Important New Customer for Aehr

This dropped this morning on Yahoo.

[Aehr] has received an initial customer order for a FOX-NP™ wafer level test and burn-in system and a FOX WaferPak™ Aligner to be used for gallium nitride (GaN) power devices. The customer is a leading global supplier of semiconductor devices used in electric vehicles and power infrastructure and adds another major customer to the list of companies using Aehr’s FOX products for wafer level test and burn-in of wide bandgap compound semiconductors. The FOX-NP system, including the FOX WaferPak Aligner, is scheduled to ship and be installed in the current fiscal quarter.

On calls, CEO Gayn Erickson has talked (with some frustration) about a potential customer that has been tinkering with and testing their systems for literal years. It sounds like this order might be the long-awaited result. At least that’s how I interpret this section:

Gayn Erickson, President and CEO of Aehr Test Systems, commented, "After seeing the positive results from their long and extensive evaluation of our FOX wafer level test systems for their silicon carbide devices, this customer decided to first move forward with our FOX-NP system to test their gallium nitride devices’ long-term reliability failure rates, as well as qualify the production extrinsic failure screening process for their devices in applications where safety, reliability, and/or security are critical. A key consideration behind their decision is that the FOX-NP system is 100% compatible with the Aehr FOX-XP system that is targeted for high volume production and can support all the test modes needed for both gallium nitride and silicon carbide device testing and burn-in, including high-voltage testing of up to 2,000 volts with full wafer test without electrical arcing that can damage the wafer, which is a distinct advantage of our unique patented technology.

Key to my thesis for Aehr is the fact that they can pivot. They developed their testing systems for the memory market, but then they saw that the puck was headed for EVs, so they quickly shifted to testing SiC chips and went after that market.

But they were simultaneously developing testing for other chips for other promising applications. All analysts wanted to talk about was EVs, especially Tesla, but there were always parts of the call that pushed back on that, talking about the photonics market, GaN chips, and their patented technology for high-voltage testing. The reaction was always some version of “Yeah, well maybe someday, but right now it’s all about EVs.”

That was true until it wasn’t. Almost overnight, all the EV hype was tempered with a slew of not-exciting earnings from the OEM’s, including–and led by–Tesla. Aehr’s stock price sank with every single one of them. Because no one would listen to their insistence that they could pivot to other kinds of chips for other kinds of applications.

And here they are. Once again, they are ready for the moment–as is this customer, apparently, because key to this sale was that the system could support both GaN and SiC testing.

The stock is up almost 10% as I write, as it should be. They can pivot. They have before; they’re doing it now; and they will do it in the future. They have done their R&D; Gayn Erickson knows the industry and can see around corners. Holding all my shares.

8.5% position (as of this moment)