FormFactor Inc (FORM) 2011 Q2 法說會逐字稿

Thank you, and welcome, everyone, to FormFactor's second quarter 2011 earnings conference call. On today's call are Chief Executive Officer Tom St. Dennis and Chief Financial Officer Michael Ludwig.

Before we begin, let me remind you that the Company will be discussing GAAP P&L results, and some key non-GAAP results to supplement understanding of the Company's financials. A schedule that provides GAAP/non-GAAP reconciliation is available in the press release issued today, and also on the investor section of FormFactor's website.

Also, a reminder for everyone that today's discussion contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include, but are not limited to, projections, including statements regarding business momentum, demand for our products and future growth, statements that contain words like "expects," "anticipates," "believes," "possibly," "should," and the assumptions upon which such statements are based.

These forward-looking statements are based upon current information and expectations that are inherently subject to change and involve a number of risks and uncertainties. FormFactor's actual results could differ materially from those projected in our forward-looking statements. The Company assumes no obligation to update the information provided during today's call, to revise any forward-looking statements, or to update those reasons actual results could differ materially from those anticipated in the forward-looking statements.

For more information, please refer to the risk factor discussions in the Company's Form 10-K for fiscal year 2010 as filed with the SEC, subsequent SEC filings, and in the press release issued today. With that, we will now turn the call over to CEO Tom St. Dennis.

Thank you, and good afternoon. FormFactor's second fiscal quarter of 2011 was marked by several important accomplishments and continued improving trends. Market demand in the quarter remained strong, which provided us a chance to realize some of the gains that we have made in customer relationships and operational performance during the past few quarters.

Customer qualifications of the Matrix product line continued in Q2, and we are now re-engaged with all four of the major DRAM customer constellations for full wafer contact probe cards.

This is significant, as we were participating in less than half of the available DRAM market for over three quarters. We are still at the beginning of the Matrix adoption with some of these customers, but I expect that we will see share growth in the DRAM market over the next few quarters.

We also completed a qualification of the TouchMatrix product with one major NAND flash manufacturer at multiple production locations. We've subsequently received follow-on orders and new designs from that customer.

FormFactor shipped its 600th Matrix probe card in the quarter, and we see continued adoption of this product family at advanced memory manufacturers around the world. The Matrix product architecture is also gaining interest and some early-adoption for high-parallelism applications in the SoC market. We completed our 100th customer design, utilizing FormFactor's advanced tester resource extension or ATRE test technology this quarter.

FormFactor is currently shipping its third generation of ATRE products to customers, and we expect to have a fourth generation of ATRE-enabled products beginning qualification in early 2012. Looking ahead, we see growing opportunities for the ATRE technology to provide significant value to our customers by enabling increased parallelism and designed for test functionality.

During Q2, we completed a key customer qualification of a new spring technology that will allow customers to further reduce their bond pad sizes while giving them increased current-carrying capacity. We expect that this new technology will be increasingly adopted throughout 2011 and 2012.

Customer feedback on the products and technical capabilities of FormFactor remain very strong. Our investments in the past year in spring technology, Matrix platform enhancements and ATRE products are all contributing to FormFactor's recovery today. The technology trends that we see ahead in the device test market will further emphasize the capabilities and differentiation that FormFactor delivers to our customers.

Our lead-time reduction program continued to make progress during Q2 as lead times for the Matrix product line decreased by approximately 10% relative to Q1, and we expect a further 10% decrease in Q3. We are currently increasing Matrix capacity by approximately 25%, and should have the full capacity available by the end of Q3. The capacity increase is primarily related to direct labor increases, and does not require significant capital investment.

FormFactor's second quarter financial performance improved significantly compared to Q3 of 2010, which had similar revenue levels. While Mike Ludwig will review the Q2 numbers in great detail in a few moments, I do want to highlight the improvements that the FormFactor team has made since Q3 of last year. Excluding one-time charges, gross margins have improved by over 25 points.

Operating expenses have decreased by 24%, and cash burn has decreased by $18 million, good progress over a period of three quarters. That said, the Company has not yet reached our intermediate goal of reducing cash usage to 0. We remain focused on this and expect to make further progress in the third quarter.

