Good day, and welcome to the Aehr Test Systems Second Quarter Fiscal 2022 Financial Results Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jim Byers of MKR Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon, and welcome to Aehr Test Systems' second quarter fiscal 22 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. Right after market close Aehr Test issued a press release announcing its second quarter fiscal 2022 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 today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These factors that may cause results to differ materially from those in the forward-looking statements are discussed in the company's most recent periodic and current reports filed with the SEC. The 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.

Thanks, Jim. Good afternoon, everyone, and thank you for joining us for our second quarter fiscal '22 earnings conference call. We hope that everyone is off to a great New Year and are healthy and managing through these historic times with COVID-19. Also, I do want to apologize in advance that I have a lingering dry cough, after recovering from COVID myself over the holidays. While I was fully vaccinated and one of those that had the breakthrough case I'm happy to say I'm feeling fine and fully recovered from what little symptoms I had. Let's start with a quick summary of the highlights of the quarter and momentum we're experiencing in the semiconductor wafer level test and burn-in market. And then Ken will go over the financials in detail. Then we'll open up the lines to take your questions. In the second quarter, we're happy to announce our second consecutive quarter of record bookings and solid results for revenue, our bottom line, our balance sheet, and we finished the quarter with new record for bookings in a single quarter of $29.1 million. This follows the previous quarter where we set a record of $20.7 million. Revenue for Q2 was $9.6 million, a sequential increase of 70% over the first quarter and up over 470% year-over-year. Our backlog at quarter-end was $36.1 million, which is our highest backlog on record for the company. With our strong backlog and the incredible performance of our manufacturing and supply chain team, as well as the great job our suppliers are doing in ramping to meet the significant uptick in revenues, we're confident and are reiterating our previously provided guidance for full year total revenue of at least $50 million for the fiscal year ending May 31, 2022. This equates to fiscal '22 revenue,…

Thank you Gayn, and good afternoon everyone. As Gayn noted we had another solid quarter for Q2, with our second consecutive quarter of record bookings, strong sequential growth in revenue and our highest backlog on record at quarter end. Looking at our financial results, net sales in the second quarter were $9.6 million, up 70% sequentially from $5.6 million in the preceding first quarter, and up 471% from $1.7 million in the second quarter of the previous year. The sequential increase in net sales from the preceding first quarter includes an increase in WaferPak DiePak revenues of $4.1 million. This was partially offset by a decrease in system revenues of $125,000. The increase from Q2 last year includes an increase in WaferPak, DiePak revenues of $4.3 million and an increase in system revenues of $3.6 million. Customer service revenues were flat for both periods. WaferPak and DiePak revenue comprised over half, 53% or $5.1 million of our total revenue in the second quarter. We also had a record number of WaferPaks and DiePaks shipped during the quarter, reflecting growth in the consumables piece of our business, as well as our ability to scale and meet customer demand. Non-GAAP net income for the second quarter was $1.4 million or $0.05 per diluted share. This compares to a non-GAAP net loss of $414,000, or $0.02 per diluted share in the preceding first quarter, which exclude the impact of forgiveness of $1.7 million in loans from the Paycheck Protection Program that we received in fiscal year 2020 and non-GAAP net loss of $1.7 million or $0.07 per diluted share in the second quarter of fiscal 2021. The non-GAAP results also exclude the impact of stock-based compensation in all periods reported. Stock based compensation costs of $718,000 in Q2 '22 reflect a significant increase…

Thank you. [Operator Instructions] And we will go first to Christian Schwab of Craig-Hallum Capital Group.

Congratulations on a great quarter and continuation of strong bookings.

Thanks, Christian.

Gayn, I'm just wondering if you could give us just a little bit of -- or help me with a little bit of clarity on the silicon carbide. We talked about a large silicon carbide supplier, who's in evaluation and then we talked about several new silicon carbide customers that will ramp into production. So is that a minimum of three customers that could be close at hand? Or is -- are you referring to the large silicon carbide supplier, when you talk about several car customers? It wasn't clear to me.

