Earnings Call Transcript
AEHR TEST SYSTEMS (AEHR)
Earnings Call Transcript - AEHR Q2 2021
Operator, Operator
Please stand by. Good day and welcome to the Aehr Test Systems Second Quarter Fiscal 2021 Financial Results Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Jim Byers of MKR Investor Relations. Please go ahead, sir.
Jim Byers, Investor Relations
Thank you, operator. Good afternoon, and welcome to Aehr Test Systems' second quarter fiscal 2021 financial results conference call. With me on today's call are Aehr Test Systems' President and Chief Executive Officer, Gayn Erickson, and Chief Financial Officer, Ken Spink. Before I turn the call over to Gayn and Ken, I'd like to cover a few quick items. This afternoon, Aehr Test issued a press release announcing its second quarter fiscal 2021 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 in the Investor Relations section of the company's 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 that 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 the results to differ materially from those in 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 provided during today's call, are only valid as of this date, and Aehr Test Systems undertakes no obligation to update the forward-looking statements. And now, with that said, I'd like to turn the call over to Gayn Erickson, President and CEO of Aehr Test Systems.
Gayn Erickson, CEO
Thanks, Jim. And good afternoon to those who joined us on the conference call online and also listening over the web. Ken will go over the second quarter financial results later in the call, but first, I'll spend a few minutes providing some details about the challenges we experienced during the quarter and how we've responded. Then I'll turn to what we're seeing now and why we think things are moving in the right direction, and then following our remarks, we'll open up the lines for your questions. As we anticipated on last quarter's call, our bookings and revenue for the first half of our fiscal year were negatively impacted by several customer-specific production ramp delays and push-outs of forecasted orders due to COVID-19-related impacts, as well as the continued challenging global business environment created by the COVID-19 pandemic. These customers continue to indicate they believe the push-outs are temporary and they will require additional system capacity and consumables in the current fiscal year. We continue to be optimistic about generating significant bookings and revenue increases in the second half of this fiscal year compared to the first half based on these customer forecasts and the initial order flow we began to see already in the second half. As we get into the third quarter, just last month, we announced that we received a design win for new high-volume production tests and burn-in applications for a critical new mobile center application. This engagement with the new customer, who is a supplier of sensors to a major mobile device manufacturer, began with an initial $4.3 million order for an initial test cell consisting of the FOX-XP production test and burn-in system, a set of DiePak Carriers, and the FOX Automated DiePak loader/unloader. This initial test cell is expected to ship during the fiscal third quarter, and we expect follow-on capacity orders from this customer in this fiscal year for additional test system capacity, DiePak Carriers, and our DiePak autoloader solution. We are proud we've been selected for this application, which we were awarded due to our unique technical capabilities and the cost-effectiveness of our solution that is critical to this application, which will require 100% test, burn-in, traceability, and validation of these devices. Our highly differentiated FOX solution achieved this test requirement and met the customer's low cost of test targets due to the significantly higher parallelism that can be obtained on our FOX-XP systems and DiePaks. During the second quarter, we also received a design win on an initial order from our lead customer for multiple DiePak Carriers for test and burn-in of their next-generation sensor modules for mobile devices. This order expands the deployment of our test solutions to additional devices with that large multinational customer, and we're excited to engage with them earlier in the design cycle for this product. The customer will use our proprietary DiePaks for production qualification tests and burn-in of these devices. We expect this to turn to volume production orders for additional DiePaks and had anticipated beginning the shipment of the incremental DiePak capacity in our fiscal fourth quarter. However, this customer recently told us this capacity need is likely to be delayed until after our current fiscal year and instead pushed into the first and second quarters of our next fiscal year that begins in June. We continue to be optimistic about the mobile sensor market space and continue to see increasing interest in our FOX systems and DiePaks for production tests and burn-in of complex 2D and 3D sensors in multiple mobile applications. Since the beginning of the current third quarter, we received multiple follow-on orders and are seeing an increase in bookings forecast for our proprietary WaferPaks and DiePaks consumables across multiple market segments for the installed base of FOX wafer