FormFactor (FORM) 3 Feb 222021 Q4 Earnings call transcript

Thank you, and welcome, everyone, to FormFactor's Fourth Quarter 2021 Earnings Conference Call. On today's call are Chief Executive Officer, Mike Slessor, and Chief Financial Officer, Shai Shahar.

Before we begin, Stan Finkelstein, the company's VP of Investor Relations 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 discussion laws. securities forward-looking the within meaning the Today's of contains federal statements and the trends, forward-looking of of anticipated for develop, financial acquisitions industry pandemic, new in and performance, such of our and projections such impacts based. respect technologies, the conditions, in of includes investments products, statements and Examples future in to statements anticipated chain, the products, the which disruption the with regulatory supply ability macroeconomic those assumptions to sell changes, demand of business upon produce, benefits are the the COVID-XX impacts and our the capacity known statements unknown materially differ those subject These uncertainties actual cause that results risks to call. and this to are could expressed during from and uncertainties filing year with in are risk contained our in SECs factors on available XXXX, on and recent issued ended SEC and the SEC in release www.sec.gov, our today. the most filings Information our and at other XX-K which is for Form website on press physical

made to now over and Xnd, today, of assume no CEO, Mike we we FormFactor's to obligation Forward-looking February turn are update statements that, as With call them. XXXX, will the Mike? Slessor.

joining Thanks for everybody today. us

non-GAAP company I'd thank their produce worldwide and of $XXX revenue, in this FormFactor our with quarter, over caps team of results. opportunity of $XXX over three to non-GAAP This record to history, billion the and the per the quarters dollars fourth time take revenue a operating in dedication We outstanding delivering a And income. posted the in to results produced a million range. FormFactor record million for share outlook like first XXXX. these high-end perseverance earnings at for over of

in in innovation probe XXXX excited industry. important to demand and systems all cards continue in markets we're and we're growth benefit the of and the about the across enabling As playing our and we solid semiconductor from served engineering start Year the Tiger, we role

In addition Newsweek were companies. to leadership for America's responsible our record results, recognized as recently by one most our we of ESG financial

team FormFactor's environmental high by supported an score Driving of proud Like and challenges. labor our we're in governance. and to a efforts. in and to recent chain years, have was world-class become focus social we to Directors variety performance companies, FormFactor's recognized for to focus, leadership manufacturing Board addition and a supply very overall for continue corporate face ranking In a level has these major been a many of ESG

automation XXXX. Our headwinds, help integration us long-term deliver disease enabling investments effect to mitigate strong in us the to results and vertical throughout

to the of spread our and for quarter our labor partially weeks outlook. first the responsible sequential the variant shortages is Omicron factories early recent the in has However, in in U.S. caused reduction XXXX in revenues

are certain also times for specific of subsystems suppliers. for We caused the delayed in in sub-components deliveries primarily segment, some system our products, experiencing from by lead extended

with closely growing managing view in team especially these Minimizing qualifying our ramping suppliers. challenges, is and and Our investments labor of supply and and our to capital new on demand. important working to by current our focused resolving actively chain remains suppliers meet availability both rapidly impacts customer

of the $XXX also financial million facilities We're then adding tools and current in October customer our contributed other which our and to the from our As Livermore target capacity quarterly meet Livermore shipments revenue. manufacturing meet both expanding to began global increasing gradually to our customer fourth across we new our create shipments these we model. in quarter, the previewed record demand network, revenue will labor. call, and by capacity in exceed We're earnings Center Manufacturing

business, first-quarter reduction equipment, offset by the largest details. in in and place some level market in cards, been logic expect overall years. seasonal in our the most of a This cards differences insight has strength test responsible seasonality, the it was fourth to with slight cards partially probe a we with the automated and for segments equipment. revenues probe to few and a RF demand. foundry consumables, tracking for sequential now real-time pattern, into quarter, and see probe foundry to strong for decrease past Turning drivers growth the demand Foundry provides between Consistent foundry Logic that capital like like

As consumable we new are chip note, specifically each often probe design. cards

nodes. our applications. as release existing we the so And test testers release of designs, performance business the our component, In enable and quarter, installed we second being in transitions high and designs first designs nodes, is the of by of node reuse base to computer of new foundry customers benefit on existing primarily chip new the new both from driven

evident continued of our long-term for and of in help EMIB, market investing early driven to are expansions. growth as architectures in Moore's offset record Logic edge wafer primary fab the Foveros, drivers XDFabric advanced like levels slowing capacity, equipment the from expectation and packaging both capacity law. Our innovative ongoing and spending Probe of one is front-end leading stage the Customers of Foundry Card

the logic tile-based complexity expands As and intensity per and required test these both of demand. schemes competitive the which foundry both test dynamics for advantage. cards probe we've drive FormFactor's integration discussed card or widens in number long-term create past, tailwinds Together, out probe these which wafer chiplet higher

