FormFactor (FORM) 9 May 202020 Q1 Earnings call transcript

Thank you, and welcome everyone to FormFactor's First Quarter 2020 Earnings Conference Call. On today's call, our Chief Executive Officer, Mike Slessor; and Chief Financial Officer, Shai Shahar.

Before we begin, Jason Cohen, the company's General Counsel, will remind you of some important information.

Thank you. Today, the company will be discussing GAAP P&L results and some important non-GAAP results intended to supplement your understanding of the company's financials. section non-GAAP press other the release on Investor to available information company GAAP the the website. in issued Relations of measures financial and are and Reconciliations our of today by

the discussion performance, our laws. future of demand products pandemic, respect requirements, the future the securities assumptions to macroeconomic for forward-looking the those changes, of projections products, of statements sell anticipated statements Examples of and such within based. meaning are the future conditions, such to impact the Today's of COVID-XX products, contains ability financial federal the the regulatory include forward-looking with statements and impacts the and upon of and which produce customer development business technologies

year and recent cause release that and our filing and www.sec.gov XX-K from contained known unknown most SEC SEC on differ with call. materially in our is These website risks actual the on the expressed to Form factors statements could today. which during press this risk in available those our SEC's on ended Information and other subject at uncertainties the XXXX results uncertainties issued filings, are are fiscal and for to

issues. May today, bear with this us no as XXXX, an call us, please Forward-looking is earnings for or made as aside, an update on them. statements are audio of and assume since to we X, obligation Also, entirely delays remote any

turn the will over now Mike that, With FormFactor's we call to CEO, Slessor.

for Thank you, everyone, Thanks, us joining today. Jason.

COVID-XX dedication and peers want pandemic. recognize the thank effort, employees and and for I outlook, Before during their results to discussing our person and

quickly replan focus customers, proud California restart all our closely extremely and and operations products and of Our delivered. our government global variety to Their to performance quickly agility directives manufacturing I'm resilience, key demonstrates prioritized our with and that of and were factories, team. shifted our reacted to a

our where weeks strong quarter reduced. weeks, by ship products was and This substantially followed efforts, X ability distinct had to a X first produce first

shelter-in-place You'll first including the recall we temporary shutdown that quarter all Bayer our sites, range of manufacturing operations. on orders and following outlook Livermore

Oregon revenue development employee margin, Subsequent Beaverton but annualized on targeted through and it's our results, of quarter per at set our California of and of of with FormFactor that business cash the Viewing We'll statewide financial the delivered Carlsbad we results but quarter. a essential each $XXX quarter noteworthy basis, details of avalanche clearly an for the also $X.XX restarted our non-GAAP first infrastructure review final and on-site to of gross flow. , unexpected in procedures, site at days model. XX% the of production the million and of earnings we delivered $XXX validate free million share orders

demonstrate model, these year conditions when achievement fourth results together we model to Take our update quarter, and overall our have our financial target it plan with of later this settled.

strong call. February Our with of we contained consistent revenue cards, our logic probe and provided on first quarter commentary X foundry a the earnings mix

period XG-enabling X-nanometer variety was mobile in and broad-based, XX-nanometer high-performance the down designs quarter was DRAM multiple a expected and and . with demand both X- and revenue first This designs, card RF of an spanning devices. compute microprocessor probe sequential of XX- during along foundry antenna quarters record digestion filter full

new in on of XZ expected are each nodes. These wall both closely XXXX. with currently nanometer are of in new the the mobile on and working and designs the second We DRAM manufacturers volume half designs

is results and steady delivered seasonally challenges weakest to FormFactor quarter Our in customers engage engineering continue measurement electrical to R&D. solve what systems office in

to system to noise, help ultra-low lead development, a our delivered X-nanometer we build example, an them automated foundry As XXX-meter improvement.

market card of probe in in leadership and consumable the diversified capital decline VLSIresearch's contrast to card leadership market engineering growth XXXX's documented XX% point the market, in of outpaced sharp service. again cards demonstrate probe This spending FormFactor's same the equipment and demand. provides That period. growth in of nature position, probe results resilience annual where an semiconductor is growth X% XXXX, in the FormFactor's annual additional proof survey

reminder, consumable is chip probe a new design. to specific As each cards a are that

is node And existing generated so demand of transitions from designs release and the chip nodes. on both new

advanced MEMS space integration. electrical XX% performance The requirements Namely are of market technology probe challenging market in we've packaging the to FormFactor's FormFactor's and complexity before. provides increase interconnect associated of card like share to differentiated probe and significant test in performance cost chiplets high heterogeneous where discussed by a themes densities with advanced ownership gains continues be and applications advanced packaging driven schemes test the advantages.

