FormFactor (FORM) 28 Apr 222022 Q1 Earnings call transcript

Thank you. And welcome, everyone, to FormFactor 's First Quarter 2022 Earnings Conference Call. On today's call, our Chief Executive Officer, Michael Slessor, and Chief Financial Officer, Shai Shahar.

Before we begin, Stan Finkelstein, the Company's Vice President of Investor Relations will remind you of some important information.

Thank you. be intended P&L of to financials. will important and the Company results non-GAAP supplement the discussing results GAAP some Company's Today your understanding of website. the Company financial on the and the Reconciliations section release and non-GAAP of Relations available our press by are in other today issued Investor to GAAP information, measures, laws. Today's discussion the within statements meaning of contains forward-looking the federal securities benefits COVID-XX financial the and changes, pandemic, includes of Examples trends, with respect technologies, the assumptions statements the of are forward-looking upon geopolitical projections in macroeconomic future and statements ability disruption new those acquisitions regulatory for chain, demand in produce, our our and which such the investments products, such supply performance, of the business anticipated in and capacity industry of conditions, anticipated to to and impacts based. of and the products, impacts develop, the the sell and cause during differ and subject are risks uncertainties unknown statements call. this from could that materially to These to results those known actual expressed on for contained on the factors with our XXXX. XX-K Form most recent SEC filing Information uncertainties year in and ended physical is risk And our SEC's release and other www.sec.gov, website today. on in in available the at SEC filings, which our issued press are

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

thanks Thanks, And everyone Stan. today. for us joining

continue capacity quarterly of for variety the through in as quarter, quarter, manufacturing model, labor momentum terms the our to manage companies, FormFactor financial to Like many customer our availability levels demand highest face in again the our supply we and and growing non-GAAP margin in headwinds, utilize meeting chain the a both of posted in challenges flow operating products. company continues delivering revenue producing second we second added cost. and of in and cash This strong first the history, highest gross in quarterly history. company exceeding results free target

remains tactically least of issues components steps on in emerge, labor expenses. focused the inflation and the We expect impact of taking our middle at they to part manufacturing continue operating resolving and while these moderate to as through team XXXX, and both constraints

vertical partially effect Our headwinds, our helped strong long-term integration has mitigate for has several the and contributed of and quarters. us automation in results these the past investments to

to Before we exciting news like move the I'd market customer on share to details, level plan. some

was their excellence, of earned of XX recently Intel's Intel and dedication Only And in its Intel this worldwide program performance recent we're by improvement. excellence this to Epic honor. quality FormFactor to for suppliers FormFactor's and thousands a partnership, recognized second-highest recognized supplier award XXXX proud as our supplier distinguished commitment with inclusion, award continuous that extremely year.

ramps. business, PC with along evident diverse mobile profile compute, like equipment are MEMS architectures, required cards IDM RF, which were Probe packaging overall the intensity, Foundry vertically in offset production integration the drivers These in on X high stage for integrated by raises Foundry continues innovative to our Advanced innovative demand spending, meet X Key our MEMS wafer XD from growing challenging largest to card investing same requirements requirements meet support customers IDM, cards, at the to we capacity heavily rapid edge of XX-nanometer early challenging advantage, or and memory and record meet customers MEMS and card quarter. our nanometer expected find XD largest to requirements technologies. now the competitive the have to we These Turning both differentiated Foveros, XD per for quarter. And Logic details; complexity, in similar demand node. wafer market stronger XX% time, test customers and level Foundry essential segment compelling and were technical and Logic technologies. leading needed like fab to Both we're Probe a logic top business in the Foundry schemes, to collaborating cost designs we're while delivery to we dynamic levels of these and the expands FormFactor's investing be the out, with and and technology drive the demand. fourth At maintain demand and Foundry MEMS in both with test and investing are chiplet, as sustained for in strong higher ensure the performance our at the comparable demand second and an of EMIB, capacity, are customers architectures and production times foundry short mix advanced and sufficiently tile-based card. and RF. microprocessor the to Probe client lead Fabric. level which probe probe commercial proprietary primarily server in our quarter key our expect which a To these of number designs, and performance ownership. R&D logic technical

DRAM. now Turning to

As levels comparable we from quarter. expected, throughout near to demand expect first of the the quarter demand delivered card quarter record much probe through for we DRAM be probe cards DRAM second XXXX, reduced and first

server designs the a and and DDRX major each mix in design mobile of remained DRAM with activity of healthy new manufacturers applications. PC both DDRX New from

we expect of memory benefit to existing and first business designs designs nodes. quarter, the new As across a delivered cards transitions million. the systems manufacturers. we with note, in each for novel devices often again to results from of customers part with early current its range design, for achieve $XX node each are The improvements Fab from second and probers DRAM near with level yield to processors. strategy. wafer of new mix both A and quantum revenue is the DRAM yield that multiple X-nanometer tomorrow's from on developments nodes of strong also mainstream to us technology of release we systems diversification, XXX and engagements probe the These advanced the Lab Orr so in architectures characterization leading applications, specific Paired quarter. activity chip inspection financial diverse in value, for our cryogenic of engage contribution key from packaging solid to strategic as wafer and significant in loss chip-scale millimeter new development, and consumable to tools optical provides probers, enabling and revenue and seam chiplet business metrology improvement

