Thank you for standing by, welcome to the Enovix Corporation fourth quarter 2025 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, today's program will be recorded. Now I'd like to introduce your host for today's program, Robert Lahey, Head of Investor Relations. Please go ahead, sir. Thank you. Hello, everyone, and welcome to the Enovix Corporation's fourth quarter and full year 2025 financial results conference call. With me today, our President and Chief Executive Officer, Dr. Raj Talluri, and Chief Financial Officer, Ryan Benton. Raj and Ryan will provide remarks followed by Q&A. Before we begin, please note that today's call contains forward-looking statements that are subject to risks and uncertainties. These statements are based on current expectations and may differ materially from actual future results due to various factors. For a discussion of these risks, please refer to the disclosures in today's press release and/or filings with the Securities and Exchange Commission. You can find these materials on our website at ir.enovix.com. All statements made on this call are as of today, February 25th, 2026, and we undertake no obligation to update them except as required by law. Additionally, during the call, we may reference non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP measures in the materials posted on our investor relations website. With that, I'll turn the call over to Raj. Good afternoon, everyone. Thank you for joining us. The fourth quarter represented continued progress as we transition from qualification into early commercialization across multiple end markets. First, we continued advancing smartphone qualification for the AI-1 platform with our lead mobile customer. Second, engagement expanded across smart eyewear and other AI-powered devices. We view smart eyewear as an earlier commercialization pathway for AI-1 due to lower qualification barriers and thresholds. We are currently preparing production to support initial high volume demand from our lead smart eyewear customer. Third, defense and industrial programs continue to provide revenue, operational validation, and manufacturing execution experience as we prepare for consumer-scale production. Finally, we ended the year with a strong liquidity position, giving us flexibility to execute our commercialization roadmap while maintaining disciplined capital allocation, including recently authorized share repurchase program. Overall, we believe 2025 positioned us well for the next phase, moving from qualification towards commercialization across smartphones, smart eyewear, and additional defense applications. We'll walk through that progress today. For the full year 2025, revenue grew 38% year-over-year to $31.8 million, with the defense shipments remaining our largest contributor and batteries for naval munitions specifically being our top product in Q4. Full year non-GAAP gross margin improved to 23%, reflecting higher production volumes and improved mix shift towards higher-margin defense batteries following our April 2025 asset acquisition. We ended the year with $621 million in cash equivalent, and marketable securities, supporting qualification completion, commercial scale-up, and additional potential strategic transactions. To support this next phase, we strengthened our operational leadership. Kihong Park, or K.H., as he prefers to be called, now leads our global manufacturing organization, bringing decades of battery production experience and deep operational knowledge from our South Korea platform to our Malaysia scale-up efforts. We also welcomed Ed Casey to lead advanced manufacturing engineering, adding significant expertise in scaling complex, high-volume manufacturing environments across global networks. Together, this leadership alignment reinforces our focus on manufacturing execution as we prepare for high-volume production. We continue to improve yield and throughput across Fab2. As we discussed on our previous call, Zone 1 laser dicing remains the primary rate-limiting factor, and we are methodically addressing that constraint to process optimization and alternative dicing approaches. We believe in our ability to unlock higher production rates as we transition towards commercialization. In 2026, we are capable of qualifying other new products and customers in the very production line they will use and meeting demand for smart eyewear customers. Our overall company focus remains on disciplined execution, advancing smartphone qualification while expanding into adjacent markets that support earlier revenue and manufacturing scale, and leading in smart eyewear markets with our silicon battery shipment. You'll see how these pieces come together through today's presentation. Let's talk about markets. Last quarter, we introduced this framework for outlining the end applications where our technology can create a durable moat. The smartphone market represents the fastest path, the large scale, and is ideal for our technology. An independent study from Polaris Labs previously validated our energy density leadership in smartphone batteries. This quarter, we extended that validation through a second apples-to-apples comparison against a leading competitor using identical methodologies. The