geometries and the fact that they're putting multiple devices into one package because they can't make the devices any bigger are driving the requirements for reliability and burn-in test. And if you look at the roadmaps from all of the players, every single one of them, from all of the NVIDIA products to everyone else, from the ASIC suppliers, all of their products going forward are pulling multiple compute processors to make it generic in a single package, along with many, many stacks of HBM and ultimately optical I.O. chipsets. They put these on these complex advanced packaging substrates, and they're extremely expensive. And I always remind people, the reason you burn them in is because they fail. And when they fail, you take out all the other devices. So the value proposition, if someone could ever do wafer-level burn-in, is overwhelming because the cost of the wafer-level burn-in is cheaper than the yield loss. I actually alluded to it in my prepared remarks that our lead customer for Package Part Burn-In is going to do a couple few generations in Package Part and then wants to switch to wafer level. So, you know, what are they going to do with all those Sonomas? It doesn't matter. The yield advantage of moving it to wafer level pays for it all. So, you know, that's a thing that's a macro trend heading our way. And it's not just AI. It happened to us in the silicon carbide side of things. We see it in stacked memories in both DRAM and flash. We see it in other complex devices in GAN that are going to automotive that are mixing different devices together and why it's driving for wafer level. And these large trends are good for both reliability as a tide that's rising for all, and really good for us, but also for our unique products, particularly the Sonoma and the high-power wafer-level burning systems we have with our Fox products.

Mark Shooter | Analyst

Dane, all that color is very helpful. Thank you. To dig in a bit around that last part of the Sonoma versus the Fox products, what's the gating factor of why customers are going first with the Sonoma and not right to wafer-level burning? What needs to be proven out? for wafer-level burn-in for those customers? And how – I'm assuming there's a sales cycle there of you'd like to start with Sonoma and then push people to wafer-level burn-in. So how does that transition go?

Gane Erickson | President and Chief Executive Officer

Yeah, you know, the way we look at it is we say we're just neutral. If you want to do package part or you want to do wafer-level, we love you both, okay? Okay. it's not easy to just go, you know, talk someone out or whatever it is they're used to. So in this case, we don't have to. We just say, listen, we think we make the best machine for qualification reliability of your complex packages with Sonoma. They can test all the processors, HBM, and all the chipsets inside of it in a single path during your quals. If you want, we'll do it in production as well, and we're now adding automation to it. But if you'd like to kind of go to the next step, you could take the high-failing devices out of there and do a wafer-level burn-in of them before you put them in those packages. And our data would suggest you don't need to burn them in again. But, you know, if you still need a little burn-in, that may be fine, but you don't want to have the massive yield loss. Some of these processors have four and eight CPU chips in them, right, compute chips, and have another, you know, six or eight HBM stacks on it. Just the co-loss substrate is extremely expensive and rare. And so, you know, it makes sense to go to wafer-level, but, you know, to be candid, one year ago, 12 months ago, we didn't even have the first order. There was not one machine in the world that could do a wafer-level burn-in of an AI processor. None. We're the only ones, and we've now just, you know, And, you know, we're at the front end of this thing. I understand people are sort of in a doubting mode. Let us prove it to them. And for those that are on the call, if you have a processor, you can sit down with us under non-disclosure. We can tell you which exact specific files we need, and we can do a paper benchmark and give you an answer within a couple of days. as to the feasibility of your devices. And so far, we have not found one that we haven't been able to test that we've been given that detailed data on. So, I'm sure there are some out there. But for now, we're on a roll.

Mark Shooter | Analyst

Okay.

Operator | Conference Operator

Much appreciated. Thank you. Thank you. Your next question is coming from Bradford Ferguson. Bradford, your line is live.

Please go ahead. Bradford Ferguson | Analyst

Hello, Gane. I'm curious about the cost to wait until you get to the motherboard or the package part or the final part. When we were talking about silicon carbide, you could have 24 or 48 sick devices in one inverter, and then the whole inverter is bad, and maybe that's a $1,000 or $2,000, but the retail price on these NVIDIAs is, what, $40,000?

Gane Erickson | President and Chief Executive Officer

Well, the rumor is they have really high margins, and I'd love it if the customers would give me credit for their sales price. They really only give me credit for their cost, but fair enough. But their cost is significantly higher than any silicon carbide module ever would be. Fair enough. Yeah, I mean, it's, you know, and by the way, to me, the craziest thing is how many people are doing it at the rack level. Like, you're talking about all the way at the computer level side of things and burning it in. And, you know, obviously, a failure there is, you know, a lot more expensive than it would be all the way back at wafer level. So you want to move, in our industry, we refer to shift left. You want it to go as far left in the process as possible because it's way more cost effective. In this case, we have the first two steps in the left side, wafer level and when it's just the module level. Before that module is then put actually into the system level where you'd start to see all of the power supplies and everything else on it, you know, like the GB200 module itself. And then you, certainly before it goes over super micro or $2 or something in some mainframe rack. So, you know, one thing to put in perspective, and I don't think this is the value proposition yet, but it is interesting. We know that people are doing this burn-in at the rack level or the computer level, right? When you're in the computer level, basically what burn-in does is you're basically applying stress condition of, power via voltages or current, and temperature. And what it does is it accelerates the life of the part without killing it. So I can take a device and in 24 hours make it look like it's one year old, and if it hasn't died by then, it's going to last 20 years. There's all kinds of books on it. You can read it, Google it, or something, and you can find out about the basic process of burn-in and why you do it. Thanks. The key here is you want to do it in, you know, 24 hours or four hours or two hours or something along those lines to get the infant mortality rate out so it doesn't shift to the customer or take down your large language model compilation, okay? Now, when you're at system level, you can't run that rack at 125 degrees C. Everything will burn up. In fact, those racks are running cold water through them. they're probably running 30 degrees C temperature maximum. I know of a company that was trying to do some things to try and get an isolation of the GPU or the processors to 60 degrees C, and their burn-in time was measured in days at the system level. That's what they were doing. Now, by moving it to wafer level, we can actually run the devices at a junction temperature at 125 degrees C which is an accelerant that's more than 10x. We can also run the voltages extremely closely to their edge, and we can get the burning times to come down. So when we do that, we're actually applying only power to the processor, not the HBM, not all the inefficiencies everywhere else, not the rack, et cetera, just to the processor, and we can do it for a significantly less amount of time. The long and short of it is I can burn it in to the same level of quality at a fraction of the power. Now, I don't think anyone's going to buy our system because of that per se, although there's some argument for it. But you know what's hard? Getting a permit for a megawatt burn-in floor for your racks. So people may buy our systems because they can actually get the power infrastructure to burn in hundreds of wafers at a time in parallel and in a regular 480-volt, maybe 1,000 or multi-thousand-amp circuit like we have in our building. You wouldn't be able to do that. If you had to burn in a bunch of racks in our building, you wouldn't be able to do it. But I could have 10 systems running with nine wafers apiece and test 100 wafers at a time with the power that I have in my facility, which is not that atypical of a facility – in the Bay Area in Silicon Valley. So there is a value proposition there. In addition to the real cost savings, it might just be feasibility of power.

Bradford Ferguson | Analyst

And so you mentioned the high bandwidth flash. I'm hearing from some systems makers that they're focused on burn-in more. just because of how expensive it is to, you know, scrap the whole motherboard or whatever. Do you have any kind of end to high bandwidth memory, or is it mainly the high bandwidth flash?

Gane Erickson | President and Chief Executive Officer

Yeah, I mean, we talked at kind of our first – our belief was that the engagements and the interest was first on the HP – yeah, on the flash side of things. There is some things – there's discussions on the DRAM side of things. I mean, people are really scrambling to try and solve that through all kinds of mechanisms, and I won't get into all the technological things that we understand. You know, there's very different implications when you talk about Micron, Samsung, and Hynix. and what they do and how they stack their memories and how they test them and burn them in that have, you know, kind of key differentiating features amongst themselves that make tests interesting. We have a pretty good insight to that. I'm certainly not going to talk about it publicly, but that makes that interesting. Bottom line is, you know, high bandwidth memory and then eventually high bandwidth flash needs to be burnt in. and needs to have a cycle and stress to remove that somehow, or it's going to show up as it has been in the processors, in the AI stacks. You know, and that's widely known and understood. And, you know, NVIDIA came out last, what, six months ago, yelled at everybody and said, you need to figure out how to burn these things in before you ship them to me. We're sick and tired of it. So, you know, I'm not creating rumors. Those are widely understood reports. And so right now what we're seeing in the test community is sort of, you know, people overuse, you know, the Wild West, but there's just people scrambling for good ideas on how to address this and running as fast as they can. And, you know, it makes it exciting every day when you show up to work and you've got people that are like, how can, you know, how can you help us? So I love our hand. I love the cards we're dealt right now. I love our position. I love our visibility that we have within. Pretty much all, I think we can now say we have communicated with every single one of the AI players. And, you know, we have a line into them and some thread, either package or wafer level related, that gives us some great insights. And I think we may be completely unique in that realm. So I think the HP app, it looks pretty interesting. Again, you know, that stuff takes time. But more and more things are breaking the infrastructure of tests because of power at wafer level, and that's a good thing for us. We're really good at that. Our system, you know, I just throw out 3.5 kilowatts per wafer, and, you know, most people would not know what that means. That's crazy. I mean, you know, the world has wafer probers, you know, thousands of those installed, that has 300 watts of power capability. If you try to go get a prober that has 1,500 to 2,000 watts, it's a specialized half-a-million-dollar prober. It's what we ship with the CP to the hard disk drive guys. That's one wafer's capacity. Our systems can do 3,500 watts on each of nine wafers in one machine. Nobody can do 3,500 watts on one machine. I'm sorry, on one wafer on one machine. And so people are coming to us because of the thermal capabilities that are unique. Many, if not most of them, are patented around the whole wafer pack concept and the blade where we deliver thermal power without a wafer prober to create uniformity across a 3,000-plus-watt wafer is really awesome. And it's fun to talk about with the technical people. And they're, you know, I'd say that people are quite impressed with what they hear. And so, it's great to rotate people through here. And by the way, they see it. We can show them in operation when they come. This is not a story. I think, you know, the more and more of these things, the rising tide, you know, the better shape we're in. And we're not abandoning our silicon carbide customers that are listening. I know they have ramps. They have opportunities. There's new fabs. There's new capacity coming on. They have new technologies. We're not abandoning the OEMs, the electric vehicle suppliers that we have met with personally and helped them to develop the burden structures and the burden plans that they drive their vendors towards. We're fully committed to those guys, and we'll be there as they rep, and we have more capacity than we ever had to be able to address their needs at a lower price point. I think we got that covered. We're not pivoting the company. We're just adding to it with this AI stuff.

Bradford Ferguson | Analyst

On silicon carbide, this will be my last one. Thank you for your generosity. On CIMI, I think one reason for their success is how aggressively they adopted air test systems, Fox XP systems. And we have a pretty large bankruptcy that happened with one of their competitors. Is there some kind of risk for the other chip makers if they don't take if they don't take burn-in more seriously, that it could spell issues for them?

Gane Erickson | President and Chief Executive Officer

So let me answer it this way. I have been invited to be a keynote speaker. I've spoken at multiple technical conferences around the world, and Silicon Carbide and Galvanitride conferences. I've sat on several panels, and I have been very almost emotional in some of those discussions. because we have seen the test and burden data of more, almost all of the wafers in the world, okay? That's pretty bold, okay? Certainly more than anyone by far, okay? Everybody would like to think that they are special and their devices are just so much better than everybody else's. The reality is that these devices fail immediately. during burn-in that represent the actual duty cycle or what's called the mission profile of electric vehicles. What that means is if you do not burn them in, it is our belief in the data that we have, they will fail during the life of the car, period. We've talked about that. I think I've quoted several times. Whatever you do, it is my opinion, never buy an electric vehicle that didn't have burn-in for something in the six to 18 hours, depending on the size of the engine and things like that. And there are OEM suppliers that have the data. They have failed customers who try to qualify without doing an extensive burn-in and kick them out. And there have been very large suppliers that have lost in the industry because of quality and reliability. So my call to arms for everybody is there's no reason – not to do wafer level burn-in or package part if, you know, if you don't want to go with us. But whatever you do, don't skip it. And we now with our 18-wafer system, even at high voltage, okay, so we've extended the capability with more capabilities. The cost of test at high voltage on our system with a capital depreciation of five years, et cetera, is about .5 cents per die today. on an 8-inch silicon carbide inverter wafer per hour. Per hour. You can do 24 hours of burn-in for 12 cents a die. And we have been very clear with that to all the OEMs, and they understand it. And so they drive for a level of quality that they can measure directly on our tools from their suppliers. And I think there is a difference between the people that have adopted a high level of quality and reliability in their market share. And all I'll say is, you know, I think On Semiconductor has done an incredible job. You know, in 2019, I think the year before, they had done $10 million in silicon carbide, and they're now, you know, kind of neck and neck for market leadership, and they have won well more than their fair share of the industry across the, and I'm just repeating what they have said, across Europe, the U.S., Japan, and even China. They have done really, really well, and I commend them for that.

Operator | Conference Operator

Thank you. Your next question is coming from Larry Chapina. Larry, your line is live.

Please go ahead. Larry Chapina | Analyst

Hi, Gane. The news today on the AMD – hook up with OpenAI. Does that accelerate your evaluation process that you have with that second process, or does that put more pressure on getting that done?

Gane Erickson | President and Chief Executive Officer

We have not talked to the level of detail to determine who it is. We've given enough hints that it's amongst the top, suppliers of ai they it's not one of the asic guys so i i'm going to try and avoid being more specific i will restate we are in conversation with every one of the suppliers and i will then say including those guys okay um so my interpretation of that is you know it honestly just sort of warms my heart to see the different people's commitment to the different types of processors. I mean, without going into whether they are or could or might already be a customer or not, one thing about AMDs, and we've used that, again, not as an endorsement to them. We've used them as one of the examples because their MI325 has eight processor chips in addition to, I think, at least that many HBM stacks plus a chip set. in one substrate if there's anyone that ought to be doing wafer level burning they would be amongst them okay um but you know for example you know right now we provide uh opportunities for our customers uh including the likes of those guys to buy our tools for their their burning requirements for qualifications either themselves or to use it at one of the many test houses that have our systems to use our systems for package pump burn-in for the lowest cost alternative to things like system-level test systems that are being used out there, and if the most advanced process would be to do wafer-level burn-in over time. So, you know, I won't comment on anything more than that. Sorry, Larry. No, sir. You know, I think in general, you know, I think good news for the processor market is generally good for us right now.

Larry Chapina | Analyst

The optical IO opportunity, is that going to involve actually new machines instead of upgrading existing machines? Is that transition going to happen here shortly, or do they have more machines that they're going to?

Gane Erickson | President and Chief Executive Officer

The forecast includes both. So more upgrades and more new machines.

Larry Chapina | Analyst

They've got to be running out of machines to upgrade, don't they?

Gane Erickson | President and Chief Executive Officer

Yeah, but there's also a scenario where they also have a bunch of products on the current machines that haven't gone away. And so, you know, it's sort of, you know, while you're upgrading these systems, they're backwards compatible, so you can still use the old wafer packs and everything on them. But nevertheless, it's both. And then the other thing, and it's subtle, and those that don't know it, so we introduced a couple years ago, a front end to the Fox systems that allow you for fully hands-free operation with a wafer pack aligner. So you can come up to that with FOOPS, in this case with 300 millimeter, with both overhead or AGV, automatic ground vehicles, with an E86 compliant port that allows you to not even come and touch the machine. And the wafers can run around on the fab and they can run a burden cycle and then move on and go to the next step of test.

