I agree with Saul’s points and, @brittlerock while I also agree about customer concentration being less of a worry, I disagree slightly about the reason why. I believe we have very concrete reasons to not be worried about it going forward. That is because they actually have told us quite a bit about the number of SiC customers they have - by my calc they now have 5 - and they’ve also told us quite a bit about their large customers in years past, and going forward their customer concentration should fall rapidly. That’s the basis for my expected revenue calc which I did here. Below is the supporting bits for the customer numbers.
First, their disclosures about large customers
Q4 2023: Their largest customer (OnSemi) accounted for 79% of revenue - $51.4m
2022: One customers (Onsemi) accounted for 82% of revenue - $41.7m
2021: OnSemi (this was before they started ramping SiC) was 23% of revenue - $3.8m
From the 2021 10-K:
Advanced Semiconductor Engineering, Inc., ON Semiconductor Korea, Ltd., or ON Semiconductor, Intel Corporation, or Intel, and Inphi International Pte. Ltd, or Inphi, accounted for approximately 24%, 23%, 20% and 10%, respectively, of the Company’s net sales. During fiscal 2020, Intel, ON Semiconductor and STMicroelectronics, Inc., or STMicroelectronics, accounted for approximately 43%, 16% and 15%, respectively, of the Company’s net sales. During fiscal 2019, Intel, Texas Instruments Incorporated, or Texas Instruments, Cypress Semiconductor Corporation, or Cypress Semiconductor, and STMicroelectronics accounted for approximately 36%, 14%, 12% and 10%, respectively, of the Company’s net sales
→ So we know they have the who’s who of the market as customers, but they didn’t contribute that much to revenue. The big change came when OnSemi started rapidly ramping up SiC production and became their biggest customer by far in 2022.
Moving on to SiC customers specifically
I’m quoting the CEO in the different quarterly calls below. It paints a fairly clear and strong picture of growing demand and customer wins for SiC. I’m starting the quotes from Q4 2021.
Q4 2021
This year we successfully took the initial order core and installed our first production capacity for silicon carbide devices
This new silicon carbide application with a Fortune 500 market leader in silicon carbide and power modules […]
Since our initial installation in January we’ve received multiple follow-on orders for additional WaferPaks from this customer
→ They got their first SiC customer installed in January 2021 and this customer then started ramping. This gels well with Onsemi’s announced plans and execution.
Q1 2022:
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 wafer level test and burn-in systems and full wafer, WaferPak Contactors to support testing silicon carbide 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.
We’re currently in detailed discussions with multiple 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.
→ Onsemi’s ramping up; they’re starting to talk to many other existing SiC players and they expect to land a number of them in the next 18 months.
Q2 2022:
During this last quarter, we received a follow-on $19.4 million order for FOX-XP wafer level test and burn-in systems from our lead silicon carbide customer.
We’re currently engaged in discussions and/or evaluations with several other silicon carbide suppliers regarding their wafer level test and burn-in needs. This includes all of the current large silicon carbide suppliers, and a number of companies both large and small that intend to enter the silicon carbide market.
Later in the Q&A
So just for clarity, the industry, market forecasters that talk out there, generally refer to the largest suppliers in this space traditionally have been ST had the number one position, and then Infineon and Cree, now Wolfspeed are others. And then ON Semiconductor that kind of came out of nowhere, and people know that On Semiconductor is one of our top 10% customers, are generally thought of by most people as the current larger players in the space. In addition to that, you have Mitsubishi and ROHM that historically were kind of filled out the top six.
We have some level, if not a deep level of engagement with all of the above
So I mentioned six companies. There’s also think, four, maybe five more […] Part of the challenge is how do you bet on – which horses do you bet on. Our current strategy is we’re betting on all of them. We have the capacity and sales
→ So they are going after and in discussions with all of the top suppliers - ST, Infineon, Cree, Wolfspeed, Mitsubishi, ROHM, and they have OnSemi already and it is their biggest customer.
Q3 2022
During the quarter, four additional companies provided detailed wafer layouts to Aehr for their silicon carbide wafers as part of their evaluation of using Aehr’s FOX-XP systems.