All right, let me try. And folks, one of the challenges that we're dealing with right now is, and we've made statements like talking to all of the suppliers, and then some. The subtlety here is, when you're talking to all of the players, there's always this balance of trying to maintain competitive information and where they're at, and not giving too much information about one player versus the other. And so sometimes my, I guess, indirection and all is just related to that, because obviously, my key customers listen in on this thing as well. And we have pretty clear non-disclosures and things in place. So we always have to try and muddy it as best we can. But when you're talking, some of these deals and the really large deals and the discreteness of it, I know that gets difficult. So let me try now a little bit of color as well. So just for clarity, the industry, market forecasters that talk out there, generally refer to the largest suppliers in this space traditionally have been FT had the number one position, and then Infineon and Cree, now Wolfspeed are others. And then ON Semiconductor that kind of came out of nowhere, and people know that On Semiconductor is one of our top 10% customers, are generally thought of by most people as the current larger players in the space. In addition to that, you have Mitsubishi and ROHM that historically were kind of filled out the top six. We have some level, if not a deep level of engagement with all of the above, okay? And we certainly are in conversations with the - all top four of them, including one of them being our biggest lead customer. What we have done is we've been involved in,…

That does help Gayn. And then just a follow up on the pace of evaluation of the customers. In the press release you talked about adding several new silicon carbide customers that will ramp into production by next fiscal year. So I assume that means that by the end of May of 2022, there'll be a couple other customers ramping. Am I reading that sentence correctly?

I wouldn't know. I apologize if that's how I wrote it. And no, the intent was not to push it all the way out. But I wouldn't say we expect several companies to be ramping into production by this May. I intended to imply by next or through next fiscal year, so by next May. Now that's not to suggest that, we couldn't get a customer or even make shipments by May. That's not the intent. But I probably wouldn't describe that as ramping into production anyhow. But I think, we were -- we kind of were referring to before, over the next 18 months, we said that before, I'm just trying to tighten that up a little as to what we're thinking. But we do believe by our next fiscal year, which we call fiscal '23, which ends in May, at the end of May of '23 that we would expect to be adding several new customers.

Right, it would and then production is different from like, potential initial. Would you anticipate seeing orders from other customers here in the first half of this calendar year, that would lead into more "kind of real capacity [ph]?"

It is fair, I would -- I guess it would surprise me. It's most likely that any new customer will start by ordering one, before they will order multiple. And there might be three to six months break in between perhaps. I mean, it was longer than that to begin with. I feel like it will move faster. But so in that sense, there is sort of a timing. Is it -- it's certainly possible that we could be getting our first customer orders before the end of this fiscal year. I also want to, I guess hedge my bet a little bit in terms of if we didn't, does that mean, we have lost the production of these key customers? I would say that is definitely not the case. One thing that kind of surprised me a little bit is -- and I -- now I don't, I don't want to get too carried away with specific customers. But there's some companies that were out there that were talking about this expansion, new fabs that were going in 2022. And six months ago, I was like, oh, my gosh, we got to hurry, hurry, hurry. We're going to miss the ramp. They bought from us yet, they're going to be ramping in January of 2022. We're going to miss out. That's just not the case. I mean, those same companies are now saying, well, we're going to be sampling in 2022. So they barely even need a production tool by the end of 2022. So part of this is just trying to understand what's really going on out there and make sure that we're not missing anything, that specific customer, for example, we don't feel we're missing. We're still talking to them, etc. And they're not on a timeline. They were not looking for a solution to be installed this quarter, for example. So I think there's a little bit of this challenge of trying to guess exactly when people are going to be ordering. And the timing of that is obviously pretty important, because if you're in the stock before that, that's good. And if you are out when those orders are announced, obviously, that's bad. I tried my best to try and get an estimate of what's going on. Again, I'll give you at least the window that I expect, not only will people have bought their first orders, but we'll start to see orders that would be going to be ramping into production by the end of next May.

Great, and then I guess my last question, just as it relates to silicon photonics, and the packaging, technology changes, etc., and inter chip technologies. Have you guys had a chance -- I know you guys kind of previously talked about how large you thought the potential TAM could be over time, if everybody, was a silicon carbide customer. And there was, 30 some million cars sold by 2030. Have you guys been able to do any work behind the scenes in silicon photonics to say, a range of potential revenue outcomes to the company could be kind of x to y, in two to three year?