Larry Chapina | Analyst

And you can upgrade them with the automation as well.

Gane Erickson | President and Chief Executive Officer

Exactly. So we took what we actually took their tools that they had bought in the past with our older wafer pack aligners. And they are now upgrading to the new wafer pack aligner. But instead of it being offline, it's integrated with the system. So you know, that's kind of a that's kind of a good way. That's the advanced way of doing it. And particularly when you think about 300 millimeter fabs of like memory, big AI processors, you know, even the silicon photonics, you kind of want to do it. You know, that's the best way of doing it, full automation. But if they want offline, they can do that too with us.

Larry Chapina | Analyst

On this HPF opportunity, is this a different company other than who you've been working with for two, three and a half?

Gane Erickson | President and Chief Executive Officer

What's that? Same company.

Just evolving requirements. Larry Chapina | Analyst

Okay. Yeah. I mean, do you expect anything to break loose on the original Enterprise Flash application, or is this going to continue on?

Gane Erickson | President and Chief Executive Officer

It kind of feels like this is, let's just say trumping it, but that word means something different these days. It feels like this is such an enormous opportunity to the Flash guys. that it's sort of like, you know, the shiny bright light that may actually be better for us. I'm not sure it's better in terms of near term, like, you know, the opportunity is fast. We'll see. But they could, you know, they could configure a system. The new system configuration is a superset of the old requirements. And so we had already worked on the previous one. and we're working on an updated proposal to show them how they could build blades in our system that could do both their old devices and the new ones. So maybe that will help it be better. I think it is, but, you know, it's always interesting when things change. But the one thing, none of their old tools will work with this HP Flash.

Larry Chapina | Analyst

No, I wouldn't think so.

Gane Erickson | President and Chief Executive Officer

So that's, you know, maybe that's a good thing for us, right?

Larry Chapina | Analyst

All right. That's all I had. I'll see you tomorrow, I guess.

Gane Erickson | President and Chief Executive Officer

Thanks, Larry. And Larry's just alluding to, we're going to be over, we're here at Semicon in Arizona, Semicon West, and there's this CEO summit that Chris alluded to. Although, Chris, I don't know if you knew this, you were breaking up. And it sounds like we had operator problems with the operator connection. The new one has been a lot better. So sorry about that to folks that are on the line. Operator, any other questions?

Operator | Conference Operator

I'm showing there are no further questions in queue at this time, and I'd now like to hand the floor back to management for closing remarks.

Gane Erickson | President and Chief Executive Officer

Okay, thank you. You know, I meant to try and work this in. I'm going to do one little other thing. So the other one we haven't talked about, and maybe next call we'll spend a little bit more time on, we did a deep dive last time on the AI side of things. This time was more of an update on things. But there's other products that we have, and one of the things I want to highlight is the activities that we have within package part outside of AI. It turns out that with the NCAL acquisition, they have a low-power and a medium-power system called Echo and Tahoe that we've been shipping a lot of systems kind of quietly in the background. And recently we've had some customers, I think, egged on by some competitors that were saying, oh, there isn't even doing that stuff anymore, and that's just not true. These products are beloved by the customers for their software, their flexibility, and they did a really good job. In fact, those products were the products that honestly took air out of the Pacify burning market because the products were just better than ours. And, you know, we still love those. And if you come on our floor, you'll see them being built right alongside of the Sonoma systems and our Fox systems as well. So just a message out to our customers, we still love you. We're still committed to supporting those products, and we have way more manufacturing capacity than Intel ever did. So don't be timid. We're happy to continue to ship as we have, and we'll give the investors a little bit more insight on some of the systems we're building right now, some of the interesting applications that they're going into. that are also another part of this overall shift of all semiconductors needing more and more reliability tests from qualifications to burn-in. So with that, I thank everybody, and we appreciate your time. And putting up with a little bit of the stuff going on with the call, we'll work on that and make sure we do better next time. And we appreciate it, too. Thank you, now.

Operator | Conference Operator

Goodbye. Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you once again for your participation. jsPDF 3.0.3 D:20260608224405-00'00'

NASDAQ:AEHR Q4 2025 Earnings Call Transcript Generated on 6/8/2026 Operator | Conference Operator: Greetings. Welcome to the Aehr Test Systems Fiscal 2025 Fourth Quarter and Full Year Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Jim Byers of Pondell Wilkinson Investor Relations.

You may begin. Jim Byers | Investor Relations Host, Pondell Wilkinson

Systems Fiscal 2025 Fourth Quarter and Full-Year Financial Results Conference Call. On today's call are Aehr Test Systems President and CEO, Gane Erickson, and CFO, Chris Siu. Before I turn the call over to Gane and Chris, I'd like to cover a few quick items. This afternoon, right after market close, Aehr Test issued a press release announcing its Fiscal 2025 Fourth Quarter and Full-Year Results. That release is available on the company's website at aehr.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the investor relations page of the company's website. I'd like to remind everyone that on today's call, management will be making forward-looking statements that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors are discussed in the company's most recent periodic and current reports filed with the SEC. These forward-looking statements are only valid as of this date, and Aehr Test Systems undertakes no obligation to update the forward-looking statements. And with that, I'd like to turn the conference call over to Gane Erickson, President and CEO.