multiple release expect probe sustained Demand for the in these in as and near DRAM in quarter several after moderate designs sequential quarter a the levels high DRAM in Turning of second to decrease DRAM. ramp We continued revenues quarters record fourth first at the quarters and do third new near cards the levels. volume. customers to

our both and each PC design to mix in manufacturers of designs with of new applications. with and New DRAM DDRX diverse activity the continues be DDRX mobile strong server major

our customers. from of this activity healthy each We new DRAM design expect continue sustain to will demand

of is a the long-term in markets manufacturers, these it our applications absorb of diversified our and market tenant to to and operational a of all major key be short-term and semiconductor result these supplying our each markets remains specific ability served initiatives FormFactor's strategy. within demand leader markets, from fluctuations customers,

also optical engineering the quarter, in the metrology million quarter. adoption results advanced gate-all-around of business in experience of applications, in like optical packaging primarily in investments record with to with Our sustained revenue CMOS the demand we like $XX demand tools is and customer nearly systems and This Photonics. enable FRT engineering architectures delivered first industry fourth new continue to and continued Silicon by progress applications along driven innovation

cryogenic enabling quantum computing exciting to as customers to capabilities service, Using test sockets innovative dramatically their recently can cycles we and stats FormFactor's probe addition, cryo program with utilize rapidly new upfront a and capital no probe market-leading launched this accelerate In an from tools our investment. cost-effectively to service developers resonators. characterize development card with business, adapted HPD and offer state-of-the-art cubits

Let me path close noting per target demand achieve non-GAAP financial a demand, model that over, the share to revenue. of by well $X capacity solid along delivers that million an the $XXX increased that to of with we're meet on earnings

towards execution, you. and differentiated markets, share attractive paired gains we our and in to progress position target disciplined over and strategy our our Shai, drive growth model beyond. will leadership served continued with as Our

and afternoon. Mike Thank you, good

while finish our with record annual concluded a the record profit opening the a the the to you income range center range Fourth high saw manufacturing revenues pretax was and year. during the outlook of achieved at as quarter Mike quarterly revenues while above was our year end and in that. margin As low at operating great new and mentioned, non-GAAP of and quarterly EPS quarter. our were release end press We QX non-GAAP gross and strong non-GAAP represented

a X% Logic million from total segment sales and of quarter fiscal to X% Probe by $XX year-over-year XXX increase partially The contributed was QX, the fourth systems mainly $XXX $XX million serve, to $X increase segment millimeter compared revenues in XX% probers $XXX biggest record older and revenue. an an lower we FormFactor's and XXXX XX% sequential were of and systems million, and X% XXXX. revenues higher $XXX increase in or million a from increase in the fourth cards a of revenues quarter, driven in for revenues of were offset QX. higher increase QX million, million by applications increase Foundry cryogenic thermal System quarter third an the markets revenues result revenues. with from quantum of were as or increase of an

range, GAAP gross quarter the revenues segment outlined included reflecting to Investor issued than $XXX DRAM non-GAAP Cost fourth of million slightly as the the gross cards quarter, reconciliation -- quarter table million in Flash to logic $XX.X QX was X% the website. which higher total gross within focus. lower to probe higher in QX. million third quarter margins of lower our fourth in XX.X% the our the total X% segments XX% XX% of XXX or reconciling million foundry the in to and revenues in QX. quarter, QX. million With improvement and an XX% margin basis, of than outlook revenues, of were in of gross revenues in quarterly of same QX third of revenues was segment, in release available for in revenues revenues remains of in third XX.X% section XX.X% and margin Relations as $X.X in were the million $X.X comprising GAAP the $X.X QX, total revenues On the today probe and $XX.X of were we margin compared by XX% basis in than cards for our XX% quarter. in the increased fourth and than a quarter. were million as points company Gross higher both non-GAAP revenues within from QX, sorry, $X area in non-GAAP third margin press items, the in compared the

from we in As margins a changes that a to expect will as product mainly quarter, fluctuate quarter of mix. result reminder,

Our XX.X% expenses decrease offset Probe in mix QX. related and The less basis cards by product lower gross XX.X% partially to timing, to production was flow is material segment to XXX the compared in wafer quarter, a spending. due favorable a fourth points mainly processing higher difference of indirect margin

and basis year-end XX.X% gross margin favorable This product in System was margin inventory than adjustments. less XXX the lower a mix to third XX.X%, the QX due is decrease Our points gross quarter. segment