system served and systems markets continue industrial We applications. of automotive, renewable by first expand evidenced Tesla probing the quarter the our products, as wafer our for XXX for energy, high-power introduction to

continue another and and be model financial outlook, million of chain share first our demonstrate our earnings cost including delivers target and second challenges per inflationary to constraints Let on pressures. industry quarter step me both overcome supply for towards close by revenue. results the as whole, noting that that $X to million FormFactor non-GAAP quarter a $XXX There of

Our target recent positions results our towards outlook growth over served and our drive markets, the And this resilience agility Shai, attractive and and progresses will and and with agility team resilience our and have as of you. leadership gains our model, model. and to beyond. FormFactor demonstrated together operational share continued

afternoon. good and Michael, you Thank

in the FormFactor posted were As range, non-GAAP press outlook in outlook margin at range. high-end and and Michael strong first of the as our saw results. gross quarter exceeded our and you mentioned, release, value Revenues EPS

free flow income, operating the record and We record cash non-GAAP and GAAP net non-GAAP achieved in income, quarter. also record

first revenues $XXX an revenue. a Quarter record of quarter. $X million our QX decrease $XXX or decrease $XX sequential segment a lower in quarter, or were million decrease the fourth revenues of from were and DRAM Probe of X% X% from the XX. First million, XX from QX The X% of million System by X% driven $X in quarterly decrease QX, million, were revenues year-over-year. a was of revenue, segment increase card

card with manufacturing in outlook basis our costs, points quarter, of the at Relations or and More margin Within range unlogic product section was so and the in fourth our comprising higher QX million $X.X were high-end $X the for probe to slightly in total XX% in the quarter. $XX flat XX%, of DRAM in the million, basis, mainly GAAP compared The high million XX% non-GAAP for than was in issued our quarter, the today, included quarter QX to as of QX due XX.X% both reconciliation points our margin first revenues revenue revenues gross revenues, outlook, non-GAAP than the the a table revenues in higher Flash lower company with the segment, Investor of our quarterly than XX% the of to non-GAAP margins of to of of margin the higher mix, compared XX% in QX. fourth the more QX found at total QX, revenues in gross as which were reconciling of press outlined compared Probe lower company total essentially end website. were range million in XXX items, of increase of were the the is revenues, Cost favorable and gross segment. segments. On release same were and as gross fourth quarter in card flat as in through XX.X% quarter. basis fourth above million revenues revenue XX.X% QX, QX. and available XXX we first $XX.X to $XXX significantly X% utilization. higher and GAAP revenues the XX% in the in

factors Probe segment QX. to basis is the to the Our gross increase quarter. card mainly XX.X% of An XXX points The XX.X% mentioned. increase in compared margin first in due just I was

margin due was warranty, inventory mix XX.X% expenses, in lower gross Our a points XX.X%, and more favorable This higher than QX basis quarter. is XXX increase gross segment and the face, system reserves. margin primarily fourth to the

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

model We margin quarter. by first are in gross a our the target encouraged above achieving

However, will expect from quarter-to-quarter. fluctuate we continue that to margins

quarter per compared quarter operating GAAP by - $X.X which were the of the higher $XX GAAP $XX.X $X expenses the result $X.X income as a million million million QX. or million XX.X% last tax or for higher the for fourth increase higher for million, for and GAAP for first annualized amortization to relates quarter for for operating revenues, and acquisition-related was was the than was the per of was fourth than share fully quarter with quarter, as of $XX $X.XX at or XX.X% and first XX%. fully included The compared estimated net expenses in revenues, million stock-based XX.X% million income million, both $X.X the as intangibles, lower similar for and the mainly $X.X with effective $X.XX QX. Our GAAP QX. compared $XX.X fourth quarter and headcount, the of non-cash $XX were to for levels operating travel $XX.X record per effective $XX.X effect, a million Non-GAAP our $X first quarter rate to in Non non-GAAP quarter. tax in compensation share annual first diluted expenses. income in first million. million the than $X.X below for operating QX, benefits XXX diluted in depreciation expansion. tax record quarter quarter, XX% points our million, QX expenses of Company of basis capacity non-GAAP of or rate breaking are in million set the XX.X%, first $XX.X diluted the the million, share, higher fully