and singulated die and module test systems. This reflects customer capacity and consumable needs for our previously announced design wins from customers for devices in silicon photonics, silicon carbide, mobile sensors, and flash memory. We're forecasting additional DiePaks and WaferPak orders during the second half of fiscal 2021 from our installed base studies in applications in these key market segments. As we've noted before, Aehr's proprietary test and burn-in solutions include customized WaferPaks and DiePaks that are needed not only for new systems orders but also for each new design win or each new device added to production tests. As we increase our installed base of FOX systems with current and new customers, particularly with our FOX-NP and XP multi-wafer and singulated die module test and burn-in systems, we expect our consumables business to continue to grow in absolute value and as a percentage of our total sales. Over the long term, we expect these recurring consumable sales to account for up to half or even more of our total overall revenue. In Q4 of our prior fiscal year, we announced a new design win with a new Tier 1 customer for our FOX-NP system that we shipped in Q1. This customer is a global leader of communication transceivers for data centers, telecom, and 5G infrastructure and is forecasting to transition to our FOX-XP wafer-level test and burn-in systems during this fiscal year to meet their volume production forecast. In addition to the order we expect to receive this fiscal year, we expect them to continue to place additional systems and consumable orders over the next several years. We also announced that we began a new relationship with a new customer, who is the world's largest outsourced semiconductor assembly and test supplier. During the first quarter, we began an initial marketing and sales campaign with this customer for our FOX-P family of products, including Aehr WaferPaks and DiePaks for production tests, burn-in, and reliability screening of devices with full wafer, singulated die, and modules. This campaign is generally in discussions with multiple potential new customers and continues to gain momentum with new customers, including yet another opportunity as late as the last few weeks. They have asked us that we not name them publicly yet as they see their move into the silicon photonics assembly, packaging, and test space as a strategic initiative. They want to gain market share with some critical target customers before going public with what they see as a competitive advantage of being able to provide a total solution, including full wafer level test and burn-in before assembly of the silicon photonics engines into the transceiver modules. We expect to make this partnership public in due course. We continue to expand the device wins and release to production of the FOX-XP for silicon carbide devices during the first quarter and the second quarter. We added a couple of new device design wins for the new high-voltage silicon carbide devices on our FOX-XP system with our lead customer. They are using the FOX-XP system for high volume production burn-in and infant mortality screening of silicon carbide devices at wafer level for a few key applications, including electric and hybrid electric vehicles. They are forecasting additional bookings and capacity needs for our FOX-XP systems and WaferPaks during this fiscal year and for years into the future. For those who are not familiar with it, silicon carbide is a very impressive material for high-power and particularly high voltage devices for applications such as the new electric and hybrid electric vehicles, powertrains, and electric vehicle charging infrastructure. As such, most if not every EV or HEV automotive company is moving to silicon carbide based power drive and charging systems. The challenge with silicon carbide, it is known to have high infant mortality rates, but after reliability burn-in screening, these defects can be completely removed to provide extremely reliable devices for these mission-critical applications. Aehr is able to provide a complete solution for one of the key reliability screening tests of an entire wafer at a time, while testing and monitoring every device for failures during the burn-in process to provide critical information on those devices. This is an enormously valuable capability as it allows our customers to screen devices that would otherwise fail after they are packaged into multi-die modules where the yield impact is 10 times or even 100 times as costly. The critical capability that only our solution can provide to the market today is the ability to test 100% of the die on a wafer in a single insertion, while providing 100% traceability of pass/fail results of every single device and including exactly what time during the test and burn-in cycle the device fails. This is a critical feature for this customer to provide confidence to their customers that they are removing all potential failures prior to shipment. This customer has made public presentations at industry conferences citing the cost and quality assurance advantages of our FOX solution compared to traditional package or module level tests. Our systems are not only able to test 100% of devices at 4, 6 inches, as well as the ability to test 12-inch wafers, but we can test and