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    Aehr Test Systems (AEHR)

    Q1 2025 Earnings Summary

    Reported on Mar 19, 2025 (After Market Close)
    Pre-Earnings Price$6.78Last close (Apr 8, 2025)
    Post-Earnings Price$7.01Open (Apr 9, 2025)
    Price Change
    $0.23(+3.39%)

    What went well

    • AEHR expects to add several new silicon carbide customers this fiscal year, with potential to become as significant as their largest customer, indicating strong growth prospects in their core market.
    • AEHR is expanding into the AI processor market, working with a revenue-generating AI processor company today (not NVIDIA), and is very excited about the significant opportunity this presents, which could become a more substantial revenue source over time.
    • AEHR's acquisition of Incal Technology enhances their capabilities, allowing them to serve both wafer-level and package burn-in testing for high-power semiconductors, expanding their addressable market and strengthening their position in the growing AI and semiconductor markets.

    What went wrong

    • Delays in customer acquisition and revenue growth due to pushed timelines: Aehr Test Systems anticipated that new customers would have purchased their first systems last spring, but the ramps and decision timelines have been pushed out by about a year. This delay may impact near-term revenue growth.
    • Lack of transparency and reduced visibility in backlog details: The company admitted to struggling with providing detailed backlog information and chose not to disclose certain details to avoid giving precise data to competitors. This lack of transparency and acknowledgment of less visibility could raise concerns about future revenue predictability.
    • Dependence on uncertain adoption of new technologies by major players: Aehr's growth in markets like silicon photonics and AI processors relies on the adoption of these technologies by industry giants such as NVIDIA, AMD, and Intel. The timing and extent of this adoption are uncertain, which may affect Aehr's future growth prospects if these markets do not materialize as expected.

    Q&A Summary

    1. New Silicon Carbide Customers
      Q: Are you gaining new silicon carbide customers?
      A: We're anticipating winning up to six new silicon carbide customers. Some are customers we've been working with whose timelines have shifted, and others are new engagements. Each could potentially purchase significant volumes, perhaps even as big as our largest customer , who is doing extremely well and is expected to grow substantially over the next several years.

    2. AI Processor Opportunity
      Q: What's the outlook for the AI processor market?
      A: We're very excited about the AI processor opportunity. These processors require extended burn-in times due to their complexity. With the Incal acquisition, we're testing more AI processors and can offer both wafer-level and package part burn-in capabilities. We're engaged with major industry names, and there's a huge opportunity ahead.

    3. Backlog and Revenue Breakdown
      Q: Can you provide details on your backlog?
      A: Our backlog includes a significant contribution from Incal, which has longer lead times and better visibility. This quarter's sales are more balanced between systems and WaferPaks, with a shift toward non-silicon carbide systems. We're seeing increased activity in other markets beyond silicon carbide.

    4. Silicon Photonics and Optical I/O
      Q: What's the status of your silicon photonics initiatives?
      A: We're prepared for the growth in silicon photonics and optical I/O, which involve companies like NVIDIA, AMD, and Intel. Although we have minimal silicon photonics revenue this fiscal year, we're ready to support this market as it develops. Our investments position us well for when this market takes off.

    5. Shift to 200mm Wafers
      Q: How is the transition to 200mm silicon carbide wafers progressing?
      A: We're already testing a significant number of 200mm silicon carbide wafers. While 150mm wafers remain dominant, we expect 200mm to become more prevalent in 2025. Our systems can test all wafer sizes from 100mm to 300mm, so we're well-positioned regardless of wafer size.

    6. Automated Aligners Attach Rate
      Q: What's the attach rate for automated aligners?
      A: The attach rate for automated aligners is increasing, with more than half of future systems expected to include them. Customers are moving towards automation for improved efficiency, though some still opt for manual aligners.

    7. Customers Skipping Evaluation Phase
      Q: Are new customers skipping the evaluation phase?
      A: Yes, many new customers are starting directly with production tools like the FOX-XP, skipping the evaluation phase. Out of the next five customers, four are starting with XPs. This is due to our in-house testing and the confidence customers have in our process.

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