R&D foreign as FDII, During the a income quarter, changed, higher rate. also effective lower known benefit, resulting tax that's first of capitalization intangible and required in the derived expenses a

for We remainder range XX% XX% expect end the the these to lower the year. of be of to on

remain our income, annual rate to our expected pre fully tax non-GAAP remaining -tax cash U.S. R&D As we credit. single-digits reminder, utilized around based is of a mid-to-high until

fully performance-based to compensation. First than was our fully in EPS tax higher higher offset due compared to rate, in a range $XX.X million per $X.XX expenses effective $XX.X QX. per high-end margin, higher record by outlook or due quarter gross wind, partially to or and non-GAAP the lower of $X.XX operating the revenue came at higher being summary, In net diluted million share income share, diluted

to the Moving to cash $XX cash flows. flow million the balance bringing $XXX increase million increase similar We in quarter. capital the previous QX, cash expenditures The reflects generated end in in sheet quarter, were dose in the million, investments the free compared as a million to total at sequential the and $XX flow, at $X cash in profitability, of free the quarter. and level, record first of

expenditures million. our of totaling $XX compared during invested We loans in the end to the we of the As million $XX.X two million quarter, first first had $XX.X capital QX. remaining term balance sheet, in in quarter,

call, with CapEx to between to meet million. XXXX we $XX in As million expect planned demand $XX mentioned capacity continue in customer earnings to be increasing invest in and previous our to full-year

the CapEx As of financial our reminder, expect X% model, we these capacity a target in conclude to we revenues after X.X% return to expansions. to

quarter, million shares. $XX during available purchased we XXX,XXX the million shares, $XX.X repurchases XXX,XXX our This repurchase At brings two-year our Regarding plan. stock the remain quarter-end, first for QX, buyback, existing of future under end repurchases. through

by second Turning of operating diluted QX QX share quarter, of outlook on approximately by offset for a of plus A Logic. and quarter due per increases. non-GAAP to Michael Investor higher be outlook With is GAAP with million, Foundry website for expected higher questions. press annual let's costs. conciliation million. plus non-GAAP expect to product is QX and or fully or expected to be section these our plus the momentum to $XXX earnings in outlook that, expect At Accordingly, than and minus is to million continue of to points, today. midpoint in XXX the Operator. the we or quarter call QX $X.XX, to mainly be our on issued minus manufacturing These salary mix mainly outlook, hiring the minus million, $X $X released in ranges, Non-GAAP the to our $X.XX. resulting expenses QX QX, the the additional $X open in mentioned, factors non-GAAP as basis similar of available Relations revenue strong XX%, for sequential margin second we increase gross second to

the [Operator of first Inc. question Instructions] Our comes line Cowen from Shankar Krish from

please. question, Your

I taking a of and Thanks had strong congrats Shai. on Michael the Hi. for Yeah. them question. results, couple my really and

think fact the could is in of mentioned given DRAM mix to forward like a one-time the the for March, March, down June it's margins too, should relative we gross that costs, in reasons relative given manufacturing mix curious, the because that June be that about margins is margins of costs. with March, You thought it lower? but headwind good I'd in I'm really less looks that really higher in of I margin June to how be better one given or DRAM the manufacturing good fact the going the is much

talk two I about about for Kris, lower being Thanks, question. talk the want to QX margin components when QX. than I

past, the it's revenues product even we the the markets. to important that in said in the these changes with be mix we As markets there know changes in in specific the within all can or serve,

So going that is better. be even necessarily luggage to but go doesn't DRAM product it is to though the mean foundry comparable we up, will mix be say going

on We margin expect QX. comes impact a product gross in mix it similar to when the the

So that's one point.

QX. is The expenses mentioned I in well, manufacturing other one call expect the in as that higher we

also is capacity manufacturing our expected the expansion some coming of in and absorption expenses there higher As many and QX. peers, there prices, of raw increases an of our of result impact timing also impact seeing which is online, see production costs, lower flow we're material we in labor to in higher our

QX is or Now, target which of our plus said midpoint XX% we XXX basis minus is outlook -- plus our model. range points,

So that. by we're encouraged very

then Got it. Very Shai. a And follow-up. helpful,

think to DDRX weakness DRAM a ago, DRAM $XX.X months about maybe in guys DDRX $XX to or did And way the about by is Is push-out? driven there revenues. DDRX? and that between split six million You all million the relative

it's I'll Michael. that. Krish, take

even months over to continued the a past DDRX think, DDRX. pretty of mix it's and be X I

be million XXXX, the although a think, more second had a which through of operating up about much right around but expect DRAM quarter, the around level talked were about we somewhere we quarterly revenues, to realistic where quarter. we we being think I when median $XX our is mid-XXs, in it

running and So know to any got point through And I major DDRX little and of manufacturers. DDRX I in broad a to those with per We've flow DRAM we that quarter DDRX bit. don't push-outs all can of mix factory the se. designs the expect ebb a

is along DDRX squeeze just path. one differential DDRX costs? could I in any if margin and this And growth between Michael, there

systematically. Not

different Shai said, that can probe our us and do complexity probe card or whether different once, gross to touches. a does from card test touchdown regardless gross designs, higher-value, margin that, so and card, compensate The they're customers requiring uplift. for accordingly on the based whether at bear a significantly touchdown differences whole one higher wafer two margin touchdown DRAM that see probe it's we DDRX, DDRX single drives As card, so different things or designs, margins probe But card. like two

less to architectures, logic of deal memory or So as much to much in the foundry well. true more technology the with nodes and configuration, true that's It's actual in with do details DRAM. the

Michael thanks Thanks, Shai. and ,

Krish. Thanks,

you all. Thank

question Next in of Stifel line from the comes Chin Brian Financial Corp.