of the view quarter and the a restrictions near-term provide region our formal not we FormFactor this COVID-XX insight continued operate, suppliers where supply constraints. in range uncertainty and and instead into In are providing regarding we'll demand outlook

demand. constraints customer persist shutdowns to factory present constraint As lack and least through capacity by I and to continues, distancing results the capacity expect were of second we manufacturing operations the a and limited mentioned, requirement, At situation social at five quarter by quarter.

doing first experience We and with steady communication production our designs. internal our with for card throughput both limited increasing focused are and We've foundry and logic to and their constraints, supplier the design continues customer demand probe production for customers, release extending to best systematically phase products maintained engineering team same memory through to close theme Operations shutdown in on for and resolve capacity and with ensure steadily priority we basic schedules. starting highest robust to keep continue restart and the the quarter. systems, transparent factory the cards to

second of limit the below approximately first various output. output quarter Our factory XX% constraints overall present quarter output view the to

limited quarter, sequential is growth output be visibility Shai, and more constraints. consumables you. over even FormFactor's produce would design-specific these products Although the usual, not demand our than expected for second if in to to for R&D-driven

Mike, you, afternoon. Thank and good

are our impressive especially These light in from XX% FormFactor's QX impacts the decrease temporary shutdown which of were $XXX a included 'XX These high XX% testament our our of increase. of team's necessary a chain while revenues sequential and our weeks results record challenges. unprecedented first supporting factories supply period on the results, partners are for customers for our the and agility a quarter last of deliver a COVID-XX, during revenue safeguarding California the to employees a X year-over-year million, quarter. of of focus

Mike also across challenging a P&L As of evidence ability our environment. perform our levels financial very noted, of model our long-term there in all are target lines compelling at nearly to

increase segment or XXXX, X% QX revenues QX, XXX-millimeter segment with systems. sales XXXX. $XXX of Probe $X.X from first XX% quarter, were our from million in were of the strong or million card QX decrease Systems million in revenues an $XX million of a advanced $XX

X% increase the quarters. compared of were revenue peak large customers million to demand DRAM due QX probe million, million of revenues in robust in $XX the million the card XX% $XX XX% $XXX and was absorbing decrease total logic recent from quarter. revenue a in company down to segment, were Within comprising fourth fourth the quarterly for DRAM in continued, revenue with in from made foundry quarter XX% and XX% in QX, as fourth quarter. of several demand total part from revenue up QX, purchases to

X.X% fourth Flash and in revenues million lower in in X.X% of the of were than were $X.X million QX. quarter QX $X to QX, revenue total in the similar

quarter-to-quarter. press was the quarter to continue revenue expect XX XX.X% be GAAP XXXX from Relations in reconciling revenues, of the in our to our which to Investor GAAP of GAAP or higher website. million gross QX. release margin for first issued reconciliation included the of basis on in than section lumpy We non-GAAP $X.X revenues we gross items, margin table $XX points the Cost of outlined million flash today XX.X% and of available

or the of in reconciling quarter QX. basis, FRT that basis related segment margin points result higher of higher the the gross of in XX.X% XX than first XX.X% revenues, a gross to quarter million margin $X.X mainly On acquisition non-GAAP QX, as of reoccur did in had $XX the We margin. Systems was gross for non-GAAP a fourth items not million

basis partially product gross in and lower compared decrease probe margin was by Our QX. a points favorable XX.X% quarter, volume, performance-based offset result QX decrease XX.X% mix small to The a lower a card first segment of from compensation. the in more of XX was

margin systems quarter. compared as product XXX the mix. was Our points The driven basis segment was XX.X% fourth increase mainly to more favorable XX% in of gross QX a by

said our we XXs. have Systems margin between the expect we previously, range to to XXs gross segment As low high

operating in in to first revenues to the is of typical to expenses quarter, quarter. compared lower operating compensation lower travel the $X.X expenses or to $XX GAAP mainly benefits non-GAAP GAAP million $X.X million from $X This $XX stock-based is were reconciling quarter reset. and $XX first QX million XX.X% quarter of the XX.X% partially first $X.X than performance-based decrease impact A million to Our of mainly in revenues of for or by items the were year in QX. beginning offset Non-GAAP of due million in expenses, million decrease The due lower million compensation. lower fourth for the the QX.