As the system previously, we expect between XXs. our high segment gross to margin low XXs we've to said range

effective operating Non-GAAP brings million and Non-GAAP quarter. million $XX The to diluted our rate diluted The the increase in the for third $X in revenues quarter. quarter, or of million, XX.X% XX.X% relates our tax income QX. GAAP or basis quarter was in quarter. rate for of fourth as with within $XX.X the the share, third than lower fourth This or revenues for XX.X% with XXXX mainly million line levels fourth of GAAP compared non-cash the $X.X million, within $XX.X the non-GAAP fully operating was QX. acquisition-related anticipated million, of Our sales to the similar XX%. higher were quarter commissions quarter XX.X% $X.X expenses tax million expenses for tax in the rate record, operating to the income to intangible, all or than were million based expenses for $X.XX higher million year quarter $XX.X to company share $XX full and points million revenues fourth million, quarter XX% fourth $X.X $X.XX per depreciation XXX the non-GAAP XX.X%, $X.X per effective stock higher effective expenses and Company than was fourth the in marketing, and the of activity. net increase business amortization compensation, third a included compared for for for million non-GAAP $XX travel, QX. fully $X.X

XXXX. share utilize annual non-GAAP was remain QX. until quarter's As share U.S. quarter X% net only per or was of $X.XX quarter is income $XX.X based non-GAAP remaining X% $XX.X fourth cash net non-GAAP The fourth tax to to diluted R&D to fully income the $X.XX per a compared pre in million diluted reminder, of second fully our fully million or at rate income to -tax expected credit. Fourth our we

expenditures. million Moving quarter had to of that $XX We flow in investments cash $XXX the increase flows. of of the a free cash in reflects million. capital capital a in fourth quarter. the of decrease significant million balance expenditures free at in capital We fourth XXXX investment in generated decreased $X sheet end a the to bringing sequential $XX $XX $XX investment $XX million QX, flow cash and million cash in quarter included The to of total a and year cash flow and million million in million $X working free compared

$XX during end sheet $XX CapEx term had million. -- below of our in our quarter, our fourth This $XX QX. fourth to balance just expenditures $XX We the million previously two quarter, the on remaining during expected. loans CapEx we to Manufacturing This invested we million million as to the between the $XX to brings in to the chiefly in of on meet communicated As totaling capital be of range capacity to compared year-to-date million, and capacity demand. $XX online our million. million increasing $XX continue expansion XXXX, Accordingly, million. related Livermore in went In invest Center, to expect which quarter $XX the to fourth XXXX investment is planned customer

price significant model No after year This remain purchase to The available offset year-end, share dilution share shares return over were under purchased the conclude with two-year repurchase just our X.X% we quarter. of purpose of made this for is And in to capacity stock-based of the outstanding financial future $XX.XX repurchases during million at plan our main repurchases these revenues $XX X% our average XXX,XXX million repurchases. to And the from a under expansions. target X.X% brings share of shares. fourth $XX our we an we for compensation. to end, As plan. CapEx reminder, to about total plan expect

first outlook. Turning quarter XXXX to non-GAAP

and share mainly $X benefits higher range earnings decline fully ranges, $X.XX of million Investor gross the revenue in million. to revenues and and in the costs product DRAM These As quarter Mike $XXX call today. for is we Relations release outlook non-GAAP mainly Non-GAAP moderate and per higher of factors partially these expect on be QX QX press to million resulting XX% questions. additional open XX% on With margin that, in expect the operating to to due midpoint a mentioned, expenses. QX of a approximately in our between of $X.XX. the our outlook let's to the to more Operator? in $XXX revenues. we expected by At the of and Reconciliation foundry mix, decrease diluted for in GAAP our available expenses QX is non-GAAP is QX outlook annual expected be be to range website favorable to first Accordingly, research and offset seasonal issued the by input hiring. for logic section labor

Q&A Please stand roster. while by Instructions]. compile the [Operator we

Our first comes from of question line Brian of Chin the Stifel.

Your line is open.

ask Nice afternoon. revenue is constraints good just few question, the component and and how results large XQ referenced? wise, Hi, from XQ labor thanks for questions. the housekeeping us you the a letting first Maybe impact

Mike. it's Brian,

And to early the is and I'd piece supply we you between foundry quarter. chain have in net see QX And midpoint, down downticks half that in it, the labor we foundry at If and to quite in the QX basically split QX that roughly some the seasonality element said, of $XX seasonality larger million. of but it in the half we've I see There logic. experienced the look the QX. constraints being other business it's strong. as -- seen we directionally typically is

again, down So about seasonality. I'd midpoint, between $XX the split and constraints half at million it demand

record Okay, customer, quarterly Logic revenue into XQ, a the of do rate it bringing maybe that's as like run that and -- to XX% business. think revenue really part part the stream? its a positive. of ties in it's more die timing that from company down your maybe is that And process the seven built I you devices integration? become an helpful. could with But perspective, even anticipate largest in revenue XX%, When you XX on observation Foundry looks technology like guess your would nanometer a a that significant a XXXX, of maybe heterogeneous rely surging seems when from logic that

Yeah.