burn-in 18 wafers at a time on a single FOX-XP system. We continue to see the total available opportunity for silicon carbide and silicon photonics wafer-level and singulated die test markets to be approximately $250 million of needed capacity, including consumables based on total wafer starts, yields, and test times. The silicon carbide semiconductor device market is growing at a tremendous rate with unit growth of high-power devices expected to grow over 50% CAGR from 2019 through 2025. Turning to our packaged part business, as I've talked about before, we've begun to see forecasts for renewed demand for packaged part burn-in applications, particularly from customers seeking high-voltage capability, reflecting a move towards higher voltages and other market requirements for devices and automobiles. We expect to see bookings resume from several current Aehr customers this fiscal year and also expect to generate additional new opportunities with our planned introduction of new packaged part burn-in products that have very high voltage test capabilities. We're being relatively conservative with our forecast in packaged part burn-in as this segment still seems to be heavily impacted by COVID-19 delays and customer evaluations. Still, we do see the need for high-voltage capabilities in both wafer level and packaged parts as a high-growth opportunity for Aehr and expect orders from several new customers, including both Tier 1 and Tier 2 level customers for packaged part burn-in systems this fiscal year and next. As we look at the second half of this fiscal year and beyond, we remain actively engaged in discussions with a large and growing group of potential new Tier 1 and Tier 2 customers that are considering using Aehr's products to support several high-market growth opportunities. These not only include silicon photonics and silicon carbide production burn-in, but also applications for automotive, memory in general, and microcontroller applications. The breadth of opportunity for our products makes us more and more excited about the broad-based adoption of wafer-level burn-in. We continue to receive specific forecasts from existing customers for additional new capacity and expect additional bookings, shipments, and revenue for our systems and consumables. These customers are in key growth segments that we have started to already penetrate, including silicon photonics and silicon carbide, and they have already purchased initial systems from us and are either in production or sampling with customers. They have told us explicitly that they plan for and will require additional capacity utilizing our FOX-XP systems to test 18 full wafers at a time or DiePaks containing devices in each of nine blades per system. These customers have asked us to anticipate and secure specific capacity to meet their needs and have indicated they expect to place orders for this capacity this fiscal year. We're certainly excited about this strong level of interest, but at the same time, COVID-19-related impacts have affected our customers and hindered our ability to forecast the timing of these orders. We continue to engage in ongoing discussions with a large number of potential new customers. However, these discussions have clearly been slowed by travel-related restrictions due to the COVID-19 pandemic and related precautions taken by several new potential customers worldwide, including policies for limited on-site engineers. This absolutely has delayed the evaluations and initial orders for Aehr's systems and consumable products in the first six months of this fiscal year. Given this fiscal year's guidance has been almost entirely based on current customer forecasts, we are taking a more conservative approach to our fiscal year forecast at this time and revising our revenue guidance for fiscal 2021 to be between $20 million and $25 million, while continuing to expect to be GAAP profitable for the fiscal year. With the fiscal year's second half revenue range of $16 million to $21 million, this new revenue range reflects significantly increased revenue in the second half compared to first half revenue of under $4 million. As we look into the second half of fiscal '21, we remain optimistic about the growth opportunities for our systems and consumables within our installed base of customers, as well as our ability to expand the number of customers using our family of FOX-P solutions. We have additional potential customer engagements that could provide upside to our revenue for the fiscal year as well. We maintain our confidence in the long-term demand for our products, the attractiveness of the key markets that we serve, and our belief that we will come out of this worldwide pandemic stronger than we have been, with more production customers, more applications, and higher value products. Our key customers are serving some of the highest growth markets including data centers, 5G infrastructure, sensors and technology for smartphones and tablets, electric and hybrid electric vehicles, and memory and data storage for computing data centers, mobile devices with hundreds of applications that are keeping the world connected. As a result, we believe our products will be in high demand this year and for years to come. And with that, let me turn it over to Ken before we open up the line for questions.
