Earnings Call Transcript
AEHR TEST SYSTEMS (AEHR)
Earnings Call Transcript - AEHR Q1 2023
Operator, Operator
Hello, and welcome to the Aehr Test Systems Fiscal 2023 First Quarter Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Todd Kehrli of MKR Investor Relations. Please go ahead.
Todd Kehrli, Investor Relations
Thank you, operator. Good afternoon, and welcome to Aehr Test Systems first quarter fiscal 2023 financial results conference call. With me on today’s call are Aehr Test’s President and Chief Executive Officer, Gayn Erickson; and Chief Financial Officer, Ken Spink. Before I turn the call over to you, Gayn and Ken, I’d like to cover a few quick items. This afternoon Aehr Test issued a press release announcing its first quarter financial 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 forward-looking statements which 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 the guidance provided today are only valid as of this date and Aehr Test undertakes no obligation to update the forward-looking statements. Now I’d like to turn the call over to Gayn Erickson, President and Chief Executive Officer of Aehr Test. Gayn?
Gayn Erickson, CEO
Thanks, Todd. Good afternoon, everyone. Thank you for joining us on the first quarter conference call. Let’s start with a quick summary of the highlights of the quarter and the momentum we’re experiencing in the semiconductor wafer level test and burn-in market, and then Ken will go over the financials in detail. After that we’ll open up the lines to take your questions. We’re off to a good start this year finishing the quarter with revenue and net income ahead of consensus estimates and strong bookings of $19.1 million. Revenue for the quarter was $10.7 million, which is up 89% year-over-year, and we generated non-GAAP net income of $1.3 million. As we’ve noted before and discussed last quarter, over the last couple of years, our first quarter tends to be our seasonally softest quarter, as it was again this year, and we expect each consecutive quarter to ramp higher throughout the year. Let me get right to it and talk about how we’re progressing in getting into more accounts focused on silicon carbide for electric vehicles and other markets since that’s where a lot of the questions are coming up. We’re currently engaged or in discussions with almost all the existing and future silicon carbide suppliers regarding our unique low-cost multi-wafer level test and burn-in solution that enables contact to and testing of 100% of devices on every wafer. This allows our customers to burn in every device at a lower cost than they could in any other form, due to our ability to contact thousands of devices on each of 18 wafers at a time with our FOX-XP multi-wafer test and burn-in system and proprietary FOX Full Wafer Contact WaferPaks. All of these major silicon carbide companies expect that electric vehicle traction inverters will move to multi-chip modules, as this is where the electric vehicle manufacturers are driving the industry. As such, they’ve told us they must move to wafer-level test and burn-in to remove the inherent failures before they put these devices into multi-die modules to meet the cost, yield, and reliability goals of those modules. Aehr’s technology provides a total turnkey single vendor solution to meet this customer’s critical test and stress requirements at a cost and test floor footprint significantly lower than any other alternative on the market. Our lead customer for silicon carbide wafer level burn-in continues to ramp up use of our FOX-XP multi-wafer systems and WaferPaks, placing yet another significant order with us during the quarter. Similar to past orders, they purchased the systems without the necessary WaferPaks for wafer contactors, and as such, we expect significant orders from them for WaferPaks to match these systems. This need for additional capacity is being driven by increased demand for silicon carbide customers for electric vehicles. This customer recently announced that they expect their growth rate to accelerate faster than previously forecasted, and they continue to forecast orders for a significant number of FOX systems and WaferPaks contactors with us over the next several years. Beyond this lead customer, our previously announced benchmarks and evaluations with two additional major silicon carbide semiconductor suppliers continue to move forward with great progress this quarter. Following the end of the quarter, we announced an initial purchase order from one of these suppliers for our FOX-NP multi-wafer test and burn-in system, multiple WaferPak contactors, and a FOX WaferPak Aligner to be used for qualification of our wafer level burn-in solution for silicon carbide devices for electric vehicles and other markets. This new customer is one of the world’s largest suppliers of silicon carbide devices serving several significant markets, including the electric vehicle industry. We now have two of the top four silicon carbide market participants as customers. We’ve already shipped the system to this new customer’s facility, and we believe we’ll achieve their specific performance and functionality evaluation criteria on their test floor during the next three to six months. This new customer indicated to us that Aehr Test is the only provider that has a product scalable to high volume production to meet the production capacity they need to address the increasing demand for silicon carbide devices. They have provided us with forecasts for our FOX-XP systems for volume production of their silicon carbide devices at multiple facilities around the world, and we expect that they will purchase FOX-XP production systems to be shipped before the end of our fiscal year ending May 31, 2023. The benchmark with the other potential customer has also progressed significantly since last quarter’s call. We completed a significant milestone using a new capability we publicly announced today, where we tested a significant number of wafers for correlation of an automotive device, and we