million $X.XX share quarter net expenses Stock-based the in of income the of was and similar in for for stock-based or of assets, The the XX.X% million diluted call. XX% grants. income our GAAP share $X.X lower depreciation compensation QX or in net quarter diluted QX. the million the of for for due compared $X.X noncash we rate to $XX million. non-GAAP and effective Company quarter XXXX $XX $X.X first XX% year, range for of first fully first to to previous communicated rate fully in earnings timing included estimated as amortization intangible million $X.XX of per was XX.X%, tax to compensation $X.X was annual the for the than QX GAAP within million per

U.S.-based R&D reminder, at income to cash utilize fully the and a non-GAAP X% to expected of our As our rate remain NOLs X% until remaining pretax is we tax credits.

net non-GAAP $X.XX share compared share diluted to or or per quarter QX. income fully diluted million $XX per in $XX fully million $X.XX First was

Moving sheet balance cash on to flows. and the

decrease on flow This we the of to time. XX total end U.S. brings $XX the As generated $XX free profitability $XXX expenditures. compared flows the Almost in trailing at cash the over to sequential We our lower cash investment flow revenue are free cash in first in first cash the result takes million a to at our in cash cash in are in focused and would increase expect, balances mainly you quarter management an the quarter The of and of million this QX. investment flow and investments quarter. million especially in these of $XXX million and capital free was and X% months

$XX have balance loans term million. totaling our on We sheet, X

the acquisition at is end of balance of and remaining to a and first the million expected Cascade The by related it fully of to $XX be had end, in XXXX. XXXX June loan repaid Microtech quarter

is loan loan cost The second denominated acquisition remaining €XX The million optimize balance of capital. to this utilizing QX we fund as euro-based interest took FRT rates low the in loan our a X-year, of end XXXX, the of first the quarter. interest to during was these an the $XX.X debt of €XX.X spent the At We balance total by quarter quarter on increase million. $XX X cash $XXX million. payments exceeded on principal loans balance our million, and term million of end,

FRT acquire term multiyear be and for deploy our of continues intend continue plan. as investigate these loans CapEx support we to our first quarter invest plan expand year. of to compared our expenditures demand served is QX. with the term. and $X.X in our XXXX using anticipate medium expenditures cash, our down to that support over as to to we during in paying first While We multiyear continue capital that invested million opportunities of $XX capital important products part our in and the we to also organic the capital of in million positions to of last we strategy, quarter in priority the first The growth increase part for that acquisition M&A leadership our markets R&D did an long remain to part the

directly part to related capital to expenses of disciplined or customer as additional our rationing aligning capacity is demand continue development. in while not technology our that We with very spending, be will

economic are our Our to with solid. downturn. cost together position our and structure approach structure, And we an spending significant capital flexible retain resilience weather and liquidity disciplined to

update we light we the our update results to the of for align later recent a will in this investment serve, strategy our hold community our at which to model year, growth financial better and In model. markets webcast with plan target long-term we

We will details more event. the provide closer to

outlook. QX our to Turning

about to to our Although we quarter performance. can second some uncertainties a thinking not given formal the financial are providing outlook continued things COVID-XX, related when I consider for share you

factory to adjustments measures. with limitations capacity and other that experience operations to implement continuing are We distancing safety social

Capacity revenue appears demand strong, will are gross While we impact in constrained. negatively QX. to margin and our challenges output remain

of constraints, we we course, QX absent Mike is constraints, Based noted, approximately COVID-XX our have uncertainty, QX. estimate expect potential on its revenue in classes these expected of lower sequential As than will capacity XX%. would with This assessment be capacity considerable evolving subject broader the by and current impacts. growth to QX

we uncertainties, call gross second Operator? margin can imagine, for or question, With range for are not if EPS we to open to an same that, please the the not your as outlook in the question questions. ask since indicate Given quarter. ask We that you room. when Mike you your me, to are providing you the direct let's or