Going forward, our priorities are, number one, consolidate our market share wins at top memory and SoC customers to drive topline revenue growth. Two, continuing to invest in products -- in current products, as well as next-generation solutions for the memory and SoC markets while keeping OpEx below $20 million a quarter, and three, improved overall operational execution to deliver increased gross margins, shorter lead times and positive non-GAAP earnings.

Now, Mike will review our second quarter financial performance and guidance for Q3.

Thank you, Tom. The results for our second quarter are as follows. Revenues for Q2 were $46.6 million, an increase of 15% from Q1, but down 19% from Q2 2010. The revenue growth compared to the first quarter came from the DRAM sector of the business.

Second quarter revenues for DRAM products were $34 million, an increase of 26% from our first quarter, but down 20% versus the second quarter a year ago. The increase in DRAM revenues versus the first quarter resulted from a substantial increase in our SmartMatrix business in the quarter, a positive outcome from the qualifications of the Matrix platform at significant customers in the first quarter of 2011.

Flash revenues were $5.2 million for the second quarter, a decrease of 17% from the first quarter, and a decline of 38% compared to the second quarter a year ago. NOR continued to be the majority of our flash revenues, at $3.8 billion. Our NAND flash TouchMatrix revenues for Q2, at $1.7 million, were flat to Q1. SoC revenues were $7.4 million in the quarter, up slightly from Q1, and up 9% versus the second quarter of last year.

Revenues from our new product architecture, SmartMatrix and TouchMatrix, were $21.2 million for the second quarter, which represents 90% of our full-wafer contact business, and is a 62% increase compared to Q1 2011. Second-quarter GAAP gross margin was $9.9 million, or 21% of revenue compared to $4.1 million or 10% of revenue for the first quarter.

On a non-GAAP basis, gross margin for the second quarter was $10.6 million, or 23% of revenue, compared to 12% in the first quarter. In addition to the fixed spending leverage on incremental revenues, the better performance was driven by several factors, including a favorable SmartMatrix volume, a reduction in the charge for excess and obsolete inventory reserves, better factory yields and reductions in our material cost.

We did experience some pricing pressure in Q2, but our operational performance offset that pressure. As a result of better performance, we experienced a fallthrough percentage of greater than 90% on increased revenues, but we do not believe we will obtain a similar fallthrough percentage going forward.

Our GAAP operating expenses were $20 million for Q2, compared to $25.3 million for Q1. Q2 operating expenses included $1.1 million of restructuring benefit primarily related to the reversal of both the cease-use liability and a reinstatement liability for our facility in Singapore. The restructuring benefit was mitigated by a charge for employee severance cost recognized in the second quarter.

Non-GAAP operating expenses for the quarter were $19.5 million, down $1.3 million from $20.8 million in Q1, demonstrating continued reductions in our operating expenses. The reduction in operating expenses was due to both lower labor-related expenses and lower outside professional service fees in the quarter.

In addition, operating expenses benefited from the collection of a previously written-off receivable in the amount of $300,000. While we continue to address our operating expense structure, we expect the expense reductions to moderate going forward.

In the second quarter, the company recorded a tax benefit of $2.4 million compared to an expense of $200,000 in Q1. The one-time tax benefit was derived primarily from evaluation allowance release of $2.5 million associated with the deferred tax assets for past operating losses incurred in Singapore. The change in the entity structure for our Singapore operation makes it more likely than not that we will realize the deferred tax asset, hence we reduced evaluation allowance in the second quarter. Going forward, we do not expect additional releases of significant evaluation allowances.

Cash, comprised of cash and short-term investments, ended the quarter at $325 million, $9 million lower than the previous quarter. The cash burn included $1 million for the repurchase of common stock during the quarter. The improvement in cash usage compared to Q1 was driven by good collection efforts and lower-than-forecasted capital additions. Our stock repurchases for the second quarter were slightly more than a 117,000 shares at an average price of $8.85 per share, and, since inception of the program have been just over 450,000 shares at an average price of $8.87 per share. Under our current program, we are authorized to purchase an additional $46 million worth of shares over the next three months.

Here are some other financial details. Our depreciation and amortization in the second quarter was $2.9 million. Our capital additions were $1.2 million. We expect capital spending for all of 2011 to be at or below $12 million. Our stock-based compensation for the second quarter was $2.4 million, a $1.6 million reduction of similar charges recorded in Q1. Reduction in Q2 resulted from the full vesting of a large tranche of previously issued shares, partially offset by expense related to the current-quarter grants. Going forward, we expect stock-based compensation to be closer to $3 million per quarter.