believe that we will successfully complete their production correlation over the next few months, allowing them to also move forward with our FOX solution. With both of these major silicon carbide suppliers, we expect both of these major silicon carbide suppliers to implement our FOX platform solution into their volume manufacturing production flow as they look to capitalize on the fast-growing demand for silicon carbide devices and electric vehicles. FOX demand is building for wafer-level burn-in in silicon carbide devices and specifically for traction inverters and onboard and off-board chargers for electric vehicles. During the last few months, multiple additional silicon carbide suppliers have asked us to provide technical feasibility, quotations and schedules for production test and burn-in of their wafers. While some of these companies want to do on wafer validation of our solutions before they place orders for systems from us, others are planning to move directly to purchasing our FOX systems and our WaferPaks to accelerate their time to market. An example of this is just a few days ago, we received orders for WaferPaks on two designs from a brand new customer for silicon carbide MOSFETs targeted for electric vehicles. This multibillion-dollar semiconductor company that is already making silicon carbide MOSFET wafers has not even gone public with their silicon carbide MOSFET introduction plans. The silicon carbide market for electric vehicles and its supporting infrastructure requirements are growing at a tremendous rate. With Canaccord Genuity estimating that wafer capacity will increase from 125,000 6-inch wafers in 2021 to over 4 million 6-inch equivalent wafers in 2030 just to meet the EV market alone. Add in the other applications for silicon carbide, including solar power conversion, industrial and other electrification infrastructure, and the market size doubles. This past month, Vernon Rogers, our EVP of Sales and Marketing, and I met face-to-face with multiple potential customers at their facilities in both the U.S. and Europe, and are very encouraged about our prospects for winning this capacity with these prospective customers. We also had very productive meetings around our participation in two important industry conferences in Europe. Vernon attended this year’s International Conference on Silicon Carbide and Related Materials, known as ICSCRM in Davos, Switzerland, considered to be the most important technical conference series on silicon carbide and related materials. He and I also attended the EU Power Semiconductor Executive Summit in Munich, where I gave a presentation on Aehr and the impact of wafer-level burn-in on reliability and stability of silicon carbide devices to a large audience of power semiconductor industry leaders, as well as automotive and other users of silicon carbide power semiconductors from around the globe. From our many discussions and introductions at these events, two themes were very important. The first theme is that there’s a continued momentum in silicon carbide. In fact, there seems to be an acceleration of the expected adoption rate, as well as an increase in the expected growth in electric vehicles. Several silicon carbide and electric vehicle companies are now saying electric vehicles are more likely to account for 50% of all vehicles made in 2030, as opposed to the 30% number we’ve previously stated. In fact, VW Group, one of the largest automotive suppliers in the world, along with Toyota, stated in a presentation that they expect electric vehicles to comprise 50% of all their vehicles sold by 2030. The second theme is that there’s an increasing consensus that not only do you need to do 100% burn-in for silicon carbide devices that go into the automotive space and other mission-critical applications, but that burning of the die must be done at the wafer level before they’re put into the modules for the traction inverters, particularly for electric vehicles. In my presentation at the EU Summit, I noted that in addition to the obvious cost advantage of removing device failures before they’re put into a module with many other devices, companies also want to stabilize the inherent early life drift of threshold voltages observed in silicon carbide MOSFETs and then select devices with matching threshold voltages to put into multi-chip modules. Higher than acceptable infant mortality rates of silicon carbide MOSFETs require 100% production stress and burn-in testing to achieve automotive and industrial quality levels. The need for stabilization of the devices goes beyond just infant mortality to include critical parametric parameters such as the threshold voltage. With the transition from discrete silicon carbide components to multiple silicon carbide die modules or integrated power modules, the gate threshold voltage stability is critical to module reliability, driven by the prerequisite to have matching and stable gate voltage thresholds die-to-die. Aehr’s technologies and capabilities enable gate threshold stability and reliability at the wafer level. Module manufacturers are requesting and requiring devices with matching threshold voltages or total on-resistance between the drain and source in the MOSFET. The major silicon carbide companies expect that most EV traction inverters will move to modules and have told us they must move to wafer-level stress and burn-in to remove the inherent failures before they put the devices into multi-die modules to meet their cost yield and reliability goals. Aehr’s unique low-cost multi-wafer level test and burn-in solution provides test electronics and the device contactor technology that enables contact to 100% of devices on a single wafer, along with the handling and alignment equipment to provide a total turnkey single vendor solution to meet the critical test and stress requirements. We believe we’ll have multiple more customer wins in silicon carbide for our solutions this fiscal year. In addition to our progress with silicon carbide applications, we’re