Okay, great. Delighted to have the Enovix team with us. Raj Talluri, to my left, President and CEO, Farhan Ahmad, Chief Financial Officer, and Charlie Anderson, Senior Vice President, IR and Corporate Strategy. Thanks, guys, for joining us. Appreciate it. Yeah? Our pleasure. Thank you so much for having us. Yeah, I know there's a lot, a lot going on. I wanted to give you some time at the top, but just for those that, that are not familiar with Enovix, Enovix has an advanced—it's an advanced battery company using 100% active Silicon Anode technology, leveraging a proprietary approach to battery cell architecture. So it's architecture first, borrowing from a lot of principles from the semiconductor industry, promising energy-dense, fast-charge batteries that are exceptionally safe. That's the other, that's the important thing here. And the company does generate revenue today. They are, they are generating revenue, and they're delivering batteries to customers right now. So this is, this is not your average battery startup company. I'll leave it at that. So, Raj, any, any key messages you want to impress? No, absolutely, Adam. Thank you so much for having us. You know, I've been at the company, this is my actually ninth month now, September. Time flies. But you had a baby. Exactly. Super exciting technology. And, for those of you who are not familiar with us, we make lithium-ion batteries, but we make them, you know, in a way that's, you know, as Adam said, extremely safe, but also very high energy density. And that is the key value proposition. You know, with all the different applications, you know, smartphones, computers, IoTs, everybody wants more energy density. And, we have a unique architecture where instead of making the batteries as Jelly Rolls, we slice them into, you know, little, we laser pattern, little thin anodes and cathodes, and we stack them together. So then we are able to put them together with a mechanical constraint so the silicon doesn't swell. That might have been one of the problems of using silicon instead of graphite batteries. It swells up, and we're able to constrain it, and that gives us a huge energy density advantage. You know, all our customers love it, and it's super exciting to be here and answer more questions. Awesome. Raj, you come from a—we published a note earlier this week. Was it Sunday afternoon, Daniela, on supercomputing and Tesla's neural net training? And I have to give you some credit. I mean, we had a conversation- Yeah -about Enovix, but we also got on the topic of Vision Pro and machine learning, and I'm bringing this up for your background here, but just some of the things you were saying were very... The moment I got off the phone with you, I emailed our team. I'm like, oh, my goodness, like, this guy, Raj, just thinks differently. Like, you have an unbelievable level of experience around, you know, real hard tech. All right? Not fancy, like, hard tech, and then manufacturing it and scaling it. Yeah. You come from a decades-long AI computer vision background at Micron, but also Texas Instruments and Qualcomm. And I just learned so much talking from you. So tell us, like, why... Tell that moment again of nine months ago or a little more than nine months ago. Right. Why go to a battery startup? Right. Right. Yeah, I mean, you know, I think, as Adam you know mentioned generously, I've spent a lot of time in the semiconductor industry. I did my Ph.D. in AI, in computer vision in those days when it was mostly computer vision, not so much AI. Went on to work at Texas Instruments for about 16 years, worked on a lot of processors. Then about 10 years also at Qualcomm, building the Qualcomm processor, then about four or five years at Micron. You know, in all of my career, what I found is that we were making these chips that are faster and faster, and memories that were faster and faster, and producing you know tremendous value to all the products we went to, you know, from smartphones to cars and so on. But what I found towards the latter part of my career was, you know, we made this LPDDR5, which was tremendously powerful, but you found that most customers weren't using it at the full speed. And we made all these gigahertz processors at Qualcomm, and, people would not run them at full speed. You know, they would actually, you know, when you put these processors and memories in a phone, they don't run them at full speed, because if you do, the battery goes down fast. Particularly, if you actually look at some of the newer products that are coming, like, like this phone, it's actually a great example. The problem is getting worse at a faster rate, right? It's worse. Like, if you look at this thing, the display is so big, and it burns about a lot of battery. And, and also the applications, like you talked about, Most of us don't think about it. The camera is actually a huge AI application. You know, it does auto exposure, auto focus, auto white balance, detects faces and so on. So what I found as I visited customers was that the number one problem now is the battery. So that's why I felt the problem to solve now is to build a better battery. Just my interpretation of that, again, is a bottleneck at edge compute, and as