Ken Spink, CFO
Thank you, Gayn, and good afternoon, everyone. As Gayn noted, our revenue and bookings for the first half of the fiscal year were negatively impacted by several customer-specific production ramp delays and push-outs of forecasted orders and the continued challenging global business environment created by the COVID-19 pandemic. However, these customers continue to indicate they believe the push-outs are temporary. Based on these customer forecasts and the initial order flow we have started to see since the beginning of the third quarter, we expect significant bookings and revenue increases in the second half of this fiscal year. At the same time, as we discussed on previous earnings calls, we have taken significant actions to control spending and maintain our cash position as a result of customer order push-outs and delays in production ramps. In our fourth quarter of the prior fiscal year, we completed a restructuring that resulted in permanent savings of approximately $120,000 per year and also required mandatory vacation days to reduce costs. Starting in our current fiscal year, we implemented additional temporary cost reduction initiatives across the company. These measures included 30% pay reductions for our executive staff that took effect starting the last quarter. The total of all cost reductions resulted in savings of over $550,000 in the second quarter. With our recent booking and improved forecast for the second half of the year, the temporary pay reductions for non-officers were eliminated starting in the current fiscal third quarter. The pay reductions for our executive staff remain in place. It is also important to note that even with these cost controls, our operational capacity and bandwidth have not been impacted, and our main focus continues to be growing our revenue base within the large market opportunities that Gayn mentioned earlier. Now turning to the financial results, net sales in the second quarter were $1.7 million, down 16% from $2 million in the preceding first quarter and down 76% from $6.9 million in the second quarter of the previous year. The sequential decrease from the preceding Q1 reflects a decrease of $484,000 in wafer-level burn-in revenues, partially offset by an increase in customer service revenues of $155,000. The reduction in wafer-level burn-in revenues was primarily due to a decrease in system revenues of $630,000, which was partially offset by an increase in WaferPak DiePak revenues of $146,000. The decrease from Q2 last year includes a decrease of $5.1 million in wafer-level burn-in revenues. This was primarily due to a decrease in system revenues of $2.8 million and a decrease in WaferPak, DiePak revenues of $2.3 million. Customer service revenues were flat compared to the prior year. There were no packaged part system revenues in Q2 '21 or Q2 '20. Non-GAAP net loss for the second quarter was $1.7 million or $0.07 per diluted share. This compares to a non-GAAP net loss of $2 million or $0.09 per diluted share in the preceding first quarter, which excludes the impact of stock-based compensation expense and a $2.4 million adjustment related to the closure of our Japan subsidiary and non-GAAP net income of $456,000 or $0.02 per diluted share in the second quarter of the previous year. On a GAAP basis, net loss for the second quarter was $2 million or $0.08 per diluted share, compared to GAAP net income of $107,000 or zero cents per diluted share in the preceding quarter and GAAP net income of $251,000 or $0.01 per diluted share in the second quarter of the previous year. Gross profit in the second quarter was $377,000 or 22% of sales, up $150,000 compared to gross profit of $227,000 or 11% of sales in the preceding first quarter and down from gross profit of $3.2 million or 47% of sales in the second quarter of the previous year. The increase in gross margin from the preceding quarter is primarily due to a decrease in unabsorbed overhead costs to cost of sales due to an increase in manufactured parts in inventory and a change in product mix. WaferPak DiePak consumable revenues accounted for 46% of revenues in the second quarter, compared to 31% in the preceding first quarter. The decrease in gross margin percentage from the second quarter last year is primarily due to an increase in unabsorbed overhead costs to cost of goods sold due to lower revenue levels and an increase in warranty costs as a percentage of sales. Operating expenses in the second quarter were $2.3 million, down $93,000 or 4% from $2.4 million in the preceding first quarter and down $631,000 or 21% from $3 million in the second quarter of last year. The decrease in operating expenses from the preceding first quarter is primarily due to a decrease in R&D expenses of $80,000. The decrease from the second quarter last year includes a decrease in SG&A of $656,000, primarily due to cost reduction initiatives implemented in fiscal 2021. SG&A was $1.5 million in the second quarter, flat from the preceding first quarter and down $656,000 from $2.2 million in the prior year’s second quarter. R&D expenses were $820,000 in the first quarter, down from $900,000 in the preceding first quarter and up from $795,000 in the prior year’s second quarter. Turning to the balance sheet for the second quarter, our cash and cash equivalents were $3.4 million at November 30th, down $2.9 million, compared to $6.3 million at the end of the preceding quarter. Accounts receivable at quarter end was $1.4 million, up $313,000 from $1.1 million at the preceding quarter end relating to the timing of revenue in the second