Richard Shannon: Okay, fair enough. And the last question, I’ll jump on the line here. You signed a license with an unnamed fabless RF customer, I think, back in like 2018 or something like that; I haven’t heard much about them since. You talked every quarter about what sounds like some bridge engagement in RF SOI in general. Maybe just characterize what the specific customer has been doing since that announcement or recently? And does that overlap with any of the commentary on RF SOI you had mentioned today in the past…
Scott Bibaud: Yes, sorry; it definitely overlaps. We’re still working with that customer. We’re still doing development with them and we hope that turns into something very good in the future; probably could have done a better job in my prepared remarks of connecting that particular customer with our RF SOI work but that is something that is continuing and we’re quite excited about.
Mike Bishop: Our next question comes from Cody Acree of Benchmark.
Cody Acree: Congrats on the progress this year. Frank, if we can be really clear on your guidance for Q1, you said ratable STMicro license. Can you just be clear on what you’re expecting for the first quarter?
Francis Laurencio: Yes. No, I was not referring to STMicro. I was talking to license revenue from MS TCAD. So yes, that’s — and those are not large amounts. So, I didn’t go into details but I think in the past, the largest we’ve had of revenue from a single in this quarter from MS TCAD was under $10,000. So, this is a larger engagement but it’s still kind of in that range. Yes, that’s separate from STMicro.
Cody Acree: Any impact on your delay with TSI? I understand the R&D push, the lumpiness, that will come in next year but — or later this year. But is there any business impact on that delay?
Scott Bibaud: We don’t see any business impact from the delay. None of our wafers would go to a customer of any kind, whether it be — certainly with ST, they’re now installed and doing everything in quick turns in their fab. But for customers that would have been sending wafers to us for MST deposition, that never disflow through TSI either. TSI was solely a vehicle for us to be able to do internal R&D testing. And so, it has no impact on customers. In terms of longer-term R&D, yes, prolonged inability to work with the foundry would have some impact on us but we’re not seeing that. We actually had a much higher spend in the first 3 quarters of 2023 than we had in previous years with TSI. Now part of that was price increases and kind of faster turnaround but we were able to — as we kind of got into Q4, anticipate that they were winding down and run quite a few wafers that we can use for additional internal testing and for TCAD calibration.
And so that’s keeping us plenty busy now. And we are very close in discussions with signing up a new foundry. So, we don’t anticipate that that’s going to hurt us commercially at all.
Cody Acree: Excellent. And Scott, maybe can you talk a bit more about this engagement with MST, SP and SPX, the new engagement that you mentioned in your prepared remarks.
Scott Bibaud: Yes, I’m not sure what else I can say about it. So maybe you can just talk about what it means to license MS TCAD. So our MS TCAD is a software package that sits on top of Synopsys’ TCAD software and it gives people to analyze the performance that MST could bring. This particular customer wants to do kind of a comprehensive analysis of how MST could get added into their product line. And so that means it’s a fairly big installation for them. And so we’re charging them at a monthly level to be able to use it and we’re providing quite a bit of support to them. Now that — what’s frequently the case for customers who are experts in higher voltage technology is they aren’t going to use our MST SPX or SP packaged product but they will look at how we do that and then they use the tricks we figured out to how — so that MST can make their product better.
So, we’ll train them how to put all of the tricks in the trade into their development and then they can change their existing designs to get higher performance levels out of those. I talked a little bit about this trend where higher voltage ships is going to China. We’re seeing that more and more. And so definitely, many of the players are trying to either make their existing portfolios, higher performance for lower costs so then compete better with those with the Chinese fabs.
Cody Acree: And then lastly, just you mentioned some increased interest in DRAM around a chiplet strategy. Are you seeing engagements in the DRAM that are material? Or is this just more road map plausibility?
Scott Bibaud: Now we’ve been talking to DRAM manufacturers for a little while now. We don’t have anything to announce there yet but we definitely are still in discussions with a number of companies there. It’s not specifically related to chiplets but it is something that I think would be used in chiplets just like any memory technology. But we’re talking to people about DRAM. We’re talking to people about other memory architectures and we’re even doing some work on how MST could help to change memory architectures to make them more responsive to the needs of AI memory demands. So again, a number of things that we’re working on in R&D that we haven’t announced yet but that we hope will turn into something soon.