Candidly, I don't think we have really good numbers on that yet. And we'll be working with that and doing the best we can -- there's not actually anyone forecasting that yet publicly. So obviously, anything we would know about that through non-disclosures with customers and stuff that you have to wait for somebody to talk about it publicly. To us right now, we see it as a rising tide, in an area, we have a great, very fast boat, if you want to call it that. Also, just in general, the physics are such that it makes sense to have to be thinking about stabilization. It makes sense to be doing this at wafer level. So many of the bets that we've made for those folks that have followed us for a number of years, we make these bets to basically anticipate major waves. It's tough to make calls and look for market opportunities that don't exist. But this would be one of them. This would be an example where you can see why people are going towards this. You know, I didn't mention it in my prepared remarks, but one of the things that I was, I guess, just surprised at or I don't know, shocked is the right word. But the folks that really get into the technical details related to why silicon photonics makes sense long term for these inter chip communications or these chip to chip communications in these multi die modules, or in the packaging technology that Intel has talked about publicly, is that, SerDes, serial to deserialize high speed gigabit channels are nearing the end of their physics. So basically, today, you can go get a SerDes channel that's 120 gigabit or something like that, or I think 104, 108 or something like…

That helps, Gayn thanks. No other questions. Thank you.

Thank you.

And we'll go next to Jon Gruber, Gruber & McBaine Investors.

Hey, good afternoon. I have two quick financial questions. One, I'm confused why your property, plant equipment which was -- has gone down in 12 months, given the amount of throughput you're putting through it? So you're spending nothing on the factories or what -- why is that -- why has property, plant gone from $700,000 plus to $600,000, which is [indiscernible] by any stretch of the imagination?

Yeah, so let me -- Gayn, let me address that. Yeah, we closed the year out, or excuse me the quarter out in November 30, at $661,000 compared to $676,000, like we talked about, even if you compare to the last year of $677,000. So it's remained relatively flat. Keep in mind, we depreciate $100,000, we'll call it in depreciation per quarter. So we're actually adding equipment and we just happened to offset the adds with the amendment of depreciation that's getting recognized. Also a key that we like to say that allows us to scale is we use contract manufacturers. So doing final assembly and test and having the capacity that we have here in our 51,000 square foot facility, it allows us to really grow without having to add capital. So that's a great benefit that we have and a great opportunity we have.

Now you've gone from 5.6 in Q1 to 9.6 in Q2. You're going to have to go to 15.5 and 21 to see your 50. Even with that you will not need to add any property plant equipment to your facility?

Very little.

Very little.

My next question, Gayn, you want to say something?

Oh, I was going to say, I have a couple of engineers that are asking me to buy some really fancy test equipment right now that are listening, but it still won't tap this number.

All right. Now gross margin went from roughly 41% to 47%, Q1 to Q2. Now your revenue is going to explode in Q3, and then even further in Q4. What kind of gross margin goal do we have here as we get up to these big numbers like over $20 million? I realize your shipping costs have gone up some, but we're talking such huge numbers relative to what we've been. We increased six points in Q2. What's going to happen in Q3 and Q4 in gross margins side?

Gross margins, just to reiterate what I had mentioned in our last call, we expect as we grow to our $50 million year end number to get gross margins up to 50%. So we're at 47% now. We've talked about there being impact for some unanticipated costs. And we still see those costs, even though we call them temporary, still impacting us for at least the next quarter, potentially next, all the way through our fiscal year end. However, I still believe that we expect to show gross margins in each of those quarters approaching 50%. I wouldn't say it's going to be 50% next quarter, but probably Q4.

Okay, thank you. I got my questions answered. Thank you.

Thanks Jon.

Thanks, Jon.

And we'll go next to Dylan Patel of SemiAnalysis.

Hey Dylan.

Hey, thank you. I have two questions. The first one is that SemiAnalysis has tracked seven firms in China investing over $100 million and two hovering close to about the seven, over $1 billion in silicon carbide materials and device manufacturing. And it's basically all greenfield. You talked a lot about the fantastic wins and traction you have in the U.S., Japan and Europe. But what is Aehr doing to penetrate the China silicon carbide burn-in test market given it's potentially going to be just as large as the U.S. or Europe?

Okay, well, I'll take that one fairly at a high level. And I actually specifically in prepared comments mentioned customers with a plural as in China. Yeah, there is actually a number of companies in China that are talking about greenfield silicon carbide fabs of which, I guess, I think it's notable, reached out to us, okay. So our kind of marketing and our messaging and our reputation is getting out there. So I know at least one, if not two of them, called us and we had not even heard of them before for what that -- maybe that's scary too. But they're contacting us and talking to us about their capacity, and it's pretty significant. Now we do have systems, we have burn-in systems in China. We actually last quarter announced our first wafer level burn-in or our first box system that was going to be being installed into China in addition to we have a fairly large customer base of packaged fab burn-in systems. And we do have infrastructure and people there and Kevin [ph], because it's particularly difficult to travel in and out of China right now. So we have the ability from a sales perspective, we have ability from applications and support perspective to support folks in China and the company that have been talking to us are actually near where our people are, which actually helps as well. So we're working on it, Dylan.