quarter compared to Q1. Inventories at November 30 were $9.1 million, up $955,000 from $8.1 million at the preceding quarter end. The increase in inventories includes an increase in labor and overhead of $371,000 related to an increase in manufactured parts and inventory. Property and equipment were $683,000, compared to $622,000 at the preceding quarter end. Customer deposits and deferred revenue, both short-term and long-term, were $75,000, a decrease of $331,000, compared to $406,000 at the preceding quarter end related primarily to the decrease in backlog from the prior quarter. Our current and long-term debt of $1.7 million is related to funds received during the fourth quarter of the last fiscal year under the Paycheck Protection Program or PPP. The company applied for forgiveness of the PPP loan on November 6, 2020, and the Small Business Administration has 90 days to review and approve the application. Bookings in the second quarter totaled $1.6 million and did not reflect any system orders. Backlog at November 30 was $1.1 million, down $147,000 compared to $1.2 million at the end of the preceding first quarter. Since the start of our current fiscal third quarter, the company has received a $4.3 million order from a new customer for a FOX-XP test cell and also additional WaferPak DiePak consumable orders improving our overall backlog. Now turning to our outlook for fiscal 2021, as Gayn mentioned, COVID-related impacts continue to affect our customers' customers, creating delays in some anticipated orders and overall caution with our customers that have resulted in delays of some of our customer production ramps. With that in mind, we are taking a more conservative approach to our forecast for the second half of the fiscal year. As such, we are revising our revenue guidance for fiscal ’21 down to between $20 million and $25 million, while continuing to expect to be profitable on a GAAP basis for the fiscal year, which includes the impact of the net gain on the dissolution of Aehr Test Systems Japan and the anticipated loan forgiveness of the PPP loan. This new revenue range still reflects a significant ramp in the back half of the fiscal year compared to the first half. This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.
Operator, Operator
Thank you. We will now take our first question today from Christian Schwab with Craig-Hallum.
Tyler Burmeister, Analyst
Hi, guys. This is Tyler on behalf of Christian. Thanks for letting us ask a few questions. First question...
Gayn Erickson, CEO
Hi, Tyler.
Tyler Burmeister, Analyst
Hi, guys. So first question, on the multiple, I think you called a dozen previously or more than a dozen Tier 1 and Tier 2 potential customers, engagements you have, kind of, the silicon photonics and silicon carbide, as well as other customers, in the next couple of quarters, fiscal year and into next year, should we expect a majority of orders from these customers or how many of this customer pipeline would you expect to turn into orders?
Gayn Erickson, CEO
That's a good question and it helps us clarify our forecast approach. We've received considerable feedback on how we view our forecasts. Primarily, we've focused on revenue forecasts rather than specific bookings data because bookings occur before we recognize revenue. At the beginning of the year, we aimed to clearly express that our expectations were largely based on existing customers—those who were already with us and had indicated their intention to make additional purchases. At that time, we believed this was a conservative approach, as we were uncertain about factors like the impact of COVID. We paid close attention to our customers' feedback. Typically, revenue forecasts account not just for what customers communicate but also for potential new deals or customer expansion, which can be challenging to predict. In our latest guidance, we again focused on our current customers and their specific feedback, including a recent deal we secured. This method is what we and the Board feel is the most effective way to communicate our guidance, as we have a clear perspective on those deals. It also helps to explain that in my prepared comments, I mentioned we have other deals. I want to clarify that most of what we discuss in our guidance is based on what our customers tell us—customer A has indicated they need this configuration for this price by this month, and that's how we developed our forecast. The downside is that if a customer has information we do not, we could be mistaken in specific details. We strive to do our best in this process. In interpreting this, you could say that what they communicate falls right in the middle of what we've indicated. We acknowledge there are potential downsides and upsides, and we are trying to provide appropriate guidance while managing the business to ensure profitability. Furthermore, it's essential to note that we are profitable at the low end of our range, so we must be quite profitable at the high end, which is a reasonable perspective to have.
Tyler Burmeister, Analyst
That was great. Appreciate all the color, Gayn. Second question here, I want to follow-up on your new customer order, this $4.3 million order for customers serving a large mobile manufacturer. So I know we've, kind of, been surprised or maybe disappointed in the lack of follow-through previously here. So I'm just wondering if you could add some color, some comments on your conviction that this customer will turn into more meaningful revenue in the future? Just kind of your best expectations of that customer today. Thanks.