results confirmed that AI-1 delivers a meaningful volumetric density advantage versus commercially available silicon-doped lithium-ion batteries. We expect AI-2 and AI-3 to further expand our technology lead with performance gains well beyond historically industry advancement rates. This quarter, we updated this slide by breaking out smart eyewear and drone applications as distinct, growing addressable markets where our engagement has progressed. Smart eyewear adoption is presently accelerating as AI workloads migrate to compact, always-on devices. We expect to ship our first smart eyewear batteries for use in AI/AR devices in the second half of 2026. Exceptional growth in this market is expected to continue throughout this decade, with display-enabled architectures that significantly increase power demand and require higher energy density for constrained form factors. We believe smart eyewear battery TAM could exceed $400 million by 2030. We are targeting meaningful participation based on early engagement with key partners and strong technical suitability. Drones represent another priority area of focus, where we see an attractive TAM and a strong competitive advantage. Western drone platforms, both defense and commercial, are increasingly prioritizing higher energy density, extended flight time, and supply chain diversification. This battery segment is projected to be approximately $1.5 billion this year. Breaking these markets out reflects growing conviction that we are well-positioned across multiple high-growth platforms. With that context, let me walk you through our smartphone qualification progress and the defined pathways we see towards commercialization. Turning to our smartphone commercialization plan, we remain engaged with seven of the top eight global smartphone OEMs by market share, and validation efforts have expanded this year with multiple leading OEMs, including those serving the U.S. market. Our near-term focus, though, remains on two Asia market leaders, with Honor being our lead customer. We commenced their formal product qualification process in the third quarter of 2025. Most of the requirements have now been met, and cycle life testing remains the primary gating item to complete qualification and move into system integration and production planning. Because cycle life testing is often misunderstood, particularly for silicon anode batteries, let me spend a minute explaining what these tests actually measure and why they matter for real-world smartphone usage. The key point, and what we want to clarify next, is that cycle life results are complex and depend heavily on test protocols, which is especially important when evaluating next-generation silicon anode technology. When we say cycle life testing, we are referring to multiple tests based on different charge and discharge rates, or C-rates. This is standardized measure how quickly a battery is discharged relative to its total capacity, where a 1 C-rate means the battery can be fully discharged in 1 hour, and a 0.2 C-rate means battery is discharged in 5 hours. This slide illustrates relative C-rates across common smartphone applications. The highest power-consuming activity is video recording, which requires approximately 0.17 C discharge rate. We include a host of other popular consumer applications, as well as scenario for running multiple applications simultaneously to account for use cases such as using ChatGPT while also playing a Netflix movie. When we refer to our lead customer's primary qualification requirement of 1,000 cycles, that is based on a rate of 0.2 C. As you can see that everything below this level, which is why smartphone as well as smartphone OEMs rely on this test to ensure batteries provide a positive experience for a wide range of consumer usage patterns. A test purely based on this rate would take one year to complete, though, so most companies compress the test time to four months by using an accelerated 0.7 C rate for a majority of the cycles, where the battery is fully discharged in 1.4 hours. Smartphone OEMs also include in their qualification process a secondary requirement of 800 cycles for just the 0.7 C cycles, though this C-rate is well beyond any single app consumption we are aware of. For the parts shipped in December, customer qualification testing for cycle life began in January. This testing is progressing in parallel under customer control protocols. On this slide, you can see how batteries we sent to our lead customer perform in our 0.2 C cycle test. We made improvements over our initial version submitted in July, and our internal test indicates we are now likely to exceed the requirement of 1,000 cycles at 0.2 C-rate. This is a significant achievement that is indicative that our product is approaching readiness for integration into commercial products. However, these same batteries are not currently on track to exceed the accelerated 0.7 C target. As it is the first time a 100% silicon anode smartphone battery has been brought to the market, we're working closely with our customer on alternative pathways for testing that is more suitable for silicon anode batteries. While customer testing ultimately determines qualification, this internal data set gives us increasing