Your please. question,

letting thanks and seem margins the was on But Perhaps swings execution doesn't again, start output mix. again new congratulations in the few your the gross quarter. for one to variable on to surface, here wild incremental in questions. afternoon, with ask Good certainly Livermore. And the disposal the any that us a and quarter, from at was be there

level, few that that at were really constrained maybe to even, you were your bigger put of something line sustainability And quarter in, about target model, drags capacity think not this thinking out past over your a unlocks out, above really higher floor Is on the you margins to years, gross as than new we're allows there some I it gross margin we've fair Maybe margins? quarter say under that, point? so modeling. the higher which at closer but quarter been is levels. the more XX% to definitely these And

been margin is results see We good has of the always job right ability of on margin improvements operational at financial more having right? validates million the gross an one our focus to design, on on levels model, XX% that. an results I'm for to gross more company target something prices. achieve at excellent there. on our really about efficient strategic gross QX $XX And such the revenue to which maybe important efficient at securing our say rate is all been company, action invest these always that for happy very margins and would making us, And teams doing year. it's point an area I on being excellent a And of more supply in

are We our target model. approaching

look you happen. the target X% If we outlook Foundry came really from and and revenue are at we of to mostly growth QX said going it's range, the within expected, Logic, as as model,

So expected be. where margin it gross to is we

So we it fluctuate, to will continue this as ability our But to before. it. validates said achieve

You big. XX% got is still --

you constraints I up also doing I across And it's output? to have know year, certainly people guess, the and end is flex in plan in about next to need annual capacity $XX thinking But think, year. big this enough. towards the fair pretty And maybe to that into thinking if the are translate place million way a there CapEx, that board be, about, some revenue provisions of incremental make equipment, safeguarding getting a the the other this of terms about to number. that year sure CapEx for also $XX million you

I -- think

Sorry, Michael.

number. into to It's revenue CapEx number translate the a difficult

with large about footprint tools. been capacity. infrastructure being some think, while, know, for but assets their tools capacity. not demand, been a enough this multiyear that industry but in started customers following platform fixed underlying year off since for, to challenging continue buildings, I by to a situation this more transitioning some allow to like ability into they're us and us you expansion heard capacity It's still As has plan now get increase them being by to the We've big -- growth-constrained, talk everybody add to a you've

everybody I think for in that's almost industry. case the the

equipment a we increase turned to an be capacity are this trying labeled both supply. we difficult equal obviously, from place, as safeguards from the to which, to people but fast in can, challenge in perspective out as So market, are has an to and equipment perspective put

Got just nanometer output. commensurate of various feel And your substantial roadmap terms I seven packaging year. logic I next Agricola, it. increasing IBM advanced with I'll feel Michael. coincide like last like things? in one, in in [Indiscernible] of Maybe in increasing with one this confidence there. nanometer customers. those Three Foundry Is and there's in attach rate terms increase stop confidence the designs. architectures will level output for

Foundry where strategies I they and it, as cards put about up tile each the associated tile-based is attach Really, a Test a now strong advanced economically customers. which kill situation required obviously, coupling, going test test the is need that great a talked whether these to die again Yeah, relatively also really or drive one be Logic for going other sure as Things together stacking, bad three, other tiles those node, It or up, into you one you intensity number otherwise if there's out, tiles very we test drives X-nanometer, it's and rate chiplets confidence four a think different a point of chip, tiles of is these advanced nodes, our you're complexity. complexity that X-nanometer to have of the good. these intensity, while or that wafer put you packaging like each technologies. to couldn't high a probe making of with good, because scenario. can per very chiplet, simply, have both that so

of as get these us, ramps increased in for we in potential these attach think, and do Foundry advanced tailwinds probe lead the XXXX, there with so we the we closer Logic to the packaging card technologies, there's market. And as next overall intensity, with some I the opportunity in of associated nodes, think and the front rate

Thanks lot. great. Okay, a

Brian. Thanks

Thank you.