Gayn Erickson | President and CEO, Aehr Test Systems

Thanks, Jim. Good afternoon, everyone. Thank you for joining us on Aehr Test Systems' fiscal 25 fourth quarter full-year earnings conference call. Before we begin, I'd like to thank our customers, employees, and partners for their dedication throughout this transformative year of execution. expansion and strategic diversification for Aehr in fiscal 2025. I'll start with an update on the primary markets Aehr is targeting for semiconductor testing in Vernon, as well as the significant progress we've made in this year in new markets. After that, Chris will give a detailed review of our financial performance. And finally, we'll open up the floor to your questions. I just want to also point out that we've had a lot of inbound questions related to the AI market and what that means to air test. So we'll be doing a deep dive as we have often done in other markets today to hopefully let people really understand the implications and how air is playing in that. This past year, we made significant progress expanding into additional key markets for our semiconductor burn-in solutions, including artificial intelligence processors, gallium nitride power semiconductors, data storage devices, silicon photonics integrated circuits, and flash memory. This diversification of our markets and customers is significant given our revenue concentration in silicon carbide devices used in electric vehicles during our previous fiscal year. Silicon carbide wafer-level burn-in accounted for over 90% of our revenue in fiscal 24, whereas it made up less than 40% of our revenue this fiscal 25. In contrast, the burn-in of artificial intelligent processors represented 0% of our revenue last year, but this year accounted for over 35% of our revenue. And we had three companies representing over 10% of Aehr's revenue this year, with two of these representing new markets and customers. As we grow, we expect that expanding into new markets and customers will not only allow us to grow faster, but also do so sustainably. The main growth areas for us in markets beyond silicon carbide included production wafer-level burn-in of AI processors, package part burn-in for qualification and ongoing process monitoring of AI processors, and also production package part burn-in and screening of those AI processors. We also had wafer-level burn-in of gallium nitride semiconductors and silicon photonics integrated circuits wafer-level burn-in. And while there was only a small amount of revenue in the fiscal year from wafer-level burn-in of hard disk drive components, About 10% of our order bookings for the fiscal year came from this new market, all of which we expect to ship and generate revenue from during this fiscal year, now 26. Looking back on the year, we're excited about the significant progress we've made with the key initiatives to expand these total addressable markets, diversify our customer base, and develop new products, capabilities, and capacity, all aimed at driving revenue growth and increased profitability. One of our biggest milestones this past year and what we believe is currently the most important for future revenue growth was the completion of development, validation, shipment, and customer acceptance of the first-ever wafer-level burn-in system for AI processors. Delivering the industry's first wafer-level burn-in solution for the AI processor market, the only one of its kind in the world, marks a major technological and commercial milestone and significantly expands the market potential for our Fox XP wafer-level test and burn-in systems. Our new high-power Fox XP wafer-level burn-in system can test up to nine 300-millimeter AI processor wafers at the same time. This achievement is a result of extensive development efforts over the last decade in test technology, particularly in delivering massive amounts of power and current to a wafer during test, wafer contacting technology, and thermal control and heat removal as well as wafer handling and automation. When our lead AI customer first approached us about testing and burning their AI processors at the wafer level, it wasn't clear if this was even technically feasible, even with our proprietary and unique technology. We leveraged the technical capabilities we had developed over the years, along with the technology and design for test methods used in state-of-the-art wafer foundries to meet these unique test and burn and stress requirements. This included applying thousands of amps of current to a single wafer to test devices capable of withstanding thousands of watts, and then not only doing it with one wafer, but nine wafers simultaneously. We also expanded our proprietary wafer pack contactor to support very high current testing capabilities, including the ability to adapt the thermals to create uniformity across a wafer that, by definition, is not otherwise uniform during burning conditions. With Aehr demonstrating and now shipping the first-ever solution for wafer-level burn-in of AI processors in partnership with this customer's outsourced assembly and test partner, one of the largest OSATs worldwide, we have proven that our high-power Fox XP multi-wafer systems and proprietary wafer pack contactors are a viable solution for high-volume testing and burn-in of AI processors in wafer form. This approach eliminates the need to burn in these devices in package or system form, where test costs and yield losses due to failing devices during burn-in are significantly higher and have a much more significant impact on overall manufacturing yield. Many AI processor companies are talking about billions of dollars of devices a year, with the largest AI processor company in the world shipping over $100 billion worth of processors in the data center applications this year alone. Even a 0.1% increase in yield by shifting the burn-in of devices from the system or heterogeneous package level to wafer level is very significant. Today, burn-in related screening and early life failures at the system or package level causes the entire package or system to be discarded due to the inability to repair these devices at this stage. Moving this screen to wafer level allows devices that would otherwise fail during screening at the package or system level to be removed before they're packaged, or worse, put into the system level. We believe using wafer level burn-in will result in savings in manufacturing costs, increases in revenues associated with the limited supply of these devices, and a reduction in field-related failures and warranty costs, as you can afford to put more screens in place or burn in longer to ensure the highest quality and reliability of devices. We're also receiving feedback from potential customers that doing this screening at wafer level is not only cheaper overall, but requires less electrical power from the grid, which has significant benefits. An important part of our story, which we have discussed for years, is the evolution of semiconductors that has driven the increased need for wafer level burn-in. This includes the fact that semiconductors are becoming less reliable with the transition to smaller geometries, devices are physically larger, And more devices are being developed on compound semiconductors like silicon, carbide, and gallium nitride, which require additional burn-in and stress testing, such as Aehr provides, to meet the stringent quality and reliability needs of their customers in the end markets. AI processors and other high-performance central processing units, or CPUs, and network processors are also facing limitations related to their physical size due to the reticle limit in semiconductor manufacturing. The reticle limit is the maximum area that can be exposed in a single pass of the lithography equipment. Due to the reticle limit, a single chip or die cannot exceed this maximum area. This is a physical constraint imposed by the manufacturing process. AI models, especially large language models, require massive amounts of computation and memory. This translates to the need for increasingly large and complex chips. The GPUs used for AI training have already reached the reticle field limit. In order to overcome the reticle limit that prevents them from building a single massive chip, manufacturers are using chiplets, which are smaller die that can be interconnected to form a larger system. This approach effectively circumvents the reticle limit and allows for much larger total transistor counts. Advanced packaging technologies such as COAS, or chip on wafer on substrate, and SOIC, or system unintegrated circuits, enable the integration of multiple chiplets onto an interposer allowing for complex high-performance systems that exceed the size of a single reticle. As AI processors require increasingly large and complex designs, chip-like architectures and advanced packaging technologies are being used to overcome this limitation and enable the continued scaling of AI compute power. The reason these matter to Aehr Test is that these devices all need production burn-in screening to remove early failures that would otherwise occur during the lifespan of the AI processor. These failure rates are unacceptable and costly, impacting the end customer and increasing warranty costs for the supplier. In many cases, they can also pose safety issues, especially for processors used in autonomous or driver-assisted vehicle technologies. The screening and burn-in durations vary by process and device, but generally range from one to several hours or even 24 hours or more, depending on the desired quality and reliability level for the end application or customer. These GPUs, particularly those used in data centers and in the creation and use of large language AI models, are not the commodity consumer semiconductors of the 90s and 2000s. These are not chips used in $200 graphics cards for gaming. Instead, these are nodes worth tens of thousands of dollars operated in parallel, thousands at a time. If one node fails, it can completely disrupt the development or construction of the entire language model. As we've discussed with automotive and other applications, reliability is critically important for these customers. Aehr now offers a high-volume production solution for package-level burden with our new Sonoma product line following the acquisition of in-cal technology last year. For customers seeking to perform production screening of these devices in package form, we now provide a highly cost-effective solution with upcoming fully automated JEDEC trade-to-trade device handling and testing. Before our Fox XP wafer-level test and burden system, The only solution for doing this screening was products like our Sonoma system. And while this screening step is cost-effective, and we believe our Sonoma systems offer the lowest cost solutions on the market for packaged part burn-in of AI processors, it not only weeds out defective processors or memory, but also results in discarding highly expensive advanced packages, such as the co-op package and substrate, along with all of the other devices packaged in the failed device. For example, multiple new AI processors feature two or more AI, ASICs, or GPO processors in the advanced package, with each AI processor die containing up to four high-bandwidth memory or HBM stacks, totaling up to eight or more HBM stacks per package. Keep following here. Each of these HBM stacks can be eight die or more in the future, meaning it has eight stack memory dies for HBM stack. You go through all the math and there's a total of up to 64 or more HBM dies and two or more AI processors plus a very expensive co-op package substrate per package. If one of the AI processors or one of the HBM die fails during the production burn-in after packaging, all of the other die plus the co-op substrate are discarded. You can see the cost impact of performing burn-in at the package part level. If you take this a step further, companies also perform a burn-in at the system level when the GPU or AI processor multi-die package is installed on a computer system printed circuit board, along with the device power supplies, heat sinks, and supporting infrastructure, such as all the high-speed interconnect technology for AI processor to AI processor communication. Performing burn-in at this stage impacts cost and yield even more significantly. You can see why the industry is showing such interest in our ability to test these devices at the wafer floor. In addition to this lead customer for AI wafer-level test, we have now received multiple inbound requests from several high-profile processor companies that are very serious about wafer-level testing. This ecosystem is very small, and having demonstrated that wafer-level burden of high-power AI processors is feasible, We're gaining visibility beyond our own sales and marketing efforts with the growing recognition that moving the AI processors and CPUs to wafer level is overwhelmingly advantageous from both a cost perspective and for yield. We're extremely busy right now engaging with multiple companies who are asking, can you test my parts? The conversation is, can Aehr do it, not do we want it? I'm very excited to report today that one of these companies has now asked us to move forward with an evaluation for wafer-level testing of their devices with one of their current high-volume processors. This feasibility study will allow them to see the real advantages and performance of doing a production burn-in at wafer level instead of in package or system-level form as they do today. Based on what they have shared with us, we believe that if this evaluation succeeds, they plan to transition to high-volume production wafer-level testing which would be a significant opportunity for Aehr. While this evaluation involves new wafer packs for their specific wafers, we believe that Aehr can address the needs in the near term with our proprietary AI processor optimized wafer packs designed specifically for these devices. We also have systems needed to run their wafers on our floor today, demonstrating this capability, as well as fully automated aligners to showcase the automation of the 300 millimeter wafer handling. We expect this evaluation to take one or two quarters to complete fully. At the same time, we're working with this customer to determine their production capacity needs and discussing lead times to meet their requirements. Their capacity requirements are significant, and we feel we have the manufacturing capacity for systems, aligners, and wafer racks to meet the potential demand if we're successful with this evaluation and they decide to move to wafer-level burn-in using our solution. We also expect to move to evaluation phases with other AI companies during this fiscal year and believe we can capture a meaningful share of the total production burn-in market for AI processors with our FOX wafer-level test and burn-in systems and proprietary wafer pack contactors. So let me spend a few minutes on some of the other markets quickly, and I'll start with package part burn-in. As I mentioned earlier, we also offer customers the option to perform their package part burn-in screening as well as a qualification reliability characterization for their GPUs, AI processors, CPUs, and network processors. We completed our acquisition of NCAL last July 31st, expanding our product portfolio to include their highly regarded package-part reliability burn-in and test solutions, especially their ultra-high power capabilities for AI processors, GPUs, and computing processors. Since that date, Aehr has shipped more package-part burn-in systems than NCAL did in the last three years. It is a record-breaking sales achievement for the qualification and production burden of AI processors. We're very excited that with the added capabilities and resources from Aehr, we have been able to ramp up production to levels that Intel had never achieved, meeting the demand from AI processor companies for the qualification and production of their devices. With the addition of significant number of people, processes, and scale, we've been able to shorten lead times, maintain low costs, address quality, and do this in a high reliability platform. which has been overwhelmingly positive for customers. As a result, we won our first production AI processor customer for package part burn-in during the fiscal year, receiving initial volume production orders for the multiple Sonoma ultra-high-power systems. This customer is one of the premier large-scale data center hyperscalers that is making their own AI processors and is growing this capacity significantly. These are their first devices that use a production burn-in system at the package part level instead of at the system level. They plan to ramp this device over the next year and are already discussing their next generation process, as well as the one after that with Aehr, to ensure we can meet their production capacity needs. We said before that one of the best things about this acquisition is that it gives us a front row seat to the future requirements of a large number of these AI processor customers, providing us with visibility into the production burning needs. As a result, some of these customers from packaged part side are coming to us asking right away for level burning capabilities. Aehr is the only company in the world that offers both a wafer-level and packaged part burn-in system for both qualification and production burn-in of AI processors. We can provide them with options and show direct side-by-side comparisons of cost of test, capacity output, footprint, operational costs, and impact on yield based on how they decide to do their burn-in. We're in the perfect position to help them while also remaining balanced so we can tell them yes, regardless of how they want to do their burn-in. We're very excited about all our new AI product offerings and the expanded total adjustable market they bring to air, and we look forward to discussing our progress to further capitalize on this new market as we move through our new fiscal year. Another key milestone this past year was expanding the production level burn-in for gallium nitrate power semiconductors. We secured an additional order for our Fox XP high-power wafer production system with high-volume for volume production of GaN devices from a leading automotive semiconductor supplier and a key player in the GaN nitride power semiconductor market, marking their commitment to advancing volume production wafer-level burn in other GaN devices using our XP platform. This achievement expands our production wafer-level burn in market for power semiconductors beyond silicon carbide applications used in electric vehicles, data center power conversion, and solar to now include GaN a high-performance compound semiconductor optimized for mid-power applications such as data centers, solar energy, automotive systems, and consumer electronics and PCs. Additionally, we're in discussions and engagements with multiple other potential new GaN customers about their needs. GaN's a new and exciting semiconductor technology with high-value applications, including automotive power conversion, solar inverters, and solid-state transformers and breakers. GAN offers a much broader application range than silicon carbide and is poised for significant growth in the coming decade. We've also made significant progress in the hard disk drive market. This past year, a lead customer began ordering multiple Fox CP single wafer production test and burn-in systems, featuring an integrated high-power wafer probe for their new high-volume parts in a new application for burn-in and stabilization of new devices in hard disk drives. These are follow-on system orders to the first production order received all the way back in 2019. As we stated in previous calls, their plans for this new product were delayed during the pandemic, but they continue to work on this new device continuously over the last five years to ensure the performance and reliability of their devices. We understand from several analysts and shareholders that this customer has publicly called out our Fox systems as a key contributing factor in helping them achieve the long-term reliability needs of this market. This customer is one of the top suppliers of data storage devices, and we're very excited to start this production ramp after all these years of working with them on qualification and process development. During our last earnings call, I noted that the high-power probers for our Fox CP for this HDD customer are sourced from Japan, and it was unclear how the tariff uncertainty might affect the timing of receiving these probers. At that time, we were hoping to receive this shipment by the end of May, But because of tariff uncertainties, these programs did in fact get significantly delayed. We just received the first one last week. We're working quickly to do the integration and engineering steps needed to finalize the test cell to be able to make the first shipments this quarter. In addition to multiple systems and backlog, the customers told us that they will be purchasing additional systems both in the short term and over time. I know it must be a broken record to hear terms like uncertainty around tariffs on many company earnings calls, but this is still the case. Despite this, we're extremely excited about our growth opportunity for our wafer-level solution for HDD market and look forward to updating you further on the progress next quarter. Now turning to silicon photonics ICs. This market continues to demonstrate market adoption for optical chip-to-chip communication and optical network switching. Several companies, including AMD, NVIDIA, Intel, TSMC, and Global Foundries have announced product roadmaps for devices that utilize optical chip-to-chip communication. We have several customers in this space. At last count, it was five to six customers, with one of the customers being an OSAT that purchases our tools for one customer but is marketing it to others. We've seen a significant number of new wafer pack designs from our install base of systems for new designs that they use for qualification development work on their FOX wafer-level test and burn-in systems. We also now offer a new system with higher power, 3,500 watt per wafer configuration, to meet the needs of new higher power wafers for optical IO and chip-to-chip communication devices. This is also available as an upgrade to our Fox NP systems for low volume production, as well as for Fox XP 9 wafer production systems. Recently received another order for an upgrade to one of the Fox XPs we shipped a few years ago that includes upgrading to include our new integrated wafer pack auto liner, which provides fully hands-free factory automation of silicon photonics integrated circuit wafers. We also have forecasts for new systems for incremental capacity this fiscal year for both systems and wafer packs. We're well prepared with expanded manufacturing capacity for Fox high-power systems and remain enthusiastic about the silicon photonics market, especially for the new application of silicon photonics integrated circuits and optical chip-to-chip communication, which we see as a significant market opportunity for our products. It seems odd to wait this long to talk about silicon carbide, but let me talk a little bit about that market as well. The silicon carbide power semiconductor market remains a significant opportunity for air, and we believe we're well positioned to continue to grow with our current customers in this sector, as well as add some additional customers in this space over time. Despite a slowdown in the growth of electric vehicle shipments, electric vehicles are still growing significantly worldwide, and we believe the silicon carbide market continues on a robust long-term growth trajectory. Demand for silicon carbide remains significantly driven by battery electric vehicles, but silicon carbide devices are also gaining traction in other markets, including power infrastructure, solar, and various other industrial applications. This quarter, we shipped our first configuration of the Fox XP, which can test 18 wafers at a time in a single system with support for our high-voltage test resources that can test devices up to 2,000 volts in wafer form. The system also includes a proprietary arc suppression technology that prevents the devices from electrically arcing at these high voltage while testing all devices at a time in a single insertion on each of 18 wafers. This capability has already proven in our nine wafer configuration but is now extended to the 18 wafer system. It's also capable of being directly docked to our fully automated wafer pack aligner that takes industry standard wafer cassettes and foops to allow full factory integration. We believe we're well positioned in the silicon carbide market as we have a large customer base and the industry leading solution for wafer level burn-in. So lastly, a little bit on our flash memory proof of concept project that we've been working on this year. As noted in earlier calls, we're collaborating with one of the world's leaders in flash memory to demonstrate the capability and cost effectiveness of our Fox XP platform for high volume production wafer level testing in burn-in and flash memory wafers. This is very exciting because we believe Aehr can successfully demonstrate how to create a high density, high power, fully automated test cell, which will help us move to the next development phase. That next step involves working together to develop a next-generation test system specifically designed to meet this customer's needs. Although this memory validation benchmark has taken us a bit longer than expected due to shipment delays in some of the components of this integrated system, the new MEMS-based fine-pitched wafer-packed full wafer contactor is in-house and ready to complete the benchmark. We're very encouraged, and we hope to generate data and results this quarter with the aim of completing the benchmark by next quarter. New technologies in NAND are driving new requirements for wafer-level burn-in to address the manufacturing and negative yield implication of testing these devices at package or system level. We believe that AERS-FOX wafer-level test and burn-in platform, combined with our proprietary wafer-packed full wafer contactors, is well-positioned to offer a competitive and cost-advantaged solution in this market. Looking ahead and concluding, Aehr is well positioned to capitalize in growth in the overall semiconductor market. We remain focused on addressing the critical reliability requirements of next generation applications and leveraging key megatrends shaping our industry. Today, reliability is a vital priority across diverse sectors, including combustion, electric vehicles, data centers, infrastructure electrification, and then expanding range of AI applications. As we enter fiscal 2026, we've established the infrastructure and capacity to support significant growth. This was the purpose of the investments we made this past fiscal year, including the upgrade of our manufacturing facility, including upgrades to power and infrastructure, consolidating package and wafer-level burning under one roof, and implementing the necessary processes to support a very high volume of both wafer-level and package-level test and burning systems and our proprietary wafer pack contactors. These foundational efforts are now complete. In the year ahead, we plan to increase our research and development investment to support further product enhancements, expand our R&D resources, hire additional talent to serve our growing AI customer base, and enhance automation to improve scalability. Beyond these initiatives, the new fiscal year will focus on securing and executing orders. We believe that nearly all the opportunities and market verticals we discussed today will experience order growth in fiscal 2026. The one exception may be silicon carbide, as customer forecasts for this market are back half loaded, with stronger growth expected in our fiscal 27. Still, there are many variables, and silicon carbide may end up growing faster than expected, giving the market share shifts currently underway and our lead customers increasing market share in the industry. During our previous earnings call, we announced the temporary withdrawal of our financial guidance following the U.S. administration's tariff announcements just a few days earlier. At that time, we were concerned about the potential secondary impacts on our current and prospective customers, as well as the possibility of pauses or delays in customer orders, shipments, or supply chain deliveries. We remain very confident errors long-term outlook, but we are still seeing the impact of tariff-related uncertainty on the timing of specific orders, particularly in our first quarter. As a result, we've chosen to maintain a cautious approach and are not reinstating specific guidance at this time beyond what we've already stated, which is that we anticipate order growth across all segments in this fiscal year, with this possible exception of silicon carbide. We're very optimistic about our growth opportunities in all the segments we've discussed and our ability to meet the potential demand of these markets. With that, I'll turn it over to Chris.

Chris Siu | Chief Financial Officer, Aehr Test Systems

Thank you, Gane. Before I review our financial results, I'd like to provide an update on the integration of our in-cal acquisition, which we completed on July 31st of last year. Since the acquisition, Aehr has dedicated significant financial and human resources to ensure a successful integration of InCal into our operations. We have fully migrated InCal's financial records into our Oracle NetSuite Cloud ERP system and integrated their HR and manufacturing functions into Aehr's broad information systems. Additionally, we have completed transfer of all inventory, as well as comprehensive documentation of product designs source code and assembly and test instructions into AehrS processes. I'm pleased to report that our plan to consolidate personnel and manufacturing into AehrS Fremont facility was complete by the fourth quarter of fiscal 2025. And we successfully closed the in-camp facility on May 30th, 2025, ahead of our original schedule. I want to express my sincere thanks to our teams for their commitment, dedication and outstanding execution throughout this integration. As a result of the consolidation, we incurred one-time restructuring charges of $864,000 in our fiscal fourth quarter related to closure of the in-cal facility. With the integration of the two companies, we'll be able to create synergy and reduce our facility costs by over $800,000 per year going forward. Turning to the full year results, we reported revenue of $59 million down 11% year-over-year. Our full year non-GAAP growth margin was 44%, compared to 49.6% in the prior year. Our full year non-GAAP net income was $4.6 million, or $0.15 per diluted share in fiscal 2025, compared to non-GAAP net income of $35.8 million, or $1.21 per diluted share in fiscal 2024. which included the impact of a one-time tax benefit of approximately 20.7 million, resulting from the release of the company's full income tax valuation allowance. Our annual bookings in fiscal 2025 were 61.1 million, up over 24% compared to 49 million in the prior fiscal year. The increase in bookings was primarily related to the sales of AI processor burning systems. wafer packs, and burn-in module boards, partially offset by lower customer orders related to silicon carbide wafer packs. Our backlog as of the end was 15.2 million, with 1.1 million bookings received in the first five weeks of the first quarter of fiscal 2026. We now have an effective backlog of 16.3 million. Turning to our Q4 performance, we're excited about our continued momentum in penetrating the artificial intelligence market. with AI processors burning now accounting for over 35% of our business this year, compared to zero last year. For the fourth quarter, we had three customers representing over 10% of total revenue, and two of these customers target the AI market. Revenue for the fourth quarter totaled $14.1 million, a 15% decrease compared to $16.6 million in Q4 last year. The year-over-year decrease was primarily due to a delayed shipment of a Fox CP system that was forecasted to be shipped to our hard disk drive customer. Because of tariff-related uncertainties, public source from Asia to support the Fox CP system were delayed. We now expect to complete this shipment in our current quarter, Q1 of fiscal 2026. Wafer pack revenues were $4.2 million and accounted for 30% of our total revenue in the fourth quarter. Wafer Pack revenues continue to represent a sizable revenue stream for our business, driven by the ongoing demand for new Wafer Pack designs from both existing and new customers, and they secure new end customer designs and strive to meet their market requirements. We are pleased with the significant progress we made integrating products from our in-cal acquisition into our product portfolio to capitalize on emerging opportunities in the AI market. Sales of our Sonoma, Tahoe, and Echo package part burning systems continue to contribute strongly, accounting for 44% of our fourth quarter revenue. We believe our strategy to expand Aehr's product offerings and diversify beyond second callback applications is gaining meaningful traction in the marketplace. Non-GAAP growth margin for the fourth quarter was 34.7%, compared to 51.5% in the same period last year. Non-GAAP growth margin decreased primarily due to lower overall revenue level compared to Q4 last year and less favorable product mix. Additionally, we incurred high manufacturing overhead due to underabsorption as our manufacturing capacity utilization was lower during the renovation of our Fremont site and the consolidation of inventory from the in-cal facility. Non-GAAP operating expenses in the fourth quarter were $5.4 million, reflecting a 6% increase from 5.1 million Q4 last year. This year-over-year rise is primarily attributed to the inclusion of in-cows operating expenses in our financial results, as well as higher legal and professional service fees. We anticipate incurring additional legal expenses in the upcoming quarters as we continue to protect our intellectual property rights in China. Non-GAAP net loss for the fourth quarter excluding the impact of stock-based compensation, amortization of intangible assets, and restructuring charges was $248,000, or negative one penny, per diluted share, in line with the street consensus. This compares to a non-GAAP net income of $24.7 million, or $0.84 per diluted share, in the fourth quarter of fiscal 2024, which, as a reminder, including a one-time tax benefit of approximately $20.7 million resulting from the release of the company's full income tax valuation allowance. Moving to the balance sheet, at the end of Q4, our cash, cash equivalents, and restricted cash totaled $26.5 million, down from $49.3 million at the end of Q4 fiscal 2024. During fiscal 2025, We used $11 million to acquire Incal, which enabled us to enter the AI market and secure key customer relationships with his superior package part burn-in product, Sonoma. Additionally, we spent $5 million on CapEx to support the consolidation and upgrade of our Fremont manufacturing facility and headquarters, and used $3.6 million to procure inventory and $3.8 million for the remaining working capital. We have no debt and continue and continue to invest excess cash in money market funds to generate interest income. Let me provide an update on the class action claims and derivative lawsuit filed against Aehrtas on December 3, 2024. We are pleased to report that on May 16, 2025, the court appointed lead plaintiff for the class action lawsuit elected to voluntarily dismiss the case, with all parties bearing their own fees and costs. On June 9th, 2025, the court also dismissed the derivative lawsuit without prejudice. The company believes the claims in all these cases were without merit. Following the voluntary dismissal of the shareholder class action and the court's dismissal of the consolidated derivative action, no related proceedings are currently pending. As Gayn mentioned, considering the secondary effects of the tariff announcements on our current and potential new customers, along with the uncertainty this quarter regarding possible pauses or delays in customer orders, shipments, or supply chain delivery delays. We're temporarily withholding our guidance for our fiscal 2026 year, and we'll reassess our guidance policy as clarity develops. Despite the uncertainties around tariffs, we're excited about the long-term growth opportunities across our more diverse target markets. We're especially encouraged by the progress we've made in addressing the artificial intelligence processes market and other potential high-growth sectors, including gallium nitride power semiconductors, data storage devices, Seacom Photonics integrated circuits, and flash memory. To succeed in these new markets, we plan to increase our research and development investments this fiscal year by expanding our R&D resources and hiring additional talent in the US and the Philippines to support our growing AI customer base and increase automation for scalability. With more R&D talent, a strong infrastructure, and enhanced manufacturing capabilities in place, we're more prepared than ever to achieve our growth objectives. Lastly, you may have noticed that we are holding this earnings call one week earlier than usual because of the CEO Summit has been pushed back from July to October and will be held in Phoenix instead of San Francisco. Looking at the investor relations calendar, Aehr Test will be participating in two upcoming conferences over the next month. We'll be meeting with investors virtually at the Needham Sixth Annual Semiconductor and Semicab One-on-One Conference on Wednesday, August 20th. The following week, we'll meet with investors in person on Tuesday, August 26th at the Jefferies Technology Summit Conference in Chicago. We hope to see some of you at these conferences. This concludes our prepared remarks. We're now ready to take your questions. Operator, please go ahead.

