Reposting the same post from the forum. This is a quick post – I will follow up with a more detailed blog post later but we wanted to get this stock on your radar.
Aehr Test Systems (AEHR) reported strong results today:
-Sales up 181% YOY
-Bookings up 263% QOQ
-Backlog up 21,500% QoQ
We think the story is just now getting started. Below are some notes on what the company does, what the opportunity is and recent results.
Aehr Test Systems makes silicon carbide testing equipment. This year in July, AEHR announced strong Q4 FY21 results as orders for its silicon carbide testing equipment increased 113% to $5.5 million. Backlog was $1.6m in May and increased to $7m by July 2021. On the call, CEO Gayn Erickson gave more details about the opportunities for silicon carbide devices as he explained that:
“Silicon carbide power semiconductors have emerged as the preferred technology for battery electric vehicle power conversion in on-board and off-board electric vehicle battery chargers and the electric power conversion and control of the electric engines. Our FOX-P family of products are very cost-effective solutions for ensuring the critical quality and reliability of devices in this market, where performance and reliability can not only mean increased battery life, but also whether you have to walk home from a vehicle whose power semiconductor fails in the power train.”
Silicon carbide is more expensive than silicon. This helps explain why it is not used across all industries. However, Silicon carbide excels when it is stressful environment, as it can handle higher temperatures without failure relative to silicon. As a result, silicon carbide has found a niche with EVs and renewables such as solar and wind. Despite being more expensive, silicon carbide is becoming increasingly critical for EVs because if a chip fails in an EV, the vehicle will not work. No body wants to be stuck in the rain.
With demand for silicon carbide chips increasing, there is a sudden and rapid increase in demand for Aehr's silicon carbide testing equipment.
The company reported Q2 FY2022 results today, which came in strong. Sales grew 181% YOY; Bookings increased 263% QoQ from $5.5m in Q1 to $20m in Q2, a record quarter for bookings. Backlog increased from $1.6m in May (Q1) to $36m as of September. The company raised its guide 80% to “at least $50m”.
The company stated that “Our strong bookings include several sizable orders received over the past few months from our lead silicon carbide test and burn-in customer for our FOX-XP™ systems and WaferPak™ Contactors to support testing of silicon carbide power devices for electric vehicles… this Fortune 500 customer is a major automotive semiconductor supplier, and we continue to work closely with them to achieve their test and burn-in requirements and capacity needs. They continue to forecast orders for additional FOX systems and WaferPaks this fiscal year and a significant number of systems and WaferPaks over the next several years driven by electric vehicle semiconductor test and burn-in demand.”
The company also stated it is in the process of adding more customers:
“In addition to this large opportunity with our lead silicon carbide customer, we are currently in detailed discussions with multiple other major silicon carbide suppliers regarding their wafer level test and burn-in needs. We believe we will add several new silicon carbide customers over the next 18 months that will ramp into production on our solutions… We are seeing very strong demand across the industry for wafer level burn-in of silicon carbide devices and continue to ramp our FOX multi-wafer test and burn-in systems and full wafer WaferPaks to meet this silicon carbide market opportunity which we believe is only just beginning.”
The company also shared the following stats:
– The silicon carbide power semiconductor device market is expected to increase over 500% between 2020 and 2026, growing at a compound average growth rate (“CAGR”) of 36% to $4.5 billion, according to Yole Research’s latest forecast
– Deloitte forecasts that the total electric vehicle industry will likely grow at a CAGR of 29% from 2020 to 2025, before reaching 31.1 million vehicles by 2030 and securing approximately 32% of the total market share for new car sales
Silicon carbide is an emerging trend and Aehr is positioned well to benefit from the sudden and sharp rise in demand for silicon carbide. The company is just starting to ramp and the opportunity in front of it is large. To recap recent results:
-Sales up 181% YOY
-Bookings up 263% QOQ
-Backlog up 21,500% QoQ
Disclosure: Bradley Cipriano owns shares in AEHR and he has no plans to change his position within the next 72 hours. The above article expresses the opinions of the author, and the author did not receive compensation from any of the discussed companies.Disclosure: Bradley Cipriano owns shares in AEHR and he has no plans to change his position within the next 72 hours. The above article expresses the opinions of the author, and the author did not receive compensation from any of the discussed companies.