Release Date: July 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aehr Test Systems (AEHR, Financial) has significantly diversified its market presence, reducing reliance on silicon carbide devices and expanding into AI processors, gallium nitride power semiconductors, and silicon photonics integrated circuits.
- The company successfully developed and shipped the first-ever wafer-level burn-in system for AI processors, marking a major technological milestone.
- Aehr Test Systems (AEHR) reported a 24% increase in annual bookings, driven by sales of AI processor burn-in systems and related products.
- The integration of Incal Technology has been completed, resulting in cost synergies and reduced facility costs by over $800,000 annually.
- The company has no debt and maintains a strong cash position, allowing for continued investment in R&D and infrastructure to support growth.
Negative Points
- Revenue for the fiscal year decreased by 11% year-over-year, with a notable decline in the fourth quarter due to delayed shipments and tariff-related uncertainties.
- Non-GAAP gross margin for the fourth quarter dropped to 34.7% from 51.5% in the same period last year, primarily due to lower revenue levels and less favorable product mix.
- The company is facing ongoing tariff-related uncertainties, impacting the timing of orders and shipments, leading to the temporary withdrawal of financial guidance for fiscal 2026.
- Aehr Test Systems (AEHR) reported a non-GAAP net loss for the fourth quarter, attributed to restructuring charges and higher operating expenses following the Incal acquisition.
- The company is experiencing delays in the completion of its flash memory validation benchmark due to shipment delays of key components.
Q & A Highlights
Q: How should investors interpret the list of well-known names in your investor deck? Are these current, past, or prospective customers?
A: The updated customer list reflects current customers from the Incal package part burn-in side of our business. These are actual customers, not prospects, and include some notable names. However, not every historical customer is listed due to specific agreements or limitations on public disclosure.
Q: Regarding the AI opportunity, how does it compare to the silicon carbide opportunity over time?
A: The AI market could be significantly larger than the silicon carbide market. Although the AI market may involve fewer wafers, the complexity and power requirements mean multiple touch-downs are needed for testing. This results in a market potentially three to five times larger than silicon carbide, depending on burn-in times and customer requirements.
Q: What caused the step down in gross margin year-over-year?
A: The decrease in gross margin was primarily due to a mix shift towards lower-margin packaged part systems and consumables, as well as the full burn-in of the Incal facility. Additionally, lower utilization during the facility move contributed to higher overhead costs.
Q: Can you elaborate on the shift in focus towards AI processors and the excitement around this market?
A: The shift is due to the successful demonstration of our wafer-level burn-in technology for AI processors, which has proven to be technically feasible and highly valuable. The market's response has been overwhelmingly positive, with significant interest from potential customers recognizing the cost and yield benefits of our solution.
Q: What is the status of your engagement with foundries and OSATs for AI processors?
A: We are actively engaged with major foundries like TSMC and design houses such as Marvell and Broadcom. The ecosystem is small, and our successful demonstration has led to increased interest and inquiries from these entities, indicating strong potential for future collaborations.
Q: How long will it take for new AI clients to complete evaluations and reach final decisions?
A: The evaluation process for new AI clients could take around six months, with potential orders following thereafter. Our confidence is higher now due to successful demonstrations and positive customer feedback.
Q: What is the outlook for 2027, particularly regarding TSMC's plans for gallium nitride foundry services?
A: While we haven't provided specific guidance for 2027, we anticipate significant growth driven by AI, silicon photonics, and silicon carbide markets. TSMC's potential wind-down of gallium nitride services is not expected to negatively impact us, as demand could shift to other foundries or IDMs.
Q: Are you expecting more orders from your first AI customer at the OSAT?
A: Yes, we expect more orders from this customer within the year. They have been pleased with the results, and we anticipate continued business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