seeing an increase in our wafer-level burn-in business for silicon photonics devices used in data communications. We shipped multiple FOX-NP systems this quarter to support the characterization and product qualification of new photonics-based devices. We’ve also received multiple orders for upgrades to existing systems that enable a higher number of devices and higher power per wafer, as well as multiple new designs for WaferPaks from several companies. We expect these will be first ordered for engineering a new product introduction, and then they will turn to volume production with higher quantity orders. As I’ve noted before, we expect to see a nice recovery in the silicon photonics market segment sometime over this into next year, as we’re being told by our customers. We’re expecting customers to resume buying in the fiscal year 2023 and fiscal year 2024, with several customers addressing the silicon photonics market forecasting additional FOX systems and WaferPak or DiePak contactor capacity needs during that time. So let me spend a minute on our R&D investments. On our last earnings call, I mentioned several tests of some enhancements we plan to introduce that will extend the capabilities of our FOX-P wafer-level test and burn-in platform. Today we formally announced two new advanced test and burn-in capabilities that enable silicon carbide and gallium nitride semiconductor manufacturers more flexibility to address a wider variety of stress and burn-in conditions for their engineering qualification and production needs. These include our FOX Bipolar Voltage Channel Module or BVCM, which provides customers a wide range of bipolar voltage programmability from positive 40 volts to negative 30 volts applied to the gate for positive High Temperature Gate Bias or Negative HTGB. This solution, combined with our proprietary WaferPak for wafer contactors, delivers a unique capability, benefiting power silicon carbide diodes and MOSFETs and both E-mode and D-mode gallium nitride power MOSFET manufacturers. Enabling these tests is essential for threshold voltage and gate oxide stabilization and screening, and the new BVCM extends our current capability even farther. The other enhancement is our Very High Voltage Channel Module or VHVCM that enables customers to perform High Temperature Reverse Bias testing on wafers of up to 2000 volts on MOSFETs and diodes, measuring individual device leakage current. Aehr’s proprietary WaferPak Contactor implements arcing mitigation technology to alleviate high voltage arcing on the wafer, especially with fine pitch die-to-die geometries. The flexibility of the FOX-P system offers customers the ability to configure solutions to provide advanced test capabilities for their power electronic device wafers. These advanced capabilities are designed to enable manufacturers to ship product with higher reliability and parametric stability necessary for EV traction inverters and onboard chargers. Feedback from current and potential new customers has been very positive, and we’ve already taken orders for both systems and WaferPak for these new options that we discussed with customers under non-disclosure agreements. This includes the new major silicon carbide customer announced last month and the brand new customer I just mentioned, who ordered multiple WaferPaks for a planned FOX-P system purchased from us for their silicon carbide products. We expect these new enhancements will drive incremental bookings in revenue for our FOX-NP systems for new product introductions and engineering qualification needs, as well as our FOX-XP multi-wafer systems to be used for high volume production with these new features. We’re also quoting and will accept orders for our new fully automated FOX WaferPak Aligner, which is configured to fully integrate with our FOX-XP multi-wafer systems to enable hands-free operation and includes full integration with our WaferPaks. As capacity and volume forecasts increase, eliminating all manual interfaces for automated handling becomes critical. We expect to see our new Aligner with this full automation capability begin shipments by the end of our fiscal year. Now, let me wrap this up. While the timing for volume production decisions, initial production orders, as well as follow-on orders from customers is never certain. There’s no doubt as to the way the silicon carbide market is developing. As many of you know, ON Semi, one of the top silicon carbide suppliers in the world announced in August it would increase its silicon carbide production capacity by five times and almost quadruple the number of its employees by the end of this year at its new silicon carbide facility in New Hampshire. And last month, Wolfspeed, another top supplier announced a new manufacturing facility in North Carolina, a $1.3 billion factory with a ten-fold increase in wafer capacity. And ST, who last year was the largest silicon carbide supplier in the world just announced it will build an integrated silicon carbide substrate manufacturing facility in Catania, Italy, right next to its existing device manufacturing facility, with production expected to start in 2023. The decisions being made today are in response to the explosive demand in silicon carbide. We’re very encouraged by the continued positive momentum and expanding growth opportunities we’re seeing with current and prospective customers. As such, we’re confident with our previously provided forecasts for total annual revenue of at least $60 million to $70 million this fiscal year, which would represent a growth of at least 18% to 38% year-over-year and clearly emphasize our belief that revenue will grow substantially through this fiscal year to achieve these levels. This includes our belief that we’ll receive production system orders from several silicon carbide customers beyond our initial lead customer and begin shipping systems to meet their production capacity by the end of our current fiscal year ending May 31, 2023. We also continue to expect bookings to grow faster than