That's awesome to hear. My other question is regarding on device liners and DoD illuminators, which will go incredibly pervasive if you're a big believer in the metaverse artificial reality, virtual reality. These devices can use PCSEL lasers and you've told us about burn-in test for those in the past and you've updated us on the burn-in test market for these lasers for 200G, 400G co-package optics. But can you update us on the burn-in test market for sensor applications and potential given how pervasive the native metaverse could be?

Okay, so actually, LiDAR, when I think of LiDAR, think of the automotive side of things. The DoD illuminators, I think of what's on, certainly on iPhones and things like that, or kind of consumer type electronics or heads up displays or AV/VR kind of things, right. So we're actually talking with both of those. We've got some activities going on with LiDAR. It's out in time, but I'd say we've got our toes in that right now, with one lead customer. And related DoD illuminators, I mean, actually one of the - our lead customer, our very first customer on the FOX-P system that we've now parlayed into number of others, I think people understand that they were a 10% customer early on, which was Apple. But we do -- we are using that tool in 2D, 3D sensing in mobile applications, a number of them. It's always been an interesting thing for us. And we've kind of -- I'm a pretty optimistic guy. This is an area you'll see a little bit of the cloud over, and that is most of the time the DoD illuminators and the pixel arrays, people are able to deal with what I'll call sampling. They are not doing 100% burn-in and they're not necessarily aging them. Whereas in the communication application and the pixel, they do 100% burn-in. So 100% burn-in and to age it might take 24 or 48 hours. But if you're actually only sampling, and you're not trying to age it, you might do that for several hours, and certainly not 24 hours. But if you're only sampling a few percent, then all of a sudden the market size is not as big. So today, so far, most of that has played out that way. Because the amount of time that the illuminator is actually on, and particularly with facial recognition and security access type points, is a very, very small amount of time. I mean, if it's only on for milliseconds, even if you look at your phone 100 times a day, it's only on for hundreds of milliseconds. So in the entire life, it might only be on for 300 seconds or something. So in reality that isn't even enough to notice that the thing is actually decaying like, but in a pixel array for communications, that's a big problem. So the one thing that people talked about is when you go into gaming and other applications or certainly automotive LiDAR, the decay of that would be a problem, and because it's in continuous use. And so we continue to keep our fingers in that. Some of those deals are fantastic. They've got great margin. They just haven't had the volume to them yet. But we're still involved in those and believe that if some of the applications proved to need capacity, that will be a great vendor already qualified, and certainly have the manufacturing capacity to meet their needs. Hope that helps.

Thank you so much.

Operator, do we have others?

And we will move next to Willard Brown [ph], Otter Creek Investments.

Hi, and a great quarter. You did exactly what you said you would do.

Thank you.

I had a question. Out of the $9.6 million in revenues in the quarter, how many customers did you have?

We typically aren't giving that but I think it would be fair to say it was quite dominated by one lead customer in silicon carbide just by the announcements that we made, although it probably was made up of total, I mean, you have to get down to services and things like that. But certainly a dozen or more customers. But so that's fair to say that our lead customer in silicon carbide is dominating our revenue right now.

So as we go forward, into the third and fourth quarter and then into fiscal '23 what kind of ideas do you have? I understand this market could explode. But what kind of ideas do you have as the number of customers that you will serve in a given quarter? One of the problems here is concentration. I don't think that's the big problem here because of your technology. But it's something I think about. So if you go forward several quarters, are we looking at more of a dispersed customer base?