Instructions]. [Operator

from question of comes line D.A. first Tom Our Diffely with Davidson. the

Yes.

purely manufacturing the talk you chain parts as issues and issues? when constraints well capacity So in supply for just pieces? having you Mike, manufacturing, is getting that curious the I'm are Or about

Yes. of remarks understand I great. address Good I the prepared that one, my before Tom. particular And question, wasn't fidelity

the for script written all we've distributed So for participants, as the you well.

but apologies we So there, get here. information transfer better hopefully,

Your be as constraints, chain. as our internal can to -- There both There as FormFactor really, supply through our your are is you answer question -- supply chain the to in imagine, is continuing question global nature. both. well to

different directives quarter. with different suppliers regions impact different in in government different so starting have times, And China with had early the at

and operations to a to factories team our conflicts, FormFactor as social California of experience operating constraints measures. capacity operations distancing to those as well as revolving we grow resolving Our those Oregon continue done in internal in these has job great the continuing add

Okay, from of a then a sides view? strong, the there demand point about between and your great. demand being talked And you strength but is memory of relative business logic

and In really detail foundry tried we in Yes. continued you, it the prepared for strength to remarks, logic.

we XXXX, record quarter coming where strong relatively off revenues DRAM several had weak were First a sequential quarters. very

same Our activity seeing customers logic, space, record and digesting both are time, strong those we're the microprocessor at space. and in shipments. the foundry space foundry RF very And the in the

good strong, balance go and way a results FormFactor's relatively weak, as managed our to down. capacity these a find When overall is deliver out of others nicely. each into overall And of manufacturing segment this pretty segments and think demands of example to be strategy to we each stable are I of to playing our diversification them. some are up deliver able

when -- near-term not some by but Okay. And when margin way additional to I then understand, giving will finally, you gross for the the what Shai, brought at you're look be? guidance, cost on impact there COVID-XX, quantify is

continue impact. add when So to change what are margin additional main additional about like to margin, we in I will think that to it's all, do right? But gross than think QX operational way. and be of this as first volume as true will think QX. that product -- executing then impact, offset was Our it in job QX some offset QX, biggest the have are the right? did even -- mix volume, that was in noticed a excellence, QX by you these doing And challenging in And there, quarters, related previous And COVID-XX cleaning think stuff. mix. most drivers of I lower This the excellent versus product impact quarter-to-quarter. are, have And times. item from about and team gross in some that cost we course, we need second

quantify margin exactly you, impact will for things impact to the I that QX. know So continue didn't I in are the these and but main gross

Goellner the with line question of Our comes Sidoti. from Tianyan next

question First, Shai. for just

I give million formal I a million last and the this to us $XX of I'm guidance still but look a XXXX? know you be will range range per in just wondering, don't probably remember quarter. gave into reasonable OpEx, the we now, quarter On $XX guidance the the to for

Yes, that's a great question.

annual an we less the course, directly OpEx QX up And went As This main it. of versus $X of and QX. like added you move QX compensation, full in reason environment X.X is of in performance, for in had is our expenses QX, impact. with a a impacts has And to the performance-based quarter and although QX. months decrease -- and the saw that's this our is, in that down travel, tied usually FRT also million. reset only that is down which And benefit portion we

saw impacted R&D that's QX. we're see just We done a rest a control You less in suspect it I work. performance-based. you the same decrease because think be from we're travel. these to why in to portion So projects expenses, be right? bit about cannot little I'm in think going lab If will of And QX, about the have I the to year, still well to some the home, by I right? continue thinking that of as to impacted a going be see perform trends,

QX the it benefit is sorry, And -- but higher annual and lower next previous will quarters. impact includes to quarters. so factor And this continue compared as benefits a to compensation good performance-based estimate, lower annual

wondering, will still transition and node of a for Mike, foundry high, level foundry XXXX, then I would And the as the purchase. will due the where back about should know, to the is really And on And the lower, be and we a Okay. new I'm just digesting really a kind Mike. high. we look it's are logic how the the when other for DRAM similar and follow-up at you previous be to higher hand, think customers at go logic, very when mentioned DRAM technologies? level?

with Let DRAM. me start

expected think year we're we . Obviously, to current period year. right to the to conditions the memory of around adds. of for forward one the schedules where very the and the in things new manufacturer I DRAM with caveats half engaged cash half now next DRAM, are interesting macro-economic major there's but we're is way according preparing think the we're a of actively the of Designs I design obvious market, ramp the that's currently tremendous look on we in

customers from our and is now, I the for XXXX. XXXX. against should impact high-performance mobility there's and broad-based logic of and are think that, macroeconomic indications robust that the going of strength balance with be prepared we're demand Again, obviously, associated to XG processors, getting are that we foundry, strength issues foundry be it's our the caveats continue getting of all we're of right customers fairly to in this

things. we the For now, that's way see

comes line the Ellis Our with from Riley. next Craig of question B.