revenue this year, particularly to address the ramp in demand for silicon carbide and electric vehicles. Lastly, I want to quickly announce a couple of changes in our organization. I’m excited to announce today the appointment of Nick Spork as Vice President of our Contactor Business. In this role, Nick will be leading the effort to manage and grow our WaferPak Contactor and DiePak Carrier Consumables Business, which has become more and more strategic and grown into a significantly larger part of our overall business. Over time, we expect Consumables to not only grow in total revenue for Aehr but as a total percentage of our business nearing 50% of our annual business. Nick has an excellent background to lead this effort with broad experience in the semiconductor and electronics industries leading people, engineering teams, and organizations in multiple areas covering product development, product design, and manufacturing applications. Nick started as a Product Test Engineering Manager at LSI Logic, which is now part of Broadcom. He then worked at FormFacto for 17 years in various roles, mainly as VP of Design Engineering. After leaving FormFacto, he was VP of Design and Applications at Translarity, VP of Business Development for ISC, a Korean socket and probe card company, and most recently, he had his own company making various components for the probe card and test industry. We’re extremely pleased to add someone of his caliber and experience to our executive team. At the same time, I’d like to announce that Dave Hendrickson, our Chief Technology Officer, will be retiring at the end of this fiscal year next May. Dave has served as a valuable member of our executive team for more than 20 years and contributed substantially to our product portfolio and many of our business practices. Most recently, he has led a focus component sourcing task force, where his combination of engineering operations and business skills has allowed Aehr to achieve our business growth in the face of a global semiconductor crisis. He’s also been leading the effort to grow our Consumables business through strengthening and collaborating with our supply chain partners. Dave will continue as a part-time employee through the end of the year as we transition our component sourcing leadership to our new Chief Technology Operating Officer, Adil Engineer, and our WaferPak and DiePak Technologies and Business VP, Nick Spork. With that, let me turn it over to Ken before we open it up for questions.
Ken Spink, CFO
Thank you, Gayn. Good afternoon, everyone. We’re off to a solid start to fiscal 2023 after a record Q4 and fiscal 2022. During our first quarter, we recognized strong revenues, increased backlog, and improved cash flow. As Gayn noted, revenue for the first quarter was up 89% year-over-year. Both our top and bottom line results came in ahead of analysts' estimates for Q1. Bookings in the first quarter were $19.1 million, and we ended the quarter with a healthy backlog of $19.5 million. Included in our bookings were announced orders of $16.8 million from our lead silicon carbide customer for additional systems, WaferPaks, and a high-volume production WaferPak Aligner. Looking at our financial results, net sales in the first quarter were $10.7 million, which is down 47% sequentially from our record sales of $20.3 million in the fourth quarter and up 89% from $5.6 million in the first quarter last year. The first quarter sales were consistent with our expectations, and we are forecasting significant growth in the upcoming quarters. The sequential decrease in net sales from Q4 includes a decrease in WaferPak and DiePak revenues of $8.7 million. These consumable revenues accounted for only 5% of revenues in Q1 2023, compared to 45% of revenues in Q4 2022. Customers often buy systems and then WaferPaks later after they’ve completed their WaferPak designs. While our lead customers ordered several systems recently, we have yet to receive all the WaferPak orders to match up with these systems. We expect to receive these WaferPak orders later this year. This change in product mix had a direct impact on our gross margin in Q1 2023, as our Consumables business delivers higher gross margins. Gross profit in the first quarter was $4.5 million or 42% of sales, down from a gross profit of $10.5 million or 52% of sales in the preceding fourth quarter and up from a gross profit of $2.3 million or 40% of sales in the first quarter of the previous year. Direct materials accounted for an increase in the cost of sales of 3.5 percentage points from Q4 2022. Also contributing to the decrease in gross margin from the preceding fourth quarter was an increase in unabsorbed overhead costs related to lower revenue levels, accounting for a 3.3-percentage-point impact on gross margin. Lastly, an increase in other costs of goods sold including increased inventory reserves, freight, warranty, and tariff costs accounted for a 2.7-percentage-point impact on gross margin from the prior fourth quarter. During this challenging supply chain environment, we have maintained the ability to meet customer commitments. As our FOX-P platform contains a high concentration of common parts across the platform, it allows flexibility among various customer configurations. Also, the use of contract manufacturers provides the ability to scale easily and quickly without increasing our fixed costs. We expect our gross margins to improve as we move through the remainder of the year, as we recognize more consumable revenue and our absorption of our manufacturing overhead improves as revenue increases throughout the year. Non-GAAP net income for the first quarter was $1.3 million or $0.05 per share. This compares to non-GAAP net income of $6.5 million or $0.23 per diluted share in the preceding fourth quarter and the non-GAAP net loss of $414,000 or $0.02 per diluted share in the first quarter of fiscal 2022. Operating expenses in the first quarter were $4 million, a decrease of $625,000 or 13% from $4.6 million in the preceding