Yeah, let me let me get to that. I mean, I think it is absolutely fair to point out that no matter how unconcentrated we get we're still concentrated by most methods. My previous company, which was Verigy, it was bought by Advantest for about a $1 billion in 2011. We were doing $600 million, $700 million, $800 million dollars a year. But I'll tell you, every single year, two or three customers accounted for 30%, 40% of the revenue. In the semiconductor world, it's very typical to have a fairly high concentration. If you've got -- if you need 20 customers to get the 90%, you're doing pretty good. The reality is there's more concentration in semiconductor companies than there were, certainly when I started in my career. So we have to build a business model around the fact that we would aspire to be able to have 20 customers make up 90% of our revenue, but most industries, that's a high concentration. But I will not be surprised if we continuously have a 20%, 30% customer, even over the next decade, because even if we have ten customers, it's very typical that one might be ramping more than the others. Now, having said that, from a manufacturing planning perspective, we're actually betting a little bit different than that. And that is seldom do you see, or have I seen where a market is so uniform, and so clear on what the discontinuity and what the ramp is as this. As we saw, in flash memory is one of my experiences where every company was growing, every single company could not supply enough. And so you have to have be able to supply to everybody. That doesn't mean we win everybody, but what I mean by that is, it's not like you're going to see one customer ramp one year, and then the next customer the next. Most of the -- most customers over the next decade are going to have to ramp every single year to keep up with the demand.

Yeah, I had come to that conclusion also.

So we're -- so we have -- as we've done deep dives with our customers, we have, in almost every case, at least two suppliers for every critical subsystem. And for the ones that we have single suppliers, we've done some pretty spectacular things to ensure that we have buffers in there. But we are not only activating our second suppliers, but we're ramping both primary and second suppliers like mad right now, because they have to have the bandwidth to be able to react to it. And it's not just total capacity, but also to within reasonable short lead times, because the reality is we think that companies are going to get to a point where it's like, at some point someone, I'm sure will have something that will compete with us, right? And if they do, we want to be able to compete [ph] based upon being the industry experts, the industry standard. We can list all the companies that are already counting on us, and also be the people that can supply in short times. But we're going to have concentration. Don't bet against that.

So here's my second question and my last question, but it's a really tough one. And it's really tough because of what appears to be a mind boggling expansion of the products that you supply. And that is the total addressable market. I've tried to do this. I've gone through the number of wafers that are going to be needed. And then okay, how many Aehr systems do we throw in there? I don't know how to do the math, basically what the problem is. And so how do I look at that?

Well, we've walked through the math several different ways. And let me do it a little bit briefly, without filling in the numbers. Let me just show you how to calculate. And then I'll give you a rule of thumb that's been working for us. Okay, so figure out how many cars are going to be built, and how many engines there's going to be, and I guarantee it'll be at least one engine in it, right. A year and a half ago, people were assuming that every car had one engine. And most people were saying there'll be at least 30 million cars a year built by the end of the decade. Every car engine needs about 50 devices. It's actually 48 plus some onboard stuff. And a wafer today for those types of devices contest about, have about 500 devices on it for 10 engines. So you just go through the math and say, okay, if you need 30 million cars, okay, and a wafer can give you 10 of those cars per wafer, if there's one engine on it. And then you start looking at burn-in times and test times and, and there have been people that have talked, it ranges from six hours or 12 hours or 24 hours or 48 hours that we've talked about, people would hope to get to 24 hours right now. And then you can give some estimates. What we ended up doing is there was a couple of people that had done this, and I think it's still very conservative rule of thumb, and that is for every million cars that are shipped, you're going to need at least eight of our systems in the world, either from us or somebody else, and keep in mind these are 18 wafer systems. [Multiple Speakers].

Yeah something on the order of a system with all the WaferPaks and everything else being maybe $4 million apiece, okay, you need about $32 million worth and that's a way of looking at it. And it still holds up under pressure. And it's easy to say that's conservative, but it's still a big number.

I appreciate. Very good job, gentlemen.

Okay, thank you. Operator, maybe one or two maybe quicker. Is there other folks?

And we have a question from Mark [indiscernible].

Okay. Hey, Gayn, thanks for taking the call. You talked about the sampling going on at the potential new customer. Is that the typical process that we should be looking for, as you go down the path? You've been great about giving us visibility into how your pipeline looks publicly, and, and things of that nature. What if you could just briefly walk us through what the process is, getting to the point. They sample. Do they have to do internal wrangling, qualification negotiation with you? What's the process that leads to the finish line? Thanks.

