George Marema

George Marema (Pareto Ventures) questioned what Data I/O is displacing in the physical AI and inline programming markets, and what changes are required in distribution, sales, and marketing. He also asked about the revenue threshold needed for the company to achieve positive cash flow.

Answer

President and CEO Bill Wentworth stated that Data I/O isn't changing channels but is directly engaging existing and new large contract manufacturers tasked with edge AI build-outs. He noted a shift towards direct sales to control revenue and leverage the team's passion and knowledge, with plans to add more sales resources. VP and CFO Charlie DiBona explained that while specific revenue guidance isn't provided, positive operating cash flow by late 2026 is targeted through a combination of revenue upside and significant cost containment, including $1 million in run-rate reductions.

George Marema asked about the revenue level required for Data I/O to achieve positive cash flow.

Answer

President and CEO Bill Wentworth mentioned ongoing business optimization. CFO Charlie DiBona stated that while specific revenue guidance couldn't be provided, the combination of anticipated revenue upside and $1 million in run rate cost reductions should lead to positive operating cash flow by the end of 2026.

Asked for details about a large EV order from China, the potential market size opportunity if the company successfully solves its UFS yield problems, and whether the recurring revenue model for adapters remains consistent with these new solutions.

Answer

The Chinese EV order was an expansion from an existing customer, contingent on Data I/O proving its UFS 4.0 capabilities, which it did. Solving the UFS yield issue represents a very large market opportunity across multiple regions, as the technology is growing at twice the rate of the overall semiconductor market. The recurring adapter revenue model remains the same for these solutions.

George Marema from Pareto Ventures asked about the recent $1.4 million EV order from China, the potential market opportunity from solving UFS yield issues, and the recurring revenue profile of the associated solutions.

Answer

President & CEO Bill Wentworth explained the EV order was an expansion from an existing customer, contingent on Data I/O proving it could handle UFS 4.0 technology. He emphasized that solving the UFS yield problem unlocks a large, global opportunity in a market growing at twice the rate of the overall semiconductor industry. Wentworth confirmed that the solution maintains the same recurring adapter revenue model as existing platforms.

George Marema from Pareto Ventures inquired about the panel-level packaging business, seeking clarification on its nature and its relation to previously discussed new products. He also asked for an update on qualifications underway in the specialty chemical business.

Answer

Bob Daigle, Chairman and CEO of Amtech Systems, explained that panel-level packaging is an emerging technology for cost-effective, high-throughput chip packaging, representing the future of advanced packaging. He clarified that new products for higher-density packaging are distinct and expected to see meaningful demand around 2027. Daigle also expressed satisfaction with customer engagement and the promising pipeline for specialty chemicals, validating their niche business model.

George Marema inquired about the new panel-level packaging business, its connection to previously discussed new products for fiscal 2026, and the progress of qualifications in the specialty chemical and services segments following a recent win.

Answer

Chairman and CEO Bob Daigle explained that panel-level packaging is an emerging technology for advanced packaging, offering cost and throughput advantages, and initial orders validate future demand. He clarified that new products for higher density packaging are still in early stages, with meaningful demand expected in 2027, while panel processing uses similar existing technology. Mr. Daigle also confirmed active customer engagements and a strong pipeline for specialty chemicals, validating their niche business model.

George Marema asked about the expected impact of the ramp-up of Blackwell versus Hopper and custom ASICs like TPUs on Amtech Systems. He also requested an update on new products and initiatives for 2026 stemming from focused R&D and inquired about any changes in the competitive landscape in the thermal area.

Answer

Chairman and CEO Bob Daigle stated that the ramp-up of Blackwell, Hopper, and custom ASICs uses similar processes and equipment, so increased volume would be beneficial without significant technological impact on Amtech. For 2026 R&D initiatives, Daigle outlined a focus on enabling continuous processing for higher-density devices in thermal processing solutions (TPS) to expand participation in GPU/TPU processes and electronic assembly, aiming for higher ASPs. In semiconductor fabrication solutions (SFS), the investment is in driving growth in the chemicals business through application development and customer engagement. Daigle reported no visible changes in the competitive landscape for the thermal area.

George Marema inquired about Frequency Electronics' involvement in the Golden Dome Awards, seeking details on component and system content opportunities, and asked for an update on the activities and focus of the company's Colorado operations. He also questioned the potential for the Turbo product in commercial drones and the company's role in the emerging trend of data centers in space.