fourth quarter and up $749,000 or 23% from $3.3 million in the first quarter last year. The decrease from the preceding fourth quarter is primarily due to higher incentive payments and stock compensation in Q4 related to bonus objectives resulting from our record revenue and bookings last fiscal year. The increase from prior Q1 is primarily due to increased headcount, higher incentive payments, stock compensation, and an increase in shareholder relations costs. We continue to invest in R&D to enhance our existing market-leading products and to introduce new products to maintain our competitive advantages and expand our applications in addressable markets. These new products include the recently introduced new advanced testing capabilities on our FOX-P systems for silicon carbide and gallium nitride technologies and our fully automated and integrated aligner. Turning to the balance sheet for the first quarter, we finished the quarter with a strong balance sheet. Our cash and cash equivalents were $36.1 million at August 31st, up $4.7 million from $31.5 million at the end of the preceding quarter and up $29.6 million from $6.5 million at the end of the first quarter of fiscal 2022. The significant increase year-over-year includes the $24 million we raised in our ATM offering in Q2 22. Working capital at August 31st was $49.4 million. Inventories at the end of the first quarter were $17.2 million, an increase of $2.2 million from the preceding quarter end and $7.1 million from Q1 last year. As we’ve noted before, we have been ordering long lead components for systems and WaferPaks to ensure adequate supply to meet customer lead times and to support our expected growth in fiscal 2023. Now turning to our outlook for the 2023 fiscal year, which ends on May 31, 2023, we are confident in the company’s growth trajectory and our unique capabilities and product offerings to meet customer demands. As such, we are reiterating our previously provided guidance for total revenue of at least $60 million to $70 million, representing growth of at least 18% to 38% year-over-year, with strong profit margins similar to last year. We continue to expect bookings to grow faster than revenue in fiscal 2023 as the ramp in demand for silicon carbide and electric vehicles increases. The company continues to make investments to support its future growth. This includes investments in headcount and operations. The company plans to make improvements to its corporate facilities to allow for increased production. In addition, the company has invested in expanding its foreign operations, including its Philippine repair center. This repair center replaces resources close to our Asia customers in a lower-cost region to support repairs, installations, and upgrades. This also provides for lower freight costs and faster response times, as the Asia market accounted for 90% of revenues in fiscal 2022. Lastly, looking at the Investor Relations calendar, our Annual Shareholders Meeting will be held at our corporate headquarters on Tuesday, October 18th. We will also be participating in several investor conferences in the next few months. On October 25th, we will be presenting at the LD Micro Main Conference taking place in Los Angeles. On November 17th, we’ll be participating in Craig-Hallum Alpha Select Conference taking place in New York. And on December 13th, we’ll be participating in the CEO Summit Conference, which is also taking place in New York. We hope to see some of you in person at these events. This concludes our prepared remarks. We are now ready to take your questions. Operator, please go ahead.
Operator, Operator
Thank you. The first question today comes from Christian Schwab with Craig-Hallum Capital Group. Please go ahead.
Christian Schwab, Analyst
Good evening, guys. Congrats on a great start to the year. Gayn, can you give us a number? You talked about being engaged in discussions with almost all existing and future silicon carbide suppliers. How many potential customers are there as you see it today?
Gayn Erickson, CEO
That's a good question. I don’t have that information in front of me. I'm trying to visualize the list that Vernon has, and it's quite extensive. I would estimate it to be around a dozen or more.
Christian Schwab, Analyst
Okay. Great. And then as the several new customers ramp throughout the course of this year, is this the type of ramp that you expect to accelerate strongly this year and be greater next year? And can it ramp to the level that your largest customer ramped once they started making production-type orders?
Gayn Erickson, CEO
I have a few questions. Typically, people take one system, work through some issues, and then order another one, which leads to shipping after managing lead times. However, with these customers, the pattern is different. They tend to order full systems, sometimes multiple systems at once, and often across various facilities. It's a fast-paced environment. One of our lead customers has made significant investments and has been a pioneer in the wafer-level burn-in area, which is widely recognized in the industry. They took time to absorb their first system before ramping up quickly. I anticipate that the initial six to twelve months may be slower, but then it will gain momentum. It all depends on the customer. Interestingly, when discussing test times with customers, the times they report often vary from the actual times when they place orders, which tend to be longer. We are currently trying to gather accurate lead times and forecasts from multiple customers to ensure we procure enough materials. I expect a gradual increase in orders. Many people are contemplating the capacity levels expected to come online in 2025, but attention is heavily focused on the second half of 2023 and into 2024, as significant capacity is being added. This situation may be more about the timing of the silicon carbide ramp rather than our own timing. Our objective is to be qualified before that ramp occurs and to have ample capacity and materials ready.
