Aehr Test Systems (NASDAQ:AEHR) Q3 2023 Earnings Call Transcript

Aehr Test Systems (NASDAQ:AEHR) Q3 2023 Earnings Call Transcript March 30, 2023

Operator: Hello. And welcome to the Aehr Test Systems Fiscal 2023 Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead.

Jim Byers: Thank you, Operator. Good afternoon. And welcome to Aehr Test Systems third quarter fiscal 2023 financial results conference call. With me on today’s call are Aehr Test Systems’ President and Chief Executive Officer, Gayn Erickson; and Chief Financial Officer, Ken Spink. Before I turn the call over to Gayn and Ken, I’d like to cover a few quick items. This afternoon right after market close, Aehr Test issued a press release announcing its third quarter fiscal 2023 results. That release is available on the company’s website at aehr.com. This call is also being broadcast live over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company’s website. I’d like to remind everyone that on today’s call, management will be making forward-looking statements today that are based on current information and estimates, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

These factors that may cause results to differ materially from those in the forward-looking statements are discussed in the company’s most recent periodic and current reports filed with the SEC. These forward-looking statements, including guidance provided during today’s call are only valid as of this date and Aehr Test Systems undertakes no obligation to update the forward-looking statements. And now, with that, I’d like to turn the call over to Gayn Erickson, President and CEO.

Gayn Erickson: Thanks, Jim. Good afternoon, everyone. And welcome to our third quarter fiscal 2023 earnings call. Appreciate you guys joining us today. Let’s start with a quick summary of the highlights of the quarter and the continued momentum we are seeing in the semiconductor wafer level test and burn-in market, then Ken will go over the financials in more detail. Then after that, we will open up the lines to take your questions. Aehr had another great quarter in Q3, with revenue and net income ahead of consensus estimates. We finished the quarter with record bookings for a single quarter of $33.3 million and a strong backlog of $31.6 million at the end of the quarter. Our effective backlog, which includes all orders received since the end of the quarter or since March 1st, the beginning of the fourth quarter are $41 million.

Our total bookings for the fiscal year-to-date is already $72.5 million. Let me start with the increasing momentum we are seeing in wafer level test and burn-in for silicon carbide. Companies are adding significant capacity in silicon carbide semiconductors to address the incredible forecasted demand, particularly for the electric vehicle and electric vehicle charger markets. The silicon carbide market for electric vehicles and its supporting infrastructure requirements are growing at a tremendous rate. Forecast from William Blair estimate that the silicon carbide market for devices in electric vehicles alone, such as traction inverters and onboard chargers is expected to grow from 119,000 6-inch equivalent silicon carbide wafers for EVs in 2021 to more than 4.1 million 6-inch equivalent wafers in 2030, representing a compound annual growth rate of 48.4%.

This equates to almost 35 times larger in 2030 than in 2021. Also, 6-inch equivalent silicon carbide wafers for other markets such as solar, industrial and other electrification infrastructure are expected to grow to at least another 3 million wafers by 2030. This expands our silicon carbide testing market — test and burn-in market even more. During the quarter, our second major silicon carbide semiconductor customer moved from an initial FOX-NP dual wafer test and burn-in system of ours, used for engineering and device qualification to purchasing their first FOX-XP systems to be used for production test and burn-in other silicon carbide wafers. Last week, we announced a follow-on order from this customer for production quantities of our WaferPak full wafer Contactors, which will begin shipping this quarter to be used with these systems in production.

We believe this customer who serves several significant markets, including the electric vehicle industry, as well as other industrial applications will purchase a large number of our FOX-XP systems to meet the publicly announced significant increase in plant capacity and revenue growth over the next several years and to end of the decade. These systems include our new very high voltage channel module option, enabling high-temperature reverse bias or HTRB as it’s known in the industry, testing of silicon carbide devices using our proprietary WaferPak Contactors, which include patented anti- arching capability that is necessary to avoid high voltage electrical arching between devices or between devices and the streets on the wafer. This solves a challenge with high-voltage wafer level test and burn-in.