chiplet rates the So come levels for one XXXX manufacturing do see of out. it's until strategies, little require which the or did tile cards XXXX, of XX-nanometer to the I but a look in for to going maybe we in if observation second least run further about probably half But early We to you very bit us normalized being levels. right expect or sustainable probe is Brian into raising people. that at some integration, and not more talked those indeed, a to And strategies, That test customer back you at definitely for is great XXXX. activity, this the some a model. out for want help revenue intensity, to to emphasize year more R&D with are late heterogeneous wafer I wouldn't significantly now significant it

at the releases, card product couple customer, and can you the look you in or quarters of there. If a between lag demand, there's delay usual probe see

with logic late And the the so customer part impact expect a leading in although, and may year space, early customers 'XX the a active it all do in R&D engagement revenue. very of our again, and be or to that foundry I

step And back off. I question, Got just it. maybe one Mike, before then hop

horizon? were out the If to part for card to isolate that carve on you might of over that market, be of advanced you market the CAGR the foundry two-year think the probe next [Indiscernible], what kind logic do

couple XXXX. So Omicron issues we've some also of with The interesting components unpredictable some that there, recent it's years. structural of obviously tailwinds question most because over to headwinds but being an real dealt the there's start last the

That And You where I Probe high logic, takes a to tailwinds difficult high-end the associated puts market foundry the that's with quantify think are. although different look the they're and Card and overall piece, WFE, probably it's single-digit grower. at high end biggest spend. the with

on, Card a in and adoption, to sub-segment we've outgrow there's heterogeneous just the the potential think integration adoption for the seen that recent single-digit I packaging couple touched advanced market, of that growth do years. Probe the Some of for we that

Fortunately, biggest and it's do. one market which our we

That's great. much. so Okay, helpful. Thanks

Thank [Operator you. Instructions].

Cowen from comes line question next the Company. Our Krish Sankar of of &

Your question, please.

right. shipping And equipment customers. are my the want consumable, taking but is for business that, probe card impacted case, issues at is and To prepared Systems comments just but have to you that among question. I mentioned the the constraints that the having them. the not three How does actually impact in I I that of constraints Thanks if probe it's card sure your I Hi. front-end understand demand? card. supply if into a your Probe with all, folks in make Mike, heard

of impact the hard wafers, qualifies of the designs, But in It's and them, moment. in obviously customers Yeah. we in to two the typically new seasonal part past, discussed place WFE produce going not customer if we're to probe they're It and demand that. quarters, may the tell on And downtick here somewhere front-end installed spending seeing ramp ramp the yield the the card. details be capacity by QX. the have between depending and and we've in to four don't and as lag

good any delays industry the there the the and So and the record WFE of capacity in half stand in that in said XXXX. XXXX pretty across step. brokerage result that, in led year, overall back in here are added enough WFE in to was led strong the to some to results Having delays demand momentum continued going that

leading card is I know your leading XX you Is super lagging it, and nodes? edge, and in-house understand think it's probe your probe I if nanometer And -- there of one way of cards lagging-edge, and in say does or Got for foundry I cards you a say customers leading say or between lagging XX like edge. and above are then like, did most probably split helpful. edge mature revenue what do a your probe

reasonable as significant I designs revenues the chips from guess a fibbed automotive a you probe often we'd significant the probably on like the driven we to front it's customer. the new to Gosh, a trailing those you're have a that back majority card to things by end of manufacturer and to that are and nodes. do that's business visibility lot one of our of automotive of a back-end, a my on get edge are inception sort leading-edge on is But and don't tough node We industry. nodes. but leading-edge right. have in visibility the design there's from The unless don't between where special feet want the very [Indiscernible] The on, microcontrollers ton of one nodes in ramping on specifics obviously

the is demand target Got it. now, you, like moved And it XXXX a out you Logic final between looks question work obviously are Clearly, in almost there. and model then Mike. for you meaningfully laid then million Thank higher. mean, or And to $XX Shai. has in earnings. the Foundry WFE, I

$XX the feel the exceeding I'm target, good million kind curious, is about do is of just EPS So you to that? above or still

there rate which we achieving run quarters a model provide run the a with we So if far. a to target year closer we previous this making great made got we to and in And as we run we of target feel did put to to get in we'll very progress although update rate, a QX. the the place when similar on And comfortable model, we we so yet, not model. million the what ago the close We model as in are is progress. an closer couple

Shai. enough. Mike. Thanks, Thanks, Fair it. Got

Thank you, Krish.

Thank you.