Christian Schwab, Analyst
That’s a great question, Gayn. Can you remind us what you think your yearly manufacturing capacity is or could be by the time you get to calendar 2025?
Gayn Erickson, CEO
Yeah. It’s broken up into maybe a few things. What most people think is the obvious, is if you come look at our facility, and you say, well, how many tools can you build on the floor here? In reality, that’s some ways the easiest thing. The testers basically bolt into water and power and they test themselves. We have a pretty good-sized facility with enough test base to build significantly. Ken alluded to that. We’re actually going to be doing some investments, probably a couple million dollars into the facility over the next couple of years, putting in additional power, water drops, and some other enhancements to support our WaferPak business as well. That would allow us to have maybe 10-plus drops, meaning we can be building 10 systems at a time on two weeks spreads. That’s a lot of capacity, more than the whole industry would take right now. We build 20 systems a month, for example. The next one is the subcontractors that are building all those subassemblies that come to us, and then I have to go down the list of them. But we have multiple chamber suppliers, multiple blade suppliers, multiple printed circuit board suppliers. Generally speaking, even as grandiose as we are excited, we don’t really press that. We’ve been able to do this without really being impacted by everybody’s complaints about the supply chain, outside of one thing, and that is the semiconductor components. We have a really good handle on semiconductor components. We know exactly how many that go in the system, we’re forecasting and buying semiconductor components right now 12 months and 18 months out, and have been for 18 months. Because of the massive leverage on semiconductor components to our revenue, we can afford to buy a lot of semiconductors ahead of time. We’re just not being caught. Now having said that, we still have our onesie, twosie along the way and hiccups, and the guys are working hard to ensure it looks easy. But for the most part, we’ve just not been impacted and it has allowed us to keep both our lead times down and our capacity up. But could we ship $100 million, $200 million, $300 million worth of FOX-XP systems in a year? Absolutely.
Christian Schwab, Analyst
Great. And then just one last question, I’ll let others chime in. In your guidance of $60 million to $70 million, can you give us just kind of your rough expectation of what you think will be from your current customers?
Gayn Erickson, CEO
It will not be as much as last year in percentage terms, which is a positive development. Some of the potential within that range and beyond includes new customers. However, we don’t always have complete visibility. We have a lot more to share, but the team is exploring various manufacturing plans and scenarios with systems being implemented in different facilities. Even with our existing customers, we lack perfect visibility. As a result, we purchase enough materials to anticipate our market share. Within that figure, there are several new customers, not only in engineering but also with first production systems being set up. A significant aspect also involves how many we can install on schedule and whether there will be any revenue recognition issues related to their acceptance, which creates some uncertainty. If we didn’t have to think about quarterly timelines, it would simplify things. However, I am more focused on the upcoming year and the ramp-up. I understand we have expectations to meet and we want to satisfy our shareholders. Nevertheless, timing everything within a single quarter can be challenging, which is reflected in the $60 million to $70 million range, leaving room for statements about our capacity to exceed that.
Christian Schwab, Analyst
That’s great. Well, just a quick follow-up on that, is using your words, if you could just look out for December of next year, if we looked at your business in a calendar basis next year, you’re excited about, how big of a revenue range opportunity are you thinking about?
Gayn Erickson, CEO
I’m not going to address that, Christian. I apologize for that. We put in a lot of effort to ensure we focus on it as a Board. However, I am very confident that we will see growth next year compared to this year. Let's just leave it at that.
Christian Schwab, Analyst
Yeah. Great. All right. No other questions. Thanks, Gayn.
Gayn Erickson, CEO
Okay. Nice try, though, Christian. All good.
Operator, Operator
The next question comes from Bradford Ferguson of Halter Ferguson Financial Group. Please go ahead.
Bradford Ferguson, Analyst
Hello. I’m curious, is your lead customer successfully making their own substrate? Wolfspeed has come out and said on a go-forward basis, as of some certain date, they’re not going to be selling substrate or extra substrate to other suppliers of silicon carbide devices. I am curious if this is a risk for Aehr Test Systems?