confidence that the current batteries are tracking towards the required performance. There has been no 100% silicon battery qualified in a smartphone. There are no defined testing protocols for qualification. Based on current test results, we're discussing multiple pathways to qualification with our lead customer. The first scenario is approval based on our 0.2 C results and acceptance of the 0.7 C cycle life below their current requirement. A second scenario involves adoption of new accelerated testing protocol tailored for silicon anode batteries. Finally, we're also continuing to develop improved electrochemistry variation to hit the 0.7 C target. While we believe our battery platform is ready for deployment, we also understand that we're entering the largest consumer electronic market in the world. Customers appropriately maintain a high qualification bar for new entrants. We look forward to meeting all the necessary standards in 2026 and transitioning into commercial production. Initial smartphone-related revenue in 2026 is expected to support system integration and launch preparation, positioning us for a larger scale commercialization in late 2026 or beginning in 2027. Let's turn to smart eyewear. We view smart eyewear as an earlier commercialization pathway for AI-1, due to shorter qualification cycles and lower durability thresholds. We believe this market represents a compelling near-term expansion opportunity for the platform, where our high energy density architecture is well aligned with product requirements. Our engagement in this category began early, we're working with partners we believe are well-positioned to lead in this market as it scales. Compared to smartphones, where an incumbent is deeply entrenched, this creates a more direct path to initial adoption. Our focus now is execution as we prepare for initial volume shipments to lead smartwear platform later this year. Today, the eyewear market is dominated by products without displays, largely focused on audio, connectivity, and basic AI assistance. Over the balance of this decade, we expect more than 5x unit growth as display-enabled ecosystem emerge, which translates to even higher battery TAM expansion as ASPs increase over the same timeframe. Display-enabled eyewear materially increases the power demand. Always-on AI processing, image capture, and augmented reality overlays create sustained energy draw in a highly constrained form factor. That combination, compact design and higher sustained power consumption, is precisely where volumetric energy density matters most. Based on current engagement, which has accelerated rapidly, we expect smart eyewear to represent an earlier commercialization pathway for the AI-1 relative to smartphones. This market matures, we estimate the smart eyewear battery TAM could exceed $400 million by 2030. We believe AI-1 is well suited to participate meaningfully in this market. This slide illustrates how our platform aligns with smart eyewear cycle life requirements. Importantly, in this segment, customers typically require less than 1,000 cycles durability at 0.2 C rates and do not have a pure 0.7 C cycle test. Our energy density architecture is optimized for constrained space and sustained power draw. Because we architected AI-1 first for smartphones, the segment which has the highest technical qualification standards in consumer electronics, we believe extending the platform into smart eyewear is comparatively more straightforward from a performance standpoint. Once you're designed for the most demanding use case, adjacent applications become natural extensions of the same core architecture. That allows us to prioritize energy density and power efficiency while comfortably meeting eyewear durability thresholds. In addition, we expect this market will have a mix of smaller customers who address a wide range of fashion preferences and use cases that are also enabled by the budding Android XR ecosystem. This means our future sales mix may include meaningful percentage of off-the-shelf products in addition to customized products for the market leaders. We are seeing this dynamic play out already with multiple wins we announced at CES earlier this year. Let me now turn to defense. Defense continues to provide both revenue and operational validation of our technology and manufacturing capabilities. We operate two differentiated defense-focused platforms across our global footprint. In Malaysia, we're advancing our 100% silicon anode architecture, our largest format AI-1 variation, optimized for high energy density applications. These batteries are well suited for next-generation soldier systems, including augmented reality headsets and wearable power systems. We have supported U.S. Army programs since 2021 and recently provided deliveries under the Conformal Wearable Battery program. In Korea, we have a conventional architecture platform utilizing graphite and silicon doped anodes. This facility has an extensive operating history in Korean defense markets and supports a wide range of battery sizes and configurations optimized for high discharge rate applications, including drones, subsea systems, and munitions for several Korea's large defense contractors. Naval munitions, specifically, were