Dear Shareholders, Customers, Partners, and Employees,
Fiscal 2023 was a breakout year for Aehr Test Systems. We achieved record financial performance for the full fiscal year. We significantly expanded our customer base with additional silicon carbide customers and saw increasing momentum with our benchmarks and engagements with prospective new customers. We successfully introduced several significant new test system enhancements that broadened our total available market and extended the competitive advantage of our FOXTM products. We see new market opportunities on the horizon that we believe can become significant additional markets for our differentiated and proprietary wafer-level test and burn-in products.
We finished fiscal 2023 with record financial performance, including record annual revenue, bookings and profit. For the fiscal year, total revenue grew 28% to $65.0 million, our highest annual revenue on record. We also generated record bookings for the year of $78.3 million. With our higher revenue, we saw significant leverage in our operating model. We also recorded record GAAP and non-GAAP profit of $14.6 million and $17.3 million, respectively. This represents year-over-year growth of 54% and 62%, respectively. We generated a record $10 million in operating cash flow, up more than 500% from the prior year, and we finished the year with a strong balance sheet, with nearly $48 million in cash and short-term investments and no debt.
Our record performance was driven by demand for our FOX solutions for silicon carbide semiconductors used in electric vehicles and electric vehicle charging infrastructure, as well as silicon photonics devices used in data and telecommunications infrastructure and a new application for multi-chip modules using optical data interconnections. Semiconductor companies are adding significant capacity to manufacture silicon carbide semiconductors to address 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, with industry data suggesting a compound annual growth rate (CAGR) of close to 50% over the rest of this decade. Our unique wafer-level test and burn-in products provide complete solutions for semiconductor manufacturers for high-volume test, burn-in, and stabilization of semiconductors such as those used in electric vehicles, electric vehicle charging infrastructure,photovoltaic (solar) power conversion, and data and telecommunications infrastructure.William Blair forecasts total demand for silicon carbide wafers just for electric vehicles (including electric vehicle inverters and on-board and off-board chargers) to grow from 220,000 wafers in 2022 to over 4.5 million 6-inch equivalent wafers in 2030, a greater than 45% CAGR and over 20 times larger in 2030 than in 2022.
In addition, they expect demand for industrial applications, electric trains, energy conversion, and radio frequency amplifiers to drive another 2.8 million silicon carbide wafers in 2030. This further expands the total available silicon carbide test and burn-in market.
We significantly expanded our customer base with the addition of four new silicon carbide customers this past year, and we expect to add more in fiscal 2024. Each of these new customers is already ramping or is planning to ramp our products into high-volume production using our multi-wafer test and burn-in systems. These new customers, which include another one of the top four silicon carbide market participants, expand our market penetration beyond our initial lead silicon carbide wafer-level burn-in customer and provide us with confidence in our ability to gain significant market share of the test and burn-in market for silicon
Our benchmarks and engagements with prospective new silicon carbide customers are increasing and making great progress. With essentially all Covid-related restrictions behind us throughout the world, our customer-facing meetings and our progress on new customer opportunities have grown substantially. Our increasing engagements with numerous potential customers give us confidence in our growth expectations over the next several years, particularly as the positive momentum in demand for silicon carbide in electric vehicles continues to accelerate.
We continue to engage with current suppliers of silicon carbide devices as well as companies planning to enter into this market. We are working 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. This qualification continues to make great progress and we believe this will ultimately result in them moving to our FOX solution for their volume production.
While the majority of the silicon carbide applications driving our wafer-level burn-in capacity to date have been purchased for electric vehicles and electric vehicle charging infrastructures, we are also seeing high levels of interest for our solutions to test and burn-in silicon carbide in other markets including solar, wind, and numerous industrial applications.
In addition to our momentum in silicon carbide, we are seeing increasing interest in our products for the emerging market for gallium nitride devices. We have multiple potential new customers inquiring about our systems to test and burn-in gallium nitride semiconductors. Similar to silicon carbide, gallium nitride is also a wide band-gap compound semiconductor being applied for efficient high-speed power conversion applications.
While silicon carbide devices and modules have key advantages for the very high-power traction inverters and onboard and offboard chargers for electric vehicles and other high-power industrial applications, gallium nitride is generally believed to be superior for lower-power applications, particularly under 1,000 watts. We believe gallium nitride will be a significant market, driven by high-volume applications such as electronic power converters in data centers, solar power inverters, and power and conversion applications in standard and electric vehicles. Both silicon carbide and gallium nitride device types are forecasted to grow significantly over the next several years and into the future.