Congratulations environment. on your execution in challenging a

did is The ask first I'll level wanted Shai. versus Shai, a as an Maybe that was the the at question shelter-in-place to this other? or and percent end logic Or variance being concentrated area I manufacturing. really that more in reported direct initial across about guidance, the just one impacting revenue issues to et was clarification. due foundry we cetera? it to revenues look impact it distributed on and Was basis? on the equally How a DRAM, basis market

Sure.

first mainly so California were So the not in Germany were all, Beaverton, later then impacted and and factories impacted. factories in the were in of that

Systems the business not the So was on impact that big.

So the on can these. most each weeks within came factories the that impact we try and card couple if to know or in extrapolate Livermore, business. shut down serve that of our these of probes one on they of the don't all was And factory Carlsbad, the basically I exactly what was take markets. of this California, San Jose, impact, it all almost market, from

feeding other. factory each is So also the

it. Got

Okay.

So then second to to XX% the supply. tough given be quarter would piece the impact apart impact it for

a on ask me and Mike move Let question.

things we cards on the in level, term? But supply less fewer thinking is that's the in near to than system, help Or on going available if at going know understand that's were don't what's one it some probe half have of you we with of year can customer months you first some Mike, probe operate Are card beyond the happening downstream customer a occurring supply ago? there seems shift share just FormFactor. in the is like just way the at given way? I So either there us the from constraint what couple that the finding that customers What's level? and is of

probe overall have and I And you look supplier Yes. that's this to observation, that our by sitting think at government good the a been some in Craig, in the regions all responses. competitors, pandemic FormFactor affected we're card major and if

that our supply on say a card is there would with customers. with other been of So very a probe active overall pieces I supply. well. concern it's And discussions there as chain

activity we on design industry, prioritization And job can day, down that's to moving that, of probe in the reactor's it's and throughout sure our cards and to them. priority the up priority we're supporting capital this things both make going in best the continues So ongoing, my view that's equipment. shifting and

Shai, of And the since you to just can need operational broadly, I exiting near-term That's quarter at be you impacted more helpful. that if be constraints. output give then list a levels lastly, or back real back our X on by do to teams comfortable is things, to short come I helpful? just you, would see second optimal and supply that view XQ? X could could, some be the What from us can If

government So orders. by are now we impacted

to employees are some place we're make putting our We sure have constraints, And some measures to mainly safe. capacity distancing. in social related also

better are it. at better and We getting

tools shifting and social are capacity. increase room make the of around the factories the We to some for fab and distancing rest

right? it's ongoing still we we uncertainties, output times, secure what guidelines we're if supply well. and we're the at relatively great are make evolve. make it. progress still there to change through sure lead better lot continue the need though different government the remember, are we I to And our as still, also we getting and partners with And And So a an hard and there's working produce, of But very expect to chain even we process, our short halfway quarter, improve. you are to

Craig-Hallum. from & comes question next Our Cowen line of Company, the with Christian Schwab

foundry to between and out, DRAM? like segment had strong from really try and I revenues figure just multinational trying and domestic it logic, you to you was can China. between Mike,

China And for past company. quarters, revenue about the has people to Sure. several of the recently total been

That mix major As is on to who that's and spending operate and customers according in Chris for that multinationals cycles. the mix logistics. notes, of forth are back our

So the does I'm and try won't same not sure Foundry segment I thing. it.

with been and the quite multinationals obviously, demand. recent a again Although has strong perspective, the the from memory from

of pretty rest good world, the between the the a segments, and blend all been strong. memory recently, So has although quite

it. Got then And follow-up, supply enough, understand Fair constraint. right. All as Mike. I a your

Your typical stretch come if -- lead a of quarter we see like back or times pent-up should to snap are probably supply And Are QX, because demand? constraints, end are the normal you with so. -- does half times by back QX you seeing out? of in a lead in supply