Last quarter, we said that we believe we’ll add several new customers that will be ramping into production by the end of our fiscal '23, which ends May 31, 2023.
→ Still only 1 customer, but the discussions of the previous Q have now led to evaluations.
Q4 2022:
Our lead customer for silicon carbide wafer level burn-in made significant investments in their silicon carbide production throughout this past fiscal year.
We’re excited to see them continue their ramp, and we continue to expect significant additional system and wafer pack purchases from them over the next several years and to the end of the decade, as they strive to be a market leader – market leading supplier of silicon carbide devices.
Q&A:
There are others. In fact there’s a – reviewing the funnel with Vernon and the team. There is a significant number of players that are talking about getting into silicon carbide. Many of them have been in now announced that include large and small and candidly, many actually see large players that have not announced their plans that have approached us and have been talking to us about their very real plans for entering the silicon carbide market.
So it’s welcome to have all these new players coming in, because all of the players today don’t have a chance of meeting all the demand as they basically go from 1x to 25x, the output by the end of the decade.
→ They still have only 1 SiC customer which is ramping and planning to continue to ramp but they are progressing discussion with all the others and there are big new players planning SiC production - which they are talking to - but these customers have not yet announced anything.
Q1 2023:
We’re currently engaged or in discussions with almost all the existing and future silicon carbide suppliers.
Our lead customer for silicon carbide wafer level burn-in continues to ramp up use of our FOX-XP multi-wafer systems and WaferPaks, placing yet another significant order with us during the quarter.
→ Still have only 1 SiC customer but now are talking to all of the existing suppliers as well as all the future suppliers.
Q2 2023:
We are excited to have added two new customers for silicon carbide test and burn-in during the quarter. The first is a major silicon carbide semiconductor supplier that purchased our FOX-NP dual wafer test and burn-in system used for engineering and device qualification during the quarter, and after the quarter closed, has since placed their first orders for two of our FOX-XP multi-wafer systems for volume production test and burn-in of their silicon carbide wafers, including the order we just announced today. This company is one of the world’s largest suppliers of silicon carbide devices and serve several significant markets, including the electric vehicle industry, as well as other industrial applications.
We now have two of the top four silicon carbide market participants as customers.
→ They added two and now have 3 SiC customers, including two of the top 4 - Onsemi and another, new one.
Q3 2023:
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.
→ They still have 3. But their second big customer - one of of the current top four SiC producers in the world customers has moved to production. Remember that when OnSemi started to ramp end 2021, their revenue to AEHR went from $3.8m in 2021 to $41.7m in the next year, 2022.
Q4 2023:
With the addition of this latest new customer, we’ve significantly expanded our customer base by adding a total of four new silicon carbide customers this year.
→ In Q2 they said they added two. Now they say they added four in the year, which means they added another two in this Q, and now have five SiC customers. - Onsemi and four others, of which one is in the top 4 in the world and has started to ramp.
And then they also told us:
We continue to work closely with one of the largest silicon carbide players in the world on a large wafer level benchmark and qualification for automotive and other markets.
While candidly this has taken much longer than we thought it would, we’re excited that this qualification continues to make good progress and we remain confident that it will result in them moving to our FOX wafer level systems and WaferPaks for their volume production. They have told us that their plan is to move all new production capacity to wafer level burn-in and away from packaged part burn-in.
→ So in addition to the existing 5, there is another big one waiting in the wings which is not yet a customer but is soon expected to be.
Putting all of this together
They have just about everyone as a customer for bits and bobs - they’ve been in business for 40 years so this is to be expected. But revenue has only recently started to explode due to SiC, and as of now only based on the rapid scaling of SiC production by one large customer - likely Onsemi. That of course led to revenue concentration from this one customer.
But during this last year they have added four new SiC customers for a total of five. And there is another big one waiting in the wings which is expected to become a customer soon. Standing back a bit, this seems like a water-shed year. The big revenue ramp of the last year and a bit was on the back of just one customer in SiC. And now they have five (and soon six).
And that is before even looking at photonics, which they expect will be bigger than SiC.