Gayn Erickson, CEO
Sure. Let me expand on your point about the disappointing follow-through. For those who are new to us or not familiar with our story, we had a significant mobile manufacturer who became the initial lead customer for our new FOX family of wafer-level and singulated die and module products. Initially, it was uncertain how they would use the tool regarding which high-volume applications they would target, the duration of the testing, and what percentage of the devices were actually testing. We've clarified that the market in this case has shifted to what's known as sampling, meaning they do not test every single device with their tool. Instead, they conduct a quality reliability sample. To put that in perspective, if they only sample 5% or 1%, they only purchase that corresponding percentage of what they could. This creates a significant dynamic range. In the initial orders from these customers and applications, we were unsure whether they would opt for sampling or higher volume production. Ultimately, the sampling rate was lower than anticipated, resulting in them purchasing $10 million to $15 million worth instead of $50 million. Now, specifically regarding this application, we need to be careful about what we say. I will try to stick to the same points I've made before and in the release. We have been informed that this is a production burn-in, which means it is a complete test. The positive aspect is that it doesn't involve the usual multipliers for test time and volume percentages, which I prefer not to discuss. There is some uncertainty about the specific applications it will be used for, although some of us have insights into the programs that we won't disclose. All I can say at this moment is that we've been assured there is volume behind it. We firmly believe in this, and this particular customer is requesting that we commit capital and resources for increased capacity this year. So, even if it doesn't sound like it, I am genuinely excited about this opportunity. I will remain cautious but optimistic; everything seems positive so far. It's not difficult to reach significant amounts with $4.3 million in test cells when you're generating this level of revenue, which is truly encouraging. I want to emphasize that I'm genuinely excited about this new customer, not just for the substantial potential revenue, but because the customer recognized and chose our system for its ability to provide complete validation of the device. This aspect could have been assessed using what's known as a packaged part burn-in system, which we sell. The main difference between a packaged part burn-in system and a traditional convection oven is that the latter often requires many shared resources. This means you lack full traceability and validation for each individual device. Our FOX products offer up to 100 times more resources per device, allowing us to be completely certain that each part has been tested, and with our thermally conductive cooling and heating, we can confirm that it was properly burned in. This method is more costly than using packaged parts. In certain applications, we can test many more in parallel through wafer level or singulated die, which allows us to do it more cost-effectively while providing better data. They specifically invested more to ensure that this device underwent 100% burn-in and clarity, and we understand why that was important to them. This is very encouraging to me because it's exactly what we've been promoting for years, and they recognize it. I believe this will lead to more business and similar opportunities due to the clear value of this type of burn-in and testing.
Tyler Burmeister, Analyst
That's great. Appreciate that. And then last quick one, and I'll turn the call or the question over. A little bit of a modeling question, I guess, as well as fundamental. Your implied second-half guidance with the visibility you have today, any color on Q3 versus Q4? Would you expect Q3 and Q4 to be kind of similar in size or more of a progressive improvement through the end of the year and Q4 sequentially better? Any color there would be great. Thanks.
Gayn Erickson, CEO
I think it's fair to say that Q4 will still be larger than Q3, considering the current situation of our backlog. When we announced the $4.3 million order, we've received additional orders since then, although we haven't issued press releases for them. I believe we received that order early on the 1st, which unfortunately missed our quarter by less than 24 hours. While it would have been nice to have that order count in our backlog, it's still part of it from day one. A little bit of a head start is necessary to ensure timely shipments. We haven't announced any significant orders we anticipate for this quarter, but I would argue that Q4 should generate more revenue than Q3. For bookings, they may be spread out or similar, but revenues in Q4 should be higher.
Tyler Burmeister, Analyst
That sounds great. I appreciate. That's all from me. Thanks, Gayn.
Gayn Erickson, CEO
Thanks, Tyler.
Operator, Operator
We'll now hear from John Fichthorn with Dialectic Capital.
John Fichthorn, Analyst
Thanks for taking my question. I appreciate it. So a little bit of a follow-on from the questions you just got asked, in a slightly different way since he asked some of my questions. Hey, are the bullet customer one with a $4.3 million order and then the bullet customer two, are those different customers or same customer different...?
Gayn Erickson, CEO
I actually do have some feedback, John, and it seems to be better now. We had not made that clear, although I think most people interpreted it wrong but close. I want to clarify that the end customer is the same, but the subcontractor is different, and the application and the device are also different. That's a good thing for us. Just because the end customer is the same doesn't mean you win one application and automatically get another. Internally, the groups and applications can be different, so this feels like a new win for us, not just with the subcontractor but even within the application and the group where it was secured. One reason I'm particularly excited is that there's cross-pollination going on with that customer, and they recognized us in this application. So that's the answer, John.