Gayn Erickson, CEO
So obviously, we have insight under non-disclosures, and given the fact that I’m talking to all the big suppliers, you can imply I’m talking to every one of the major players, including the ones you mentioned and then some under non-disclosure agreements. That gives me in many ways way more visibility than others, but primarily related to the devices. I don’t have as much visibility on their substrates, and I wouldn’t share much. It’s my belief that all of the major suppliers are all having success and depending on success of developing their own substrate supply chain, including the big guys. Wolfspeed, of course, has been the major supplier of it, and they’re expected to be very successful making devices out of that. With their announcement of their new fab, ST Microelectronics is absolutely counting on ramping their own. And ON Semiconductor is another one along those lines, and of course, Infineon is also getting involved. I believe that all of them will be successful. I’m not hearing anyone that can genuinely say there’s quite a bit of uncertainty. Certainly, people say it’s not as easy as it looks, and it takes some time, but there’s a lot of money being put into solving this problem. I mean, Wolfspeed spent 30 years working on this stuff, and their competitors are spending more money to make pools this year than maybe Wolfspeed spent in their whole career. I don’t know if that’s fair, but it feels that way. So there’s a lot of energy trying to solve this problem, and my belief is they’ll figure it out.
Bradford Ferguson, Analyst
One name I haven’t heard you mention is Infineon. Are there any large silicon carbide makers who aren’t doing wafer-level burn-in or are doing it as the others intend to do?
Gayn Erickson, CEO
Let me answer it differently. Most of the vendors or companies today have either little or zero wafer-level burn-in, with the exception of our lead customer. I actually know by quantity how many wafers of capacity, and it is a very small fraction comparatively. Keep in mind, one of my systems can test 18 wafers at a time. We’ve talked about our competitors. I choose not to do it in this forum because they can read about it, and it’s not because—most of the people testing today use a prober and it just doesn’t scale. In the same footprint I mentioned, it’s about the size of a small Prius car. I’m looking at our parking lot, in that room. You can test 18 wafers while our competitors test one. If you go through the math, if you realize that the world needs 8 million wafers in 2030, that’s a Canaccord number, and if you round down using like 8700 hours a year with inefficiencies, you need 1,000 wafers an hour to meet that demand. If you start looking at a 10-hour burn-in time, you would need 10,000 wafer capacity; if that is the case, that’s a 10,000 car parking lot by my competitor. We’re not zero footprint. But in a manufacturing floor of a wafer fab, it’s enormous. If you’re a player needing 10,000 wafers of capacity and you want a 20% market share, you need to put that somewhere. No test floor in the world can support 2,000 wafer probers for silicon carbide. There’s no way. So we’re just—obviously, it’s a very big opportunity.
Bradford Ferguson, Analyst
Can I ask one more?
Gayn Erickson, CEO
Sure.
Bradford Ferguson, Analyst
You mentioned a brand new player that’s an experienced chipmaker. Are there chipmakers that are going to enter this market with the same scale as the current announced plans of the top three players?
Gayn Erickson, CEO
Yeah. We’re now talking to several. I had to double-check this because we’ve been talking to these guys for not very long, probably four months. I had to double-check to make sure they haven’t publicly stated anything when I wrote that, but they haven’t. There’s another customer we’ve been working with that has never made anything public, either. But I recently saw they showed up at one of the trade shows. However, I’m still not going to talk any more about it. We know they have massive plans on the order of some of the current top fours. Keep in mind, it’s always interesting. If you just go through the math of these forecasts, if there were 125,000 wafer starts in silicon carbide last year and there’s a need for 4 million, you’re multiplying that by 25. Another way of thinking is that all of the silicon carbide that was built last year is not even what 2% or 4% of the overall market, you get that. So all of the suppliers today don’t even dent the market in eight years. So they all have to grow substantially. I sat in meetings where leaders like ST Microelectronics said they have no plans to build enough capacity to maintain a 50% market share like they did last year. They’re not going to spend that much. So by definition, they will lose market share from being number one at 50%. But they’re planning to grow substantially but not by 25 times. The world actually needs more players.
Gregory Ratliff, Analyst
Yeah. Mr. Erickson, congratulations on the company’s success. One thought I have is to carry on with that final question and if you were to look at maybe the weaknesses in the structure of the company currently or the competitive threats down the road. Could you give us a bit of your thinking regarding what you need to do to continue to be a champion or to be a champion amidst the tough competition you had?