These systems were also purchased with our new fully integrated and automated WaferPak Aligners, which will begin shipping this fiscal quarter we are in right now. As I have noted before, adding automation to our FOX production systems through our new Aligner gives our wafer level test and burn-in offering even greater value and opens up several large incremental markets to Aehr, such as high volume processes and chipsets with integrated photonics transceivers, high volume memory devices and also high volume high mix devices require an extremely high reliability and 100% burn-in such as automotive microcontrollers and sensors. We have the new automated WaferPak Aligners here at our facility in Fremont going through customer benchmarks and completing system integration with our fully integrated FOX-XP multi-wafer test and burn-in system, so customers can come in and see the Aligners in action.

We also had several potential new customers come in to see the automated WaferPak Aligners in operation. Our lead silicon carbide customer continued to ramp up the production and the use of our FOX-XP production systems and WaferPak Contactors. During the quarter, we received a $25 million order for a significant number of additional FOX-XP wafer level test and burn-in systems scheduled to ship over the next six months to seven months to meet their increased capacity needs for producing silicon carbide devices for electric vehicles, chargers and electrification infrastructure. Earlier this month, we also announced a $6.7 million follow-on order for WaferPaks from them, representing about half of the total WaferPak full wafer Contactors needed for these FOX-XP systems.

Each of these FOX-XP systems has the capacity to test and burn-in 18 full wafers of devices at a time. Now let me tell you about our benchmarks and engagements with prospective new customers. We also continue to make great progress with our previously announced benchmarks and engagements. We continue to work closely with one of the largest silicon carbide players in the world on a large wafer level benchmark and qualification. We are excited that this qualification continues towards success as the company finishes their internal processes to complete the qualification. As with our other large silicon carbide customers, we expect the silicon carbide supplier to require significant capacity of wafer level test and burn-in systems to meet the fast-growing demand for silicon carbide devices and electric vehicles over the next decade.

We understand that this has taken a long time, but we are confident that this will result in success for both them and Aehr Test in using the FOX wafer level systems and WaferPaks for their volume production. We also had a very productive quarter in terms of new customer engagement, which has continued into this quarter and even multiple new customer — potential customers visiting there just this week. With essentially all COVID-related restrictions behind us throughout the world, our customer-facing meetings and our progress on new customer opportunities has grown substantially. Since last quarter’s conference call, three additional companies currently making silicon carbide devices decided to move forward with full wafer level evaluations and/or directly to purchase our systems.

We are seeing companies shift from long-term roadmaps to near-term execution of the product and production plans for silicon carbide devices and are internalizing the critical need for long wafer level test and burn-in times. As such, some companies that we had only met with briefly in the past are coming to us with their wafer designs and asking for quick feasibility studies, quotations and lead times. It’s unbelievably exciting time in the silicon carbide industry and the markets that silicon carbide semiconductors are serving. In addition to our momentum in silicon carbide, we are now engaged with several gallium nitride semiconductor suppliers ranging from radio frequency or RF devices to power devices. Since our last call, we also received a firm commitment from a very large multinational semiconductor supplier to move forward with a full wafer level evaluation of gallium nitride devices.

This evaluation includes our new high voltage option for doing the critical HTRB stress needed for gallium nitride MOSFETs and amplifiers. We believe gallium nitride will be a significant market, driven by some of the very — some very high volume applications such as RF amplifiers, consumer, electronic power converters and chargers, solar power inverters and charger and converter applications in both standard and electric vehicles. Feedback from companies has been that several of these applications will require production burn-in to meet the application’s critical quality and reliability needs. With our proven FOX-XP wafer level burden solution and its cost-effective ability to test thousands of advices in parallel and up to nine wafers at a time with the high-voltage capability option, we believe we are well positioned to capitalize on this opportunity and believe gallium nitride can expand our total addressable market in a meaningful way.

In just the last two months, I have personally met with over a dozen companies across Europe, the U.S. and Asia and demand is extremely strong across the world. We have had questions about China since COVID restrictions have eased. From our perspective, the customer pull has been much greater for our solution outside of China so far. Having said that, we have recently seen activity pick up at several of the larger silicon carbide suppliers and electric vehicle producing companies in China. It’s becoming clearer to them that wafer level burn-in is critically important to remove the infant mortality or early failures of silicon carbide devices before they are put into modules and for certain before installing them into an inverter or a drive unit or heaven forbid the electric vehicle itself.