the largest growth driver in 2025. Our pipeline is increasingly focused on expanding our presence in the aerial drones market. In 2024, we kicked off a campaign to introduce our technology to U.S. and European military contractors, who are attracted by our diverse supply chain and internal manufacturing capacity. Establishing initial programs and building a pipeline has required time. But it is starting to pay off. We entered 2026 with a global pipeline of approximately $100 million, including opportunities with multiple Tier 1 Defense Contractors. Recent design win traction in Q4 has strengthened our confidence in pipeline conversion. As programs progress, we expect to provide greater visibility into customer engagements as we convert pipeline to backlog. Aerial drones represent a compelling battery growth opportunity, with an estimated $1.5 billion TAM this year. Next-generation drone platforms require higher energy density to extend flight time and strong discharge capability to support power-intensive missions. As autonomy and AI capabilities expand, power requirements will continue to increase. Our platform aligns well with these needs, enabling longer flight times, sustained high discharge performance, and diversified supply chains through our manufacturing in Korea and Malaysia. We are building on deployed defense cells and existing customer relationship to expand into next-generation silicon anode drone applications. This segment demonstrates how our architecture scales beyond smartphones and supports a diversified growth strategy. This slide highlights our energy density progress in drone applications. Today, we have deployed defense cells supporting high-discharge drone programs. We are now advancing a higher energy drone cell in development, with internal testing achieving approximately 342 Wh /kg. Looking ahead, our next-generation silicon anode roadmap targets energy density above the 400 Wh/kg to support increasingly autonomous platforms. The roadmap shows clear progression, deployed cells today, higher energy product launches next, and next-generation silicon anode performance that expands mission capability. I'll turn it over to Ryan to talk about our financials. Ryan? Thanks, Raj. First, a few highlights on the fourth quarter results. Fourth quarter revenue was $11.3 million, a record for Enovix, up 16% year-over-year and above the top end of our guidance range of $10.5 million. This performance was driven by continued strength in defense and industrial shipments out of Korea. Non-GAAP gross profit was $2.9 million, for a non-GAAP gross margin of approximately 26%. While margins can fluctuate quarter-to-quarter based upon product mix, Q4 benefited from higher volumes and operational improvements in Korea. Non-GAAP operating expenses were consistent with our planned investment levels, reflecting continued investment in smartphone and smart eyewear qualification programs, as well as Fab2 readiness. Non-GAAP loss from operations was $28.9 million, modestly better than the guidance range of $30 million-$33 million. Non-GAAP net loss per share attributable to Enovix was a loss of $0.14, also better than the guidance range of a loss of between $0.16 and $0.20. With respect to the balance sheet, we ended the year with approximately $621 million in cash equivalents, and marketable securities, providing substantial liquidity to execute on our commercial plans, as well as enabling us to evaluate strategic opportunities from a position of strength. Additionally, the board authorized a share repurchase program, reflecting confidence in our long-term strategy and adding another tool to our capital allocation framework as we focus on long-term shareholder value. Turning to the full year results. For the full year 2025, revenue totaled $31.8 million, a record for the company, representing 38% year-over-year growth. This growth reflects sustained execution in defense and industrial markets, while new products in the smartphone and smart eyewear markets advanced towards commercialization. Full-year non-GAAP gross margin improved to 23%, benefiting from higher volumes and demonstrating substantial progress in manufacturing execution. Capital expenditures for the year were disciplined and aligned with our staged manufacturing expansion plans. Overall, we exited 2025 in a stronger financial and operational position than we entered it, with growing revenue, improving margins, and substantial liquidity to execute upon our roadmap. Turning to Q1 2026 guidance. For Q1, we expect revenue in the range of $6.5 million-$7.5 million, reflecting normal seasonality and program timing of defense shipments. We expect non-GAAP loss from operations between $29 million and $32 million, reflecting continued investment in product qualification and manufacturing readiness. We expect capital expenditures between $9 million and $11 million, primarily related to Fab2 equipment. Actual cash payments in Q4 were lower than previously guided due to the timing of equipment and vendor payments. The majority of those payments are expected to occur in the first half of 2026. This is primarily timing, though we also made a couple of intentional near-term adjustments. Coincident with the operations