Cody Acree: Would you characterize these as fairly early stage yet?
Scott Bibaud: Our work with DRAM manufacturers is not early stage but some of the other work, I would say, is earlier stage, yes.
Mike Bishop: A couple of questions on the Q&A line here. Scott, you mentioned tech in the prepared comments. Are you — the question that came in is, are you involved with Soitec Technology Smart SIC going into production with STMicro this year?
Scott Bibaud: Yes. So we have been working with Soitec for a number of years. As you guys know, we’ve been talking about RF SOI and the benefits we bring there for a long time. And most — I would say, a good percentage of that RF SOI that’s delivered to the market is delivered by Soitec. So we have been working with them to ensure that our product works well with theirs. We have not announced any kind of a partnership with them or any kind of engagement with a joint customer, like the question you’re asking about STMicro but we certainly hope that any customer who would be using RF SOI would be very interested in working with both us and Soitec.
Mike Bishop: All right. And one for you, Frank. There was a comment about the increase in sales and marketing expenses in the fourth quarter. Do you want to address that?
Francis Laurencio: Yes. This kind of applies actually across all areas of operating expenses. But as you saw, we had the $550,000 of revenue in Q4 which is an important milestone. One of the things that impact our expenses across all departments is the annual bonus that we accrue as we achieve certain milestones. And so with an important milestone like that in Q4, that certainly increased the amount of bonus accrual in the quarter. Otherwise, though sales and marketing can be very spotty. There’s a lot of travel and we certainly spent a lot of time this year traveling to customers. But I wouldn’t read anything more into that other than just travel and overall across the company, accrual of bonuses which is not always linear every quarter.
Mike Bishop: Okay. And there’s a request for an update for — about the Chips Act and the news that we put out last year. And I was wondering, Scott, if you could provide an update on the CHIPS Act.
Scott Bibaud: Yes. Of course, we talked last year about what — I mean we think the CHIPS Act really provides a tailwind for us in many ways and especially the establishment of the new national semiconductor development center that they’re talking about. So, we have gotten involved and a lot of that, as you know, our announcement is about our involvement out in Arizona with Arizona State University. But the other thing about the CHIPS Act is to — in the early rounds of RFQs that chipset has been putting out, it’s been about people building fabs. First, the big companies, building fabs and then some medium-sized companies. We weren’t really eligible for those but we are doing a lot of work to get engaged with the government at different levels, so we could be eligible for work on the CHIPS Act in other areas. And so again, nothing to announce there but I would tell you that, that’s something that we’re working on.
Mike Bishop: Okay. And I see Richard Shannon has his hand up. Richard, did you have another — a follow-up question?
Richard Shannon: I did, Mike. Thank you. Scott, I’m going to reask Cody’s last question on a different topic. He asked kind of the maturity of work in the DRAM space and thanks for that answer here. But I’ll turn around and throw it at the advanced nodes. And I want to get your update on and ultimately characterizing the situation there relative to DRAM or other dynamics and how that workflow is consistent with work you’ve done in other areas like power and RF SOI, etcetera.
Scott Bibaud: Yes. I think it’s interesting. It’s not exactly the same type of work that we’re doing in power and RF SOI. Let me address a few things. First, in the advanced nodes, the sizes that you’re working with are so small that it really has required us to do new R&D to prove our capabilities to prove that we can develop a film and deliver it at the tiny process geometries that they have and when we do that if it can still be effective. And so, we have done that and we did that working in conjunction with some of the advanced node customers who’ve really guided us towards what they would need if we were able to bring them some solutions. We’ve also — I think in the past, we’ve put some papers out and maybe even some white papers about some other things that are very useful.
One of which is the surface roughness scattering improvements. This is quite technical but there are different scattering mechanisms that happen in transistors when they’re sending electrons across them and they impede the mobility of electron flow. As you get to very, very small process geometries, one of the most difficult scattering mechanisms that’s gotten very — has gotten a lot worse is the surface roughness and we actually proved that MST is a very rare solution or at least improvement to surface runes scattering. And so that’s something that’s garnering attention from a lot of industry participants. And then actually, earlier in the fall, we put out a white paper and I talked a little bit on the earnings calls about random dopant fluctuation.