Operator | Conference Operator

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. Our first question comes from Christian Schwab with Craig Hellam.

Please proceed. Christian Schwab | Analyst, Craig-Hallum Capital Group

Again, I've received a lot of questions regarding your most recent slide in your investor deck with a lot of well-known marquee names. Should investors think of that list as a list of current and previous customers, or does it include maybe names of prospective customers you know, such as new AI customers that you're working with or new silicon photonics customers, et cetera? How should we be thinking about that slide?

Gayn Erickson | President and CEO, Aehr Test Systems

Okay. So when we introduced that slide, we updated the customer slide a few weeks ago compared to the deck that we've had on our website prior to that. And we were actually at a conference that had a public speaking. It is recorded and available to all people through our website. In that specific conference, I pointed out that we have updated the customer list to reflect the current customers from the in-cow package part burn inside of our business. Those are customers, not prospects. And yes, there's some notable names on there. Not every single customer is still on there. Actually, there's been some historical 10% customers that we had specific agreements with or limitations of ever saying their names publicly other than referencing when they were doing 10% of our revenue. But yeah, there's some good names on there.

Christian Schwab | Analyst, Craig-Hallum Capital Group

Great. And that is, it's released to 10% customers. Are you, since you didn't mention it a few times without naming the names, is that going to be in your K when you file it, or are you not going to name the 10% customers?

Gayn Erickson | President and CEO, Aehr Test Systems

So we're, yeah, we're, the new SEC rules do not require you to name it. So unless we already have prior arranged agreements with the customers to name them, we're no longer doing that. Prior to that SEC rule, we could name them even if the customers objected, if you will, but we're not doing that now.

Christian Schwab | Analyst, Craig-Hallum Capital Group

Great. And then as the AI opportunity seems quite significant, I know you in previous conference calls said that that market could be materially bigger than what you had previously said, that the silicon carbide opportunity could be over time. if wafer-level burden was used by many people. Can you give us any idea of, not this year or next year, but over time, have you walked through the maps?

Gayn Erickson | President and CEO, Aehr Test Systems

Yeah, as you can imagine, we have. So similar to how we built up the original silicon carbide models, that took a look at say the target applications for silicon carbide, which were primarily the electric vehicles, how many EVs, how many components would be in it, et cetera, et cetera. You could come up with how many wafer starts that would require in, say, 2030. And I know that you had put some models together at that time. There were about 4 million wafer starts. We looked at 12-hour burn-in times, single insertion with our systems. Long story short, we saw that the total market was somewhere 350 of our systems with ASPs about $4 million a piece or something like that. If you look at the AI market, the AI market, interestingly, in that same timeline, may actually be half as many wafers, which seems a little odd, but they're 300-millimeter wafers, and you actually don't test them in one single touchdown. They'll take multiple touchdowns to test these wafers because they might have 20,000 watts power on them and we're testing three four thousand watts at a time you can kind of go through the math at even significantly lower average burn-in times then say the silicon photonics I'm sorry the silicon carbide is that you go through the math and the the market is you know three to five times larger than the silicon carbide was one of the things that we'll be looking at is what are the burn-in times you know we have We're doing burn-in of customers around the world, and we have customers that are doing one-hour stress time, some four-hour burn-in times, and 24-hour burn-in times, for example, all the way up. So it'll be interesting to see, and we think that's related to how much – the longer the burn-in time, the higher the quality ends up being to the end customer. And so it kind of depends on both availability, capacity, and what the target customer is required, and how critically important it is to get to the quality levels. So there's a little bit of dynamics in here, but there's no way to do the math and not come out with it being significantly larger.

Christian Schwab | Analyst, Craig-Hallum Capital Group

Fantastic. No other questions. Thanks, Gayn.

Operator | Conference Operator

Thank you. The next question comes from Jed Dorsheimer with William Blair.

Please proceed. Jed Dorsheimer | Analyst, William Blair

Hi. Yeah, thanks for taking my question. I guess first one, either Gayn or Chris, just the step down in gross margin quarter to quarter, or year over year or two. I'm assuming that it's a mix issue in terms of drop off of wafer pack consumables and a mix towards in-cow. Is there anything else that should be called out with respect to shift in margins? Of course, lower revenues to spread the fixed costs, but is it primarily mix in revenue levels?

Gayn Erickson | President and CEO, Aehr Test Systems

There's two types of mix in this thing, too. There definitely was a mix in that we actually, when some of the wafer-level burden orders didn't materialize as we were kind of thinking at the time, we actually pulled in some packaged part systems. And the packaged part systems have a little lower margin. The consumables have a lot less margin than our wafer packs, for example. But the other piece is during that quarter, we had the full burden of the in-cal facility as well, which we talked about now not having kind of carrying forward. So we had the double whack of both facilities going on with, you know, primarily just package part burn-in revenues and some wafer packs. So I think as we go forward, you know, the same quarter would be materially better. And of course, we have the potential of much higher volumes as we go forward.

Chris Siu | Chief Financial Officer, Aehr Test Systems

Yeah, just to add on that, also the utilization was not as high as before because we were moving. Some of the folks actually were helping with the moves into operations. Not building in any... Yeah, not building products instead of. So we got to expense those labor costs.

That's helpful. Jed Dorsheimer | Analyst, William Blair

Thanks. And then, Gane, just maybe if you could... You know, your tenor around AI processors has certainly skewed much more positively over the past year. And, you know, I know that Silicon Photonics, you took time to call that out. Copackaged optics are becoming a more meaningful part of the design. I'm just curious... What was – you know, is it just the size of the TAM? There seems like there is a specific shift in terms of your excitement around this market, and is it a function of your technology and the moat that you have? If you wouldn't mind just explaining – and maybe I have that wrong, so – Oh, no.

Gayn Erickson | President and CEO, Aehr Test Systems

Yeah, I think you're – I believe, I think people often ask, you know, what makes you lose sleep at night and what makes you excited? There's a material difference in our story related to AI from, you know, nine months ago, maybe six months ago. Nine months ago, we were serious when we said we're doing this evaluation with the first AI customer. And while we believe it will work, we still have to work through it. We also didn't finalize the burn-in times, et cetera. Now that we've proven that it works, understand the size of the market through the burn-in times, and candidly delighted the customer, if you will, we're now also recognizing that the features that we implemented in that machine are applicable to other customers. So at the time, if you said, okay, nine months ago, it's like, I think this is going to work. And the customer was cheering us on. Then it worked. And then the customer, you know, two quarters ago gave us an order and we shipped it, you know, weeks later it felt like, okay. To now we have inbounds from customers to we're now evaluating on paper the qualification of those devices and recognizing we can test your parts and this is why. So you're starting to see in the eyes of the customers looking back at you the value that you have in doing this and the sincere interest in trying to make this happen. They're like, how can you make this happen? So if it's not coming across clear enough, and I know as a CEO you have to be careful of, you know, I'm always a cheerleader, but this is very real in their eyes. And we used to talk about, you know, stacked memories and how important it would be to burn them in before you stack them. You're taking devices that are maybe $2 and you're putting them eight high to make a $16 or $20 part. Then we talk about silicon carbide devices that were going into these modules for EVs. We were taking $10 parts, putting 10 of them into a package and selling them for $200 and look at the value added by doing that. Now we're talking about HBM stacks where the stack of memory is hundreds of dollars times eight stacks processors that are $1,000 a copy of out of a TSMC fab, they're all stacked together and they all need production burn-in. The math is so obvious about the value of, move this to wafer level, that it's just more about what can you do to prove it. And we have the ability now to not only physically show it, we can bring customers in, we have tools in-house that are configured for AI, high power, 300 millimeter wafers with our aligners, They can see wafer packs. We've upgraded the facility with enough power to be building 10 to 20 systems at a time if needed. That's not to imply that that's how big our forecast is, but we have that capacity. And they come in and look and go, okay, I get this. So the other thing, and I made some comment, kind of a snide comment, the customer enthusiasm exceeds our ability to sell and market, and that's not a dig on my sales and marketing team. What we believe has happened is that these customers are being walked by the tool and tools, I should say, because it's tools actually, and seeing the feasibility of it. And so the biggest OSAP is marketing this capability. And we're getting these people calling and say, whoa, whoa, hold on a second. I mean, I guess I got the press release, but I just saw it or understand it. What do I need to do to do that? So you can imagine you'd be pretty excited about that.

Jed Dorsheimer | Analyst, William Blair

Yeah, no, certainly. Um, that's helpful. Last question for you along those same lines. And you mentioned the OSAT that's starting to market. So you've got an OSAT in your silicon photonics, uh, an OSAT or two that you're working with in the AI processor. Um, and mostly customers, that own the design for the AI processors. What you haven't mentioned, you did mention TSMC, but I'm just curious from a foundry perspective, where are the discussions with foundries in the process? Are you seeing some cross-pollinization like you are with OSATs?

Gayn Erickson | President and CEO, Aehr Test Systems

For sure. Yeah. So I'm going to use a little different vocabulary. In this world, there's only really two foundries. Well, to be respectful for Intel, maybe three that can build them. So Global Foundries isn't really building AI processors because of the nodes they're on. So you're really talking about TSMC and potentially Intel? Yeah. With TSMC having, right now I think everybody but Intel. And then you talk about design houses. Design houses are the companies that are actually working with the hyperscalers in designing their new ASICs or AI processors. So you're talking about Marvell, Broadcom, all chip as examples. Those are the big guys that are actually doing the new designs. Then, of course, some of the big hyperscalers have in-house design. They then work with the models, say, for example, with TSMC that will provide them with the models based upon what particular node they're at. That will have DFT, design for testability, features and functionality inside of it that interestingly make them common. And then they can outsource that to really two or three of the big OSATs, the biggest one being ASE, who also bought Spiel, but people think those are two different companies, but candidly, they're really the same. And then you have Amcor. You have Japan that is trying to get some of the business started. J-C-T, and then they're not an OSAT, they're just test, and that's K-Y-E-C. So it's a pretty small community and a lot of cross-pollinization of ideas, I would say, and awareness. And so once this system got put into production, the lights started to go on and the phone started to ring with people saying, hey, wait a minute, I thought that was just a marketing thing. This is real. Can you do my part too?

Thank you. Larry Shlebina | Analyst, Shlebina Capital

I hope that helps.

Operator | Conference Operator

The next question comes from Igor Dolmachev with Freedom Broker.

Please proceed. Igor Dolmachev | Analyst, Freedom Broker

Hello, Jens. Thank you for the market comments. I wanted to get a glimpse into your outlook for 2027, especially for TSMC measure. Recently, JSMC reported that JSMC plans to win down Galleon Mid-Ride Foundry Services by 2027. Could you share your thoughts on how this shift in market can impact your business and address small markets?

Gayn Erickson | President and CEO, Aehr Test Systems

Okay. So, I mean, we chose not to give guidance on 26. I'll be struggling with 27. But, you know, we do believe we can get back to the track of growing significantly over this period of time. The size of the market, for example, between AI, silicon photonics for optical chip-to-chip communication, and you add in silicon, you know, even silicon carbide are all kicking in pretty hard in 27. So, you know, we're planning for... you know, pretty significant growth. I'll leave it at that, okay? Now, you specifically talked about GAN and TSMC. TSMC, mostly I wake up every day thinking about all the AI wafers that TSMC is doing. GAN, you know, gallium nitride can be put onto multiple different process substrates. The most kind of interesting one would be on silicon, large silicon substrates. But a lot of the – they're both IDM folks around the world, like Infineon, for example, or people that have dedicated foundries. And then TSMC is also doing a foundry. I don't know what TSMC's market share is, but I – Candidly, when I talk to customers, I hear a lot more about the other foundries or their own IDM sources than TSMC. So I don't believe that it has a negative impact on us if they start to wind down that business. I think that just shows up somewhere else, either at one of the IDMs or one of the other foundries.

Igor Dolmachev | Analyst, Freedom Broker

Okay, great. Thanks. And in terms of your new AI clients, how long will it take to pass all qualifications to reach your final decisions? for your client after you get the first client delivered?

Gayn Erickson | President and CEO, Aehr Test Systems

So we already have the first client. We announced that we were, I think this year exactly, we announced that we had a commitment from a first customer to evaluate our solution for AI. We said we're very excited about it, but there was still a lot of uncertainties. The customer seemed extremely willing and pulling us in. I think I used the term they're more excited than we are and more hopeful about getting the business, which, of course, was good. Then within a quarter, we said it was progressing pretty well. The following quarter, we said we are now testing wafers and the data looked good. And within that quarter, they placed an order and we shipped it at the same time. That was the first customer, which there's some argument takes longer than the second one. I will tell you our enthusiasm and confidence is a lot more higher because of actual evidence, but there's still some variables and things that we still need to worry. My attorneys will always tell you, be careful, there's always risk, and you never know until the order's in hand. But we think that a decision could be made within, say, six months or so, and, you know, potentially orders placed somewhere thereafter.

