News: Suppliers
17 January 2025
Aehr’s quarterly revenue hit by order delays
For its fiscal second-quarter 2025 (ended 29 November 2024), semiconductor production test and reliability qualification equipment supplier Aehr Test Systems of Fremont, CA, USA has reported revenue of $13.5m, up slightly from $13.1m last quarter but down on $21.4m a year ago. While Services revenue has rebounded from $0.97m last quarter to $1.47m, Product revenue has fallen further, from $19.8m a year ago and $12.2m last quarter to $12m.
“Given the nature of our business with our high ASPs, our quarterly revenue can experience significant variability if system orders anticipated by quarter-end are delayed by even a few days. This was the case in this last quarter,” notes president & CEO Gayn Erickson.
Recent business highlights include securing:
- the first artificial intelligence (AI) processor customer for wafer-level burn-in, utilizing the new high-power FOX-XP solution for wafer-level production test & burn-in of AI processors.
- the first volume production orders from an AI processor customer for package-part burn-in, utilizing recently acquired Sonoma ultra-high-power systems for high-volume production test & burn-in of AI processors.
- the first gallium nitride (GaN) customer for high-volume production wafer-level burn-in of GaN devices using the FOX-XP platform.
“In the case of both our new GaN and wafer-level AI customers, both requested pre-built systems that we fully expected to ship to them within the quarter. However, the purchase orders were not finalized until after the quarter ended,” says Erickson.
On a non-GAAP basis, operating expenses have risen further, from $4.95m a year ago and $5.52m last quarter to $5.89m.
Net income has fallen further, from $6.73m ($0.23 per diluted share) a year ago and $2.15m ($0.07 per diluted share) last quarter to just $0.69m ($0.02 per diluted share).
During the quarter, total cash, cash equivalents and restricted cash fell from $40.8m to $35.2m.
Order bookings were $9.2m, down from $16.8m last quarter but still well above the low of just $4m the quarter before that. Order backlog fell back during the quarter from $16.6m to $12.4m. However, effective backlog (including bookings taken since 29 November) is $26.6m.
Diversification of markets and customers
“We achieved significant progress on the key objectives we outlined at the start of the fiscal year, most notably expanding our product reach into additional large and fast-growing markets,” notes Erickson. “Market diversification into AI processors, gallium nitride power semiconductors, data storage devices, silicon photonics integrated circuits, and flash memory is driving new opportunities in terms of customers and revenue. This progress includes our wafer-level burn-in solutions and also the success we’re achieving with the new semiconductor package-part test & burn-in product line from the acquisition of Incal Technology we closed last August. The acquisition has led to the acceleration of our market diversification with particular success and leverage expanding our total available market (TAM) in AI processors,” he adds.
“Last month, we reached a significant milestone by securing our first AI processor customer for wafer-level burn-in. This includes initial volume production orders for multiple high-power FOX-XP systems and our proprietary WaferPak Contactors, which enable full-wafer contact for testing & burn-in of AI processors in wafer form before system integration. This achievement represents a technological and commercial breakthrough for Aehr, significantly expanding the market potential for our FOX-XP wafer-level test & burn-in systems.
“During the quarter, we secured our first production AI processor customer for package-part burn-in, receiving initial volume production orders for multiple Sonoma ultra-high-power systems. This customer is a large-scale data-center hyperscaler and provides computing power and storage capacity to millions of individuals and organizations worldwide. System shipments have already commenced to their contract manufacturer doing test & burn-in for them in Asia. We see a significant potential to expand our packaged-part test & burn-in business with the product line acquired from Incal, and feel we are particularly well positioned to capitalize on opportunities in the rapidly growing AI semiconductor market with the ultra-high-power Sonoma product line. We estimate that the combined wafer-level and package-part reliability test and production burn-in market for AI processors will exceed $100m annually in the future and, with our comprehensive product portfolio, we believe we can capture a meaningful share of this market,” says Erickson.
“Last week we announced another exciting milestone with our first gallium nitride (GaN) semiconductor production order. This achievement expands our production wafer-level burn-in market for power semiconductors beyond silicon carbide used in electric vehicles, data-center power conversion and solar to now include GaN, a high-performance compound semiconductor optimized for mid-power applications such as data centers, solar energy, automotive systems, and consumer computing. Over the past 12 months, we have collaborated with this lead customer using our FOX-NP system, leading to their purchase of multiple WaferPak reference designs for diverse GaN applications. GaN offers a broader application range than silicon carbide and is poised for significant growth in the coming decade. With an expected compound annual growth rate (CAGR) exceeding 40%, the GaN market is projected to surpass $2bn in annual device sales by 2029, according to Yole Group’s ‘Power SiC/GaN Compound Semiconductor Market Monitor’. Additionally, Frost & Sullivan estimates that GaN semiconductors will account for over 10% of the worldwide power semiconductor industry by 2028. This transformative technology represents a significant growth opportunity for Aehr's wafel-level test & burn-in solutions, positioning us to capitalize on the rapid expansion of the GaN market,” reckons Erickson.