Our Company. next & Needham of Charles question comes from Shi

open. line Your is

and your for question. about Good your afternoon, little indirect terms question and Apple my first Shai, seasonality customer maybe thank pattern a my taking here. you of bit Mike in

seasonality side, inventory. pooling you. did see from indirect weeks delayed I some be as migration indirect that on or you other hear did HPPC I did pattern there really different mobile hurt customer effect of this you of your strong, customer, we foundry by not don't coming are companies you semiconductor we some highlight the couple of or hear here? node but do last that's the as Thank the if one some seeing a year, to heard slightly over think strength. the because device the pull got that I the and Apple well filled seems know being people of also you are ins but that seeing early Apple

Yeah.

an it's still took understand, designs. new that's demand, they're think they're why piece the new If nodes demand drives remarks. prepared and is that nodes card I Probe to on by in card demand. that existing important I time the drives make on the card to obviously our to driven probe probe point business

So and often dislocations you consumables that very can businesses see closely between these our business capital equipment local related. are

to For If There primarily at the it strength but I I present, mobile dominant that foundry which through not single high is it's a with at ecosystem. if rapid the I are given as you draw and associated example, the innovation some were too foundry theme ramping said, about compute [Indiscernible]. I elements look designs no very chip HPC, compute. is interesting it, surprisingly see question high the performance it, it to of performance in think to segment

direction to you provide want Maybe your you color. if color, quantitative that. thank think chain, provide it. did the some Got next I you I supply some for question or ask can on

side of the business right chain the the card supply business? terms In the System the what seeing is it now, impacting side or of Probe you're impact more of of

shortage it's of to us, causing targeted electronic a handful from the ironically, things, back comes segment. shortages. pretty Yes, at And the what's least their when it’s get root semiconductor or suppliers you those fundamental to pretty more cause to somewhat component impacting suppliers. to targeted sub-components deliveries push And out system of definitely the it

in segments such impact the business We've qualifying to business continue suppliers. very very a focused Our chain working present. But is and But as in a and suppliers avoid management's with doing now. focused semiconductor impact places time good supply segment. Again, on an of team's That many new we're managed and with very lead it's part of existing companies, supply any any having the right job is that. system that at of chain be part done attention. managing constrained the in big of other on managing couple card active probe a semiconductor to the an

my But Got terms in about Obviously, the view. Are little Yet, a in for do what to visibility DDRX. that DRAM. you have transition from card is you bit big are this really switching year? the it. really seen Maybe some supporting terms my of that, what to last you business. supporting seeing a question value DDRX I into see the you demand? card longer-term you Probe DDRX driver ask want haven't the you. of and your Thank of DDRX expect probe cards if or either the DDRX crossover last volume you'll dollar That's to probe question. assuming

to I whether a the call or at -- you think surprised DDRX been to close pretty DDRX. we're it I've longevity DDRX. Yeah, want quite crossover between parity and of

in DDRX, and associated been our parity previous discontinuous. of I their design that But these customers on the shift observation perspective new from have sudden was have is of lot most sort related and with of to chips activity, big all that and interesting that DDRX DDRX. that's an Some DDRX with a That's not processors, around other transition, pieces, right here ecosystem don't hovering thing. designs DDRX. present still through there's a it the where DDRX. know a a of Almost at DRAM designs gone architecture peripheral some whether transitions new pretty there different became design like node of between a transition, we from case went we're DDRX

That's Mike. all you, for me. Thank Thank you.

Charles. Thanks, right. All

Thank you.

Our comes Craig Riley Securities. next B. of Ellis from question

Your line open. is

questions. taking for Thanks the Yes.

this understanding labor-related? is And of When things. that and supply feel things to some like is systems that this, related chain then you if with of have should change the good the you you supply this issues visibility say The more that get do from it you we think is or side play you the that it that quarter? supply that impacting hearing the that with you'd labor outlook s persists the are a chain to is some do into look Is you at have first one half staffing time be? in better first quarter of about are system and I you the revenue, through on of dynamics the want largely behind the question clarification think quarter around you have heard supply chain I are issues. and some first in where to issues issues. back respect I'm The just second and something Mike, things some the labor getting by some call

Yeah.

Let me let's chain to separately. supply that couple address aspects into it a question labor and and of parse

continues side, impact, with of chain quarter yes, I supply sub-components business. that, in the find team sure with and are we a customers existing those to supply and lead make chain the the keep the times our the to On can. our impact supply best of of impact -- alternatives, mitigate systems approximately of shortages, things as half as is to well, said, half to down the keep work to suppliers, These we overall work commitments that associated

the have policies infected you either require you if live were somebody you our this people are close with primarily quarantine Obviously, allowed test The with in have West tested people in close in a you even early don't is and U.S. or requirements Probe -- contact, other with the Omicron. of primarily the associated in factory. is or the part and not positive, manufacturing we side, lot quarter safety positive, of if a the A somebody Coast to footprint. had component, lot of a been card contact who due labor shortages primarily

record, past too a the And capacity labor dramatically January. if It so us rather consistent significant I'm But out far, a and of with keep trying to so. to month chunk very of in too I'm infection lean around have I as took rates, our week as COVID play good improve I'd communities the to safe not or the we're to one workforce over does that trying forecaster want we don't sure seem that can. for

us. a the two there's the behind us it's significant if of like out for of Assuming anything, last among that new most feels takes difficult make. pandemic workforce, variants the it But fraction to predictions years have bit end no of tend us a be that's that taught to the