Structuring the company to achieve cash flow break-even at the $50 million revenue level remains a top priority for the company. We continued to make good progress on this objective in the second quarter by reducing operating expenses and improving our inventory and materials management. However, as stated in our last earnings call, we're still a few million dollars of actions short of our goal. Our current focus will be to balance future reductions while we work to exploit the market opportunities mentioned in Tom's comments.

With respect to Q3, we expect third-quarter revenues to be in the range of $49 million to $53 million. With respect to gross margin, we expect continued improvement in the management of materials into and through the factory as well as other cost-saving activities. Consequently, our non-GAAP gross margin should improve from Q2 and be 25% to 28% of revenue. We will continue to take a critical look at our OpEx performance, but we had some benefits in the second quarter that we do not expect to repeat in the third quarter. We expect Q3 non-GAAP operating expenses to be roughly equal to Q2. We expect Q3 cash burn to be less than or equal to $6 million, not including any repurchase activity.

With that, let's open the call for Q&A. Operator?

Thank you, sir. (Operator Instructions). And our first question comes from the line of C.J. Muse from Barclays Capital.

Yes, good afternoon. Thank you for taking my question. I guess, first question, I was hoping you could expand on your outlook for DRAM, whether that's changed at all in terms of your growth outlook for 2011, and what kind of share gains you expect, given some of the progress you announced on the call on this far Matrix side?

Well, I think DRAM market is going through a relatively difficult period of time right now with regards to DRAM pricing and all, so it's hard to say where everything goes there. But customers are focused on shrinks. It's a way of cost reduction, that brings out several new design. So the design activity that's going on in the DRAM seems to be still pretty strong.

As I said, we have engaged now with all the major constellations, some much more than others, we're at the early stages with some. But all those are going to create opportunities for us to grow share going forward. I don't have any specific targets on share for you at this time.

Okay. And then, I guess, when you look beyond the DRAM market, and if you could kind of, I guess, pinpoint between expected gains on the NAND side, continued strength in NOR, and then also on the SoC side, when we try to get beyond kind of a break-even revenue run rate, what do you think will be the key driver to getting to the point where we can get sustainable earnings here? And, I guess within that, what's the key driver within that segment?

So SoC remains the area of greatest growth opportunity for us. That market segment is larger than DRAM this year and growing at a faster rate we believe over the next several years. So SoC is the market opportunity that has the greatest long-term growth opportunity for us. As we mentioned on the call last time, we're making incremental investments to expand our SoC capability into new portions of that SoC market. We would expect those to have an impact in the second half of 2012.

On the NAND and NOR side, as I mentioned, we had some qualification and then subsequent reorder and new designs come in from one of the major NAND customers this quarter. It doesn't -- while the NAND market is relatively large, we only serve a -- probably a 10% to 20% portion of that market. It still represents an opportunity for us, but not as large as the SoC market.

Okay. And, I guess, if I can just follow-up on the SoC side. I'm assuming you're talking on the flip chips effort there and I guess we'd love to hear what kind of milestones we should be tracking to kind of gauge your success over time and into that second half 2012 timeframe?

Well, we haven't--- we haven't put down any milestones to date on that. What we know we have is some compelling technology. And after speaking with customers we know that there is a strong growing opportunity there. We believe we can intercept that. I think we'll have to wait to make further progress down to product development and customer qualification on it before we give you any more specific milestones on it.

Okay, thank you.

Thank you. And our next question comes from the line of Timothy Arcuri from Citi.

Hi, this is (inaudible) for Tim. Couple of questions. In terms of DRAM, we heard a lot of node transitions recently to 30 nanometers and even to 20 nanometers. Could you kind of give us a quantification on when the demand for DRAM--- for probe card will peak for those transition?

I think it's hard to say, (inaudible) just when the demand will peak by technology node there. The customers' planning and actions are very, very dynamic, changing oftentimes within a month, certainly within a quarter. There is -- there are line balancing things they do or market adjustments that they do between commodity DRAM and mobile DRAM. They also change between investments in 4 gig and 2 gig, and different -- somewhat customized designs along that. So, it's a very -- I'd say very fluid and dynamic kind of environment that way.