John Fichthorn, Analyst
Great, that sounds exciting. And so without having to give any timeline around it, what do you think the total revenue potential is in these two products, either one of them alone or two of them together, like over whatever period of time. I don't...
Gayn Erickson, CEO
Historically, it's useful to mention that we've seen a couple of million dollars from the DiePaks in Q4 for the past few years. Typically, we receive a batch of DiePaks in the fall, which usually leads to production by May. I had expected this pattern would continue, but it has been pushed into summer. In general, this type of device has contributed a few million dollars each year from consumables. Regarding the new application, I anticipate there will be more revenue, and a test cell is projected to be around $4.3 million. These come in substantial amounts. We have an idea of the revenue range, though we know we still lack complete data. Our visibility is somewhat limited; we can identify capacity needs for the next six to nine months, but we will need to see how the device performs once deployed across different setups to understand its growth rate. I can share something based on what I've heard from customers. In the past, they have emphasized how significant and beneficial a project would be, but their purchasing didn't always reflect that. One customer, who has previously acted this way, has been less vocal about its potential this time around, but their actions suggest it will be substantial. I'm unsure if this is a positive indicator, but it does seem that when they overly promote something, it doesn't turn out to be as large as expected. The fact that they haven't made as many claims this time might imply a good outcome, and we anticipate it will be a significant deal that contributes to our revenue and bookings.
John Fichthorn, Analyst
But I have to believe that they need to plan their business. And so they have to give you some level of visibility. I mean, what are your lead times today? And you would say had a scope of those lead times, like, I mean, either lead time shifts or can you help us with an idea as opposed to revenue guidance through year-end like where do you think your backlog is at year-end? Maybe that will help us understand what you think the scope is as we move forward.
Gayn Erickson, CEO
What I want to share is that most of our forecast adjustments are primarily a matter of timing. We believe that, if everything goes as planned, we should have a strong backlog as we enter next year. While that might sound like a vague description, we expect it to be quite substantial compared to this year and definitely different from last quarter.
John Fichthorn, Analyst
You asked a different question, and I want to address that. Regarding your lead times, our manufacturing capacity, infrastructure, and supply chain allow us to ship significantly more than the revenue numbers we've discussed, potentially up to ten times more. The challenge is that when large Tier 1 customers come in, they conduct thorough evaluations to ensure we can meet their needs. They understand that if they place a multi-system order, we can deliver within five to six months. Therefore, they do not require extensive visibility from us. They aren’t planning on forecasting 40 systems with us and expecting them to be delivered within six months. Additionally, even with a $4 million test cell, that represents only one system for us. Okay, that was impressive how you avoided answering the question. I commend you for that. Regarding the transceiver customer, that seems like a new opportunity. What is the size of that opportunity? Perhaps you could address that.