“In addition, we are excited about our opportunity for production burn-in and stabilization of devices used in hard disk drives using our FOX-CP systems and WaferPak Contactors. Our lead customer for this application is ramping this year and has told us that they will purchase multiple production systems from us over the next few quarters to support their planned new product rollout and ramp. This customer, first announced back in 2019 prior to the COVID-19 pandemic, initially purchased our FOX-CP single-wafer test & burn-in solution to support the qualification and early test stages of this new product aimed at the enterprise and data-center markets. We view the data storage market both for hard disk drives and flashed-based semiconductor solid-state disk drives as significant growth opportunities for our systems. These markets have applications with devices made up of multiple die in complex structures, or in multiple die stacked on top of each other before they are put into higher-level packages or systems. These devices require exceptionally high levels of quality and long-term reliability of the die before they are put into these packages or systems, which aligns perfectly with the capabilities of our wafer-level test & burn-in systems,” says Erickson.
“Aehr also continues to expand its presence in the silicon carbide power semiconductor market, a critical sector for power conversion for electric vehicle traction inverters, charging infrastructure, and a range of industrial, data-center, and infrastructure applications. Based on recent market forecasts, growth in silicon carbide sales outside of China should remain challenging before recovering in calendar 2026,” notes Erickson. “We are well positioned in this market as we have a large customer base and are currently engaged in benchmarking efforts with multiple potential new silicon carbide customers around the globe, including in China. While we remain cautiously optimistic about the opportunities in China, we also recognize the geopolitical, trade and intellectual property risks associated with this market. Recently, we filed a lawsuit in China against a local supplier for intellectual property infringement. This action relates to features of products by that company targeted at wafer-level burn-in of silicon carbide devices that we believe infringe on Aehr’s intellectual property and patents granted to Aehr by the Chinese patent office. Our current fiscal year forecast includes contemplated orders and revenue yet to be booked for silicon carbide wafer-level burn-in systems and WaferPaks destined for silicon carbide manufacturers in China. It is important to bring this to our shareholders attention, as recent trade-related developments in the US and the emergence of competitive offerings in China that we believe infringe on our intellectual property have heightened the risk associated with bookings and revenue from Chinese customers,” he cautions.
SiC to comprise under half of full-year revenue
“As we look at the composition of our total revenue for this fiscal year, silicon carbide is expected to account for less than half our total revenue as we have seen our expansion into additional markets capture real market share gains. AI processors, including wafer-level and package parts, could comprise as much as 40% of our total revenue this fiscal year, up from effectively zero revenue last year. GaN, hard disk drives, silicon photonics integrated circuits, and other semiconductor package part revenues will comprise about another 20% of total revenue. We are not pivoting away from silicon carbide but rather are generating growth in these other markets while not seeing the growth in silicon carbide this year like we saw last year. According to recent market research from companies such as Yole, the estimated revenue for silicon carbide semiconductors in 2024 was around $2.5bn and is expected to reach $10bn by the end of the decade. To put this into perspective, the semiconductor market is projected to grow from about $600bn overall in 2024 to over $1 trillion by the end of this decade, so silicon carbide will be about 1% of the overall semiconductor market by 2030,” Erickson notes.
“Aehr’s innovative solutions are poised to capitalize on this growth in the overall semiconductor market by addressing the critical reliability needs of next-generation applications and leveraging key megatrends shaping the semiconductor industry. Reliability has become a critical priority across a wide range of industries, including combustion and electric vehicles, data centers, electrification of the world’s infrastructure, and a wide range of AI applications. Factors such as smaller semiconductor geometries, the increasing adoption of compound and optical semiconductors, and the complexities of ensuring semiconductor reliability ever increasing power and performance of semiconductors and advanced packaging are driving the demand for wafer-level and packaged part test and burn-in systems. Aehr’s solutions are instrumental in reducing early operational failures and ensuring long-term device performance in these rapidly advancing markets,” Erickson stresses.
“With strong customer engagements, expanding market opportunities, and innovative products designed to meet evolving demands, we are optimistic as we move into the second half of our fiscal year and maintain our previously stated financial guidance for the fiscal year.” For full-year fiscal 2025 (ending 30 May), Aehr expects revenue of at least $70m (up from $66.2m for full-year 2024) and non-GAAP net profit before taxes of at least 10% of revenue.
“Looking past quarterly variations to the full year and beyond, we are excited about the current and emerging market opportunities for our products, which not only position us for a successful fiscal year, but also lay a solid foundation for long-term, sustainable growth in the years ahead,” concludes Erickson.
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