everyone's like trying to find the next- Yeah You know, AI at the edge, but it's highlighting that the batteries we're using are just wrong. Yeah. They're just wrong. And probably the compute, too, or maybe how compute is designed, but that's not my area of expertise either. I mean, that Vision Pro you were talking about, sorry, the Vision Pro. Yeah. Excuse me. I shouldn't say Quest. The Apple- Yeah Gen one, if you will- Mm-hmm headset has this weird sack, like a little wire sack dangling out of the thing. It's like, you gotta believe Steve Jobs would be like: What, what the hell is that? But that is almost a walking advertisement for what you do. Right. Right. That's priced at thousands of dollars- Right and has, what? 90 minutes life. So it's almost like, this can't work. Like, something has to change. Exactly. Yeah. That's the main problem to solve. And in particular, I feel like the areas where there is displays and areas where there is a lot of compute are the areas where they need most- Mm-hmm battery. And actually, you know, this is something that I, after joining this company, we've had this, you know, tremendous funnel of lots of different opportunities that we were sampling our batteries to.... but now we are kind of evolving to picking the few that actually really need a high-density battery, like smartphones- Okay. - or like computers. I'm gonna throw something out there, and you tell me- Yeah. - where I'm wrong or adjust it. You're focused on the consumer electronics market now. It's a market that's moving really fast. It's a market where the properties of the batteries you're developing- Yeah Are a bit more pronounced, as we just discussed. Uh-huh. You can generate revenue right now and get the iteration really fast. Yeah. And you're even doing now work with the Department of Defense, which is, you know, fantastic, on a lot of levels, and shows that, you know, what you're doing is real. But then moving that to, like, car batteries, man, that's a, that's a big gap. Okay? This is my narrative. You tell me where you disagree. Maybe by the time... If there is a, a real sizable commercial opportunity for you in automobiles- Uh-huh. - or EVTOL s or whatever, are you really making these things at this point? Or do you use the hard problem of the EV of the CE market to iterate and then develop, and then eventually you go to a licensing model or search another alternative for your BrakeFlow in the other architectures that you have? Yeah. We are not manufacturing batteries- Mm-hmm. for auto now. We are really focused on consumer electronics, where the margins are actually really good, much better than the auto, because the energy density, we can actually margin it much higher because we are solving a... And a battery, as a percentage of the end product, is much lesser in this consumer, so much more attractive market. But, we found that our technology has great applicability in auto, not just for the energy density, but because it can dissipate the heat really, really fast. Mm-hmm Compared to other architectures, just based on our mechanical structure. And that allows automakers to charge really fast. The actual commercialization, you know, of how that we would bring our technology to market will probably be more like the latter, where we license and work with OEMs. We are working with a couple of them, but still early stages. Mm-hmm. Right now, we are focused on building our factory for the consumer side. Mm-hmm. On the manufacturing front, walk us through your contract manufacturing strategy with YBS of Malaysia. What's the plan for Fab-1 between now and then Fab-2 starting next year, and how is, you know, your current generation production equipment progressing? Yeah, absolutely. Mm-hmm. We are actually very happy with the way we've managed to improve the production capability at our current fab. In fact, we had a target that we'd like to get to about 60% yields in our current fab, and we've already achieved that- Mm-hmm ... ahead of the year. Also, we've produced enough small batteries that we feel comfortable that we know and we understand exactly what went wrong with the factory. Mm-hmm. When we first started, we had, like, very, very low single-digit yields. Our energy now is on really focusing on making bigger batteries, not because our current factory only makes small batteries. Mm-hmm. Our energy now is to make bigger batteries into these markets where the AI application and the displays are prominent, and that's going to be done in Malaysia. And that factory is coming along very nicely. We put out a podcast, I think, earlier this week, to see where that is. We expect to produce big batteries from that by April next year, and slowly go through, and we expect to be in smartphones in early 2025. Okay. Farhan, if you don't mind, you've been at the company, again, how long? Two months. Huh? Two months. Two months? Yeah. So tell me, what are your priorities in terms of allowing Raj to be a mad scientist and actually bring the stuff and execute, which he's known for, and keeping the ship together and from a capital allocation and, you know, running the business in the least dilutive way possible? Yeah. So you said it, right? Like, the main priority is for us