Igor Dolmachev | Analyst, Freedom Broker

Yeah, I got it.

Thank you. It was useful. Operator | Conference Operator

Thank you. The next question comes from Larry Shlebina with Shlebina Capital.

Please proceed. Larry Shlebina | Analyst, Shlebina Capital

Hi, Gane. That first AI customer at the OSAT. So are you under the... belief that they're really pleased with it and do you expect more orders from them in the near future? Yes, to both of those.

Gayn Erickson | President and CEO, Aehr Test Systems

Wait a minute, you said near future. I want to be careful of setting any timelines, but I'll go out and say we expect just more this year, though.

Larry Shlebina | Analyst, Shlebina Capital

And then now you have another AI customer in evaluation. So that's the second one for wafer-level burn-in. And then you have a third one that's going after the production in the package part burn-in. Are they three distinct AI customers, or are they – Yes.

Igor Dolmachev | Analyst, Freedom Broker

Yes.

Larry Shlebina | Analyst, Shlebina Capital

Totally different. Totally different. And in the write-up, you said that you shipped a 18 – wafer, high-power, silicon carbide system. Did that ship and book in the May quarter?

Gayn Erickson | President and CEO, Aehr Test Systems

Yes, yes. And it was an upgrade to one of the systems that they had purchased earlier. Part of our strategy and one of our commitment with customers is this commitment to a platform that allows people to maintain forward-backwards compatibility. So that was a really big deal. They shipped the system here. We reworked the system and then shipped it back to them, capable of testing 18 wafers at a time at high voltage, which is amazing.

Larry Shlebina | Analyst, Shlebina Capital

And that also included the automated aligner?

Gayn Erickson | President and CEO, Aehr Test Systems

Actually, in this case, it did not. It shipped back without the automated aligner.

Larry Shlebina | Analyst, Shlebina Capital

Do you anticipate...

Gayn Erickson | President and CEO, Aehr Test Systems

By the way, they have automated aligners, but we only upgraded the system, basically.

I see. Larry Shlebina | Analyst, Shlebina Capital

Do you anticipate going forward that all the silicon carbide systems will be high power?

Gayn Erickson | President and CEO, Aehr Test Systems

Actually, we refer to them as high voltage, but I know what you mean. Mostly, yes. We've been working really closely with the OEMs and making them aware, like the car suppliers, the EV guys. to making them aware of the capability to be able to continue to provide lower and lower cost solutions that include the high voltage insertion as well if they want to do it. I would say that it's mostly likely that people will buy it with that. And it allows you to do it with multiple different stress conditions, but this allows you to also do the stress condition with high voltage, which is very valuable.

Larry Shlebina | Analyst, Shlebina Capital

Does that include a premium? Do you get a premium price on that going forward or not?

Gayn Erickson | President and CEO, Aehr Test Systems

Yeah, the option does cost additional dollars.

That's correct. Larry Shlebina | Analyst, Shlebina Capital

Okay, I've got to get my memory question in. You talked up how it makes so much sense for HBM to go to wafer-level burn-in. When are you going to get a valuation going for an HBM application?

Gayn Erickson | President and CEO, Aehr Test Systems

That's a good question. We've talked about, you know, walking before we run and the walking to begin with was the wafer level burn and application for the NAND flash. But one of the critical things that we mentioned last time, but I'll mention again today, one of the most specific things we were implementing was a new fine pitch MEMS wafer pack that allow us to get to very attractive price points at extremely high pin counts. But it also allows us to go to four times or one-fourth the pitch. These are distances, if you will, than what we have today. That fine pitch is technically fully capable of doing DRAM as well. We knew that on purpose. So one of the critical things is there was no way to contact a DRAM HVM device with our previous wafer packs, but we now enable it through this wafer pack. There's also things on the AI roadmap that are reusing the technology developed under this as well.

Larry Shlebina | Analyst, Shlebina Capital

So now that you have the MEMS fine pitch wafer pack, And it's proven out on Flash, is that correct? We're trying to get it finalized throughout this quarter here. Okay, so it seems like that would entice one of the HBM guys to say, boy, this could solve a big problem that we have as we go from eight stacks to 12, possibly eventually up to 24 stacks. Yeah, I think you're right on that. All right. Well, we'll be waiting to hear when you do that. That's all the questions I have. Thanks, Larry.

Thank you. Take care. Operator | Conference Operator

Okay. We have no further questions in the queue. I'd like to turn the floor back to management for any closing remarks.

Gayn Erickson | President and CEO, Aehr Test Systems

All right. Well, I thank everybody for their patience, and I fully recognize that our prepared comments were At least 10 minutes longer, we added about a 15-minute chunk in the middle to do detail and get on record the information around the AI that we won't need to do next time as well. And hopefully we can just give you an update on the successes that we're having there. So I appreciate everyone's patience and listening through this. And if you have any follow-on questions, you can reach out to us. We'll be happy to take the call.

Thank you very much. Chris Siu | Chief Financial Officer, Aehr Test Systems

Thank you.

Operator | Conference Operator

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260608224625-00'00'

NASDAQ:AEHR Q3 2025 Earnings Call Transcript Generated on 6/9/2026 Operator | Conference Operator: Greetings. Welcome to the Aehr Test Systems Fiscal 2025 Third Quarter Financial Results Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Jim Byers of Pondell Wilkinson Investor Relations.

You may begin. Jim Byers | Host, Investor Relations at Pondell Wilkinson

Thank you, Operator. Good afternoon and welcome to Aehr Test Systems' third quarter fiscal 2025 financial results conference call. With me on today's call are Aehr Test Systems President and Chief Executive Officer, Gane Erickson, and Chief Financial Officer, Chris Tiu. Before I turn the call over to Gane and Chris, I'd like to cover a few quick items. This afternoon, after market close, Aehr Test issued a press release announcing its third quarter fiscal 2025 results. That release is available on the company's website at aehr.com. This call is being broadcast live over the internet for all interested parties and the webcast will be archived on the investor relations page of the Aehr website. I'd like to remind everyone that on today's call, management will be making forward-looking statements today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors that may cause results to differ materially from the forward-looking statements are discussed in the company's most recent periodic and current reports filed with the SEC. These forward-looking statements, including guidance and other issues, are only valid as of this date, and Aehr Test Systems undertakes no obligation to update the forward-looking statements. Now I'd like to turn the conference call over to Gane Erickson, President and CEO.

Gayn Erickson | President and Chief Executive Officer

Thanks, Jim. Good afternoon, everyone, and welcome to our third quarter fiscal 25 earnings conference call. Thanks for joining us today. I'll begin with a few opening comments, and then I'd like to spend some time discussing tariffs and air's perspective on the near and long-term implications, as this topic is obviously on everyone's mind. We received many inquiries seeking answers regarding this matter. I'll then provide a brief overview of the quarter's key highlights and share updates on the primary markets that air targets for semiconductor testing and burn-in including the significant progress we've made so far this year in new markets. After that, Chris will deliver a detailed review of our financial performance. And finally, we'll open up the floor to your questions. We're pleased to report third quarter revenue growth in solid bookings and backlog, and that we exceeded the street financial forecast consensus for both revenue and bottom line for the quarter. We're particularly excited by the significant progress we've made expanding into additional key markets and unlocking new opportunities to attract customers and drive revenue growth. Recent wins have helped us meaningfully diversify beyond silicon carbide and into high-growth markets like AI processors with our industry-leading wafer-level and packaged part test and burn-in solutions. Okay, so tariffs. Currently, it appears that the actions and announcements from the U.S. administration regarding tariffs are dominating the news cycle. At this time, we do not believe that the impact of the tariff announcements made by the U.S. administration last week will significantly affect air directly. However, we're looking at the near-term secondary effects on our current and potential new customers, along with the uncertainty this quarter regarding possible pauses or delays in customer orders, shipments, or supply chain delivery delays or disruptions. Our immediate goal is to assess the impact on a customer-by-customer basis and communicate this to them quickly to remove any uncertainty or risk so that they do not slow down or delay any orders. We already have on hand the material needed for shipments of our wafer-level burn-in and packaged part burn-in systems over the next couple quarters. For wafer-level burn-in systems, it's much longer than that. For consumables, such as our wafer packs for wafer-level burn-in, and burn-in boards and modules for our package part burn-in systems. These are quick turn items with material purchased and built to order. We're already redirecting these materials and looking to drop ship finished goods from our subcontractors as well as shifting assembly and test of our wafer packs to one of our international locations as needed to minimize tariffs and avoid any possible supply chain disruption. We also have wafer pack aligners on hand to buffer us from any tariff noise for several quarters. For the high power probers for our Fox CP, for our hard disk drive customer, the probers come from Japan. And we may look to drop ship directly from Japan to this customer so as to not even have to consider the US tariff implication. However, give it a couple of days and we may have a new tariff number with Japan or it may be zero. I provide this detail to help our customers and shareholders understand that we do have a robust supply chain and have put thought into the resiliency of our shipments for customers so they can count on us. Again, we do not believe the impact on margins or demand will be significant for error or on customer demand over time, but the challenge is not being able to control near-term secondary effects on our current and potential new customers, such as possible near-term delays in customer orders or requested delivery dates given the unknown potential tariff implications on their products or supply chain. I'll be happy to answer any additional questions on tariffs as best I can in the Q&A section. Okay, now on to running our business and to meet the needs of our customers and shareholders and stakeholders. We have been laser focused on the initiatives we set out to expand our total addressable markets, diversify our customer base, and develop new products, capabilities, and capacity to grow the business moving forward. I'll cover this in more detail, but we believe that the total available market for these target wafer level and packaged part burn-in markets we're addressing this year, plus the added flash memory wafer level burn-in that we're working on, has an addressable market of over $500 million in systems alone, plus another $500 million in consumables and wafer and device handling equipment by 2027. We're excited by the significant progress we've made this year in expanding into new key markets and unlocking new opportunities to attract customers and drive revenue growth, and particularly in diversifying our markets and customers beyond our revenue concentration last fiscal year with silicon carbide wafer level burn-in. Silicon carbide wafer level burn-in accounted for over 90% of our business in fiscal 2024. while this year it's tracking to less than 40%, with artificial intelligence processors burn-in representing over 35% of our business in just the first year. For the third quarter, we had four customers representing over 10% of revenue, and three of these are new customers slash markets for Aehr. Wafer-level burn-in for AI processors packaged part burn-in for qualification and ongoing process monitoring of AI processors, and wafer-level burn-in of gallium nitride semiconductors. If you look at bookings, yet another customer in market, hard disk drive components, accounted for over 15% of bookings. We're very excited about our expansion into new customers and markets, while at the same time, we believe we're well-positioned to continue to grow our business in the silicon carbide wafer-level burn-in market. For AI processors during the quarter, we qualified, received orders for, and shipped the world's first wafer-level burn-in systems specifically designed for AI processors. Our new high-power Fox XP wafer-level burn-in system can test up to nine 300-millimeter AI processor wafers simultaneously. This new customer ordered multiple XP systems and sets of air proprietary wafer-packed full wafer contactors for installation at their OSAT test house, which is the offshore or outsourced assembly and test house. Aehr has worked with this OSAT test house for many years, including working on wafer-level burn-in and silicon photonics devices and optical sensors on our Fox systems and on packaged part burn-in of AI processors and ASICs on our Sonoma ultra-high power test and burn-in systems. Aehr is the only company on the market that offers both a wafer-level burn-in system as well as a package part burn-in system for both qualification test and production screening and burn-in of AI processors. Another new market for Aehr is adding the production side of package part burn-in for AI processors in addition to the processor qualification burn-in. We've now shipped multiple Sonoma production burn-in systems this year to a world-leading hyperscaler for production package part burn-in of their AI application-specific processors, and expect to complete the installations on this initial order by the end of the current quarter. We've also successfully integrated the Sonoma system from the acquisition of NCAL Technology last August into Aehr's engineering and manufacturing operations, which has enabled us to scale our output to two to three times the previous record shipment volume. In addition to AI-related orders and installations for wafer-level burn-in and packaged part burn-in this quarter, Aehr achieved several other key milestones. We expanded into production wafer-level burn-in for gallium nitride power semiconductors. We secured our first high-volume production orders for the new wafer-level burn-in in hard disk drives. We completed production qualification of our new high-power multi-wafer system for wafer-level burn in the silicon photonics devices used in co-packaged optics and optical I.O. devices, and we made significant progress on proof-of-concept work with a leading flash memory supplier on a new wafer-level burn-in system for high-volume production of next-generation flash memory devices. Let me expand on each of these for just a moment and then come back to silicon carbide. I believe our most significant achievement so far this year is the successful validation of our new high-power Fox XP wafer-level burning system, which can test up to nine 300-millimeter wafers simultaneously with a power output of up to 3,500 watts per wafer. The key lies in delivering thousands of amps of current to and from each wafer while maintaining precise voltages and thermally controlling these wafers to prevent thermal runaway. We achieve this by running bidirectional logic and memory test patterns on each device, ensuring accurate burning conditions and traceability, including reading device IDs and on wafer temperature sensors for every device. This customer has told us that they're very excited about our system and that no other product on the market has the capability or capacity to test their wafers like our system. They've ordered multiple Fox XP systems and sets of air proprietary wafer pack contactors and have already completed the first system installation and will complete the installations of all of the systems from this first order this quarter at the customer's OSAT, one of the largest OSATs in the world. As I mentioned, Aehr has worked with this OSAT test house for many years, including working on wafer-level burn-in silicon photonics devices and optical sensors on our FOX systems and on packaged part burn-in of AI processors and ASICs on our Sonoma ultra-high power test and burn-in systems. We believe that allowing customers to test and burn in their processors at the wafer level before packaging them into multi-chip arrangements with other processors and memory adds significant value. We're confident that we're not only years ahead in this technology, but we also hold critical IP and patents around the world to safeguard our wafer level burn-in technology and solutions. The cloud accelerator semiconductor market is experiencing explosive growth. UBS estimates that revenues in 2024 will exceed $120 billion, and the market is growing at a CAGR of over 30%. These devices are currently burned in almost entirely at the system level, where a failed device during burn-in is significantly more expensive than at the wafer level. It is not just the cost of the advanced packaging that matters, but also the expense of co-packaged memory, as well as customers shifting to multiple processors within the same package. An annual capital test budget of 2% to 5% of revenue is typical in the semiconductor testing industry, implying a budget of $3 to $9 billion for overall testing in 2024. The potential for a solution that can do test and burn-in screening of devices while still in wafer form is remarkable, and Aehr is the first and only company in the world to demonstrate and successfully achieve this for production burn-in at the wafer level. I'm very proud of our team for this achievement with AI wafer level burn-in. Simultaneously, the finance, R&D, and manufacturing teams did an incredible job integrating NCAL technology into Aehr. Within months, they ramped up production to levels that NCAL may never have been able to reach to meet the demand from AI processor companies for the qualification and production of their devices. Aehr has shipped more NCAL package part burning systems in the past nine months than NCAL had shipped in the previous three years. Great job to the combined team. Let's keep it up as we ramp these new customers into volume production with these systems. We're also already developing multiple enhancements to increase power, cooling, parallelism, and add automation to meet the needs of the AI processor market in the future. I'm very pleased with the customer feedback on these enhancements so far. We also shipped our first Fox XP high-power multi-wafer production system with high voltage to a world-leading gallium nitride power semiconductor supplier this quarter. The system is installed and configured with our fully automated integrated wafer pack aligner, which can test 6-inch and 8-inch wafers and can even be configured for future 12-inch or 300-millimeter GaN wafers. While the system is installed for volume production of GaN devices, It is also configured to test silicon carbide wafers in the same system by simply changing the wafer pack for wafer contactors. GaN is a new and exciting semiconductor technology with high value applications such as automotive power conversion, solar inverters, and solid state transformers and breakers. We're thrilled to have been selected as the production solution for this company, which is one of the largest suppliers of power and automotive qualified semiconductors in the world. Another exciting market opportunity we're making significant progress on is the hard disk drive market. This quarter we received orders for multiple Fox CP single wafer production test and burn-in systems with an integrated high power wafer prober for the burn-in and stabilization of new devices and hard disk drive heads. We're excited to finally start this production ramp after several years of working with this company on qualification and process development. This order arrived later than we expected However, the customer is requesting shipment of all the systems as soon as possible and has already requested a forecast from when we can ship additional systems. Lastly, I want to update you on our flash memory proof of concept project that we've been working on this year. As noted in earlier calls, we're collaborating with one of the world's leaders in flash memory to demonstrate the capability and cost effectiveness of our Fox XP platform for high volume production testing and burning of flash memory wafers. Our goal has been to demonstrate this over the next quarter, and we're on track. We're setting up the test cell and new wafer packs with a high-density, fine-pitched probe head during the upcoming month. This is very exciting, as we believe Aehr has the ability to successfully demonstrate how we can achieve a high-density, high-power, and fully automated test cell, enabling us to advance to the next development phase. That next phase involves collaborating to develop a next-generation test system specifically tailored to meet this customer's needs and future requirements. Stay tuned for more updates on this demonstration and the potential for the NAND wafer-level testing and burn-in market. To provide perspective, the NAND market in 2025 is expected to exceed $80 billion U.S., according to Yole Group. Again, using the 2% to 5% rule of thumb for the budget for overall testing of semiconductor devices annually translates to a capital and expense budget in 2025 of between $1.6 and $4.2 billion. Another way of looking at it is that a 1% yield improvement on the $80 billion market amounts to $800 million. New technologies in NAND are driving new requirements for wafer-level burn-in to address the manufacturing and negative yield implications of testing these NAND devices in package or system level test. It's easy to see why the potential for the market for wafer level burden for NAND is substantial. Okay, so now let me close with silicon carbide wafer level burden market. The silicon carbide market continues to be a large opportunity for Aehr, and as I noted earlier, we believe we're well positioned to continue to grow our business in this market. Recently, we've noticed some signs of improvement in the utilization rates of our installed base of wafer-level burn-in systems for silicon carbide. Demand for silicon carbide remains significantly driven by electric vehicles and has even further strengthened its presence in EV market due to lower prices and better supply availability. Battery electric vehicles are still expected to be over 30% of all vehicles shipped in 2030 worldwide. Simultaneously, silicon carbide devices are gaining traction in other markets, such as power infrastructure, solar, and various industrial applications. According to market research firm Yol Group, despite a temporary slowdown in battery electric vehicle shipments, the silicon carbide market continues on a robust long-term growth trajectory. Yol projects that the power silicon carbide market will exceed $10 billion by 2029 and driven by a strong rebound expected in 2026, along with a compound annual growth rate of nearly 20% from 24 to 29. In response to this growing demand, we've expanded our wafer-level burn-in offering for silicon carbide to support high-voltage testing across up to 18 wafers on a single system, doubling the capacity of our industry-leading 9-wafer Fox XP system. We've already received our first order for this 18 wafer high voltage system as an upgrade to a customer's existing Fox XP configuration. This enhancement further strengthens our technical and cost advantages for silicon carbide testing and is also highly applicable to high volume production of GaN devices, an important capability for customers working on both types of wide band gap compound semiconductors. Now, here's some more details mentioned, I would say, on our available market assumptions. According to market researcher verified market research, which aligns with air internal forecast based on customer and other data from YOL, UBS, and other market forecasters, the burn-in test systems market for semiconductors is estimated to grow from approximately $750 million in 2024 to over $1.2 billion in 2030, a CAGR of 9%. This is for systems alone, not the consumables, such as our wafer packs or bibs, or handling equipment, such as our aligners, probers, or autoloaders for package part burn-in. Historically, semiconductor burn-in consumables are up to three times the annual spending on burn-in systems. By 2027, the burn-in systems TAM is forecasted to be $1 billion, and we estimate that just For the new systems purchased in 26 and 27, the consumables and handling equipment are at least another billion dollars. In this TAM are AI and high-performance computing processors, other microprocessors, DRAM, flash, optical, and compound semis. DRAM and MPUs are interesting in that the top MPU company and one of the top three DRAM companies make their own burn-in equipment. So this is not included in the system TAMs. With the introduction of our new products in compound semi, optical, both wafer-level and packaged for AI and high-performance computing processors, and our target to enter the flash wafer-level burn-in market, Aehr addresses over half of this TAM. We believe that we can address over 500 million of this TAM in 2027 for systems alone. And since Aehr provides turnkey solutions for handling and consumables, We address another $500 million annually for a total of a billion-dollar TAM. The largest portion of this is clearly the AR market, followed by the flash market, with GaN and SICK, silicon photonics, and hard disk drive optical devices rounding out the total addressable market. Obviously, we're very excited about all of these opportunities for growth. Now let me close it out and hand it over to Chris. Looking ahead, with our $45 million in revenue, and $22 million in backlog to date this fiscal year, our customer forecasts, and our success in adding new markets and customers, we feel very good about our business. We've already surpassed $66 million in combined revenue and orders this fiscal year. Currently, we do not believe that the impact of the tariff announcements made by the U.S. administration this week will significantly affect Aehr directly. However, considering the secondary effects on our current and potential new customers, along with the uncertainty this quarter regarding possible delays or pauses in customer orders, shipments, or supply chain delivery delays or impact, we're temporarily withdrawing our guidance for this quarter slash fiscal year, which ends May 30th, and we'll reassess our guidance policy as clarity develops. We're encouraged by the increasing number of engagements with both current and potential customers, as well as the long-term growth potential across our diverse target markets. Our strategic expansion in the high-growth sectors, including artificial intelligent processors, gallium nitride power semiconductors, data storage devices, silicon photonics integrated circuits, and flash memory, opens up new opportunities to attract customers and drive revenue growth. With that, let me turn it over to Chris, and then we'll open up the line for questions.