leadership transition, we made two adjustments to our capital plan. First, we deferred initiation of the NPI line in Korea to allow K.H. time to fully evaluate priorities and sequencing. Second, given the high demand for products from our Korea factory, we are accelerating, adding incremental capacity there. This is a relatively modest investment, supported by high customer demand and opportunities. On the M&A front, to provide a little bit more color there, we continue to actively evaluate a range of opportunities, both smaller and larger, that could accelerate commercialization or strengthen our manufacturing and technology position. We will only deploy capital with a focused and disciplined approach, especially with respect to strategic fit and price. With that, I think we're ready to take questions. Operator? The Q&A session. Please note that this call is being recorded. Before we go to live questions, we're going to read the two most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is: how does your current strategy differentiate Enovix from competitors? Thank you for that question. Enovix, we use 100% active silicon anode. Most of our competitors use graphite for the anode. Silicon anodes can store much more lithium, so we are able to provide much higher energy density because of that. You know, one of the problems with replacing graphite with silicon is that the silicon tends to swell, you know, when using a battery, when doing a charge and discharge. We've got an architectural advantage where we figured out how to enable the silicon anode from not swelling while maintaining the energy density advantage. That is our main advantage. That is how we differ from most of our competition, because we provide much higher energy density due to using 100% active silicon anodes. Thanks. The second question is: at our current burn rate, how long is our cash runway, and under what conditions will we need to raise additional capital? I'll take that one, of course. First, we ended the year with approximately $621 million in cash equivalents, and marketable securities. We're operating from a position of strength, in my opinion. Second, I'd caution against thinking about runway purely in terms of static burn rate, because our spending is tied to a very specific qualification and commercialization milestone set. As those programs progress, the working capital and capital expense profiles will evolve as well. As we said in the prepared remarks, we believe we have sustained substantial liquidity to execute on our commercialization strategy without needing to raise capital in the near term. That said, as we've discussed before, beyond that, we'll always evaluate capital allocation options such as strategic M&A, opportunistically, but with process rigor. We will now go to the queue. If you'd like to ask a question, please use the Raise Hand feature on your screen. If you've dialed in via phone, please use star nine to raise your hand and star six to unmute yourself. Questions will be answered in the order they are received. Please ask one question and one follow-up question at most. We'll now pause a moment to assemble the queue. Our first question comes from Mark Shooter with William Blair. Please unmute to ask your question. Hey, Raj. Can you hear me? Yeah, Mark, go ahead. Great. Thank you, guys. I appreciate you getting into the details and geeking out with us a bit on the smartphone C-rate test requirements. The 0.7 C-rate life cycle test is definitely overkill for smartphones, but it's an incumbent standard, and they're notoriously sticky and difficult to change once established. I'm wondering, in your engagements with HONOR, how receptive were they when you suggested the change? Given that, you know, cycle life and energy density are always paired trade-offs, would Honor take a formulation that hits that 0.7 rate cycle life spec with a slightly lower energy density? Thanks so much. Thanks for the question. you know, I think the first thing is to, you know, the reason I showed some of the material in this talk is to actually show that most of the use cases in the smartphones, as the batteries get bigger and bigger and more and more capacity, are under 0.2 C discharge, which basically means that we have a battery that now we believe under 0.2 C, you know, average discharge rate, goes over 1,000 cycles. We essentially, we feel we have a battery that meets the requirements of the smartphone market. As I said, one of the challenges is if you want to test if the battery, you know, meets the requirements at the, you know, how the normally battery is used in the phone, it's going to take you a year to actually at least to run that. Because if you run at 0.2 C, it takes a long time. So customers typically use, higher rate of discharge, like 0.7 C, to cut the amount of time it takes to test. This is very similar to people used to use a burn-in test, for example, for chips, you know, high temperature ovens, you know, try to find the early failures. When you change technology from graphite batteries to silicon anode batteries, silicon anode batteries behave differently when you discharge them very fast, in this 0.7 C. HONOR and our other smartphone customers, we've talked to them, they understand