Each individual silicon carbide MOSFET, which acts as an electrical switch has a failure rate of typically as much as 1% or more during the stress test burn-in conditions that correlate to the actual use and conditions and time that these devices are expected to endure or the life of the electric vehicle. This is referred to in the auto industry as the mission profile. This profile is equivalent to several hundred thousand driving miles and the time the electric vehicle would be running to drive that far, including idle time, et cetera. Semiconductor suppliers in critical applications such as silicon carbide MOSFETs that are used in the drive unit inverter of electric vehicles, must not only prove to the auto suppliers or OEMs as they are called, that their devices will last for the life of the mission profile, but they must also show how they will ensure production test screening to remove devices that will or are likely to fail.

This is where production burn-in comes in. Our solutions can apply industry standard and/or custom — customers — custom stress conditions such as high and low negative voltages at elevated temperatures to induce failures on weak devices without damaging good devices. We do this on every device up to thousands of devices on a time on every wafer with 100% traceability. We then test up to 18 wafers at a time in a single pass on a single FOX-XP system. This parallelism is literally unprecedented. No company has ever done this before Aehr Test nor is anyone else doing this today. We have a significant number of patents that protect key technical features and functionality of this solution and we believe any other company that tries to build something like our solution or any company using such a solution would be violating our intellectual property and patents.

We maintain our patents across the world, including major semiconductor and automotive supplier hubs such as the United States, Germany, Italy, Korea, Japan, Singapore and even China. Our wafer parallelism and price point leads to an unprecedentaly low test cost for whole wafer test and burn-in. At capital depreciation rates of less than US$5 per hour per wafer on a full wafer of silicon carbide MOSFETs to be used in electric vehicle, inverters or chargers, our customers can cost effectively apply a burn-in stress condition to weed out early life failures and to stabilize the threshold voltage of these devices for use in power modules for up to 24 hours or more without driving up their cost of the devices. And the yield improvement of removing the failure before they are put into the power modules actually lowers their overall manufacturing costs.

Our FOX wafer level test and burn-in solution with our proprietary WaferPak full wafer Contactors are a fantastic fit for the silicon photonic semiconductor market and we are hearing this directly from customers and potential customers. Now let me move on to silicon photonic semiconductor burn-in and stabilization. As a reminder, to clarify those not familiar with silicon photonics, this is what the industry calls the devices where both electrical semiconductor integrated circuits are combined with photonics or light-based transmitters and receivers. The classic initial device was a device that integrates an optical transceiver with an integrated circuit into a fiber optic transceiver component. This technology was heralded as a way to massively increase the manufacturing capacity and to significantly lower the cost of fiber optic communication transmission in data centers and server farms.

This was considered a major breakthrough and was key to long-term data bandwidths and to lower power data centers has really only been proven over the last several years. The pandemic actually slowed down or even stopped the initial production ramps of customers of these devices, but is now picking back up as a viable and lower cost alternative to the higher cost discrete transceivers built over the last 20 years. We continue to be very enthusiastic about this market, especially as it looks to expand beyond just being used for fiber optic transceivers to becoming an embedded market that integrates the fiber optic technology into other devices such as chipsets and processors themselves. Multiple market leaders, including companies like Intel, AMD, NVIDIA and others have publicly discussed their investments to integrate silicon photonics transceivers into their microprocessors, graphics processors and chipsets.

While we believe this transition is still several years out, we also believe it represents an enormous opportunity for Aehr Test with our unique position of having a proven and cost effective multi-wafer solution testing and burn-in and stabilizing silicon photonics devices at a massive scale while still in the wafer form. We are currently today testing 150-millimeter, 200-millimeter, as well as 300-millimeter photonics based wafers with our current FOX wafer level test and burn-in systems at customers today. We also have provided customers with our FOX-NP and XP systems using our DiePak’s for testing singulated die and photonics modules. We are beginning to see the front end of this opportunity with a strong recovery of silicon photonics from the weakness we saw during the pandemic.

Aehr currently has systems installed at over half a dozen customers for 100% test and burn-in of silicon photonics devices used in 5G infrastructure, data and telecommunication transceivers and a few additional applications yet to be introduced. As the market expands, we believe there will be more business for both engineering and characterization qualification of devices upfront, as well as for production wafer level test and burn-in. Over the next several years, we believe silicon photonics will become a significant market for wafer level test and burn-in, and could become as large or larger than silicon carbide later in the decade. To conclude, we are very encouraged by the continued positive momentum in expanding growth opportunities we see with our current and prospective customers, and continue to be very confident in the guidance we have shared for revenue at least $60 million to $70 million for our current fiscal year that ends May 31st, which represents growth of at least 18% to 30% year-over-year and revenue growth of between 35% and 75% in the second half of this fiscal year compared to the first half of the year.