There is no question that there is -- it is happening. As you said, the move to 30 nanometer and to the announced I guess 20 nanometer, 25 nanometer, whatever, that -- those actions go on, those drive early engineering activities in terms of probe cards and characterization capabilities and then volume will follow. That's often gated by getting -- achieving acceptable yields and overall market dynamics. So, I'm sorry I don't have a good timetable for you of when things would peak in any one node. Suffice it to say right now that there is activity in all those nodes that's driving demand.

Just another way to ask this question is, is it safe to assume that the demand for DRAM probe cards will increase in the second half because of the -- because of those activities?

I don't think I want to say that it's going to increase or decrease in the second half. It -- the -- I'd say the demand has been -- was pretty strong through Q2. These shrinks, I think, are going to continue that demand going forward. And beyond that, I just don't have enough visibility to give you better advice on it (inaudible).

Okay. In terms of break-even, you mentioned about target of $50 million for cash flow break-even, and next, in Q3 if the revenue is going to like $53 million-- to high enough your guidance, are you still expecting cash burn of $6 million? And where is gap right now and when do you think you can close that gap?

Yes, (inaudible), this is Mike. So we've got couple of things happening. So one would be investing -- investment needed in order to capture the growth. So, some -- part of that $6 million would be somewhat investment in the balance sheet with respect to receivables, inventories, and I think the other piece of that is, there is probably, again $2 million or $3 million -- or about $3 million of actions that we're certainly short with respect to achieving cash flow break-even at $50 million on a constant basis, and again, I think the actions that we need to take, one would be we still see reduction in OpEx opportunities to get that number below $19 million. We see opportunities for manufacturing footprint, and also inventory management of another $1 million.

So, we think we have identified the $3 million or so of actions that are needed in order to get that breakeven at $50 million. But again, balance sheet movements as a result of growth or contraction in the market also will play a piece of that as well.

Okay. Just one last question -- you talked about the future growth opportunities in SoC, and it sounds like you're investing some R&D dollars into SoC product development. What's your view on the inorganic growth in SoC market in near-term or in the long-term?

We don't comment -- we're not going to comment on M&A or inorganic activities that way. Right now we're focused not really exploiting the innovations and the technologies that our team has been able to bring forward there.

Okay, thanks.

Thank you. (Operator Instructions). Our next question comes from the line of Jim Covello from Goldman Sachs.

Great, guys. Thanks so much for taking the question. I guess kind of talking about the split a little bit more, understanding that at some point out in the future, SoC has to be bigger in order to hit the company's goals and NAND isn't the smallest of the three opportunities, how would you project several years out -- no concrete timeframe -- but what do think the revenue split looks like between DRAM, SoC and then obviously a much smaller portion being NAND?

I'd like to think that we would see SoC revenues in the company become a significant portion of what DRAM is. Whether or not it can equal DRAM or not, I don't know, it depends really on the time horizon. But, the market opportunity and the growth in that market is significant enough to over the course of, if you look at the kind of 2015 market sizings from VLSI Research, there should be an opportunity for us to have a business that's 80% or more of the DRAM business and then I would think that Flash is probably something like a 10% to 15% of our total revenue.

Okay, that's helpful. And then, understanding the comments you made before about this -- the size of the SoC market opportunity and some of the investments you've made. For those of us who have followed the company for a while, it feels like the SoC opportunity has been on the comp for many, many years and understanding you weren't running the company when some of the original discussions at the SoC opportunity were being made, what do you think is different about the company's ability to capture that opportunity over the next five years versus the previous five years when we've kind of heard similar things about that SoC opportunity? Thank you.

So I think that the company was pretty single-mindedly focused, from what I can see, in the timeframe from roughly 2008 through until late 2010 on the DRAM market. The change that I would say occurred in the 2010 timeframe was some great innovation and technology internally. And the opportunity is, as was discussed before I was here certainly wasn't hadn't escaped anyone, but really a concerted effort was done to really consolidate and get back in the DRAM market.

The opportunity cost on that was to forgo active investments in SoC. As we were able to get a more stable product portfolio together in DRAM, as we build confidence in what it could do and started to get feedback from customers around that, it allowed us to start to look more -- a little more aggressively at SoC, and we believe we have some unique capabilities there that we'll see over the course of the next three or four quarters if we can bring that to market, but we do think we have a good technology offering for where the market is headed.