case. the that's absolutely, Yep,

just DRAM and strong third -- Company you about in business. was me, is you're The question the the clearly you and the course up out share seeing excuse question strength if second opportunistic XXXX, DRAM the present in and DDRX quarter market? opportunities was over share talked further gain DDRX about in on business The are The with at each you this, there how the do manufacturer. is for and share look DDRX of feel the picking

some more. share I primary where the some market. there's year our the not think company. market key it's that there's logic us the a on past share I and manage and Japanese if foundry to two gain competitors. And It's hold DRAM, over think at in did least We high-end gain suppliers, essentially like a opportunity,

think subtleties the customers to able specific ramping. to share those a the going of two to Some achieve able I and forward has gains the the be versus our We're in hold FormFactor kind and We've hopefully and strategies them I where test one term. competitive long about of those devices and with a optimistic that DRAM touchdown touchdowns There's to are in But are on releasing a the share lot dips we've advantage. lot in gains am and can in of over talked configurations. past execute pushed XXXX, been little.

This Yeah. Can couple that call and what in is me quantum the then Makes the sense. you hop just least of the you for opportunities now in talk opportunity second the I possible is years? about queue. might be you've and some And how that at next before computing mentioned systems lastly business. material think over back

over a us really for a to Quantum because year model, it we HPD a an to to made was that. strategies, ago. is fundamental build achievement tools, major acquisition The reason help long-term to outside customers computing target $XXX of by we million figure them mean And did the that test these coming build devices. out quantum capability asking really the to long-term, Colorado us had we little But I play. Yes. us

here, our it's see and expect temperatures point, FormFactor. financials the here to computing introduced them, systems earlier I at the and characterization the get so for part nascent subtlety But natural that is continue long-term just we well to requirement. in And we service with of that an finish a not the fit quickly A really we growth engineering acquisition this these drive some operate the difficulty industry controlled expansion learning very the reason a environment, to business week, opportunity field. would most about making it. that while next couple this exciting internally. our Now, like as to to monetizing made SAM why essentially their specialized done over nascent years no to very significant of and helping industry. off. that to test impact devices side-by-side things this we're close low longer-term absolute as test the That have magnetic that capabilities years. drives have the of announced very and to it's pretty zero we us But again, enable and of one this we're for test and few on question No both quantum

if be then And of to us $XX closer and off to what's the didn't the to -- a eight I low-to-mid thirties? when six is from But new the the for $XX could higher maybe best-ever level a to quarter -- related high we're level first things in back think I seeing such Yes. prepared going sales system million I that, versus contributed potential range the quarter best to ease I bit number ask the little see per follow-up can I in systems a quarter million guidance. catch that's moving and quarters, that's comments from a think a to what the just that

the the by up business. strength business expanding a the that of is it's three That remarks primary it the lot a on strength segment of touched thermal around One of has little I piece bit being engineering Yeah, core system level in but some in million in augmented our of on. prepared worth $XX factors. really

problem. high are the with we've benefit advanced impact logic dissipates optical but so on you, need piece the other there to entities, and of foundry HPD acquisitions extent dealing very growth of power Our lesser we're top applications. the powered there. that out that business We've watts customers the just nice positive But trying technical some a out made, as some told FRT adopted of hundreds and a to is there's a the get packaging real I metrology for there solving tools seen test of that is of as and devices with their

$XX made systems strong the a of upper industry improvement, the acquisitions and is the past the along benefit that couple we've yield over million the being the legacy business systems years. and level with operating So consequence end of because of nice innovation from good

Mike. Thanks, it. Got

Craig. Thanks,

Thank you.

of next question Schwab Craig-Hallum Christian Capital. Our comes from

please. question Your

Guys.

follow-up designs on should and us we given calendar new growth a you Just new there? DRAM strong expectations a in quick was designs DDRX think on about probably DRAM But continuation DRAM. Can growth nodes. have existing of 'XX, we year. When especially of framework on this give will

foundry those at high-end and potential growth Yeah, card and back logic think the go I in -- we about talked probe market. would about,

constraining overall down. FormFactor's do using test test the that wafer One ones cost a probe and like our to the and for don't there's we spend things their and outgrow of to at job at overall pretty mid-to-high whole expect reasons market to single-digit DRAM of significantly test drive costs a CAGR, customers good look you tend If several ability that. driving their is of to kind card

-- customers try there. as this especially from place that probe expect So go increases growth coming logic sure lot about we they're is both lot previous lot to talked they on are yielding foundry see A there, call model, these intensity of -style and calls with on we and our complexity that parts, and in don't make a products. Really, chiplet growth the investment as market cards. and as associated a they real the good our and into of then driving of up