that. They realize that this test is a proxy and an accelerated test and not a true test. Like you said, this is a test they have been using. We are in discussions with them. You know, we see three pathways forward. You know, one is we are able to convince them that this is not a real-life test, and the real-life test is really 0.2 C, and we can get away with a less cycle life for 0.7 C, for example. By the way, this has got nothing to do with energy density. It's purely about cycle life testing. It's not like they need to take a lower energy density. They just have to take a lower cycle life on 0.7 C, which is not a real test, an accelerated test. The second one is we have to find, together with them, another accelerated test that is more representative, if you will, for silicon anodes. We have some ideas on what that is, and we are discussing with them on that. You know, the third one is we'll just have to modify our electrochemistry just to pass this test at 0.7 C. So we are working on all three of those. Ultimately, there is a lot of interest from our customers in wanting to use our batteries because of the higher energy density we provide, and the roadmap to even higher energy densities because of 100% silicon anode, and those conversations are going well. Ultimately, we need to solve this, you know, passing of this test to where they and us both are comfortable that in the real-life use case, when ultimately the battery is put in the phone, it's gonna do really well, and everyone's happy with the performance. Thanks, Raj. I appreciate all the color there. If I can switch over to the opportunity in smart glasses, in the presentation, you gave a lot of information there on the TAM as well. The performance advantage with Enovix's cell and technology goes up, but the battery and the application requirements get easier. I can see how this is your faster commercialization path. You did mention an initial production demand in your, in the release statement. I mean, should we think about that as a purchase order, or is that a next step? Can you frame what the revenue opportunity might be for 2026, or is this a 2027 story? Thanks. Yeah, a good question. You know, as you alluded, when the battery gets smaller, and but still the energy requirements or capacity requirements are high, we have a disproportionate advantage because the smaller it is, you know, the efficiency we have is more better compared to our competition, because the additional stuff we put in there for holding the cell from not expanding, is not as much of a penalty, right? That's why I think it's we are much more competitive there. The cycle life requirements are much lesser. You know, they don't need to do 1,000 cycles because people probably change their glasses much quickly. Those two are very good. The battery, you know, in smart glasses is the limiting factor. I mean, if you guys actually buy some of the smart glasses in the market today and start using them, you'll find that almost none of them come all day. Smartphones come all day, but most of these things will die in multiple hours. A better battery makes the product. That's why there's a lot of interest from our customers on using our battery. Also, there's lots of different kinds of applications, lots of different kinds of products. This is what I mean by, you know, there could be sport glasses, there could be utility glasses, there could be fashion glasses, and, you know, as I mentioned, when Android XR ecosystem comes, you know, there'll be even more products using that. That's why the TAM is now suddenly much larger we expect it to be in the next few years than we ever thought before. I think that's why we are very excited by this market and the fact that we can get there. Yes, you absolutely should think of the question you asked as a purchase order, and we are manufacturing them now to our lead customer. We are very excited by that. The whole team, I was in Penang last week, is focused on executing that and building the, those products and sending it out. Initial volumes will be lower, you know, just because they're just starting. But I think that, 2027, 2028, we expect the market to really grow and be meaningful for us. We're excited by that. If I can just jump in and chime in. It's, you know, I had an old boss used to say, "All dollars are not equal." It's a very important order for us. Great. Thank you, gentlemen. The next question comes from George Gianarikas with Canaccord Genuity. Please unmute to ask your question. Hi, both of you. Thank you so much for taking my questions and for the incredible level of detail and presentation. Appreciate it. Maybe first question, you pointed to sort of a little bit of an issue with the electrode dicing in the manufacturing process, getting yields up there. How much have you been talking with your potential piece of customers around fixing that issue maybe together, in anticipation of ramping production towards the end of this year? Thank you. Yeah. You know, I think, firstly, as I mentioned, the yields on almost on all steps are above 80%, as you saw in our 80% or above, as I mentioned. On the dicing side, they're close to 80%, but not quite there in fourth quarter. This quarter to date, you know, we're at 80%. We