I also think that the timing is quite good for flip chip, and that as it becomes a more broadly used technology for mobile processor applications, it's going to generate a good demand, and our belief is that FormFactor can bring the kind of increased parallelism and reduction in cost of test to that market segment like we've done in DRAM. So we hope to follow that wave as SoC moves in that direction.

Thanks very much.

You're welcome.

Thank you, sir. And our next question comes from the line of Patrick Ho from Stifel Nicolaus.

Thanks a lot, and nice quarter. Tom, you've talked a lot about lead time improvements over the last few quarters and showed another 10% improvements there. I guess two part question. One, have you reached that improvements by 30 days, and I think you mentioned you were trying to get from the beginning of the year to midyear, and, secondly, in terms of some of the additional improvements that you're looking for, where can you get them from -- are they from materials procurement, manufacturing, what areas on the lead times can you make further improvements?

Well, so, in terms -- I'm not quite sure what timeframe reference we have for a 30-day reduction, but if you go back to the Q4 timeframe we were around 88 days, and then taking 30 days off of that was or down around a 56-day target is what we had targeted to be at in Q3 of this year, right now. We're probably not going to intercept that until we get to the end of this quarter, but we're making good progress towards that.

The things that are contributing to this are a multitude of things, and it goes everything from how we interface with our customers and how we translate their technical requirements into a set of information and documents that we can design with to the design cycle, and the length of time it takes us to create the overall design of springs and probe cards and mechanical components through to our suppliers, and what they're able to do within their manufacturing processes and systems to reduce their lead times, and how we interact with them to make it the most efficient and all the way through to our test activities and what we can do to reduce test time, which is increasingly more challenging as complexity is really accelerating in these cards today. So the program that we have is multifaceted, if you will.

There is five kind of major areas that I think more or less touched on all those there right now that we review on a weekly basis. We have a dedicated team of people that are working on that, and we have contracted with outside experts that have worked with the top five semiconductor companies in the world to help them work through dramatic cycle time and lead time type changes in their semiconductor operations to reduce wafer manufacturing times and factory logistics and all to by significant percentages, sometimes by 50% or more, and we had brought -- we brought those resources in-house in the last 60 days.

So, we are attacking that across multiple fronts. It does require changes in business processes, sometimes requires changes in IT systems, and it requires changes in resources within the company to go and do it. So, we're working across all those fronts.

I expect that we will continue to work on this for -- through the next year pretty aggressively. At this point in time, we see the opportunity to build a competitive advantage out of this and to change what had been a competitive shortfall for us perhaps a year ago and really turn this around and make it a competitive advantage.

Any time you compress your cycle time you have the opportunities to essentially expand capacity with -- without capital investments or labor investments. We also have an opportunity, I think, to continue to make substantial improvements in overall quality. All those things help to reduce cost and help us raise margin.

So it's a long answer to your question, but it's broad-based.

No, that's fine, Tom. Maybe just looking at the bigger picture as you're regaining share particularly in the DRAM market, I think if I'm correct, you mentioned on call that you did see some increased pricing pressures. Is that from your increased penetration into new accounts and some of the, I guess, the competitive backlash in terms of pricing becoming a factor for your competitors to defend themselves?

There was really two areas to that one. One was, we did have some relatively small amount, but we did have a percent of the DRAM revenues that were harmony cards that were legacy designs that we were continuing to support customers with the transition out of and that's a drag on margins for us.

Where we saw a pricing pressure was actually in an existing account, but it was an area where we had had some operational and executional shortfalls, and we got into a situation where we took some actions on price to compensate for shortfalls in our part in Q1 timeframe, and, hopefully, we'll put that behind us as we execute better.

Right. And maybe a final question for Mike. You guys have done a really good job in terms of the overall restructuring pairing back your cost bases going back now probably 12 months to 18 months. Now as you begin to regain share and build the revenues once again, I think in the near-term I don't see your expenses going up.

But at what revenue levels do you see the infrastructure and cost bases going up again to meet that expanded revenue? This is something where you reached the $60 million to $70 million type of quarterly run rate where you'll happen to expand the overall infrastructure base.

I actually think Patrick, on the -- when you look at the G&A side, I actually believe we can scale to greater than that number and not really increase the base. Obviously, from an R&D perspective, we'll have a model where we're probably going to be investing anywhere from 13% to 15%, so to the extent revenues go up significantly, we would probably increase slightly our R&D investment.