Yes.

it competitors -- and our lead quarter have. obviously, have because only overall of a bit, second capacity So that times, if little lowered in the we

the probe have time So in general, here quarter. lead in card extended

I assumption think are going a back. things think it's realistic to snap to immediately

in opt we a to I which think measure factories, some ratable. more obviously continue And our throughput. going is social we're be loosening overall distancing frictions the operating to really under little will the our with of assumption reduces

Even add and this through capacity as we demand. and try long-term to measures CapEx

We're So as and a demand as going view go capacity build I meet QX to snapback. into to QX. through this we don't gradually

comes the with question Quinn Bolton line from of next Our Needham.

that follow-up to trying last question. on Just

more clean capital which the As in is you any Or build may capacity, you issues experiencing out that room spacing be intensive? clean are of capacity, room?

of whether area. MEMS rooms to issues our are operate, issues footprint begun resolve Certainly, spacing of variety be they we've we or confronted and the fab Quinn. Yes, the some clean things assembly and in the

in we and find out ops increasing footprint Lots So the areas, cash and making separated to to possible for our which each to spacing that optimize intensive. sure by deploying other. on clean team of we're our ability capital get we the no space work are rules existing imagined the people best is and additional some are room

time? of have a clean take to additional in does take equip sort it quarters? and for do that you can that additional mean, And long is space? does Or that how clean install I room, space room typically quarter's find something multiple to you

we've inside take of on our sort the up some It magnitude. But existing that in to We've our at and as depends the lab close and a pretty least investment. require that forward sharing does to you getting we're with discussion. model footprint, a capital till discussed breaking target longer-term And we strategy, new the as overall past, part to of will capacity overall look limitations. be

and just X the Or -- has that running then of temporary mean, And around now Got you you in of they're think you QX seems demand they it able now more thought year, It were certainly temporary fairly Got remained customer I high perishable, upsided think it's you that, still end significantly looks continue, nodes your Mike, do that sort environment like some it upside robust, CPU to year sustainable? still you that drove talk term. back do capture near the demand it. you guys that was the fundamentally it. of nature? environment improved? Or and the the Can largest factors in but your the output pretty has demand. late volumes. albeit constrained last and like about in QX, does feel instance, the strength is in For at do of nature? that sort

more of trends good some The you these fourth think even at of a do we in part what missing, last the quarter. I QX, the to appear Well, sustainable thought the in have be delivered we fact, little might look in quarter. than part,

can testing with high associated things as saw the frequencies nodes more on these -- are the end. advanced really stringent who share pretty fundamentally industry, test with people of spend driving I preferentially, FormFactor like gains trends VLSIresearch you associated packaging XG requirements and front some for are few serve and a in a leaders that advanced testing are only there's XG think market These there with because in results, the requirements. the some and these chiplets, the

continued, things these momentum than nimble more we are that back might a thought As little have before. in

And I final question. a of guess sort

customers of reflective Just demand your lead outside I gaining think concentration Is business. your in customer? part seen additional historically, you've foundry sustainable really of that strength, end the foundry of, the foundry kind you

become customers talked over but long-term continued Yes. compute really variety of ago, diversified now of It's important continues one lots fabless designs, business across to by of less less multiple about and point. well performance Several and We've FormFactor as lots time. our concentrated, X of growth for a is that lumpy, mobile, years a more still the much be opportunities much applications,

Ladies please gentlemen, stand and by.

you fix this stay the while everybody. we Hi, try line Can please difficulties? on to

is Yes. Slessor again. back. Apologies

hear Can me? Shai you is back.

Yes.

of line Our Christian next from question the comes with Schwab Craig-Hallum.

due we're isn't Great. Mike, I kind soon that controls. lost would maybe that sure to movement revenue something -- QX, that QX's revenue, to just you and make social Is depending fair? upon not recoup as of capacity want distancing as to expect constraint

there of think around I longer-term that some of the into and some capacity customers initiatives key key level will really capacity third There designs projects are where these initiatives. continue and investing demand Well, are quarter. increasing and some in is

probably Some of them. of investment is the one XG

some QX. So with demand are call, spill extensions element see going in I about this the you think there to is we earlier over of some lead into talked that where time

be add make capacity doing that perishable And we sure we're cannot to everything we element to that indefinitely. can the serve last that obviously could Now want to demand.