Gayn Erickson, CEO
Okay. I’m not foolish to think that as the market is obviously large and growingthere won’t be competitors trying to get into it. We are in a unique scenario where the way we do our testing is truly unique. If you look at every wafer tester in the world, I’ve been in this industry for 35 years. The method of building an ATE system to test semiconductors has been the same. Every company has built a tester that sits on one of the three main wafer probers. Three different industries, the tester, prober, and probe card supplier have effectively multiple people competing for the same capability. It’s a successful business. But the problem with that is that those test times are designed around seconds of test time. The average cost for testing one or two devices at a time is extremely expensive to do. You built a machine to take package part burn-in level costs and parallelism and implement that at wafer level, making investments to do that over the last decade driven by the macroeconomic trends of heterogeneous integration of semiconductors, automotive devices, and multi-die modules. We did not expect silicon carbide to be this hot market, but we sat in front of this. We are fully ready and prepared to take advantage of the wave. It’s not easy to do what we do, and we have a list of patents to defend it and will defend whatever company tries to build a tester like ours or any customer who wants to look into a product that isn’t ours that looks like it. We have a long head start, and we’re running hard to engage as many customers as possible. We’re also working with automotive suppliers who are looking to qualify the tool and qualify it backwards into multiple vendors. My main goal is to not limit anyone in capacity for testers. We have the shortest lead times of any other tester company from what I’ve heard. I’ll take an order like two weeks ago and ship it at the end of the week. I’ll take an order. I’m ready to talk about what my next orders are. The idea is to run as fast as we can to ensure that we do not limit anyone in capacity of testers. There are some things we need to enhance. We took our power supplies that were going at about 30 volts, and we increased them to 40 volts. We need to ensure there’s no technical reason for customers to leave us, so we have the ability to provide a technical solution for engineering characterization and then move that into high volume production and configure them to optimize the cost. We’re trying to address it all; technically, commercially, capacity and our IP patents to protect ourselves.
Gregory Ratliff, Analyst
Thank you so much for that.
Matthew Winthrop, Analyst
Hi. Hi there. Gayn, how are you?
Gayn Erickson, CEO
I’m good, sir. In a particularly good mood these days.
Matthew Winthrop, Analyst
I wanted to just blow some smoke for a quick second. As you know, as a retail advisor, I’ve been following Aehr for four or five years. I have lived through this downtime. You were so brutally honest when things weren’t great, and I just wanted to thank you and commend the fact that you guys have kept your eye on the ball, and obviously, you’re starting to see some successes, and that’s a rare attribute in this environment that we’re in. So nice work, sir.
Gayn Erickson, CEO
I really appreciate that. Real quickly, it does seem on the outset that you’re having shorter lead times. Is that true? Are they more in the workforce that suddenly sounds like the sales lead time is a little quicker unless I’m misinterpreting that? Yeah. I think I got it. You broke up a little. So I apologize if I think I got the gist of it. So let me try to repeat it back a little bit. So this idea that, it seems like things are going a little faster, maybe the sales cycles a little shorter, et cetera. That’s absolutely the case, and I think there are a few things going on there. This really is one where COVID being over helps, okay. I mean, just things were so slow with current and new customers, and people weren’t traveling, and it was hard to sell and to communicate. You can only do so much over the tune. That’s one. There’s also this element that three years ago, right, we were selling these systems. The lead customers of this platform were Apple and Intel and ST Microelectronics and some of these, because they were 10% customers for us, right? But they were still kind of unclear about whether the technology was real and would actually make sense. That was their hesitation. Then all of a sudden our big silicon carbide customer came along and bought this. They bought one system and sat on it for more than a year. Then they started ramping pretty hard. My guess is, it’s softer during the first six months to 12 months, and then it gets stronger thereafter. Things are happening quicker now. However, we’re engaging with customers to ensure we’re guessing correctly with leads. We’re making sure we have enough material purchased to keep pace.
Matthew Winthrop, Analyst
That’s great. I have one follow-up if I may. I’ll act like an analyst here. Last quarter what were you projecting for potential revenues? Was it a calendar or fiscal 2023? Now I think your release is at $60 million, maybe more. Had that number just in the last quarter increased dramatically, or was that?
Gayn Erickson, CEO
No. We provide—we really only provide guidance annually, and we only do it once a year, so we haven’t changed too much. We’re not trying to play that game; we’re just trying to be honest about expectations, which feels about right. We’re in good shape for that—it depends on the timing of these customer ramps. I’m pretty confident in winning these customers, but it’ll feel good when they give us the first POS, too.
Matthew Winthrop, Analyst
Nice work.
Operator, Operator
At this time, there are no more questions in the queue.
Gayn Erickson, CEO
I’m glad we were able to get to everybody. Thank you. I’m glad I had a chance to answer a couple of questions. I really appreciate all our shareholders who’ve been sticking with us. We’re really excited about this new market opportunity this year and heading into the next years. We look forward to seeing anyone who happens to be coming to town to visit. We will be at one of the shareholder meetings or the investor conferences. We’re getting a lot more mileage these days. So thank you very much for your time, and we’ll talk to you next time. Bye-bye.
Operator, Operator
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.