Of course, we would be more than happy as revenues increase to maybe pay a little bit more on the sales commission side. But, overall, the basic structure is not going to be increasing substantially even at the -- even at the $60 million, $65 million. So, again we would probably look to keep that somewhere in the ballpark of $20 million. I don't think we need to do much more than that.

Great. Thanks a lot guys.

Thank you. And our next question comes from the line of Mehdi Hosseini from SIG.

Yes, thanks for taking -- can you please elaborate on the mix of DRAM by commodity versus specialty DRAM and also mix of Flash NAND versus NOR?

On DRAM commodity versus specialty, the largest share of the DRAM revenue is in commodity, which is considered DDR3 and mobile, which is the lower power DDR2. The specialty DRAMs that go into some graphical applications or game applications I'd say are relatively small part of it, and that doesn't really -- it really isn't a key factor if you will for our testing or probe card technologies.

There are differences between mobile and DRAM. I will tell you it swings back and forth, as I've commented earlier, within a quarter. We can see changes that there is more mobile than commodity and vice-versa as we go through a quarter. I can't really provide you much more data than that.

On the -- in the Flash, the NOR Flash was $3.8 million versus NAND Flash was $1.4 million, and it's about the same percentage when you look at Q1 as well. So Q1, the NOR was $4.2 million and the NAND was about $2.0 million. So it stays -- the relationship has stayed consistent.

Would it be safe to say that the sequential strength in DRAM by driven by mobile DRAM?

Yes. I think that is fair. We had important mobile wins. But it might had been a 60/40 kind of a split. We also had some important wins on the commodity side with regards to really beginning to participate again with a couple of the key DRAM manufacturers to supply them -- supply them cards for their use. Mobile did play a role in the quarter, probably I'd say maybe 60% of those wins.

Sure, and just one last final one. On the commodity where you talked about increased design activity, that's all driven by all the shrink investments that has already been taking place and now they're moving to volume production. Is that the right way of thinking about it?

I don't know if it's the right way of thinking about it, but it is the way I think about it. The customers have gone off and made substantial capital investments to enable the next technology nodes, the kind of 3X and DRAM, and now some of the announced 2X DRAMs, and as those fabs and those technologies come on line, they begin to design to that or they begin to design before that of course, but as that capacity comes on line, and as the designs enter into their factory, it really, then, is matter of ensuring that their yields are high enough that a full transition from, say, 4X nanometer down to 3X nanometer is going to deliver lower cost per bit, substantially lower cost per bit, and that they've got the right mix of products to meet the market, and that gets back to the mobile commodity questions or the challenge around that.

But as soon as they see those kind of transitions, the yields at the right level and the market position at the right -- in the right way, then they start to drive demand for cards to transition that wafer volume, and I think that's the point where we're at now is many of those fabs have been upgraded and customers are now starting to drive -- to bring those new technology node based products to market and that's going to create, that's what's treating our demand and what we think is going to continue through this quarter.

And just given the fact that-- how depressed commodity prices are, would it put more pressure on your customers to pay more attention to the yields or how should we think about the impact of depressed prices on probe card investment?

Well, it's got two paths to follow, I think, and I don't know which one -- it will depend on how the customers execute on it. As prices are depressed, they can stay with existing technology nodes and try to squeeze more yield out of them if they already have all the wafer -- all of the probe card capacity they need to satisfy the wafer starts they have on the existing designs, then that would cause probe card demand to decrease. If they realize that even at entitlement levels of yield on the existing technology node, if the cost per -- the manufacturing cost per bit and probably more importantly in today's world it's the true cash cost per part build.

If that is going to be at a situation where they're going to be forced to sell assembled parts at less than the cash cost and to manufacture them, then that drives a huge motivation and impetus to shrink where you get the lowest, the lowest total cost, but you can't -- you can't shrink until you can get yield. So over the long-term, it forces shrinks which bring out new designs, which brings on demand for probe cards, but it really is a customer-by-customer situation, and customers can get stalled for three, four months at a time trying to work through yield issues on new technology, and until they solve it, they certainly don't want to have a bunch of probe cards sitting on a shelf waiting to be used.

Got it. Thank you.

Thank you. Ladies and gentlemen, this does conclude the conference for today. Thank you for your participation. You may now disconnect.