Generally speaking, and that should be typically of our test equipment, burn-in systems in our history. Our process from the time you first talk to somebody until they might place a first order is probably minimum nine months. I mean, one, we used one example where the silicon carbide customer, we talked to him in February, they put -- we were on wafer doing benchmarks with them in the summer. They were shipping wafers that we were building for them, to sample with their customers. And we actually installed the system in November now -- or shipped it to them in November. And now to be fair, and not to advertise that we do this very often or at all anymore, I think they gave us the order a couple of days before we shipped it to. That's pretty rare. But nevertheless, that's how it played out. And that, I think, would be fair to say that was moving pretty quick. We had a discussion going on with another silicon carbide customer for over a year, and they're still taking data. So it kind of can depend. This is not typically -- this isn't a 30 day process. And historically, what people will do to whenever they start, they'll bring in a system, and then they'll start doing qualifications of it with both internally and with their customers. And then they will ramp. So I think it's also reasonable to imagine that the time between the first system and the next system, often times is a minimum of a quarter or two as well. So there is a length to this. And I know that that can be frustrating, it is to me sometimes. But you also don't want to drop the ball nor do you want to guess wrong. You know, this is -- there's -- it's interesting, I said it in my prepared remarks. And I mean it. I mean, I've had conversations with executive management for silicon carbide customers, and they're literally like aghast with the forecasts that their customers are telling them in 2026. They're so much bigger than what they built. They spent 10 years or 5 years building what they've done. And these customers are saying these ridiculous in their mind numbers, three years from now. And they're like, how in the heck are we going to do this? So they're both excited, but also just frightened about it. And so a lot of my conversations with companies are less about when they can get the first tool and how many they could get, when they get around to it. Very interesting conversation. It's like, listen, you're jumping the gun. You need to verify the first one first. So listen, I have no intention of buying a system from you, if you would not be able to meet the capacity needs. That said -- it's pretty fun. It's a fun place to be.

Right, of course. Now you're looking at those incumbents. Obviously, they have processes in place by which they test systems. Our research indicates that yours would be superior to what most if not all of them are using at present. But obviously to replace those existing systems would be prohibitive because they sunk money into that. So I would assume -- is it safe to assume that anything that you would do with an existing vendor would be for future capacity?

That's usually easiest. I mean, it's sort of -- it's kind of hard to compete with free. There are things for technical reasons, like if you're going to put these devices into a module, there's no package to put them in. So your package for burn-in doesn't do you any good. So incremental might not only be capacity, but it might be type of device. But a company that might be increasing capacity of their package part devices, discrete devices, as well as modules may choose to move -- need more capacity for their modules and then shift the other capacity towards the excess package part or something like that. So but generally speaking, it's pretty bold to think you're just going to displace what they have, but I've seen it done.

Okay. And do you feel that there's any potential roadblocks or pushback to the idea of running multiple processes in parallel, right. They have an existing set of machines and provenance.

Very specifically, people wouldn't -- would actually intend to do that. I mean, by the way, a discrete component that is in a package, you can go find them on DigiKey, I usually have one with me. I'll point it out, hold it my hand. There's still a market for those. And if it's a discrete packet, and you can put it on a package by burning like one of my systems, it's not crazy. Actually, we think it's cheaper. At wafer level, we've shown that and customers have agreed to it. But it's again it's not cheaper than free. So people would just continue to package or burn-in why not, that's fine. But there's -- ability perspective if this market stayed at package part, they're going to need literally thousands of packages by burn-in systems. So those guys that are supplying 2% of the 2030 market, they need to grow 50 times. So if they have package or burn-in systems, and they didn't go to wafer level, they're going to need to buy 50 times, as many packages by burn-in systems too. That's another way of thinking about it. And so in that commercial disconnect, we call it, where it's like, wow, you're going to have to go write a check to somebody for $20 million, with a package for burn-in systems, it's like, well, if you buy my machine, it's $12 million, and it's wafer level. And it's more scalable. And by the way, you get this advantage, because you can also do -- put them into modules, and you get the yield advantage, etc. So there's a value proposition and a sales pitch there simply to displace. Our lead customer has only has shifted away from package cart. They're moving everything to wafer. It's just cheaper.

Hey, I appreciate the insight. You've been fantastic in guiding us through all this. You're easy guy to get behind. Thanks a lot.

Thanks, Mark.

And we'll take our last question from Larry Sabina of Sabina Capital [ph].

Hey, Larry.

I'm glad you're safe and sound from COVID.

Me too. Thank you.

I have three quick questions, if I could. The NP sales that you have been announcing recently for silicon photonics, the lead customer, the large customer in that area, are they buying the NPs versus XPs because they have a multitudes of applications? Or is the NP with its flexibility, cost effective enough where it actually makes more sense if you stack them up, and use them instead of an XP? What's going on there?