Needham Company, comes Shi Charles question & LLC. of next Our line from from the

question, please. Your

quarter your number that CapEx your dive that competitor really Shai, competitor me thing a couple me chance your of their out and you for like spend the is into one, public letting Thank you questions I during by to jumped the get want Michael a it's plan, your seems afternoon in closest went out over financials, got were Good CapEx thoughts, years? early The a three ask to we've one capacity competitor. you I that constrained past CEO opportunities overcapacity upside you the that be in a some decision factor, have became that do heard might right issue time understand your around you capacity the lost is than influenced of bit might quite before your expansion. XXXXs big about FORM concern terms because maybe more little in of a was and I to

us can card packaging, going especially you is and Thank So expansion, here mentioned CapEx Brian you. probe give advanced I some here, that just thoughts, believe to strategy Chin the for likely from etc. demand capacity accelerate manufacturers,

Yeah.

observation, fair a it's to and plans. XXXX, we expansion maybe I if our think in look capacity were XXXX conservative too back I but

that XXXX/XXXX-time frame. And definitely the some from is of hangover a

We a conservative team. to executive also tend be fairly

being by certainly And we've the a designs, installed so cards. capital address is you although of customers new qualified, capacity, couple see few you to the to that more and probe result that quarters takes Brian spending leading-edge And held of that more aggressive And look to years, more on the WFE the our to allow us at going back gotten in get that talked amount it referenced. require a if almost just wafers WFE, as opportunities lot from some. that past you us in spent about, can

the we little big grow think need bit investments the to these We expansion is these company market the end a and high to capture business, the good big foundry continue to fair and utilizing grow I capacity assumption expansions, at XXXX/XXXX-time shares we'll caught a frame. investments business, our that capacity with the for a for and are level flat think make, from the But confidence and our to of capital it in continues to that logic so company. continue increase. this were to And DRAM perspective

now still to my Got supply exactly began companies question, want of your believe, in the going is the April, delivery is of ask near-term. about chain have lockdowns it. one's I side side. really equipment end sides, to extending more semi in job into that's Maybe March, know on good The we something China, really but that COVID to don't seems not second end, I weighing, when two been on cap is the peer the part

reflected very obviously, your they QX a impact supply facility have probably their well, So financials. there? the I seen into of risks some manage you thought but what's bad your your having going thing, Is of in wonder, there? some little you did QX, bit something But guidance One I revenue coming like more that A intel shipping high domestic and quarters to lot of in from XX% the of do have is in past, teen than some part that. are understand China, single-digit a the of China. the a that in Chinese really like

you think are So guidance and your do Thank you. why about don't you that embedded give this? factors us some thoughts on how risk any of in the

headwinds there say, is you everybody China. like dealing mentioned. in would a as Just supply Including with, we of I your look So right? down variety chain are else,

new sometimes. a challenges situation. day, every or it's It week So dynamic very obviously, to especially every present continues itself,

dealing it. whole with It industry. It's the is us, great job for I doing is for a as concern think, our a team well.

moving specifically, us the you local the to for So for well far, longer-term estimate impact. it's by been -- it's around. too with make early what's say I us. to longer-term But [Indiscernible] things the China. it pretty to sales companies, have dealing to too And impact think they mentioned, are think not multinational I on And to early China most our as of to

you. Thank

you. Thank

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

Your question, please.

two -- on execution guys. very so I Yeah. margin clarification wanted a question and and Thanks strong much with so the to it. to gross taking parts congratulations for it's start got

quarter. cost contribution of What in that end upside those that the a at some utilization. remarks in to but to is the what's What prepared four dynamic? led versus four gives was margin, the mix revenues even others? that it benefit your a quarter-to-quarter, relative lower cost point, -- gross You the manufacturing to manufacturing in on that were the second cost upside proportionate in quarter, things was headwind it's first with then about there factors said high it just inverse about happening lower or the And manufacturing it in

the Thank for question. you

So turns X a XX% weeks. know, on the as even three first that of more be one, can quarters with about I would lead close week, X of came of upside you as times to say from we the sometimes a are the as mix. favorable majority And short to maybe the business upside,

the in So [Indiscernible] in least time, the at business.

quarter at range. So our in mix, call the close, came more gross And the line. with effect the positive the it in time amplified came revenue between high-end also outlook on previous a margin favorable and earnings which of in our

the higher were our of that's And see We be raw manufacturing labor majority I said, they other expenses contributed -- for as impact this, as that When or of bit be the of it the the manufacturing about expected it. gross each well. QX, a to little comes be the material one decrease QX. quarters is in most that balance. mix just of So are expected is margin to them higher. mix we're move costs talking the And gross in the margin expected on three about to to come expenses the as similar that peers to see. we QX and to higher is QX And prices, from to expected

element of higher and in is the a as absorption lower capacity Is manufacturing QX, in impact production online, flow, the expansion has is timing in there but And well. result expected small of Our that to an expenses. which

in balance our QX you If see inventory the build some you that look at to the in support increase we sheet, demand.