Answer

President and CEO Thomas McClelland stated that details on Golden Dome are still being defined, but Frequency Electronics anticipates significant participation in both ground-based missile programs and future space-based missile defense initiatives. Regarding Colorado operations, Mr. McClelland explained the facility focuses on quantum technology development and low-phase noise oscillators, with CRADAs with NIST. For Turbo, he indicated potential in both commercial and military drones, with a near-term military focus for sophisticated applications. For data centers in space, Mr. McClelland believes the company's compact, radiation-hardened synchronization devices position them for future participation as the technology matures.

George Marema with Pareto Ventures inquired about the component and system content opportunities for Frequency Electronics in the Golden Dome Awards, as well as the activities and focus of the company's Colorado operations, the role of TURbO in commercial versus military drones, and the company's potential involvement in space-based data centers.

Answer

President and CEO Thomas McClelland explained that details on Golden Dome are still being defined, but Frequency Electronics anticipates significant involvement in both ground-based and space-based missile defense aspects. Regarding Colorado operations, Mr. McClelland detailed that the Boulder facility, established after hiring senior NIST scientists, primarily focuses on quantum technology, including magnetometer development and cooperative research with NIST on Rydberg sensors and low-phase noise oscillators, aiming to attract local talent. He also discussed TURbO's near-term focus on military drones, with future potential in sophisticated commercial applications, and the company's anticipated role in space data centers due to compact, radiation-hardened synchronization devices.

George Marema from Pareto Ventures inquired about the progress and updated timelines for the productization of Frequency Electronics' advanced clock technologies, including the Rubidium Vapor Clock, Mercury Ion atomic clock, quantum sensing, and Envi Diamond magnetometer. He also asked for an update on quantum sensing applications in space and the potential for applying the technology to areas outside of space, such as quantum computing.

Answer

President and CEO Thomas McClelland stated that satellite-grade GPS atomic clocks are currently in active production. He provided updates on advanced technologies: Mercury Ion atomic clock prototypes are being produced with the Jet Propulsion Laboratory, with low-rate production anticipated in about a year. For Envi Diamond magnetometer technology, prototypes for alternate navigation sources are expected by mid-next calendar year, with higher-performance devices a year later. Regarding quantum sensing, McClelland clarified that while quantum computing is not a direct investment focus due to its early stage, the company is building expertise, particularly through its Colorado facility, that could contribute in the future. The current focus remains on quantum sensing applications where immediate contributions are possible.

George Marema from Pareto Ventures inquired about the progress and updated timelines for the productization of Frequency Electronics' advanced clock technologies, including the Rubidium Vapor Clock, Mercury Ion atomic clock, quantum sensing, and Envi Diamond magnetometer. He also asked for an update on quantum sensing applications, specifically regarding space and potential expansion into areas like quantum computing.

Answer

CEO Thomas McClelland confirmed active production of satellite-grade GPS atomic clocks. He provided updates on the Mercury Ion atomic clock, stating prototypes are being produced with JPL, targeting low-rate production in about a year. For Envi Diamond magnetometer technology, prototypes are expected by mid-next calendar year for customer testing, with higher-performance devices a year later. Regarding quantum sensing, Mr. McClelland clarified that while quantum computing is not a direct investment, the company is focusing on quantum sensing for immediate contributions and building expertise at the new Colorado facility for potential future involvement in quantum computing.

George Marema from Pareto Ventures inquired about the progress and updated timelines for Frequency Electronics' various advanced clock technologies, including the Rubidium Vapor Clock, Mercury Ion clock, quantum sensing, and NV Diamond magnetometer, specifically regarding their productization. He also asked for an update on quantum sensing applications in space and the potential for applying this technology to areas outside of space, such as quantum computing.

Answer

President and CEO Thomas McClelland stated that satellite-grade GPS atomic clocks are currently in active production. For the Mercury Ion atomic clock, prototypes are being produced in collaboration with JPL, with low-rate production expected in about a year. Regarding NV Diamond magnetometer technology for alternate navigation, prototypes are anticipated by mid-next calendar year for customer testing, with higher-performance devices a year later. McClelland clarified that while the company is not directly investing in quantum computing, its technologies have potential applications, and the focus is on quantum sensing for near-term contributions, while building expertise for future quantum computing involvement through initiatives like the Colorado facility.

George Marema of Pareto Ventures asked about the reason for the lower gross margin in the quarter, the target margin for the upcoming year, the revenue potential and timeline for quantum sensing, and the launch schedule and market size for the new TURBO product.