and portions manufacturing output at capacity, to continue in trying distance in lead the fourth a add we quarter even back And first our socially get the in the of us were reduce and times, to quarter. to so environment, levels

days We're at movement a hearing maybe ago. more than say have, yet? XX then chatter micro that any lot positive XXX of in about LED Are you seeing question markets your for And you. would on we positive another the Great. market side to

developers very leading technology. application an market of of we've been the with in some a the That's where engaged

you business. We've ramps. it the to -- started We're with assembly you equipment the and most ago about significant recall, see of systems serving when going to systems the we're for there. in basically it -- If from the it our to a it business, there. in that. us, space, volume providers from of years we initial that activity are really some it with some in we few exposed business to talking not going activity you're example, undergo But a know our like serving might card production from growth seeing But continued really of see don't lot see of I ramp will of who business, as probe

the of steady, in continued it. more and but R&D evolution, next-generation So enabling good

lastly, then market surprised regarding target new to your potentially our any our color that But XXXX, Okay. -- us to the XX% you spoil is model, is share since and you share market get to exiting Great. could model. with were not that share And to aspirations? so ability future close target

to FRT, keep to who do expect be Well, so the to looking their buy XX% companies the areas gains different at our share that had made Maybe at But deploying from to for think market like still Yes. are in Obviously, market. up we we're there's balanced. continued why we served end the I be we on served our suppliers our that and one from saturating need industry's overall is level. share, things reasons it point lead gains markets. in extend way. you positions addressable there think focused multiple of leadership This given a growth some do the generate cash

and I the is like M&A why one there So to continue such are we gains gains think reasons of of think overall as had to preferential things strategy. be the XG in drive for share us. part important an I advanced also our execute packaging continued share it's But

[Operator Instructions].

of next Our comes with question line Brian from Stifel. Chin the

my I to XG. we you I execution. Mike, question Nice And think here. to first upgrade need guess

In first most I were would like terms X the sound did to but sounds But retracted. about you it sense looked sort it catch quite you also us of And achieved a the know what how have And final like end quarter, like give of shut range. didn't maybe in weeks this, QX? yet in the think that so for of down of I it range, which you essentially, original shipment linearity, exceeded of guidance your that QX? can you still low you

You measures those not had the place? taking

So to from and I'll hear take Brian, you. that, good

extrapolate that second a month There vice weeks and quarters full over and versa. been I month the third strong has not the or were stronger XX our the month linearity. several not business operating. accurate weeks be think XX first it it's -- That's to will was how of than assume of quarter

would out So I and range. we have and our the divided by results XX take -- of wouldn't multiply by assume XX

high outlook stated be as would I at -- preliminary our think it the been we range, will confirmed. we have end of and you

Going into the started second quarter. quarter, we the of beginning our the -- restarted in factories the

capacity slow, imagine, slowly. you started measures putting we As place, new in increasing can

to again, linearity will the at I and quarter like. how understand QX, try look in look wouldn't even So

color, with fair for that question. here Staying another I That's Okay. Shai. enough. appreciate supply

pegged output output is graduating factor? being that efficiencies and mix do does creative terms more for Or In an to referenced? of the sort perhaps underlying the and in affected assumption QX, this you've shelter-in-place a region? higher Is have of the measures in with swing this associated lifted maybe, XX% lower to that

of Mike Brian. It's latter. again. the Yes, It's more

outlook -- used our We're second quarter. an We and to realistic sort to I view, customers analogy. be think visiting in but not may the we're going snapback taking commitments now able assuming of be measures a expecting commitments. we are distancing or to social expecting the make overly pessimistic on or sure anytime somebody not the our to a the make or then to just in on-site of factories customers free in be conservative one able we're provided, or That those deliver we're it's that

able lifting our upside the baked are government where importantly, if feel of situation we're that and is restrictions, under that essentially gradually of confident we inside employees probably things restrictions completely a to same the and assumptions balance mandates. set we restrictions and right But the this. the we're now second working those do the restrictions I confident find then with think is lifted, some and quarter feel for So improve equally of into there in

have And from supporting of the is to wafers? the for shifting for effect segment? specifically, this PC Maybe what net DRAM support helpful. do that's about server on migration server, the stronger maybe the I would case? DRAM. GDDRX? guess to PC or Anything referenced be the things do transitions more Sort you pin If migrating the demand. markets that you more of your outlook DRAM about designs That's in of you mobile no revenue to guess, they wafers, Are And towards descriptive helpful. it. more could see talking away then industry Got or be like product, I