We also remain confident that our bookings will grow faster than revenue this fiscal year as the ramp in demand for silicon carbide and electric vehicle increases, setting us up for strong momentum heading into our fiscal 2022 that begins in June. Lastly, before I turn the call over to our CFO, Ken, I want to announce that after 15 years with Aehr Test, Ken has indicated his intention to retire from the company after finishing this fiscal year and after the fiscal year reporting period. Ken has been our CFO and VP of Finance since 2015 and has been an amazing contributor and a great partner to me during a key phase in Aehr’s development and growth. Ken and I have discussed this and we feel this is actually a pretty good time for this and it’s a great time for a new CFO to come on board to help Aehr with the tremendous growth opportunity and plans ahead of us.

Aehr has engaged a professional recruiting firm and Ken is already providing help to the Board and me to find an exceptional finance executive and will provide assistance and support when a candidate is identified. We are very confident that this change when it happens will be a seamless transition. With that, let me call — turn it over to you Ken and then we will open it up for questions.

Ken Spink: Thank you, Gayn, and good afternoon, everyone. As Gayn noted, we had another solid quarter in Q3 with strong sequential and year-over-year growth in our revenue and net income, beating analyst estimates in both the top and bottomlines. We also reported record quarterly bookings and a strong backlog. In addition, with over $9 million already in bookings in the first month of the quarter, we now have an effective backlog of $41 million. Looking at our financial results in more detail. Net sales in the third quarter were $17.2 million, up 16% sequentially from $14.8 million in the second quarter and up 13% from $15.3 million in the third quarter last year. The sequential increase in net sales from Q2 includes an increase in systems revenue of $2.5 million and customer service revenues of $278,000.

This was partially offset by a decrease in WaferPak and DiePak revenues of $308,000. These consumables revenues accounted for 37% of our total revenue compared to 45% of revenue in the preceding second quarter. Customers typically purchase our FOX systems and WaferPaks at separate times and also stagger their delivery. Still, our Contactor revenue grows both with increased installations of our systems and also with the increase with the installed base. Customers purchased new contactors with new wafer or device designs, not just with new system capacity put in place. Gross profit in the third quarter was $8.9 million or 51.6% of sales, down 1.8 percentage points from gross profit of $7.9 million or 53.4% of sales in the preceding second quarter and up from gross profit of $6.4 million or 41.9% of sales in the third quarter of the previous year.

Last year’s fiscal third quarter, gross profit includes the impact of a $1 million adjustment for excess and obsolete inventory related to legacy products. Excluding the impact of this adjustment, gross margin in the third quarter last year was 48.6%. The variance in gross margin from prior quarter included a negative impact of 1.4 percentage points due to product mix shipped and another negative 1.2 percentage points due to the last quarter’s favorable freight and tariff costs, warranty provision and inventory reserves. This was partially offset by a 0.8 percentage point benefit due to a decrease in overhead cost to cost of goods sold, resulting from higher revenue levels in the quarter and an increase in capitalization of costs to inventory.

With our relatively fixed manufacturing overhead, benefits gross margin are recognized while revenues grow. Non-GAAP net income in the third quarter was $4.7 million or $0.16 per diluted share, which was a strong 27.5% of revenues. This compares to non-GAAP net income of $4.5 million or $0.16 per diluted share in the preceding second quarter and non-GAAP net income of $3.1 million or $0.11 per diluted share in the third quarter of fiscal 2022. Non-GAAP net income excludes the impact of stock-based compensation. Operating expenses in the third quarter were $5.1 million, an increase of $656,000 or 15% from $4.4 million in the preceding second quarter and up $941,000 or 23% from $4.1 million in the third quarter of the previous year. The increase from the preceding second quarter includes increases in SG&A of $375,000, primarily due to employment related expenses and an increase in R&D of $281,000 related to increased spending on development programs.