Answer

CEO Thomas McClelland attributed the quarterly margin dip to normal lumpiness and stated the company is targeting 40% or more going forward. He projected quantum sensing revenue would be less than 1% next year, with products five years out. In contrast, the TURBO compact rubidium standard will be available this fiscal year, targeting a growing market he estimated at $1-2 million in the near term.

George Marema of Pareto Ventures inquired about the company's quantum sensing initiatives, asking for a product development timeline, revenue expectations for calendar 2025, and whether new business opportunities were related to quantum or legacy systems. He also asked for the quarterly adjusted EPS and the projected tax rate.

Answer

Executive Thomas McClelland explained that while no quantum sensing products exist yet, development contracts for magnetometers and Ridberg sensors are anticipated. He noted new business would likely come from both quantum and legacy areas, with some caution due to government uncertainties. CFO Steven Bernstein addressed the financial questions, stating the quarterly EPS was not on hand but that the future tax rate would be low due to NOLs, with the primary tax burden coming from California.

George Marema of Pareto Ventures inquired about the technical difficulty of creating smaller, cheaper satellite components, the government budget outlook post-election, and the performance and R&D priorities of the Zyfer business unit.

Answer

Executive Thomas McClelland explained that the primary technical challenge is adapting terrestrial digital electronics to survive the radiation environment of space, which requires significant testing and development of cost-effective, radiation-hardened parts. He expressed cautious optimism about the budget, hoping a non-divided Congress would prevent delays. McClelland also confirmed the Zyfer unit is performing well, with R&D focused on miniaturization and adding non-GPS navigation capabilities.

George Marema of Pareto Ventures asked about the company's technology strategy, including its use of MEMS and involvement in quantum sensors, the sustainability of current R&D and SG&A spending, the outlook for gross margins, and the company's production capacity to meet demand from larger addressable markets.

Answer

Executive Thomas McClelland and CFO Steven Bernstein clarified that the high Q1 R&D spending was not a new run-rate, with a third to a half being unique to the quarter, while SG&A is at a steady state. McClelland noted that while they utilize MEMS technology, their focus remains on high-performance Quartz resonators. He stated that plant capacity is sufficient for growth, with personnel being the primary challenge. On new technologies, McClelland detailed the development of quantum sensors for applications like GPS-denied navigation, confirming they are in a pre-product phase. Bernstein also projected a very low fiscal '25 tax rate due to NOLs.

George Marema inquired about any strategic changes to Champions Oncology's data licensing business model or go-to-market approach, the potential size of this data opportunity relative to their traditional services, and the frameworks being considered for structuring deals with Corellia, their drug discovery subsidiary.

Answer

CEO Rob Brainin stated there were no immediate changes to the data business strategy, highlighting early wins, customer engagement, and a building pipeline, while acknowledging it's still premature to predict the exact size of this opportunity, though it's crucial for AI/ML in drug discovery. Regarding Corellia, Mr. Brainin explained it operates as a wholly-owned subsidiary actively seeking external partners and funding to advance its compelling data.

George Marema inquired about any strategic changes to the data licensing business model or its go-to-market approach, the potential size of this business relative to traditional services, and the frameworks being considered for Corellia's deal structuring.

Answer

CEO Rob Brainin stated there are no immediate changes to the data model strategy, emphasizing its early stage but significant potential and growing customer engagement. He noted it's premature to quantify the data business's exact size but acknowledged its role in fueling AI/ML drug discovery. For Corellia, Mr. Brainin clarified it remains a wholly owned subsidiary, with active efforts to raise external funds and secure partners to advance its compelling data.

George Marema inquired about any strategic changes to the data licensing business model or its go-to-market approach, the potential size of this opportunity relative to the traditional business, and the frameworks being considered for structuring deals with Corellia.

Answer

CEO Rob Brainin stated there are no immediate changes to the data licensing strategy, noting it's still early but showing potential with building customer engagement and pipeline. He acknowledged the difficulty in predicting the exact size of the data opportunity but emphasized its relevance to AI/ML in drug discovery. Regarding Corellia, Brainin explained the focus is on raising external funds for the wholly-owned subsidiary to advance its compelling data.

George Marema of Pareto Ventures asked what portion of the company's total data was included in the recent licensing deal, how the data licensing sales effort is structured internally, and for confirmation on the number of deals currently in the pipeline.

Answer

CEO Ronnie Morris declined to specify the portion of data licensed, stating that such details are not public. He confirmed a dedicated team, led by General Manager Matt Newman, is in place to sell data licenses. Morris clarified that while there is a pipeline of opportunities, he would not comment on the specific number of deals, noting that future deals will vary in size.