The gallium nitride market appears to be a potentially significant growth driver for our systems and WaferPakTM full-wafer Contactors, particularly for automotive and photovoltaic applications where burn-in appears to be critical for meeting the initial quality and reliability needs of those markets. With the proven cost- effective ability of our FOX-XP wafer-level burn-in solution to test thousands of devices in parallel and up to nine wafers at a time, we believe we are well positioned to capitalize on this opportunity and believe that gallium nitride can expand our total addressable market in a meaningful way.
We saw a strong recovery in the silicon photonics market and also see a major market opportunity with the upcoming application of silicon photonics integrated circuits for use in optical chip-to-chip communication. Following the weakness we saw during the pandemic, full year revenue from our shipments to silicon photonics customers this past year was up more than 45% year over year. This jump in revenue was also spread across multiple customers with much of it for new product designs and qualifications that we believe will lead to production volumes. We continue to be very enthusiastic about the current market for silicon photonics devices used in data communication, which combines electrical semiconductor integrated circuits with photonics or light-based transmitters and receivers.
We see the potential to integrate photonics integrated circuit devices into multi-chip modules as a major new market opportunity for Aehr. Multiple large semiconductor suppliers such as Intel, AMD, Nvidia, TSMC and GlobalFoundries have publicly discussed roadmaps to integrate optical devices into processors in what are being referred to as optical input/output (I/O) and co-packaged optics devices for markets such as data servers, computing, and Artificial Intelligence (AI). This new potential market is in addition to the current transceiver market for data and telecommunications.
We are beginning to see the front end of this opportunity and Aehr currently already has six customers including the market leader that have adopted our FOX-XP and NP systems for production burn-in of their silicon photonics devices. While we believe this new optical I/O market is still several years out before it
Late in the year, we received our first order from a major silicon photonics customer for a new high-power configuration of our FOX-XP system for production wafer-level burn-in of next-generation silicon photonic- based integrated circuits, which can require up to two to four times as much power for full-wafer test, burn-in, and stabilization. This customer is one of the world’s largest semiconductor manufacturers and we expect to receive orders for additional production systems as they increase production of these devices. The testing ability of this new FOX production system configuration for new high-power density devices, which can be used in new optical I/O or heterogeneous integrated packages, is unprecedented in the industry and expands the market opportunities of the FOX-XP system even further.
reaches volume production, we feel the silicon photonics test and burn-in market can become significant and could grow to be as large or even larger than the silicon carbide market later in this decade.
We introduced several significant test system enhancements that extend the market leadership of our FOX products for full-wafer test and burn-in and open new markets. Both silicon carbide and gallium nitride semiconductors address the high-voltage power semiconductor markets that are significant opportunities for our FOX wafer-level test and burn-in systems and WaferPak full-wafer Contactors. As we look to further penetrate these markets, we continue to add new capabilities to our wafer-level test and burn-in systems to address these new markets. These include the FOX Bipolar Voltage Channel Module (BVCM) and Very High Voltage Channel Module (VHVCM) options, which enable new advanced test and burn-in capabilities for silicon carbide and gallium nitride power semiconductors on Aehr’s FOX-P wafer-level test and burn-in systems.
During the fiscal year we also completed a multi-year development and began shipments to customers of our new fully automated FOX WaferPak Aligner, which enables hands-free operation of WaferPak handling and alignment and is available either as a stand-alone or in full integration with our FOX-XP system. As capacity and volume forecasts increase, eliminating all manual interfaces for automated handling can become critical to our customers. The added automation capability of our new Aligner gives our wafer-level test and burn-in offering even greater value and opens several incremental markets to Aehr, such as high-volume processors and chipsets with integrated photonics transceivers, flash and ultimately DRAM memories.
Each of these product enhancements broadens our total available market and extends our cost competitiveness and application space for our FOX products, and we continue to invest 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.
As we move into fiscal 2024, we have a significant competitive product advantage and are well positioned for significant growth. Our customers use our products to test, burn-in, and stabilize semiconductors used for applications where safety, security, quality, and reliability are absolutely critical, including electric vehicles, electric vehicle chargers, photovoltaic or solar, power conversion, industrial, and data and telecommunications applications.
With the unprecedented unique capabilities and cost-effectiveness of our FOX-P platform, we have highly differentiated solutions for full wafer-level test and burn-in that put us in an excellent position to continue to gain significant market share of these new and growing market opportunities.
The market forecast for wafer-level burn-in products is significant. William Blair estimates that the total available market for wafer-level burn-in products for silicon carbide alone will be over $400 million by 2027. We believe Aehr has the potential to capture a significant portion of that market based on the level of silicon carbide engagements we have with customers across the globe. With the continued positive momentum that we are seeing with our current and prospective customers and the expanding growth opportunities from emerging markets, we are confident in our expectation for significant growth in the coming year.
I continue to be grateful to our employees, customers, partners and shareholders for their support.
Gayn Erickson, President and CEO