Posted on July 21, 2021 by Ashleigh Day
Six weeks ago I wrote about the traction AEHR was gaining with suppliers of Silicon Carbide wafers to suppliers of electric vehicle manufacturers, including their lead customer, who supplies Tesla. Customer ramps were delayed and project pushouts occurred due to Covid-19.
In this update I will discuss the recent orders and conference call that led the stock to more than double this week, our Breakout Investor call with management two days ago as well as another underappreciated, but huge opportunity the company is seizing in the health tech space.
AEHR stock has taken off as the CEO has signaled that its gold mine phase has begun with its unique silicon carbide testing capabilities. On Monday, the company announced a $10.8m order, several times larger than recent orders and is forecasting more systems and consumables orders this fiscal year.
From the Q420 call last week:
“Silicon carbide power semiconductors have emerged as the preferred technology for battery electric vehicle power conversion”
As we’ve discussed in our research group, EV manufacturers have been requesting silicon carbide products instead of legacy IGBT. Elon Musk pioneered the usage of Silicon Carbide beginning with the model 3 and Tesla saved up to $6,000 per vehicle switching to silicon carbide, a huge competitive advantage.
“During this past fiscal year, our lead silicon carbide customer qualified Aehr’s FOX-XP system for high-volume production burn-in (usage testing) and infant mortality (faulty component) screening of silicon carbide power devices at wafer level for electric vehicles.”
Silicon carbide has a high failure rate and therefore every module must be tested. This is great for testing companies. Previously the suppliers would test the module and if it failed, would have to throw out a module containing many die that could have been tested earlier at wafer level, saving yield and cost, both critical during a Silicon carbide land grab.
“We anticipate that wafer level test and burn-in will become the industry standard for quality and reliability screening for silicon carbide devices for the automotive market. And with the most cost-effective solution on the market to address this opportunity, we believe that Aehr has a chance to build a dominant market share.”
AEHR’s unique advantage is testing at wafer level before these modules are packaged together. They are 5x more cost effective than prober solutions sold by competitors.
AEHR has done $20m-30m in revenues the past few years, but has the manufacturing capacity to produce an order of magnitude larger within their facility and without a huge addition of expenses. As much as 60% of new revenue can drop to the bottom line and new systems orders generally lead to consumables orders in the future.
If this weren’t enough, AEHR also has customers ramping in the silicon photonics space where their technology provides a unique value proposition in its ability to stabilize the lasers (that site directly on the chip) during test and burnin.
A disruptive silicon photonics company has put several lasers on a tiny chip to use in health monitoring for wearables and mobile devices. They recently announced Apple as a lead customer in an SEC filing in April. Among other clues, AEHR has announced they are working on a wearable application and is the best fit for this project.
Come collaborate in my room to learn more about the exciting opportunities and stay ahead of the curve.