I'm going to be a little vague here. But I'll just at least say no. They're buying them for engineering characterization and early qualification. Now companies could use an NP member, and NP can test two wafers at a time. So I guess in certain applications or wafers, a lot of devices. But no, these are being used in qualification engineering characterization, because they're easy. You could do quick changeovers. You don't have to -- you can run them at different -- each of the NPs can be at different temperatures. Each of the positions can be a different configurations. It's the flexibility for it. And they're just sort of bite sized. They're cheaper than the production system. But they work as well.

Easier to scale up. So am I to think that that's for the same application or the different applications.

All I've said is that they are different applications. And I really don't want to [indiscernible]. And by the way, and we don't know yet exactly what that would look like and intentions of -- I'm not forecasting what production may or may not be or anything else, but I'm very excited about this, what they're doing right now. So…

Right. You have an update or anything on the CP business for data soon? That's in the works?

Larry, we don't. So folks that are joining in on that are familiar with it. We announced a CP as a single wafer system that we announced to a customer. We referred to it in an extremely high volume application and they bought one system. So it can't be that high volume. That customer has continued to communicate to us on a fairly long period basis, every three to six months, that the ramp of that product line continues to be delayed. And what I heard was it was listen, given COVID and other things, they sold everything they can build. I think one of the updates I heard was even last May, and I think I would have said this in one of those calls, they sold everything out for a year or more. So it's our understanding that they are still fully committed to whatever those new products are going to be, which we really know what they are, but we're very vague about it. It's just out in time. And I think I think Vernon and the team are supposed to be getting an update again, over the -- during this first quarter or something. But if they're still using the tool every single day, 24 hours a day, and doing all this characterization, and pre-production and early runs, and things like that, and it's believed to be the tool of record, they just clearly have not ramped yet.

Okay, do you have a target date when you plan on introducing your automated XP, what I'm calling the XP-H?

So I have had some conversations, mostly off of this because of competitive reasons. But just as a reminder, I've told people that if you're investing in Aehr, you are investing in some level of automation. And as Larry calls it, he's got his own name for it. But we will -- got to think what I want to say here. It'll be something that we'll be introducing and shipping, certainly this calendar year. Let me just leave it at that.

Did you say it'll be shipping this calendar here?

Yes.

Is that recent?

Yes.

And is that automation? Are you are you going to make it so it's adaptable to existing XPs that somebody wants to upgrade their system?

Yes.

So it will be adaptable? And then lastly, once that one set is launched, do you anticipate providing the tool on an evaluation basis to a memory, potential memory customer immediately? Is that the idea or the thought?

Yeah, you emphasized immediately. We had to be there for a little bit. I'd love to introduce it to a memory customer. I'm not making any predictions on that yet. Okay. But one of the things that we do think that that is a critical aspect for it, is that tool would -- it's important to the memory, guys. But we also think it's important to other areas. By the way, I think it would be important to the non-silicon, the non-fiber optic transceiver, silicon photonics business. I think it would be important to some of the high volume silicon carbide guys that are talking about lights on operations. I think it'll be kind of more important when the 200 millimeter silicon carbide kicks in, because there's more levels of automation for how the wafers are moved around, and things like that. So there's a number of applications that would fit towards, and sort of stay tuned. And I know you always hit me up on that. And I'm always sort of vague, but I don't want to get too carried away with talking about that yet, okay.

All right. That's all I had. Good job. All right.

Hey, operator, I think we better end it there. I know we've got some follow on calls and stuff with people that have set up. And as always, folks, if you do want to set up calls, as follow on MKR folks can help us with setting those up. And we do that kind of usually fill up the week afterwards with it. So be happy to set those up with folks. I really do want to thank everybody for joining us. Please stay healthy and safe. One thing I do want to add is that if you guys do not already do this, we have been using kind of as our primary blog, we do use LinkedIn. And Aehr Test is publishing, maybe two to three articles a week, including primary content, things that talk about our products, or -- and then we direct things towards market, and industry announcements and stuff that we think are pertinent to our space. Got a lot of activity in silicon carbide, but also silicon photonics. You'll see some other things as well. So I would encourage you to go ahead and go connect with us on LinkedIn. And go back if you just knew and go scroll back aways because we've been putting on content pretty aggressively for several months now. And it's a great way to keep in connection with us. With that, appreciate your time and we'll look forward to talking to you next quarter. And for those that are going to be at the D.A. Davidson we'll see those folks next week as well. Take care. Bye-bye.

This concludes today's call. Thank you for your participation. You may now disconnect.