of of impact the that doesn't timing expenses as well. So

in Or then, mix also mix And the statement? segment a put that so happening? it. bow to the mix that DRAM of with something benefited lot on quarter. primarily the intra in that issue Foundry was shift first basis, Logic that and that to this wasn't on segment? Was -segment change segment all Got is a that's Given a just there

the QX, at and than higher we in when Not produced look and market. what every across-the-board. earnings sorry, systems it than design in built than came than the but higher higher also almost it's Well, you more if Even outlook one higher call. QX, customer we margin, in our previous business the unit, into came every

been it. Got the is probe a back next Michael. say as that question you about, intensity that a have those advanced far part down heterogeneous Michael, the for along their apply spending this, getting and they're a OEMs then pretty three budget. question that increasingly when They've path. known dynamics is or that then But capital of are think move entities, years been point made for just question top you that And card we and the product, that with started inquired the really And is towards goes I and at the as others to it growing which one it. at of There's it's tile-based number look it's packaging. three is others more style, two for

contribution towards year of today to So advanced and what look manufacturers? the for help then shift do three a would with the we sense XXXX, I that big packaging Thank of is to you the maybe reasonable from what is packaging? was end you. from shift the expectation much a advanced you for think the be could from end getting to if those us And this out hoping business how benefit,

are in up question these silicon drive test different to Yeah. packages does It's intensity. an advanced because pieces clearly end interesting of that going up

over that of to industry important is it's whole Now, going packaging. all not advanced move remember to it's wafer to the starts

here. do be as modeled adoption units. to that, a still is there an or in very we [Indiscernible] So that early needs And effect we're

where set It's of the if you And HBM relative of look number in impacting If probe wafer a that. stacked things starts card high-end you think business is and processors. very a go DRAMs, fraction now, packaging But it's not it's and at packaging our industry. that, advanced demand like road some there's these customer at to advanced large they you XXXX, of overall significant technologies. volume as significant of adoption, mainly the look into through, maps, as these about

of packaging all of advanced rate wafer leading attach take and to diffusion encouraged Logic we're our on for the and XXXX. customers major the it's designs nodes still for in from years And or Logic. packaging, very been But that become for these have many starts, edge high-end slated to going advanced so Foundry that majority major Foundry rate this

the right build small having to from very expect So we we're do it contribution now.

Michael, early milestones you XXXX as Got capacity? as squeeze should what going? up there after the your very, a it. you is your qualitatively are for one of going look to tight us some and got how of if that ramp in some ramping very some we Livermore could And ability and that levels just being just you've creative up impressions And we production more. up, new look through ramp I facility at doing can then really give period and to things the wanted, with keep

-- Well not and done. it's Yeah.

levels the our had it at look continues XXXX, efforts essentially projected for high the you XXXX, in XXXX. we If CapEx again were same in at

we'll model if in at And a I and first would level. so know it's the I ongoing run certainly get story an rate the but where milestones, don't there XXXX, appoint that the one, quarterly

As close. the clearly, Shai contributing is getting additional it, to noted, we're that. within a few capacity very so of percent And

So maybe milestone that's one to. look to

continue as our our add higher others and CapEx, to probably add footprint at footprint, as have seeing give look continuing CapEx footprint current our that are, beyond capacity that that us you our -- to quarterly look continue good we levels you at to deploy and inside The is to capital ability the capacity we're now. indicator annual at legs

guys. Thanks, it. Got

ask please you to And to like yourselves to you. two we'd questions. ladies and Thank gentlemen, limit

time back You may in as queue get allows. the

Dooley Our from next Securities, LLC. Steelhead Dave comes from of question the line

Your question, please.

about in at clearly, if your this, My spooked slow half the stocks build question levels, to both or down but customer you're space the recently. what done is, because any I'm wondering are about segments card and the what business, to probe sort seeing any investors your of year have are inventory customers your guy second of given space, the the saying first the of and hate and equipment any be ask I

change seen wondering customers? tone your if you've in So any from just I'm

There's really no change in tone sort of systematically across the customer base.

there's don't half. see our sequentially second had our growth. But our for business, that places getting have takes are us, in, in everybody's markets, going If large Whether like anything you wafer having we've indicate things and simple all after constraints share, look got downturn where I RF markets some would strong different of it's limiting large then. down constraining equipment a fab XXXX. we quarter-to-quarter enough sub-components cyclical they're share about the that, that's in said growth. in at very And puts a different and significant But we talked

issues card RF components, handsets we're the primarily XG probe business the in Some of our serves right now. to going

like downturn. digestion things bit and wave parts, that probably That's with communication. pause, taken a ball of So a interesting package really a occurs quarter SAW call the why broadly secular quarter. there's model, and customers broad base. or I always for our two, fundamentally see a going wouldn't be slowdown to and in but any associated It's intended individual takes indications millimeter that's diversified markets of individual we customer some certainly filters, in things that we're But to because trying puts a run with systematic a of no

customers IC Are And do of either or of just inventory holding probe as or follow-on customers cards particular. components? to you your more a this your

of be. probe the don't seem to business individual one customer the chip to the specific card certainly of are is probe nuances cards designs. I Again,

not And inventory that be expense thing changes, high build Because overhead useful to our that so customer’s results. a Very optionality. and they try came hold on. mix very as to production to