to scale this business in the least dilutive way possible. Mm-hmm. I'm coming from the same school of thought that Raj and Ajay are, which is the semiconductor industry. Enovix, if you look at the history of the company, there's a lot of great technology development, but I think in the last phase of the company, there was not as much focus on products and manufacturing. So the focus for, I think, Raj, Ajay, and me, is basically to scale the company and to make it focus more on the product and operations- Mm-hmm ... and grow the business in a least dilutive way. We will look for financing, all forms of financing, right? We think there are three forms of financing that we can use. There are capital markets, of course, that we can use. There are customers that will be also willing to finance the fabs. Obviously, nothing is free. It'll be a decision based on what is the cost of capital that we can get through our customers versus what we can do ourselves. And then, as we grow the business, I do expect that there will be governments which will be interested in moving the supply chain to their countries as well, and we will use that as an incentives, as a way of raising capital as well. Now, the key of lowering the cost of capital and to access all of these three avenues, it comes down to de-risking our technology, growing our manufacturing footprint, and getting qualified end customers. So that's where the focus is, and and we will look at things that can help us reduce our cost to manufacture, organic and inorganic, both ways, to how to lower our costs, as well by doing supply chain work. So all of those are priorities. Raj, anything you want to add to that? And do you want to address the shelf registration? Yeah, absolutely. Yeah. I think when Farhan came on board, the first thing, you know, he's a very- Dude, where's the shelf? Very, very pragmatic, you know, finance guy from Micron. He's like, "You know, as a public company, we need to have a shelf," and, you know, so that, you know, we have it out there, and it's a tool in the toolbox. And with the shelf registration, and, you know, being a early-stage company that just went public in 2021, we had to put a number on how much the shelf number was.... And we put a large enough number that people wouldn't think much about it, like $1 billion. And I got a lot of feedback that, oh, my God, these guys are going to go out and raise $1 billion of cap, you know, of capital. That, that's clearly- I mean, if you could at the right, I mean, well, I don't know, consider it, but yeah. But the other thing was, you know, we had an ATM there also, and we haven't exercised it. We haven't used it, and you know, we don't plan to use it in the near term. So I think it's important for, you know, all the other investors to know that we're just being pragmatic and running the company as a good, you know, good housekeeping, good public company. I mean, again, you're doing the fab in Malaysia, but is there any consideration of the loan program office or some of the incentives provided by the U.S. taxpayer to maybe do something else at some scale in North America, or is that not the focus right now? Well, I mean, I actually, what's interesting, you know, Adam, is that we've got people asking us to put factories in different parts. I'm not asking you to. But the U.S., I think the part of our manufacturing is actually quite a bit people intensive because it's more akin to back-end semiconductor manufacturing, not the front end. The front end is like making wafers. Back end is like packaging and testing and so on. Very few companies, almost none I know of, have back-end manufacturing in the U.S. because it's still people intensive and the cost is pretty high. Yeah, that was smart. We were talking about that. Right. Because it's all like, "Oh, it's got to be in the States. It's got to be in the States." And you're like, "Oh, my God, why'd you go to Malaysia?" You're like, "They know how to do this stuff. They've done it for a while. And you had architected this from your previous- Yeah, I mean- From your previous lives. Yeah. Questions for, for Raj or for Farhan, Charlie, just from the audience? I'll just cue you now if you have any. I'll come back to you. Tell us again, like, the, the importance of being architecture first and material agnostic. If you could elaborate. Yeah, you know, that's actually a very, very interesting, and a key part of our value proposition is that what I'm finding now, in the last many months is there are quite a few custom, you know, companies coming up with better material, better silicon anodes, better cathodes, better electrodes, particularly because of this push towards EV and ESS. And we are now finding that we can use quite a few of them in our architecture. Mm-hmm. The more people make better quality materials, the more we are able to use them and get higher and higher energy density. Like, for example, our next-generation technology, which is where we change the anode and the cathode and the electrode, has double-digit increase in energy density from the previous one. Mm-hmm. The one after that will be one more of those. So that's actually one of the key things, because our architecture first constrains