That's customer, largest customer we've least in direction some we way how your calendar us to an more have thinking your great. you them that third past should into a I this update That's visibility to able a consistent 'XX? throughout higher. previously, Can talked year about for be of Do --historically, a give at that? segue materially know a path just maybe XX% or the great be give being customer. us on about we that. scale Could

end can $XXX think get our Yeah. we for to believe expectations really. reiterating Sure. like I them that up And do customer, year something a we a million

qualifying drive intensity our for for of I business on half buying things them [Indiscernible] quite customer of expect to to half compute would the the everything these grow so continues remarks, some high-performance continue seasonality prepare the these they a of in a [Indiscernible] advanced with indicative as spend. substantially, it's first both higher test be appearing higher bar and second XX% card as to in prepared mentioned But business designs really guards probe the by first and expect some on sure continue that they is do as a Their list also I making pretty and continues to We quarter to the get strength, challenges and I grow. of we One XX% is think seasonal.

Okay.

kind in seasonality the that strong right? [Indiscernible] to is of first not the half quite and difficult second customer a half, as as So last year,

Yeah.

And sort sometimes in being of list, quarters, of most sometimes the distance within XX% striking not. on

Okay. Perfect. other Thanks, guys. No questions.

Thanks, Christian.

Thank you.

from Citi. Our ahead. Amanda Please go next Scarnati comes of question

Can Logic those you're little as a and in and over in Thanks. about shift either have the businesses? or dynamics bit change the been talk you last competitive XX bit that environment any there a Intel Foundry, the months, seeing TSMC little

competitive think the -- dynamics. we about I talked so Yes,

market. question logic, was similar Craig's I in DRAM. Foundry think and a

privately-held shown lead very got You've Italian and they've company. some a strong suppliers good growth. And two

a done continuing change I job fundamental and but wouldn't the customers, execute key I as strong competitive a of lot position dynamics. good these think a in achieve it a that in they've supplier to characterize second

than think not I to And I DRAM, design and go different healthy, share opportunities, things think in different But market is as probe of share it's for are competing not environment, there probably logic well. going foundry to fundamentally transitions. etch just a markets gains. and lithography, the to other are flows design going as two like relatively card competitive in to no credible and suppliers in where node depth, through some be but and different market be different ebbs the node

going about growth along M&A and a think you appetite M&A bit suited -- the between like that happenings strategy acquisitions growth quite do really. recent a pretty talk you sheet-propelled forward? starting for well portfolio portfolio built is XXXX now? right It and you seems Can there Is through additional little or out have nice near-term, XXXX

operations It's certain M&A. reserve continue to key the the about previously. pieces new the like partially in some markets. dollars But do our attractive drive want and you segment, more look and we're I spend of in buying segment for served the appetite if think leadership some think to gains? primarily of focused of serve we that position I dynamic markets. pieces there, related we system leadership taking can business, We a deploying execute, positions existing where component at we our Probe to card you there's be share market think talked in want generating in supplier markets, consumable Do in things of an them from of don't definitely and drive there's extending dual dollars So our because the strategy, in M&A

overall packaging applications, I strong buying think advanced good us a through and we're deploying of of and the some of acquisitions growth that -- and those that execute. taking capital, driving talked good customer get acquisitions. stands then continue growth for the it we've recent great products, some I to to metrology and relationships FRT's done a about example to FormFactor them optical industry technologies That's to theme going out

you. Thank Perfect.

Amanda. Thanks,

Davidson. question Our comes of next line [Operator Tom of D.A. Diffely the Instructions] from

open. Your is line

potential transitions, node the for the Good changing wafer at What's thanks one driver DDRX? look impacted forward, more you DRAM market. by model it Yeah. more as forward? the from question or on the question. When going the Mike, gains of starts, is or going capacity safety biggest growth by and to of new DDRX afternoon,

wafer it's think I starts.

growth the shrinks, essentially the offer at driving are way starts. bit growth don't and bit wafer very through DRAM our you are node much customers so the networks, way is look If transitions they new

fab, more wafers probe DRAM put need cards. to through a you're You more going

as driver the that's said about card Having in session, probe we fundamental market. don't lot DRAM we think of I demand. a And in growth see a so little that, bit earlier this talked of the

the starts using pretty with per customers that basis don't and associated costs and anything growth driven wafer some but at it wafer we logic chiplet to Our DRAM foundry move test so on good bit expect per are that growth we've the by are style a mostly like be there architectures. to

makes That sense. Okay.

looking there business an week several market, billion So over basis? every role a billion more Is world. at $XX that, or fab on fab a XX,XXX we about probe seems all card a annual foundry logic wafer of amount x like fabs $XX hear the on the going would start up drive

revenue -- our large test makeup through thumb, But see And customers large different of you really, that variance if you strategies. this there different wouldn't such a are rule obviously. between things. wafer driving customers in start a see simple of it demand is Not because amounts were have

fab strategy. logic that it's have test depends capacity those your test customers’ intensity But your foundry think and test wafer going a on test irrespective high-end high and intensity wafer online, they're -- of foundry logic point, coming to wafers strategy all what I whether is, strategy. moderate this to test of to or

positive is overall for this out, build to continued and us industry the fabs these certainly. as think I so And a for long-term