great why mix on go really short because and lead have that financial on our inventory to we support from to to shelf them adapt, be upside. changes. So ready times, Prepared the to need part production capture a of perspective. run We again, such not the item to a customer’s reason

from say let's three as to one nanometers of question far My is, nanometers. as five second your large goes customers,

test morning equipment another in conference will transistors increase leads intensity. or obviously go heard we company's that to think and number this of that up XX% XX% call by when do was I might XX% transistors. to back-end if test I happens, the able or be How on that much an probably XX% more guess quantify what how might wondering you much if to that or probe a intensity be? more, you card increase see in

market samplings But of see people think The in the I And uplift. And can various probe times like go significantly. deal the install where think Certainly, things doesn't for time. seen that. I up it's a to up. directionally at result XX% for APE test, and there's over time design customers test pretty increase has test But increase not definitely an A die just because with in elements understanding their XX% linear. that transistor it in this with this. are base goes good APE down increased directionally, they card you've count associated to the drive

the as As spend have transistor foundry logic and leading parts, and the gone edge on counts you've intensity up up of APE probe spend market seen in well. card go

Thank you.

Thanks, Dave.

Thank you.

the LLC. next Burmeister Tyler line Group comes Our question of Capital from from Craig-Hallum

question, Your please.

headwinds, also XX% Schwab. Thanks, supply been margins A of strong answered. I half. the of I is put and the your guided go lot begin gross as to And improving us my back at these they're heard QX that letting for time, to a behalf second on well. Well, year. we've same have in and question. up to of Thanks guys. a next the level lot chain This said, to very in want think and that very these pressures the companies from the Christian other but you strong question's commented peers expect of seeing industry, out Tyler about, you you'd

So in I some that that most of you're are and the half? those what gives the headwinds improved second was wondering, you Thanks. be what significant could confidence seeing

through forecasting we make and was see the was it of lamps an part second the Shai part saying fog I details, middle of continuing half. was only year. year, comment sure middle the the our I What the my the want was, improvement Tyler, constraints go not I'll to and answer in I the through but let

see, So we as second just, challenges through half, these part it's we year. see about emerging I am forecasting for in far is which of middle the the as the continue improvements can to not

You've yes. answered --

of things answered you've earlier. I'll think most repeat the I I that. some questions said of the about

issues include we they inflationary costs. stronger in supply or QX, the that higher see issues chain going -- increases to And we cost labor it's be in see weaker, see whether we As components, know. don't We as we've business. our any disruptions still past. can far, we We seen logistical we haven't said, that seen in so Michael similar as say the major see to

And so think issues, versus level this impact supply quarter. of comes disruption at QX to it similar fairly for of we're I chain when QX

appreciate I color, enough. the Fair for that's Thanks. me guys. all

Thanks.

Thank you.

Inc. question next Silver from the of & King L. Our from David Associates, line comes C.

please. Your question,

you Thank a maybe more picture then one. bigger a I Hi. much. very have question, targeted

about workstation fourth in maybe you longer. quarter, the think least ask just totals, systems the at this guess to the several the I years, revenue highest, engineering wanted I and First, are results. I quarter

we if how First, I about a months could a just is growth the should talk that but, about and the WFE about it revenue maybe from or cadence, forward? you maybe modeling you you. perspective. the to a in maybe business rises Thank you breakdown I going that ahead wondering of in highlight the was then new that couple of And business. secondly, if other versus In maybe spend firstly, the questions is had volume to could view increase, mix words, this XX and fab development, growth with fab co-incident relation think how development X trend

technologies. systems part segment new helping the process the second I'll -- entirely the question first. It is customers of So answer on focused develop

structures. where I've computing as all helping be investments significant quantum Now, in the things test on we've in it's gate that and able can industry devices and But its some CMOS improve be like the made to yield. said these around, past, its emerging also get feet

things, result, new of it's the broad customer programs, activity they news activities. for well And develop essentially, tends continue introduce as very what to really a correlated it's drives the development spectrum So us. things be to with a WFE. It with early that as correlated and that's velocity of development not segment in more

the levels. these at we're the of why question, of Now, first that's the composition part

We we've at of for been think which engineering few acquisition as segment. Cascade progress first the significant I engineering us And probers foundation. engineering of card can system Microtech, You we've growing also the systems has acquisition. this probe different the business. the added components. job, well business as the the the XXXX, into brought think, as business nice since a of got segment RF with into The two the that business, a business But acquisitions inside present done

inspection and acquisition of metrology got theme FRT, or new for drives and to is being The this into which want the applications. chiplet advanced packaging insepction growth of this good requirements one perform tile-based Bob strategies all a where the of be metrology Again, and and which is big a first that's legacy this of kinds revenue place is element second you like, quantum and factor Packaging business computing systems advanced. if into space. an on of so our the top acquisition the of we HPD,