Chris Tiu | Chief Financial Officer

Thank you, Gayn. Before reviewing our financial results, I would like to provide an update on the integration of our in-cal acquisition, which closed last July. Our plan to consolidate personnel and manufacturing into Ayer's Fremont facility is progressing well, and we remain on track to complete the integration by the end of this fiscal year on May 30th. As part of this effort, we have upgraded water and power systems and added new clean rooms to our remodeled Fremont headquarters to ensure the infrastructure supports the needs of both organizations. We'll be shutting down the in-cal facility no later than the first quarter of fiscal 2026. Since the acquisition, Aehr has committed significant financial and human resources to successfully integrate in-cal into our operations. We have completed the migration of in-house financial, HR, and manufacturing functions into AehrS systems. In addition, we have finalized the transfer and documentation of all product designs, source code, and work instructions for assembly and test into AehrS release processes. I want to extend my sincere thanks to both teams for the dedication and outstanding execution throughout this integration. Turning to our Q3 performance, which included a full quarter of the financial results from the in-cal acquisition, our Q3 results exceeded the analysts' consensus on both the top and bottom lines. While we faced a challenging environment marked by continued softness in the silicon carbide power semiconductor market, we were encouraged by our success in penetrating the artificial intelligence market, with AI processors burning now representing over 35% of our business this year. During the third quarter, we had four customers representing over 10% of total revenue, and two of these customers are new customers that target AI market. Revenue for the third quarter totaled $18.3 million, a 142% increase compared to the $7.6 million in Q3 last year. This significant year-over-year revenue growth was driven primarily by the shipments of our new high-power FoxXP solution, for wafer-level production tests and burning of AI processors delivered to our first AI processor customer, which we announced in December. In addition, we're pleased with the significant progress we've made integrating products from our acquisition of InCal into our product portfolio to address the AI market opportunities. System sales from our Sonoma, Tahoe, and Echo package part burning products made a strong contribution to our third quarter revenue. We believe our strategy to broaden AehrS offerings and diversify beyond CconCobb applications is beginning to show positive results both operationally and financially. WaferPak revenues were $5.9 million, accounting for 32% of our total revenue in the third quarter, a decrease from 63% in the same period last year. The company recognized bookings of $24.1 million in the third quarter of fiscal 2025. compared to $9.2 million in the second quarter of fiscal 2025. Our backlog at the end of the quarter was $18.2 million. Since the end of the third quarter of fiscal 2025, we have received $3.6 million in additional bookings. With these recent bookings, our effective backlog now stands at $21.8 million. Non-GAAP growth margin for the third quarter was 42.7%, compared to 42.5% in the same period last year. the overall change in gross margin was flat, primarily due to a much higher overall revenue level than in Q3 last year, offset by a less favorable product mix and one-time items. Even though our revenue in the third quarter was much higher than that in the same period last year, our non-gap gross margin was lower than expected due to certain one-time charges to our cost of revenue. After we upgraded our ERP from our legacy system to Oracle NetSuite, Our new ERP allowed us to account for standard costs in inventory more precisely and revised certain accounting estimates, which resulted in a one-time charge in the third quarter. Additionally, we incurred high manufacturing overhead due to under-absorption as we had lower utilization of our manufacturing capacity due to the renovation of our Fremont manufacturing facilities. Non-GAAP operating expenses in the third quarter were $6.3 million, reflecting a 34% increase from the $4.7 million in Q3 last year. This year-over-year rise is primarily attributed to the inclusion of in-cows operating expenses in our financial results, along with higher legal and professional service fees. We anticipate incurring additional legal expenses in the upcoming quarters as we strive to protect our intellectual property rights in China and defend against the class action and derivative complaints in the United States, which we believe lack merits. Non-GAAP net income for the third quarter, excluding the impact of stock-based compensation, acquisition-related costs, the fair value adjustment to inventory related to the acquisition, amortization of intangible assets, and the accelerated severance benefits paid to an executive, will pass away unexpectedly in December. was $2.0 million, or $0.07 per diluted share. This compares to a non-GAAP net loss of $888,000, or negative $0.03 per diluted share in the third quarter fiscal 2024. Turning to our balance sheet, at the end of Q3, our cash, cash equivalents, and restricted cash totaled $31.4 million, down from $35.2 million at the end of Q2. During the quarter, we used $1.6 million in operating cash flows primarily to pay our supply and service providers. We have no debt and continue to invest excess cash in money market funds. In the third quarter, we earned $270,000 in interest income. As Gabe mentioned, considering the secondary effects of the tariff announcements on our recent and potential new customers, along with the uncertainty this quarter regarding possible pauses or delays in customer orders, shipments, or supply chain delivery delays. We are temporarily withdrawing our guidance for our current fiscal 2025 year, ending May 30th, and we'll reassess our guidance policy as clarity develops. Looking ahead to fiscal 2026, we are encouraged by the growing number of engagements with both current and potential customers. as well as the long-term growth potential across our diverse target markets. Our strategic expansion into high-growth sectors, including artificial intelligence processors, gallium nitride power semiconductors, data storage devices, Zircon Photonics integrated circuits, and flash memory, opens new opportunities to attract customers and drive revenue growth. Lastly, looking at the investor relations calendar, Aehr Test will be participating in two investor conferences over the next couple months. We will be meeting with investors at the Craig Hallam Institutional Investor Conference, taking place in Minneapolis on May 28th. And we will be presenting and meeting with investors on June 3rd at the William Blair 45th Annual Growth Conference, taking place in Chicago. We hope to see some of you at these conferences. This concludes our prepared remarks. We're now ready to take your questions. Operator, please go ahead.

Operator | Conference Operator

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star 1 if you have a question or a comment. Our first question comes from Christian Schwab with Craig Hallam. Please proceed. Craig Hallam\ Hey, guys. This is Tyler on behalf of Christian. Thanks for letting us ask a couple questions here. So maybe first to start on the tariffs and the uncertainty here, I guess any color on which end markets you are seeing maybe the most potential impact or most potential uncertainty being caused on the near term here?

Gayn Erickson | President and Chief Executive Officer

I think we certainly prepared lots of different things. That's a good question. No, it's not markets. Sometimes it's more customers and geographies, right? So in this case, I'll give you one example. Our hard to strive customer has systems that are going to be going to a location outside the US. It includes a prober. We basically worked with a supplier that developed a high-power prober specific for this requirement. Prober companies are out of Japan or Korea, basically, without saying which one it was. They both are currently subject to a tariff. If that prober landed in the port tomorrow, it's going to get hit by a tariff. If it lands Friday, it may not. And so I think people are like, well, let's wait and see what happens. I mean, because I don't think anybody believes that if you write a check for the tariff, you get it back necessarily. Now, having said that, we're also looking at tariff drawbacks, which is basically a process by which historically with duties, you can, if we import something to assembly and then export it out, you can actually recover that up to 99% of it or so, although there's some people saying that the people that help you with that get a cut. So we're working through that as well. Now, in the meantime, I'm going to drop ship the probers directly to that customer past the first one. So the very first one is being impacted by, which is kind of the over-under, Unlike with respect to the end of our fiscal year, because we're going to do some integration of it here. We may even have to relook at that. So it's that sort of tactical thing. And, you know, give it a couple of days. We're what, three days in where Chris and I were saying, could we have another week? Let things settle out before this call. Again, a lot of the material we have, we have already on hand. It will never be subject to any tariffs. I guess, unless we ship it out to someone who then increases their tariffs. Last night I went to bed thinking that Europe was going to come back and raise their tariffs. Today they wake up and they say zero for zero. So, you know, it's kind of hard to look at it. And honestly, we're not, I don't think anyone's so desperate to try and solve these things in the next couple of weeks either, if you look at just schedules. And so I think we can manage through this. And then even then we start looking at material in many cases because, remember, our inbound material tariffs are on the material. We then, of course, have a markup or margin to ship it. And so a tax on the material of 10% is not a tax of the price. Does that make sense? So we kind of walk through that. I would say that there's not a specific market, you know, Obviously, China is its own challenge in that, you know, I think they came back and said it's 104% starting tomorrow. We actually have, if you specifically look at kind of risks related to China, just a couple of things. Aehr has basically had no revenue shipments into China for the last few years. That includes both our wafer-level stuff and the in-cow products. So... you know, we're not depending upon shipping a lot of revenue into China. That's not been the plan. And, you know, so if China comes back and says, you know, we're going to halt shipments or we're going to double the tariffs or whatever, it doesn't really affect us right now. Similarly, we have been pretty happy and proud that we almost do nothing in China from a supply chain perspective. I've said that in previous calls. We actually have some things like Blank printed circle board fabs, but not the assembled ones. And so it's pretty simple. And we have secondary suppliers for that just from a risk perspective. We continue to buy from them because the landing costs made more sense, but we also can supply it out of several other countries. we wake up and like, which country should we supply it from? It's like, give it a day. So there's a little bit of like settling out on this. And that, again, isn't even so much of the cost implications to margins as potential supply chain risks. What if, you know, they put that in a crate, it's shipped over here and it gets stuck in customs because people are trying to figure out what country it came from and on what day did it come in because that's the tariff it's applied to. So we're actually doing things to try and avoid anything coming into U.S. for customs in the near term. Not even so much for tariffs, just simply don't cluster, you know, have it get cluttered up and then you have it in the wrong place. We can redirect things. We have things, we have supply from material and subsistence from all over the world. they can drop ship directly into a customer internationally. We don't even have to worry about any of this stuff. So, you know, we have the infrastructure, we have the ERP systems, we have the legal entities that we can do that. And candidly, we're kind of proud of that supply chain customer. You know, I mean, with the China COVID thing, I think everybody had to take a look at it. We actually were also quite immune from anything during COVID. But, you know, this has been an important thing to tell your customers. What happens if such and such happens? We've said, you're not going to miss a shipment. We're going to be okay, right? So it's kind of an important thing to note so people understand it. But at the same time, we can't answer everything. Remember, May 30th is, what, seven weeks away. I mean, we're like, and as you know, your plus or minus one system on ours can move the bar. So that's why we just pulled the near-term guidance. Craig Hallam\ Alright, I appreciate that. That's a bunch of really great colors. So I guess following up on that then, you know, giving those comments, uncertainty around additional orders and, you know, timing of, you know, when customers might demand shipments. You know, you had $18 million in backlog X in the quarter, $22 million effective since then. Would it be reasonable or, you know, erring on the conservative side, at least a reasonable to think that you probably won't even ship all the backlog you currently have on hand in the quarter? Or is that not a great way to think about it?

