AEHR TEST SYSTEMS Q2 FY2025 earnings call

• Market diversification into AI, processors, gallium nitride power semiconductors, data storage devices, silicon photonics integrated circuits, and flash memory is driving new opportunities. - Secured first AI processor customer for wafer level burn-in, with initial volume production orders for FOX-XP systems and WaferPak Contactors. - Announced first gallium nitride semiconductor production order from a leading automotive semiconductor supplier. - Progress in silicon photonics with new system configurations for optical chip-to-chip communication. - Update on silicon carbide market, including legal action in China for intellectual property infringement and cautious optimism about opportunities there. - Acknowledgment of the passing of Avi Ray Chaudhuri, EVP of Research and Development, with Don Richmond stepping in.

In the second quarter of fiscal 2025, total revenue was $13.5 million, a 37% decline from $21.4 million in the same period last year. WaferPak revenues were $8.6 million, accounting for 64% of total revenue in Q2, up from 43% in the same period last year. Silicon carbide, which was almost 90% of revenue last year, is expected to account for less than half of total revenue this fiscal year, while AI processors (including wafer level and packaged parts) could comprise as much as 40% of total revenue, GaN, hard disk drive, silicon photonics integrated circuits, and other semiconductor packaged part revenues will make up about 20% of revenue.

Aehr Test Systems reaffirmed its financial guidance for fiscal 2025, expecting total revenue of at least $70 million with a non-GAAP net profit before taxes of no less than 10% of revenue. Recent bookings in the first six weeks of the third quarter of fiscal 2025 totaled $14.2 million, bringing the effective backlog to $26.6 million.

• Geopolitical, trade, and intellectual property risks associated with the Chinese market, including legal action against a local supplier for IP infringement. - Softness in the silicon carbide power semiconductor market. - Competitive offerings in China that may infringe on Aehr's intellectual property.

Q: When will there be a strong top line growth rate for long-term sustainable growth?

A: Gayn Erickson mentioned they haven't given multi-year forecasts but highlighted various market opportunities like AI, GaN, flash memory, etc., as drivers with potential for growth.

Q: Were the orders on the shipping dock a timing issue?

A: Gayn Erickson said the orders were on the shipping dock and were a timing issue due to customers asking for concessions and expectation management needed with customers.

Q: View on Chinese market for silicon carbide if patent case not successful?

A: Gayn Erickson stated there are legal and competitive aspects, but Aehr has a competitive advantage and is committed to addressing IP issues in China.

Q: Flash market opportunity driver?

A: Gayn Erickson explained flash memory's commercial requirements and technical issues like 3D stacked NAND devices and power per device challenges as drivers.

Q: Thoughts on HBM and silicon in accelerators?

A: Gayn Erickson noted the potential of HBM and silicon in accelerators and Aehr's capabilities to address yield issues and support customers in these areas.