The increase to SG&A includes increases in headcount, salaries, recruiting fees and also commissions, bonuses and profit sharing based on increased bookings, revenues and profits. During the quarter, the company increased its worldwide sales and marketing efforts with the addition of three senior sales executives. We are already seeing positive impacts of those additions and are very excited to have these sales professionals already making an impact. The increase in R&D is primarily due to costs associated with development programs for our new automated WaferPak Aligner and our very high-voltage channel module and bipolar voltage channel module. Our new very high-voltage channel module option enables high-temperature reverse bias testing of silicon carbide devices using our proprietary WaferPak Contactors, which include patented anti-arcing capabilities that is necessary to avoid high-voltage electrical arcing between devices or between devices and the streets on the wafer that can be under 200 microns in distance.

This solves a key challenge with high-voltage wafer level test and burn-in. We continue to invest in R&D to enhance our existing market-leading products and to introduce new products to maintain our competitive advantages and to expand our applications in addressable markets. These R&D programs include enhancements that we believe increase our competitive advantage in all our key target markets, including silicon carbide and gallium nitride power semiconductors, silicon photonics and other photonic semiconductors, mobile 2D and 3D sensing devices and memory and data storage semiconductors. Turning to the balance sheet for the third quarter. We finished the quarter with a very strong balance sheet. Our cash, cash equivalents and short-term investments were $42.8 million at February 28th, up $6.2 million from $36.6 million at the end of the preceding second quarter and up $10.7 million from $32 million at the end of the third quarter of fiscal 2022.

We continue to invest excess cash and short-term investments to take advantage of increases in interest rates, interest income in the third quarter was $374,000, up from just $1,000 in the third quarter last year. As noted in our prior 8-K filing, we were not impacted by the closure of Silicon Valley Bank. We hold over $39 million of our cash, cash equivalents and short-term investments at Morgan Stanley, a highly regarded banking institution and only maintain our operating accounts at SVB. The SVB closure did not impact our customers, employees or vendors and we continue to operate without any interruptions or impact to our operations. During the quarter, we announced an at-the-market offering of up to $25 million in shares of the company’s common stock on the open market.

As of quarter end, the company has received gross proceeds of $7.3 million on the sale of 2,917 shares at an average price of $34.78 per share, $17.7 million remains available under the ATM. Under the terms of the ATM equity distribution agreement, the company may not sell shares during the company’s closed trading windows when it is deemed the company may be in possession of material non-public information. Also, the company only plans on selling shares against the ATM during open trading windows and when it believes it would provide the best source of capital with minimum dilution to existing shareholders. Working capital at February 28th was $67.2 million. This represents an increase of $12.4 million from Q2 and an increase of $18.2 million from Q3 of the prior year.

Inventories at the end of the third quarter were $21.6 million, an increase of $3.6 million from the preceding quarter and up $6.5 million from the third quarter of fiscal 2022. We are increasing inventory to support our backlog and our near-term revenue projections and to ensure adequate supply to meet current customer and future market demand. Our highly differentiated FOX family of systems allows us to purchase material that is leveraged across many customers and markets. This provides us confidence in our ability to meet the significant market opportunities without having to purchase unique material that is only sellable to one customer or one market. During the quarter, we renewed our lease for our corporate offices and manufacturing facilities.

The amendment extends the term of the lease for a period of 86 calendar months commencing on August 1, 2023, and includes an option for the company to further extend the lease for one additional period of five years after the expiration date. With this renewal, the company recorded operating lease right-of-use assets of $5.7 million with corresponding short- and long-term operating lease liabilities. We finished the quarter with record bookings for a single quarter of $33.3 million. Backlog as of February 28th was $31.6 million, compared to $15.5 million at the end of the preceding second quarter and $26.9 million at the end of the third quarter last year. Our effective backlog, which includes all orders since the end of the third quarter is $41 million.

Total bookings for the fiscal year-to-date, including the over $9 million received in March is $72.5 million, exceeding our total bookings of $62.2 million for the full prior fiscal year. Now turning to our outlook for 2023 fiscal year, which ends on May 31, 2023, we are confident in the company’s growth trajectory and our unique capabilities and product offerings to meet customer demand. As such, we are reiterating our previously provided guidance for full yield total revenue of at least $60 million to $70 million representing growth of at least 18% to 38% year-over-year, with strong profit margins similar to last year. We continue to expect bookings to grow faster than revenues in fiscal 2023 as the ramp in demand for silicon carbide and electric vehicles increases and we build momentum going into fiscal 2024.