Gayn Erickson | President and Chief Executive Officer

One of the keys is if we're going to say we're not going to give guidance, we can't really give guidance. But nevertheless, let me still answer that directly. For sure, some of that backlog is not going to ship this quarter because it's multiple systems for the hard disk drive guy. And we were only planning to maybe ship one of those. We said that last quarter. So the over-under right now is one, maybe a second one for this quarter, but not all of them. So some of those are already planned for the... The interesting thing is we have multiple customer forecasts for things to ship this month or this quarter that they haven't ordered yet. And you're like, okay, is that going to happen? Would that happen and I can still turn that? Some of it we have material on hand and some of it is stuff that's inbound. So... I'd love to tell you it's that simple. And if it was, I'd probably just give you a new guidance, but it's sort of, you know, there's, there's kind of upside and downside to all of this. So, um, I apologize for not being really clear. I think the important thing is, you know, if we, okay, we miss it, we miss it by a little, whatever, or we're, it's going to be close. It might chip on, you know, the next week. That's the, that's the thing that's really can be very scary as a public company, right? If they're private, I wouldn't even worry about it. I'm only worried about the customers getting their shipments, getting to them on time. You know, but plus or minus one day on my 30th is a big deal to us as a public company. So this is more, you know, the things I'm talking about here, this is just timing stuff, we think. This is more timing things. I don't think, you know, the customers that are already buying, they've taken, you know, in some cases six months, you know, to a year to qualify. I mean, if you look at the GAN customer, the hard disk drive customer, this AI customer, the package part burn and AI customer, we've worked with them for over a year. They're fully qualified. They're committed. Now the question is, how do we make sure that they, you know, they can get the equipment on time with the least duties or tariffs at all possible? Craig Hallam\ Okay. All right. I appreciate that. That's great. If you think of another one...

Gayn Erickson | President and Chief Executive Officer

If you think of another one, Tyler, you can always come back too. Go ahead. What's the next question? Sorry. Craig Hallam\ No, let's move on past the tariff. So as we think about next year in growth, you've diversified your revenue nicely away from silicon carbide. Maybe at least rank order, it sounds like silicon carbide is expected to continue to recover. We would expect to see growth there, but maybe AI is going to be the primary growth driver as we look out the next year or two. Just any color kind of rank order and where you expect to see the growth from your more diversified end markets?

Gayn Erickson | President and Chief Executive Officer

Yeah, I mean, we're feeling really good about next year. I mean, there definitely is evidence that silicon carbide will kind of get back to capital equipment growth and putting more capacity in place. We're also seeing a shift from low voltage gate to high voltage testing. something we've done by working with several of the OEMs, the actual EV suppliers, for quality that they're driving to their customers, which drives them towards us, that even if they have equipment, they may need to upgrade it. That also turns into wafer pack revenue. So we think we can see revenue from our current installed base in both wafer packs and system upgrades, but then also incremental capacity. And there's still a few customers that effectively selected us, if you will, and haven't bought their first systems because they've delayed some of their fabs, that YOL is saying they will start to turn on in 26. And 26 is, when they say it's calendar, my fiscal 26 starts June. So, you know, some of that capacity may be second half, but we feel some of this already in our first half or second half of 25. Our fiscal year has kind of messed people up. Let's see here. GAN, we're pretty excited about that. There's some, you know, we have done a large number, I mean, a good number of designs that have been qualified into automotive industrial applications. They're now just going into production. So we've kind of got our fingers crossed related to that around their capacity and their needs to grow. And we're talking with several other customers We've actually heard our silicon photonics customer is talking now about ramping this year. And that's with the very high power. Remember, we upgraded their fleet to the extra high power system, which needs new wafer packs and needs new system upgrades. That's encouraging because of all the stuff that's finally going on around the silicon photonics side. But I think we think that the package part burn and qual is going to continue to grow. There's a lot of new devices coming out with higher power that's going to drive demand. And then burn-in, the production side of it. So the production burn-in, we're seeing our first customer ramp. It's in a very visible OSAT. And we're literally shipping all the systems. We finish it this quarter, and then they start their first ramp. We think they'll need more systems. We're also working on some enhancements. I don't want to get ahead of myself here in too much public, but we're working on some automation and some very specific things in the capability to add to that package part burn-in and have been communicating that to the customers and the OSATs right now. And I'm very hopeful and encouraged by the feedback that could drive more and more production burn-in to our systems with full automation with the Sonoma line. And then lastly, but honestly, maybe most impactful is what's going on with the wafer level. That first customer is expected to ramp. And we already have inbounds from other people. People are really leaning in to understand what do they need to do? What testability modes do they need to add to their wafer? How can they do this? Because The implications of being able to weed out the failure of that processor before you stick it into a large package with co-packaged memory, optics, and other processors is huge. That could be some of the most exciting stuff that's going on. Flash memory, actually, we're spending a significant amount of R&D money this year. We're spending our money, I say our as collectively as shareholders, it's a great investment. We're going to need to invest even more next year in developing the test solution to go in that. Maybe we could get some revenue at the end of the year, but this is really a early 27 is what we're thinking in terms of the timing. That's why I use those TAMs around 27 to kind of capture. At that point, we would hope to have flash memory revenue, wafer-level burn-in across more than, you know, hopefully several or more customers, package part burning across several customers, silicon carbide hitting, GAN starting to ramp, and the hard disk drive just, you know, continuing to buy along with silicon photonics. Craig Hallam\ That's great. All right. That's all for us. Thanks, Gabe.

Okay. Operator | Conference Operator

The next question comes from Jed Dorsheimer with William Blair.

Please proceed. Jed Dorsheimer | Investor, William Blair

Hi, thanks for taking my question. So, Gane, you know, I don't want to ask you a bunch of questions you don't want to answer. Just, I guess, first one, just on the balance sheet, I'm curious, AR, your accounts receivable jumped up quite a bit. Is that just from INCAL? Is there a change in terms? Could you just talk about what was going on there? Because I saw that positively inventories actually came down while revenues grew. So I'm just wondering about the receivables seem to jump out. And then I get a follow-up.

Chris Tiu | Chief Financial Officer

Yeah. So we also have an unbilled receivable in our receivable balance that we were able to recognize revenue but cannot bill yet. But I think by now we have sent out the invoice at this point.

Gayn Erickson | President and Chief Executive Officer

AR, it's called shipments towards the last month of the quarter. Not atypical of that. I think that was it. I think we may have had a special term with one of the customers with respect to billing at final shipment or something on the first tool. A couple of those things. I wouldn't read too much into it. Over time, and I want to Be sensitive to this because we have customers listening as well. We do do down payments under most circumstances. Sometimes with short lead times and things like that, we will work with the customer. Billing them 30% and then two weeks later hitting them with the other one sometimes isn't most optimum. We try and be balanced on it. But in general, we want to make sure that customers have skin in the game when they're placing the orders on these systems. And so there's a little of that. But yeah, there's no flags, no nothing.

There's nothing there. Jed Dorsheimer | Investor, William Blair

Okay. And then just on that, the AI on the processing side of things and burning, I was wondering if you could go through the value proposition and a little bit more granularity. And what needs to be achieved for this? Has this gone from R&D to commercial level or Or do you feel like there's still, you know, even though the size and scale of the orders might be, you know, commercial size compared to that of silicon carbide for these customers, do you feel like it's progressed more, you know, that it's gone beyond and you're, you know, what are you looking at to get the determination that, you know, okay, we're going to start ramping on this in a durable way.

Gayn Erickson | President and Chief Executive Officer

All right. So, Jed, I think I understand it. Let me try and answer it while repeating the question a little bit along the way. So, if the question is, is this sort of like an NPI prototype, you know, like a trial run, and they haven't really worked, you know, that kind of thing? That's not the case. So this customer, and we've alluded to it before, and we have to be somewhat sensitive to what's known publicly and what they've said. And yes, we have not identified who it is yet, okay? But what we have said is that they were doing, which is very similar to a lot of other AI guys, they were doing this burn-in at what's known as system-level test, okay? So this is very late in the process, basically damn near at the product side of things, okay? And the problem with doing it at system level test is that, you know, it's very late in the process and any processing implications, et cetera, and you have to use a much more different and sophisticated piece of equipment or the equipment itself to burn itself in to actually find these failures. The other challenge is, is that In a system-level test, you often have this memory or this processor coexists. And I'm going to be a little careful about too much detail on this because people are all trying to figure out, what kind of AI processor is it? We hope to come much more public with it. The customers talked about doing that. But it exists with other things, memories, infrastructure, heat sinks, power supplies, and all this. Burn-in... you know, I know a lot of people understand is what it sounds like. You basically are heating it up and you're actually adding more power to it to stress the device to a point that it'll weed out infant mortality or weak devices. You do not want to break it, okay? So the trick is to try and get it right to the edge to accelerate this stress test to weed out things as short a time as possible, okay? And generally speaking, the more power you put in and the more heat you put in, the faster you can do it. If you put in too much power and too much heat, you wreck the part, right? Now, so it turns out each device has a different optimum spot. Flash memory is like 85 degrees. DRAM can be 105 degrees. A microprocessor is 125 degrees. Silicon carbide is 140 degrees. They're all at different numbers. If you put them all into the same package, and I'm not saying you put silicon carbide into that package, but let me throw in silicon photonics. There's actually two burn-in temperatures for it. You do one process at one temperature and one at the other for ideal. Now stick them all into a large package. What are you burning in at? It's a problem. So if you were to put it in an oven... and you burnt in the processor 125, you could wreck the DRAM. You certainly can't bring the processor to 140 degrees like you do the silicon photonics device. So what you do is you bring it to the lowest common denominator. But here's another problem. That system is not designed to be run hot. The whole point is it's being run cold with big heat sinks and water cooling. Think of all the stuff that's going on in these racks. So it's normally trying to run at 30 degrees, and I use centigrade. Sorry for everybody, you know, a little bit more room temperature, right? That's what you are trying to run it at. But when you burn it in, we're running it at 125 degrees centigrade, 25% more than boiling water. OK, you can't do that with a system. You would ruin everything. You'd ruin all the printed circuit boards. You'd wreck all the memory. The power supplies would all die. That's not good. So you burn it in way lower temperature, maybe 60 degrees. Well, if you do that, then the burning time is like 10 times longer. So if you actually move it to the wafer level, I can burn in your memory right within a few degrees or 125 degrees. and keep it from going in a thermal runaway. That minimizes the burn-in time. I perfectly optimize that, and you take that device, and now when you put it in the system, it will not fail. It's a big deal. It's a really big deal. And by the way, like on our package part burn-in systems, which we have, one of my favorite things is I have a front row seat. On the Sonoma systems, we're testing these packages, and we're testing the memory stacks in there and the processors and the chipsets. And we have to actually test those at different conditions. It's a very interesting challenge, but it's way more effective if you can break it down and do it at the wafer level. But until now, no one has ever even imagined doing that. And we now have the technology with the power, the power supplies, the capability, the JTAG and M-BIS patterns and functionality and read and write capability to actually test these things at a wafer level in a cost-effective way. that's a real alternative to doing system-level test or a package-level burn-in test. And by the way, if you want package-level burn-in test, I'll sell them to you all day long with my Sonoma systems. Okay, hope that helps.

Jed Dorsheimer | Investor, William Blair

It does. What's the stability of the power over that duration? That seems like it would be a critical feature in terms of within a tight tolerance.

Gayn Erickson | President and Chief Executive Officer

Yeah, some of the many tricks and the keys are being able to actually regulate and drive power to each device on the wafer individually. Now, that doesn't seem intuitive, right? In traditional package port burn-in systems, like those from our competitors, they have bulk power supplies that supply to each of the devices all with the same voltages. They achieve a parallelism by actually trying to share all that That didn't work very well because each of the devices need a different voltage. Sonoma, one of the greatest things about it as a package-part burn-in system is we can individually program the power for every device that's being tested. We'll actually read an ID in the device, come back, adjust our power, and tune it for that device for an optimum burn-in. That's an amazing thing that people don't have in package-part burn-in that we do in Sonoma. We're doing the same thing at wafer level. OK, so and there's more tricks and I'm just not going to do them publicly. There's other things that we've done. In fact, there's some patents you can go and find that we've done by that we can implement in our wafer level burning system in our wafer pack that you just can't do in a normal wafer probing environment either that allow us to be able to test these devices. But it's it's pretty fun talking with the customers because they kind of light up as you talk about what you can do. And they're like, wait a minute, I've never even thought of that before. I'll give you one other hint, okay? One of the reasons everyone says this will never work at wafer-level burn-in is because these devices might, you know, one core might take 100 amps. Maybe it takes multiple 100 amps, okay? So what you do is you have a 100-amp power supply, and you run it through a probe card, and the probe card needles can only do maybe a half an amp or 50 milliamps, I heard somebody say the other day, okay? And then, so I have to put 100 of them in parallel, whatever the math is, sorry, I'm always tough online like this, to get you to 100 amps, okay? Or 1,000 pins to get to 100 amps with this. What happens if that section of the device fails and shorts? It'll ruin your probe card. So when people, when we first engage them, they're like, this is absolutely impossible because every wafer I have a device that shorts in the middle of the burn-in And it's going to ruin your probe card. And we have features in our wafer-level burn-in systems that prevent it from doing that. We've not burnt one pin yet. We've been working on this AI with this customer at wafer-level burn-in for nine months. We've not burnt one pin, which is crazy. People are like, I don't even understand how you do that. So there's some cool things about it that are just not intuitive. that are as differentiated as anything, and we're excited about it.

It's a fun market. Jed Dorsheimer | Investor, William Blair

All right, well, listen, that's it for me. I'll jump back in queue. Thanks, Gayn, for the additional color.

You're welcome. Operator | Conference Operator

Okay, the next question comes from Larry Shlebina with Shlebina Capital.

Please proceed. Larry Shlebina | Investor, Shlebina Capital

Hi, Gayn. When was the first AI processor XP developed? Let's see, was that with the auto aligner? When was that up and running at that OSINT?