Gayn Erickson, CEO
It's interesting to note that many companies involved in silicon photonics tend to follow a similar pattern. They typically start with one or two devices, which we refer to as blades, corresponding to one or two wafers of capacity. Our new FOX-NP systems enable us to facilitate this initial stage. As they move into production, they then invest in XP systems that include either nine or 18 blades or even more. A good rule of thumb is to understand this approach. Each of our initial customers in silicon carbide and silicon photonics has generally started in this manner, with the exception of our initial lead customer, as we didn't have the NP systems available at the start. The first XPs they acquired involved processing calls and other activities with two, three, or four wafers at a time, despite having received a system designed for nine or eighteen blades. It appears that they initially invest around $0.75 million to $1 million in a full test cell, which is an NP system supporting a few wafers, and then transition to purchasing a $3 million or $4 million test cell as they scale up production. This pattern continues over time, and the capacity becomes associated with the market size they are targeting. If you consider silicon photonics, not everyone is familiar with it, but there are significant metrics associated with it. Silicon photonics refers to integrated devices used for the conversion of electrical signals to fiber optic or optical transmissions. Traditionally, fiber optic transceivers are complex modules comprising various intellectual properties and mechanical, electrical structures, along with lasers, all packed into a compact unit used in data centers and telecommunications, including cross-town and undersea applications. Transceiver costs can range from several hundred dollars to over ten thousand. For years, companies like Intel have pointed out that fiber optics have not gained traction because of these prohibitive costs. It's hard to envision widespread fiber optic communication at a price point of $900 per channel. This was a significant oversight during the 1999-2000 hype surrounding fiber optics, which ultimately led nowhere due to its expense. As demand for traditional RF and microwave transmission waned, Intel proposed a solution: to integrate all the components onto a single silicon wafer, leveraging the cost efficiencies of silicon manufacturing, aiming to reduce prices from hundreds or thousands of dollars down to mere tens of dollars. And that's exactly what they accomplished. There have been several large companies, some we've mentioned and some we haven't, that are entering this sector, and it's quite chaotic with everyone getting involved. Regarding the customer we acquired in May, they are a major player in the transceiver business and are transitioning to silicon photonics. Unlike many others in the field who aren't producing transceivers and are just starting with silicon photonics, this company is one of the leading transceiver manufacturers and is shifting its business model. Their ramp-up is different because once they establish this technology, they will be able to sell a product that has lower manufacturing costs, better reliability, and a smaller footprint. Additionally, it's important to note that fiber optic communications are categorized by their protocols and speeds. Currently, fiber optic communications can reach speeds of around 50 gigabits, which is quite fast, but they are advancing to 100, 200, 400, and 800 gigabits. Meanwhile, copper technology is nearing its limits, with the fastest non-fiber optic communication hitting around 112 gigabits. As speeds increase beyond that, the industry will need to adopt photonics technology. There are several reasons in silicon for adopting photonics as a communication protocol. The positive aspect is that these photonics devices require not only a burn-in but also aging and stabilization, which is provided by our wafer-level solutions at Aehr Test. Companies moving towards whole wafer silicon photonics are all considering how to achieve wafer-level stabilization for these photonics devices, and that's what we provide with the FOX-XP. Currently, almost all market players are engaging with us, although there has been a noticeable slowdown in activity over the past six months. Last summer, we were working on how to handle various benchmarks while implementing the new marketing and clean engine at our facility in February. At this moment, there are many Zoom calls, but the level of activity is not as high as we anticipate it will be once we move past this pandemic. So that specific customer has the ability to ramp significantly and in fact be bigger than our biggest customer in this space. And we do believe that in times like this.
John Fichthorn, Analyst
Great. You almost answered it in your last comments, and I appreciated the warm-up. It would be great if you could become bigger than your biggest competitor. I’ll pass it on to someone else, but I want to reiterate that I think your Board should see some turnover. I appreciated the changes made last year, but the Board should be refreshed. You missed an opportunity for six months, and I think you should either add new members or I would like to see current board members or management buy stock. We are all out here risking our capital. You’ve been on this Board for 12 to 44 years; it would be good for you to invest in shares to demonstrate your belief in the company. It shouldn't just be about gifts and compensation for being a Board member with your four dinners a year. Shareholders would like to see you risking capital alongside us. That's the message I want to convey to them. Thank you, and good luck.
Gayn Erickson, CEO
Thank you, John.
John Fichthorn, Analyst
Yes. Good luck in the back half.
Gayn Erickson, CEO
Thank you.
Operator, Operator
That will conclude today's question-and-answer session. I would now like to turn the call over to management for any additional or closing remarks.
Gayn Erickson, CEO
Okay. Well, thank you very much, operator. And thank you, everybody. We appreciate you listening in and taking some really great questions and giving us some great questions. I absolutely want to acknowledge we understand that the first half was certainly one of the less exciting times in Aehr's history, even in recent memory, but I truly sit here at this edge and I'm so glad that 2020 is behind because it wasn't just the last six months, it was really all of 2020, but we were feeling it. And starting up with this initial order and based on what the customers are telling us, it's not just COVID and all the other things going on in the world. We're actually more excited about 2021. So I'll leave it there, and appreciate it. And as always, you know how to reach us. Do talk to us if you want to have follow-up conversations etcetera. And thank you very much, and we'll talk to you next quarter. Bye, bye.
Operator, Operator
That will conclude today's conference. Thank you for your participation. You may now disconnect.