silicon from swelling. And in fact, in time, if people start using lithium in batteries, we can put lithium instead of not have any electrode in our batteries, too- Right. Particularly, for example, maybe EV kind of thing. So being architecture first allows us to take advantage of all the material innovation happening in the industry and parlay that into energy density advantage or into cycle life advantage or into fast charge advantage and provide the value for the end customer. So it's a very exciting time. Mm-hmm. Is Enovix's technology at odds with solid-state projects, or can it kind of help enable it and address some of these expansion issues? I didn't know if you also wanted to share your views on solid state development, you know, through your knowledge, you know, categorically. No, absolutely. It coexists. I mean, in fact, we are talking to some people who are making solid state electrolytes to see how we can put that together in our constraints. Mm-hmm. You know, because ultimately, we are truly material agnostic. I think we solved the problem that when you put more lithium, the anodes swell, because as lithium combines the anode, whether what kind of electrolyte we use, what kind of cathodes we use, you know, it's just a question of, how do we solve that problem. But more importantly, you know, what we are now learning is we are understanding how these batteries actually work in end products. Like, for example, when you put a battery in a phone, the way it's charged, the way it's discharged, what temperature it works at, what temperature discharges, how it is stored, how quickly it charges, what voltages the apps processor delivers. Mm-hmm. Those are key things that we understand much better now, and that's different in phones, what is different in laptops, what is different in EVs. Mm-hmm. As a battery manufacturer, we are able to bring that know-how to take the material manufacturers, you know, into that space, so we can actually tailor the right materials to the right product. You mentioned you're kind of ahead of plan in terms of yield on the plan- Yeah. For this year. I didn't know if you wanted to add any other, make any other comment about how things are tracking for the remainder of 2023, and what key milestones should investors be focused on for 2024? Yeah, the key thing I want to add is for 2023, the demand we are seeing now is really a lot stronger and much stronger on bigger devices. So we really have to get our factory to produce larger batteries. Like the opportunity we have from the army is for a big battery. Mm-hmm. The opportunity we're now having on smartphones is in a bigger battery. So we are now trying to figure out how to manage our Fremont operation to produce more bigger batteries than smaller batteries, particularly now that we understand how to make a smaller battery and the yields are where we want, and we're making the number of units we need to satisfy our customers. For 2024, it's going well. I think the factory is going well. We expect to produce big batteries from our Malaysia factory in April and get into our customers and be in high volume production from that factory towards the latter part of 2024 and early 2025. Is it as simple as just making the battery bigger, or, you know, does the size also introduce technological challenges that need to be tested? And I didn't know, like, bigger batteries- Yeah. It could be simple, or it could be like, no, actually, it's kind of something that needs to be completely tested and validated, so it's more complex than it sounds. No, that's, that's a good question. Our architecture scales from small battery to big battery. So we make it the same way. We cut them into, you know, a laser pattern them... stack them and pack them- Mm-hmm. -and put the thing. What we are also changing is actually the, the anodes, the cathodes, and the electrodes. Because now in the bigger battery, we are able to put more advanced anodes, more advanced cathodes, so it produces much higher energy density than our current smaller batteries. That is one advantage. Mm-hmm. The second one is BrakeFlow, which is our patented technology of how to make batteries safe. A bigger battery has to be really safe because now you're packing so much energy density. Mm-hmm. So all our big batteries will come with BrakeFlow. So those are, you know, some of the advantages there. Farhan, just remind the folks that may not be as familiar, refresh us on your financial position right now, your pace of cash burn, kind of thoughts on minimum cash levels. I didn't... You know, in terms of just what you have in the tank, and then, you know- Sure. how fast you're consuming it. Yeah, I- Think about that over the next year. I can do that. So, as of last quarter, we had about $409 million in the bank. This year we have said that we will burn about $120 million operationally, and $70 million CapEx on top, so $190 million. Next year we are probably going to do lower than that, in terms of we lower the burn, cash burn. Mm. And, you know, so that gives you some idea. So we do have runway. I am fairly conservative, so I like to see a strong balance sheet, and I'm glad that we have a strong balance sheet. And, you know, it'll be my goal to make