Gayn Erickson | President and Chief Executive Officer

That's a good question. We had it up and running here first. As those that have come and visited us, they know we have these test cell labs, which we're upgrading. And we were actually shipping wafers out of our facility here. It's now up and running, the first one, and we'll have the rest of them all completed this quarter, whatever, in the next few weeks here.

Larry Shlebina | Investor, Shlebina Capital

But it was running at the OSAT when?

Gayn Erickson | President and Chief Executive Officer

We haven't. All we've said is it's up and running now.

Larry Shlebina | Investor, Shlebina Capital

All right. Hey, Chris, I've got a quick question. What was the package part revenue in Q3?

Chris Tiu | Chief Financial Officer

Package part in Q3? Let me look at it right now. Q3 is... Well, in the past, we only disclosed it in the EN, but... I would say... Let me say this. I would say more than 20%.

Larry Shlebina | Investor, Shlebina Capital

Okay, more than 20%. It's going to be in the Q1. That's all right. Hey, again... Is there any product launch on your Flash customer that they're particularly wanting to use your systems on? I know this is an enterprise application. I see these big SSDs coming up later this year that they have like 123 terabytes of data capacity on it, which if you do the math on it, they consume with a decent yield Each one consumes like a wafer and a half of NAN just to stuff into that two-and-a-half-inch form factor SSD. Is there a product like that that's – they're interested in using your system to improve the yields? Because obviously they're stacking a bunch of dyes. Is that the motivation?

Gayn Erickson | President and Chief Executive Officer

Okay. I'm going to – Boy, this is three in a row we're answering a little bit indirectly. I just want to be a little careful of customers. But we talked to multiple. There's not that many NAND customers. And we have not talked to every single one of them for some geographical obvious reasons. But we've talked to several of them. And there is a general theme going on with those customers and with the industry if you watch what's going on. And that theme is so a couple of things. In general, revenues are growing. They were down last year and the year before, and they're growing again. But wafer capacity is not. So there's not a lot of NAND fabs that are coming online. And the capacity may be going to higher utilization, but the bits are exploding. So what that means is that there's more and more density per wafer. As you do that, the test methodology is, is either going to increase in test time or you're going to need to increase in power to address it. The other thing that's going on is there's multiple kind of technologies out there that like stacked or not stacked, that's the wrong word, layers. So the NAND layers are going to hundreds of layers, which are just basically, when I think of like a high-rise building, there's a lobby floor and then there's floors above. The lobby floor may have the logic on it for the interface, And the floors above are what store all of the information, okay? Now, some people might say the IO is on the top, but don't go into that. This is on one device. Then they take those devices and they stack them together into a package, like you said, with an SSD, okay? So one of the things that's going on in the memory itself is the die are actually getting taller, right? And to hit the right things, the footprint, the XY footprint is getting smaller, which means the die count on a wafer is getting up. So the way they're getting density is they're shrinking. They're getting the die, the footprint of that building to be smaller, and they're making it taller. And that's how they're getting more out of a wafer. But that's causing problems with respect to parallelism and power, which is a key thing that would be driving our new requirements. Now, the other thing that's going on is this thing around hybrid bonding. And this is the first time I've talked about this on a call, okay? But on the hybrid bonding, there are several people out there that are introducing products that are coming up over the next year or so. What they do is they make that lobby floor, the logic I.O., on one process wafer, and then they make all the buildings or the floors that hold all the data on another wafer. And then they actually glue them together with a hybrid bond. When they do that, they can actually make the lobby floor smaller and faster because they can use a CMOS technology that will work without it. That'll still that because they don't have to make a memory cell out of it. Then they take a different technology that is good at memory cells that is lousy at lobbies or the IO speed, and they can make those taller and So now I can make the building taller by separating the NAND cells from the lobby floor I.O., and I just have to glue them together. And I say glue, fancy. There are people that do this for a living, but it's a hybrid bonding process similar to TSV bonding when you think of some of the other things that are going on in the world.

Larry Shlebina | Investor, Shlebina Capital

If you do that... Your system would be for the flash, for the NAND component of that, right?

Gayn Erickson | President and Chief Executive Officer

And or the combined combination of it, et cetera. So there's some, I don't want to get into too much of it, but there's technological things that are breaking the infrastructure. And those are the opportunities to get in because it's not that someone's throwing in a new fab. Make sense? Yes. and why would you want to go build a bunch of new equipment for that? So that's the message I want to get across, and that provides an opportunity for things to be disruptive enough to actually change the way your process is doing. And it's not just one company. Ultimately, it would be all of them.

Larry Shlebina | Investor, Shlebina Capital

I was just looking at one of those SSD drives and the amount of NAND that they consume. You know, for a reasonable expectation on sales of those drives, you work that number backwards and it seems like they would need something like $70 million worth of your equipment just to process those wafers in order to improve the yield that they get as they stack all those dyes on top of each other into that small package.

Gayn Erickson | President and Chief Executive Officer

Yeah, that was where I was going within the in the prepared remarks that, you know, and I did not trying to get, you know, there's a couple of different ways of cutting this thing. But if you're spending 80 billion, if you're incrementally selling 80 billion dollars a year of NAND and the process is technology is changing to allow you to be competitive, to get more bits, to do whatever. what kind of spend would you be doing? It's interesting if you're saying that you're not necessarily spending it all on new capital equipment, your test budget might be bigger. So being able to spend $80 million, as you said, that's not at all out of reason.

Larry Shlebina | Investor, Shlebina Capital

That's pretty astounding that one customer, one flash memory customer on one product could require that kind of spend in order to get the yields where they have to get them. Anyway, yeah. I want to switch your fine pitch wafer pack that I guess you're developing for that application. Doesn't that open up the DRAM high bandwidth market for you guys?

Gayn Erickson | President and Chief Executive Officer

It opens it. Yes. In terms of being able to test the DRAM, there's other things that would need to be done in order to do that, particularly around the DFT and low pin count test modes. But the interesting thing, and I've shared this, you have all people kind of track it over what, you know, the last how many quarters. If you go back and look at what I said two years ago, I don't know whatever it was, just any quarter prior to AI, chat GPT. I kept saying that Wave Level Burning will first go to NAND, and then ultimately it will go to DRAM. But in order for it to go to DRAM, the DRAM guys need to have the critical requirement. There needs to be more pain involved. And the pain needs to be when they start stacking DRAM. And then when they do that, they'll have to figure out a low pin count mode and testability or else they're going to get eaten up in yield. So now what you see is with HBM, which is still not the biggest part, but it's certainly the fastest growing part of DRAM, HBM requires this advanced packaging and stacking. And guess what? Yield's a big problem for them. And now you saw, was it just last month, NVIDIA came out and told and said publicly, I'm now asking that all DRAM suppliers start supplying me with known good stacks of DRAM. What does that mean? Well, obviously it means they're not good. And I already told you 10 minutes ago that on my package part burn-in systems, when we burn in those devices, we're burning in the memories too. Why are we burning in the memories there? What a horrible place to do it. Anyhow, kind of interesting.

Larry Shlebina | Investor, Shlebina Capital

But I thought the fine-pitched wafer pack, though, gets to the point where it can touch down on all those contact points on the DRAMs, so it opens that up. Am I missing something there?

Gayn Erickson | President and Chief Executive Officer

No, no, no, not really. Okay, so on these HPM memories, they may have 1,000 pins on them. They're all TSVs. They're like 10 microns. No one can touch those TSV pads, not form factor, not anything. They're still testability pads, but on a DRAM like that, maybe it used to have 50 pins or 60 pins or something times, you know, 3,000 diodes. you go through that math, that's a big probe card. And so a full wafer probe card is quite expensive and cost effectiveness isn't really there. If you implement a DFT mode, interestingly, like is done in the package, but anyhow, you can drop down to a JTAG IOPort or an Mbis IOPort, which is a single IOPin. So why not do that? The NAND guys did. So as that is implemented, you could see that people might drive towards a DRAM And if any of the DRAM guys are listening, I'd love to talk to you again if I'm not already talking to you about this because I think we can help.

Larry Shlebina | Investor, Shlebina Capital

They definitely have a yield issue. Last question real quick. There's a long-term customer of yours that's ramping up on a 3D packaging facility in New Mexico. And... They're assembling three to five chiplets onto a subchip. And I don't know, I think the throughput of that facility eventually will be at least $25 billion worth of product. At what point do you go to your customer and say, you're already in that fab on the optical side. At what point do you say, hey, what would you spend if I could – improve your yields, some of the things you said earlier, if I could improve your overall yield 3% on those heterogeneous chips, what would they spend to achieve that going forward? I mean, every year, you only have to spend it once. Wouldn't they spend like 300 million bucks to get that capability? I know you'd be testing all the incoming component wafers before they get singulated and put into the chiplets, but... Isn't that a hell of an opportunity for you guys?

Gayn Erickson | President and Chief Executive Officer

Okay. Well, I've never mentioned that we have systems installed in New Mexico or all those things that you've said. And I won't confirm or deny anything here. I don't want to get myself in trouble with any potential customers. But someone who's doing that would certainly be attractive to us. What we've definitely said is, And what you were implying there is that we have, what, six, seven optical customers related to silicon photonics, one in particular that has been our lead customer and a 10 percenter several years. And they, you know, within that, those customers, we have worked with the largest to build this very high power silicon photonics based system. that is amazing and we've qualified that we shipped it for the first time what last year they spent the last year qualifying we've been doing all kinds of engineering runs and things with the different types of wafer packs and we've heard that they are talking about ramping this year um with these new optical devices which you know the target for those are chip to chip or chiplet type things uh when we say that out loud so I'm excited about that. I think, as you said, well, why not use it in every other chip along the way? I think that's a good point. And, you know, if we can do very well with what we're planning right now, maybe that opens up an opportunity with that customer, if not others. Great. You know, just as a reminder for everybody listening on the call, our tools set primarily are on the wafer level until the NCAL acquisition of package parts. was a system that was designed around these megatrends with semiconductors that are growing to a trillion dollars, where semiconductors are not more reliable year to year. They're less reliable due to line widths, the compound semiconductors like optical and silicon carbide, stacking them all together in multi-chip modules or in modules like memories that are put together for SSDs or modules that are power going in electric vehicles. And then unfortunately, they're putting them in things that matter to the reliability, like automotive devices or data centers or these very expensive AI processors. So that opens up an opportunity to do this burn-in stress conditions on those devices before they're put into the packages. And that's why the burn-in market now is so much bigger and more interesting than than it has ever been in its history, at least going back to the early 80s, because of its enabling capabilities technology-wise that otherwise you wouldn't have been able to. We are picking up customers and markets along the way. And I always say, give it a year and we'll have another one. And Larry, if you have a specific contact on someone along those lines, it would not be the first time one of my shareholders has introduced me to a customer and I got an order out of it.

So thank you. Larry Shlebina | Investor, Shlebina Capital

Well, that would be a big one. All right.

Thanks for your time. Operator | Conference Operator

Thank you. Okay. Your last person in queue is Charles Tao, private investor.

Please proceed. Charles Tao | Private Investor

Hi, good morning. Good afternoon. Thanks for taking my question. I think my first question has been asked by Larry. So my second question is, Again, if everything is on track, when do you expect to receive mass production orders from the flash memory company you are currently working with?

Gayn Erickson | President and Chief Executive Officer

Yeah, it's a good question. What we've said, right or wrong, so that we're trying to be relatively visible, it's always a little dangerous with all your potential competitors listening in, is that this year we spent the year working on some technological steps to prove the proof of concept of our low-cost test cell that is really around this wafer pack carrier that allows everything else to be lower cost and allows higher power, higher density. If with that, our hope is upon successful completion of that, which we were targeting to try and be around this next quarter or so, We then want to work with the customer around the next step, which would be in co-development of a test system that would go into that machine. We think that's going to take about a year or so. Maybe it could take longer, but there's reasonably maybe a year. And so I wouldn't expect volume orders for that until the following year. So we're a year out or so, but you know what? If you told me I was taking volume orders and shipping for revenue in our fiscal 2027, which begins in June of 26, I would tell you that's awesome.

Charles Tao | Private Investor

Okay, so what size, how big the size, can you imagine?

Gayn Erickson | President and Chief Executive Officer

How big is the size?

Charles Tao | Private Investor

Size? Size?

Gayn Erickson | President and Chief Executive Officer

The size of the market? Yeah, I mean, this is where what we think is, if you were to look at, and I don't want to pick on any customer, okay, but the market just this year is $80 billion. I think it's growing at maybe 10%, 20% revenue. Bits are growing 40%, something like that. So two years out from now, I mean, okay, maybe it's... $100 billion, something like that. How much that is. You divide it by what? There's six customers, five customers that matter. They are not all even, but each one has 20%, maybe a little less. Then that spend by them is substantial. And the cost savings advantage to be able to do that would be substantial. So in order for us to actually help them with yield, there's a considerable market. This is embedded in the number that I said during my prepared remarks, that the total available market is a combination of 500 in test and $500 million in consumables. And the flash memory could be certainly 10%, if not more, of that overall market. So $100, $150 million, just wait for a little burn-in for flash memory in that time frame. Minimum?

Charles Tao | Private Investor

Okay.

Thank you. Gayn Erickson | President and Chief Executive Officer

You're welcome.

Operator | Conference Operator

Okay. I show no further questions in the queue. I'd like to turn the floor back to management for any closing remarks.

Gayn Erickson | President and Chief Executive Officer

All right. Well, I appreciate everybody, as always, for jumping on here. I just want to do, before closing the call, just one personnel-related thing I hadn't gotten to. I'm just happy to announce the addition of a new member to the team, Didier Wimmers. to our organization as our EVP of engineering. He's replacing Ovi, who, as we previously announced, passed away unexpectedly last year. Didier is an incredible addition to Aehr. He brings decades of direct experiences leading engineering teams in semi-tests. He's pretty well known. I joked around and said he's famous in the ATE space. He headed up all of Schlumberger ATE for many years, also managed the engineering team at FormFactor. who's basically one of the largest semiconductor test probe cart companies in the world. I worked with FormFactor for many years in my memory experience before, and that's where I had met DDA in the past. So I've known him for a long time, maybe 20 years myself. He's a great leader, extensive knowledge in ATE, wafer probing, great experience. He's a great manager and also a nerdy guy, which I say very in a warm way. He's a great team member. I'm excited to have him on because of his experience in ATE, system-level testing, and even burn-in systems before joining Aehr. So we welcome him on board and excited to have him. As always, we appreciate everybody joining in. If you happen to be anywhere near the Bay Area... and are interested, we can try and set up something. Our facility here, we're getting right down to the final of it. We're about a month away from it being pretty well completed. And we've done a little bit of just a remodel in general for cubes and facility areas for the employees, which they really love. But we did a major remodel in the manufacturing and the clean room labs area. which allow us to increase both manufacturing, prototype, engineering capacity, but particularly manufacturing capacity of our systems, our new package part systems from Sonoma, that those systems will be coming over here over the next couple of months, and also our wafer packs and our BIM consumables from the package part side. So all that will be consolidated here Q1-ish, I don't know, this summer. OK, but if you come by, then it will probably be, you know, finally happy with everything kind of put together and all the lights are up and everything, too. So I thank you, everyone, for for your encouragement. I've got a lot of calls of hang in there. A lot of people very excited about the stuff that we're working on. And, you know, we're all kind of enduring through all these tariff things. But this, too, my favorite saying, this, too, shall pass. So thank you all and we'll talk to you next quarter.

Operator | Conference Operator

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260609232130-00'00'