Sure.

the PC volume spread obviously server from think heavy designs in PC When but zero-sum second particular, That's talked to originally I right for the of about space, generated server, activity DRAM. like I starts a that tactical against we wafer operate of half designs a mobile who some seen also the have people little pretty graphics, incremental bit serve. design of by a feed the the XXXX in mobile that most shift evenly has That mobile between DRAM manufacturers specific will now, and we were designs. But planned. game probably that out PC design server. demand

much, I the looking think term, design year. to quickly our to customers the second of but demand, I haven't So don't serve the certainly, changed think, in longer-term road the the pretty short non-mobile forward adapted part go maps

Craig a the have B. We question follow-up Riley. line Ellis with of from

topical issue Yes. a this back I wanted on call. on Mike, to cycle

the demand more to versus in was, reflecting you one starting seems say, So key one, it ago. the customer but now that's probe really that's a happen and shelter-in-place to to X not starting meaningful of become incremental X or here driver is months with months It themes business some X crisis Obviously, of ago. is things the like card the the just question. engagement than for XG is on

if us as that XXXX? the with business So you back and playing see is as the it over we you through of incremental how year this true? provide half And XG an color two, is, some driver out one, can look

Yes.

NAND, for around front The the we overall our exposure is by a XG, XG think not it. portion well FormFactor's DRAM, display, the driven is move the look growth and infrastructure there well is but memory customers a -- a more broadly, momentum, to because But people, number probe we're business RF look of with as not XG real at just FormFactor at some the positioned the digital clearly handset of course, and, a think about in a as side. just when feel both of the to portion large the complex maps for increases, you we the handset and business. not side as of units road creating it RF relatively opportunity more When I in much end the it, content complex of the FormFactor. like manufacturers' applications fabless more on When so really card So certainly handset, driving reminder, more processor. RF you of XG more

FormFactor chain, overall observation XG and I of So a a your is probably think in supply driving more part the a that our overall becoming bigger observation. substantial for business position fair

of air some seen handset out. point. in Now XG We've think, initial up these launches, the manufacturers at timing the some pretty this push is handset I ones

no business. there's FormFactor I think strong question longer uncertainty. the for term, still But is tailwind some over there's this positive a very

They industry growth to had I also the strong performance identified around next they a to in forecast market comment a Form DLSI. made on a reference for But X% around share Then to was its there. the think X follow-up helpful. compound that to that's question X had and, congrats somewhere And was X.X% to basis report years. that for over

FormFactor reasonable discount in that be is with served having markets recently, can company? growth few executed growth ago, transformative deals seeing least growth tuck-in single-digit you're that there that its So to some that? mid- things deals a execution interesting that maintain possible would for company to are very your years the that if argue think on a the at to inorganic Or would high would be for it

some probe Well, in a consumable. space, the is of I probe about past overall, specific about served of in talked you are card we've design cards market the themes mentioned think our where the a function really growth the

bit quite move so think long-term single-digit a more whether equipment customers node -- from high change growth. card And than probe to capital or seeing be demand. drive why as stable it It's These a spending. things DDRX. a DDRX designs, that And are that's semiconductor you're this I change DDRX

market really are the at which want piece adjacent also As look the in systems has growth on nicely we that both and it serve we lead, overall organic engineering market. but inorganic markets we to where FormFactor capitalizing to the that in card strategy, probe of

continue in new leadership think expect So we position, of pieces and served to and organically taking our going. positions the market execute we'll this reasonable to growth to keep generate there the growth acquiring against then cash also it's leadership amplifying market I but

queue. in questions would further no the showing for closing Mike Slessor hand over remarks. I I'm to the now back to call like

If Apologies please get the technical you Thank make and to to us sure something today. do we schedule to department stay that. questions out with you, again, your for reach safe. everyone, difficulties. to IR our follow-up and and of need we Thanks that for some joining answered, again, Stan

today's Thank concludes for this conference. gentlemen, and participation. Ladies your you

may a have now disconnect. You wonderful Everyone, day.