Egor Tolmachev

Egor Tolmachev of Freedom Capital Markets asked about the potential impact of reports that TSMC may exit GaN foundry services by 2027 and questioned the typical timeline for a new AI client to complete qualification and make a purchasing decision.

Answer

President & CEO Gayn Erickson stated that a potential TSMC exit from GaN would likely have minimal impact, as he believes that business would shift to other foundries or IDMs that Aehr already engages with. Regarding AI customer timelines, Erickson referenced the first AI customer's journey from evaluation to order, which took several quarters, and estimated that a decision for a new evaluation could potentially be made within approximately six months, with orders following thereafter.

Egor Tolmachev from Freedom Broker asked about the key drivers behind the strong gross margin performance, beyond the previously announced reclassification of customer success expenses.

Answer

CFO Dave Sherry detailed that of the 300 basis point expansion in total platform gross margin, approximately 200 basis points came from the CSM reclassification. The remaining ~100 basis points were from organic platform margin expansion, driven by scale and product selection. He guided for margins to remain comparable through the year.

Egor Tolmachev of Freedom Broker asked what drove the strong gross margin performance beyond the reclassification of certain expenses.

Answer

CFO Dave Sherry explained that of the 300 basis point expansion in platform gross margin, about 200 bps came from a CSM reclassification and nearly 100 bps came from organic expansion due to scale and product selection. He expects margins to remain comparable for the year.