sure that we always have a strong balance sheet. Question. Well, if you don't mind waiting for the mic. Thank you. That's a very helpful presentation. Can you talk a little bit about what's going on on the customer side? I know you, there was these large customers you were tracking and having discussions with. Yeah. Where is that going? And when do you... Because I think that's kind of be helpful in terms of converting. You have these plans coming up. Are you- Yeah. -selling that? Is that there, or is it build it that will come? Or where I know you had some LOIs, I think it was Samsung or something like that, I can't remember. But where, where are things in that whole process? Yeah, actually a very, very good question. And particularly now that I've spent nine months in the role, I have a good comprehension of where our customer base is. What the company has done over time is to really sample these batteries to a broad base of customers. So like 100 customers with samples batteries. So there's interest from all of them. Some, of course, go through, don't fall apart, some stay, but our, what we used to call funnel, is actually a huge amount of revenue potential we had there. But as I spend more time in this space, maybe a little bit of a diversion, but I look at businesses as having either horizontal businesses or vertical businesses. A horizontal business is like a TI DSP, where we make a DSP and hundreds and thousands of customers take it. A vertical business is like a Qualcomm business. We have half a dozen cell phone customers that drive a lot of volume. I feel like for Enovix, as a manufacturing company, it needs to migrate more toward a vertical business, which means a few years from now, we'll probably have 10 customers that drive 80% of the revenue, and 20% will drive the rest of the revenue. And the reason for that is, when you make a factory, you know, when you make a custom-sized battery, you want one battery to run large number of volumes in one product. Like, a phone like this ships 2 million units, and a phone like this, you know, ships, you know, like, much more. So you kind of have to... If you take a computer, for example, there are six people who make computers. Each computer takes four batteries. So if you're designing two or three of them, you can run your factory on that. So where we are right now is, we've picked from this funnel of customers who've had the most valuable opportunities in terms of highest volume. We're sampling to them, and they are in various stages of qualification. But the challenge with them is, you know, they're not going to launch till we have millions of units of capacity, right? I mean, because each OEM, each phone launches at least 2-3 million units. But they see that we are building the factory. They are doing the qualification. They are giving us the feedback. We are testing with them. So I expect that we will give the bigger batteries to the customers through 2024, and those will ramp into production in 2025. Meanwhile, the smaller batteries we've made in Fremont, we will continue to sell those, but the real volume opportunity for the company is going to be selling big batteries into places that have a display, where this kind of, as I alluded to in the beginning, the AI machine learning, have put so much demand, and the displays are putting so much demand, that's the direction that the company will be going. Anything else? Yeah, go. Oh, that over... Just for a second, while you get the mic, that over- again, the overlap between commute, compute and energy efficiency, it's, it's a serious freaking problem. Yes. Like, it's not just Bitcoin, you know, this is- Yes. And you know, the margins are great, because when you actually provide value, the customers are happy to give us margins and prices for solving the problem. Yeah. Please. So, yeah, that makes a lot of sense the way you outlined it there. But... so you have to wait till the next fab in Malaysia is kind of coming up, and you'll have enough product there, but will people sign up for that product before? Because they'll have some time. And where will they put it into? Because I'm not sure what the capacity of that will be, but it will be for some, like, niche product from some big cell phone player. But it's hard to take what's coming out of one fab and put it on, like, the new iPhone coming out- Yeah. or, you know? Yep. Yeah, so- Must be approving, like, a time for it to really... Yeah, talk to me about that. It's a great question. So I think phone market is one of those markets, you know, I've lived there for a long time, almost 20-some years. You know, people, maybe just a little bit, there are 1,200 million phones made a year. You know, Apple and Samsung, if you remove them, the big phones that we're familiar with, another, I would say, 700 million phones between, you know, Xiaomi, Apple, Vivo, all these customers, they make a lot of models. Some models only ship 2 million units, and they may launch a model into India, they may launch a model into Europe. So those are the kind of products where for a company that doesn't have a lot of volume, we can start first. As we build our factories to be bigger and we have millions of units, then of course, we can, you