these and So then really the million each things it with the more businesses the resolve growth electronics next-generation technology. semiconductor doing of different of revenues these up of and is enabling we're exciting businesses year, in $XX different the some composition the the of are result of

excluding I'm at for just the then, announcements XXXX some a for of lot $XX to too in all you plus Ohio like been say announcements, to to the couple this that here. on look on And a to There's new included times A them crack the Thanks. have of horizon, But of I Michael, your of developments far ones number over don't call a going heard And been billion of but give existing a by you customers running are U.S. couple it those fab virtually, the Okay. maybe are maybe go things. the and announced, lists. up the projects. due by be of outside, XXXX,

believe secondly, or doing if to you. three do, the necessary with being years? to keep fab five Firstly, do development terms are then large? -- the the envision years at you for share to do you up timetables? what say, capture if major company Thank new what next capabilities And over What your you of I of to least opportunity, customers in your that overall your incremental mean not does capacity like

other times that resolution we it's that that given Yes. run downstream we far not on. Maybe oprate just it's our too lead binoculars look start of to don't like kind the to

these these longer-term support fabs but them there's large many increases discussions in customers amount. here U.S., definitely very in the been about of So being capacity has we with how domestically the

sort the the at XXXX timeframe progress you in when with look think indicators associated the I of that. XXXX,

chips these advanced I to assumption. think our support and nodes continuing do for when little at million at increase capacity, pretty as continue little while is the The packaging. in reasons clearly large these need significant one do come capture of to takes required a caught to talked these industry on the we increases, the time, to probe we our advanced It's there, and that part we full. need of about a call, But with a facilities maybe things card what in did the There's we the innovation why same to be get build look strategy the existing on test make we from capacity online that their as systems year we reason on and XXXX XXXX, round trajectory, to to And R&D. continue as a and $XXX a sure some those there earlier now. too volume advantage, long seems it on spend to like continued in is solid of make bit continue a for lead numbers with expansions investments. is industry associated I innovation to to out capacity invest as to and the few years ready competitive

time the the technology, footprint we're plan, capture the facilities, for just this manufacturing and in not have ourselves continuing elements have also giving we're a demand. So least like but sure buildings to the at optionality to make to longer lead capacity to position

Thank it. much. Appreciate you very

Okay.

Thank you.

Scarnati comes Citigroup Inc. question Our line Amanda from next from of the

please. question, Your

perspective the exposure those is and the Hi. question lagging different volume there I margin The that a have between have Is between nodes? of two. edge, versus two or you on perspective, leading edge the difference periods between

Amanda, for sure there's a volume difference.

high much because they your edge are higher edge in low are are a places of trailing The our Thermal like both trading yields do to you demanding nodes do are are on management is the yields where if much have test. edge than -- wafer don't than less simply required very where in leading the applications the automotive, see we nodes. temperatures nodes as nodes required. much to higher, trailing edge leading and temperatures bigger is is becoming at edge And high exposure Our part nodes, significant exposure to business.

volume some like where way quality on talk advanced the leading-edge very And we high in drive speed so But the you things standards and investments the see on our leading some extreme there. and in packaging. can automotive, requirements, areas maybe WFE not edge we nodes, there's expansions in other nodes question, about our no of see or and

edge by business nodes. is less leading-edge driven lagging much Our the expansion, strongly so

product second half your like propel move as second and comp launches, pretty don't something the year-over-year new you're at happening for decline was potentially. there that into look you lamps year in we DRAM in or expectations know for of are as the And for Does with bad go obviously, a But I DRAM. year set DRAM seeing that just little we far, higher? year, that, there's half? that very of last the fog the up significant balance 'XX? a terms that could in strong in opportunities it upside things up for a Or maybe

on DDRX design set valuable design is single than with markets foundry for and this diversified noise stability to the think There's is see in levels them. the a in we're tough power of lot term solid of year there record customers. around comp quarter-to-quarter a record markets in we've no why But customers, of I even They're logic we that form set diversified some we customers going near very the DRAM us. XXXX noted associated Yes. long-term for more doing to it'd good much systems, products, major year-to-year. and based market, any a rather DRAM. operated that a earnings be which at activity a long replay of all question, and And serve, timing, we do build for of on having Chris of activity. believe and years fluctuate is focused strong is whether just We bit to endeavored and it and the a headwind fundamentally some little and serve We

we broad trying more And to downs. so then business exposure the and this so we're in consistent opportunities and is different a industry, to do run the what build revenue can the ups over stable

Thank you.

Amanda. Thanks, Operator?

Yes. gentlemen. remarks. Thank the you, to ladies Michael hand I'd further back Slessor program to now any like and for

Thanks, right. Until have appearances our for today. joining talking future about in looking we're here we calendars and several through and you for we June, All and through May the in excited actual on investor as then, really ahead. of form the We're at care, again go prospects forward summer to us take many the everyone in-person seeing conferences person factor and

in This your today's gentlemen you conclude the does for Thank participation ladies conference. program. and

may You disconnect. Good day. now