CapEx helpful. looks for year a the or increased spending? That's on when the next on $XXX it the incremental to over XXXX-XXXX look impact new What's million at spending $XX COGS Shai, All -- the the going right, something facility. on And be I thanks. million of like from then, OPEX to

Yes.

on we of time. in most of Livermore. you might recall new over the helps period purchased So that with building, really the longer manufacturing expense amortizing actually This serving the a

line target was into And So don't significant amortization the it built XX% the expect to we the going be going model. is impact. a and

or it and big to we be took take already. consideration, into that somewhere So

what the it's much next more a you capacity field And right. can for us percentage or is over there schedule, sense years? to All said give you out expand on how several it is

we entire the to foot. It's look way so the at think square about it, building. I XXX,XXX purchased

but cetera, build remarks. manufacturing of some clean offices the and not Mike prepared we to we December, contributions formalizing room $XXX next revenue we in the had level. the For mentioned the a building. so in help started half will QX, what now, the we only in lot. our achieve the QX it, million around And building, And for as get us producing we now, revenue tools some et and beyond, This in to for the started process are building, in and of plans have

of still building, process second other capacity The we the in which in the world, of parts formalizing. they're half additional need extension of

Great. both you your Well, thank time for today.

you. Thank

Tom. Thanks

you. Thank

Dooley David of Securities. from comes question next Steelhead Our

line Your open. is

Thanks taking couple. my a questions, for

As your fab number? you far business, equipment XXXX, wafer business that of let's as FormFactor's what with probe say, what XX% kind do your in think you growth if grows of the the rate will around growth will be rate WFE card be or do think

directionally, spends be do as we about because specific over increases to too different talked the -- result customers increases, strategies. it's in seen WFE spends, and the test you've have in probe it WFE Again, do not can past, card years tie that probe to spend, But surprisingly. card difficult

over probe in bad probe is high-end obviously growing different downside the more time as It Very a the and at rate can question, seen market. this But There's is capital we've foundry extend more and wafers it so on single-digit I growth and the logic. correlations upside, for DRAM and high talked tends different as about equipment, be to that the blended than the and the cards, for look not which growth card different in now, think market overall As rate different with volatile you and we're segments. past. the less is situation do both for we out for Tom's more there. it's

guess get So is to rate what this at point?" "high what you your is I was answer your do -single-digits is going to at really trying [Indiscernible] think is, growth the best and

Yeah, so. I think

for long a that a this business. is that part visibility know you you challenging of have us followed time, those of For

cycle that We times down lead meet times demand through essentially so and racing drive to to we're customer continue able fab. wafers the

And on thing directionally are be or that's XXXX edge visibility a more can but cards all business, of capacity our increasing spending probe whether current so be investment even going you and quarter required. beyond leading and challenging and it's going obviously look at XXXX the to the for

we just on from this at you nanometers year. to touched guys, it XXXX, it way this there's that how there earlier you that four be at delay? of You've been Is bump on that going five happened I'm a TSMC some the nanometers But that lot but a XXXX you the for realize just overall three with or I maybe curious, delay impact quantify imagine revenue have in when at more would I can nice nanometers. designs for to impact, do of look FormFactor? would look

think has it don't impact I big an Yes. for that us.

new customers still the designs releasing transitions, are node nodes, well-planned good a part well-orchestrated, as the that's of these or five in here existing say on at look four. you If strength QX. you And

substantially things does a go intensity good to try lower go lower the they're test especially up, of with aspects go their yield. and new chip spread node, customers, intensity if yields, probe is does the One card those of to also they're initially, that one, different die improve then and to the you that yields new you more does operating a them out. a the die But at to because node happen up of wafers when least and lot start get at more testing test

But XX% new not a is test a node, difference. overall it in huge intensity. call it's XX% there. a slight to uplift so And Maybe there

to at the that at business, thing healthy nanometer nanometers, for think in the first of pretty the far part us five is continuing more drive to I least on it. interesting four designs continue fact to or release look nodes like a

foundry to assumption the as be overall One below rate? good the single-digits you be final growth DRAM me for low is a that assuming, and other it for is the think that rate double-digits business and FormFactor, if would high business logic single-digit think high I'm clarification the would stuff about

clear its segment go think very easily You read expectations this we the session. to the of of is or through some as at we questions had market. that prepared between grow [Indiscernible] talked we’ve and market that is I that back It likely reported lines overall than whole different ways of in core can bunch the higher but faster

you Thank

Thank you

remarks. time back this turn Slessor you, Mike the Thank I’d call closing for to to like

point for joining during forward everyone hopefully us you person again strong Thanks and today, year, some to seeing XXXX care. take looking a we’re in the at

today’s for conference thank concludes may call, participating disconnect. you This you now