know, aim to go into something like an iPhone or a Samsung Galaxy. But there is a lot of opportunities for a few million units per model phone in Android that we can build our factories on. Any more questions from the audience? Yeah, go for it. If you don't mind, just... Sorry. Thank you for your patience. So, for context, when you think about the energy density of your architecture using, say, pure silicon anode and a more traditional cathode, how do we think about density in terms of watt-hours per liter or watt-hours per kilogram versus existing, like, 2170s or some of the solid state guys that are claiming, you know, 850, you know, all these other things, watts per liter? Yeah, I mean, look, I, in the applications we are going into, like in the cell phones that we are going into, we get the feedback from the customers that we are providing 30% more energy density than what they're using, right? Well, the difference is this, people only quote one number, like energy density. They don't quote cycle life. They don't quote fast charging. So this is actually very important because what I've learned over the last nine months is energy density, fast charging, cycle life, all together is what a battery needs to do. So I've seen some of our competition produce much higher energy density, but they go 200 cycles. Now, if you think about cycle life, it's actually kind of sometimes it's obvious, like, we charge your phone every day, so that's 365 days. If you keep your phone for, like, two years, minimum 600. So unless you get... Our battery, we produce minimum 500 cycles now, and I haven't seen cycle life numbers from all these other people who talk about their batteries. They talk about watt-hours. I found that it's very, very difficult to get the cycle life and fast charge along with the energy density. That's where we excel, is we provide a product that solves an end product need, not just one number. Any other questions from the audience? We got some people's attention here. I wanted to give you just a chance to make any, any closing remarks or touch on any topic that you wanted to, that we didn't hit on, that you want to emphasize. Anything else, guys, I think we hit on? I think we covered everything that we have. No, I mean, I just super excited by the technology, and thank you so much for the opportunity, and, let's continue our conversations on AI. You know what, though? I do want to ask you one more question. Yeah. Give me some advice, okay? What would you do if you were writing research about the future of, you know, transportation and the interplay between energy storage and AI at the edge? What kind of things would you do or bring attention to, or where you think there might be an analytical dislocation that could help investors make better decisions? You know, I asked my- Sorry for that. We didn't script this. No, no worries. I mean, I- I just, I need, I need help. Great question. Yeah. Thanks. So I asked my team the other day to run, you know, you know, you mentioned mad scientist or crazy geek, but I'm one of those. You're not that crazy. No, I asked my team the other day, run Stable Diffusion, you know, which is an AI application that generates images like DALL-E and, you know, all these things have it. I asked them to run it. Basically, you type in a few keywords, and they create an image. You create an image of a hummingbird, you know, in the backyard. Right. There you go. Mm-hmm. So they did it, and then I asked them: "Okay, why don't you tell me how much battery life it takes if you ran it on the cloud versus you ran it on the computer?" So they ran both. It took 58 times more battery to run it on the laptop versus the cloud. 58 times. Yeah. And then I asked them: "Okay, why don't we do this?" Adobe produced a great noise filter called Denoise in Lightroom. Just cleans up the noise, and, and I'm a photographer, I take a lot of pictures. And then it... They had a noise filter before, and they had this AI noise filter. And I asked my team: "Why don't you run the same number of images, run the AI noise filter and the regular noise filter?" It took, like, orders of magnitude, more compute, and the battery just went down, like, no time. So I actually think people haven't really quantified the impact of AI moving to the edge- Yeah and how much more energy that's needed. And I think it's a great research, and now we're trying to figure out what does it do to phones. For example, if you run ChatGPT on your phone, what does it do versus the cloud, right? And, you know, people like to run on the cloud, but cloud is expensive. Yeah. You know, you already paid a lot of money for your computer. We're really seeing the new technology revolution here. I mean, remember, electric vehicles were like, that was the horseless carriage business- Yeah Like in 1905, 1906. Right. I think Thomas Edison was working on electric vehicles with Henry Ford. Henry Ford's wife, like, preferred the electric car- Mm. because of this noisy, disgusting, internal car. But the storage wasn't there. Mm. There wasn't enough, Right. They're like: "All right, let's burn some stuff. Yeah. Raj and Farhan, Charlie, thank you so much for your time. I really appreciate it. Thank you. Thank you.