We expect to provide guidance for fiscal 2024 during our July earnings call. Lastly, looking at the Investor Relations calendar, Aehr Test will participate in three investor conferences over the next month — next few months. We will be meeting with investors virtually at the Oppenheimer Emerging Growth Conference on May 11th, in-person at the Craig-Hallum Institutional Investor Conference taking place in Minneapolis on May 31st, and we will be presenting and meeting with investors in-person on June 6 at the William Blair Growth Conference taking place in Chicago. We hope to see some of you at these conferences. Before I turn it over to the operator for questions, I’d like to add to Gayn’s earlier comments regarding my pending retirement. With the market opportunities, increase in customers and customer engagements and the expected growth for Aehr Test moving forward, this is an excellent time and opportunity for a new CFO to build their team and take the company to the next level.

I greatly valued the last 15 years with Aehr Test and I appreciate the opportunities it’s presented. As Gayn noted, I will stay on as CFO until a suitable replacement can be found and I will also ensure that a clean and successful transition takes place before I leave. I know that my wife who retired a couple of years ago actually, is excited for that to happen as soon as possible so we can move on to the next chapter in our lifes. This concludes our prepared remarks. Now we are ready to take your questions. Operator, please go ahead.

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Q&A Session

Operator: Thank you very much. Today’s first question comes from Christian Schwab with Craig-Hallum Capital Group. Please go ahead.

Christian Schwab: Hey. Hi, guys. Thanks for taking my questions. Ken, congratulations on retiring, well-deserved opportunity to go spend free time with the people you love, good for you. So I just have a few quick questions. Thank you for all the clarity that you gave, Gayn. Just as far as it relates to the third customer to take a large customer, would you expect production orders in your next fiscal year from them?

Gayn Erickson: We have actually announced a total of four customers in silicon carbide so far. We expect production orders from all of them during the next fiscal year.

Christian Schwab: Perfect. That answers the question. Thank you. And then on silicon photonics and the six different customers, when would you anticipate the first meaningful orders from that new area. Is that something that could happen as soon this next fiscal year or is that two years to three years out?

Gayn Erickson: So, I mean, we think that based on some of the customer forecasts that we are seeing that we are actually going to see just call it rising tide of the previous just the transceiver business. I mean, candidly, we are seeing the same forecast they told us back in 2019 that they plan to buy in 2020 and didn’t when COVID happened. So we think there will be a rising tide of that. I think maybe more importantly, what you are trying to get to is when is that next big wave. We have already seen some purchases and are doing some early qualification work on some of those new types of products and we think that, that can continue on next year as well. I think the — under is really when do we start to see the front end of any meaningful production and right now, we are still kind of assuming it’s going to be out a couple of few years, but it could turn quickly.

And there’s been some news out there on the Internet and some of the company making announcements, et cetera. So we are really close to it. We have the products. I mean we can — based on what customers are telling us, we can test those devices in each of the different wafer forms or even singulated die with what we have today, and with the new automated Aligner, we can even do it with more automation and hands-free, et cetera. So I think we are really well positioned and what we are doing is we are just focusing to be that engineering tool to begin with and be the plan of record, if you will, when they go to production, and then as we hit it a little closer we will see. But I don’t know — I probably wouldn’t put a lot of revenue expectations for next year, but there certainly will be some, okay?

Christian Schwab: Great. And then the expansion of opportunity to domestic Chinese providers of silicon carbide. Is that something where you would expect substantial shipments to occur maybe next fiscal year or is that something where negotiations and get to know you has just started?

Gayn Erickson: We will see. I mean for clarity, we currently believe there’s a pretty reasonable or significant, I use that word a lot, but we are going to get a lot of purchases we think for our systems, for companies that serve the China market that are not in China. So there — we already are doing that today. We know that that’s going to grow. I think there’s not all silicon carbide for China is going to be built in China, for example, okay? We are also talking to suppliers in China, as well as OEMs in China. So we are kind of making our way up the food chain, if you will, with several conversations with Tier 1s and OEMs, which as people that are close to this realize that is a completely new thing. Prior to COVID, none of the automotive guys talk to the semiconductor guys, right?