feel confident that, as we make progress, it'll sort itself out. That, you know, that's because we just started making two batteries, right? We just started making a smartphone battery and a smart eyewear battery. We've been sampling a lot of batteries last year. We're now focused on two of them, one on Agility Line, one on H volume line, high volume line. We'll continue to work on each state to get it better. You know, our customers have visited our factories. They have seen it, you know, we've got men through multiple customer audits. You know, we have enough supply to meet all the requirements for 2026. We're looking at various options to increase the throughput and get even more cost-effective than laser dicing methods to actually get the volumes up. Yeah, a lot of, lot of focus on that. We are working with our customers on that. Thank you. Maybe, with regard to the drone opportunity, can you sort of talk about the different variations of chemistries that you have to work with? I'm assuming these are silicon-doped cells, not 100% silicon that you're approaching the market with first. How many different chemistries do you need to approach that market, and do you need, like, any additional salespeople to sort of attack it? Thank you. Yeah, great question. You know, we have been making. You know, we haven't really talked about it too much in the past. We've been making, very high performance, high rate of discharge cells because, you know, because we were selling into a lot into the Korean military from our, Nonsan facility. Some of the requests came from drone batteries, and we started making those. What we find now is, with the market expanding fast, you know, because as you guys have seen in the more recent, political situations, there's lots of drones being deployed, both in commercial and also in military. We have now combined, used some of our knowledge on using 100% silicon anodes with our Nonsan team, and now we dope those batteries also with silicon anode, with silicon, the graphite with silicon, and to increasing amounts. You know, as I mentioned before, when we put more and more silicon, the cells, the batteries swell. That problem hasn't gone away. Since they're inside things like drones, even if they swell 10%, you know, swell 10%, 15% or more, there's space inside to accommodate that. We have now find that we can make, you know, high gravimetric energy batteries that do swell a little bit, but still good within the application. Whereas in a smartphone, if you swell, it's not acceptable because, you know, it's very space constrained. They're both. In that sense, I think it's been a really good thing for us. As I mentioned, we have a strong roadmap now, and you'll see us sampling much higher, you know, watt-hours per kilogram cells this year and just continuing to increase that through next year. We have a lot of customers now helping us with that too. Thank you. Our next question comes from Colin Rusch with Oppenheimer. Please unmute to ask your question. Thanks so much. Can you guys hear me okay? Yes, sir. Yeah, Colin, go ahead. Okay. guys, exciting that you're moving into the drones. Can you talk a little bit about the form factors that you're working on there, as well as the diversity of electrolyte and binder materials and binder processes that you can, you know, you feel comfortable talking about at this point? I just want to get a sense of the full ecosystem here, and potential product, you know, diversification that you might see within that opportunity. Yeah, sure. You know, all drone again, like I said, it's a pretty big market, all of them are not the same, right? There are subsea drones, there are aerial drones, there are big aerial drones that, you know, carry a lot of weight. There are smaller ones that carry some munitions and maybe one-time use or just use for a few times. You know, we have different chemistries and different electrolytes to address that market. Here, this is one of those areas where we can trade off cycle life, you know, for energy density, for weight, and so on. You know, you don't need to charge them 1,000 cycles, right? That's really not a requirement here. 300 is plenty. Suddenly, a lot more opportunities open up for us in terms of the electrochemistries we use. Our team in Korea has been doing this for a long time, so we have multiple chemistries going after that. Some purely graphite, some graphite doped with silicon, you know, different kind of cathodes. Multiple form factors, multiple products, but we understand this market pretty well. You know, the other important thing is, in this market, having your own factory is a really big deal. Because manufacturing, that's something that our customers tell us that the fact that we own our factories and we can make them in Korea or Malaysia is a big advantage compared to, you know, some of our competition who actually have to use contract manufacturing in China and other places. These are sensitive you know, areas where having our own captive manufacturing helps us quite a bit. I'll add to it, I was just gonna say part of the question. I do expect that we'll add to the sales and business development organizations to support that, so it's kind of the time to build that group out. That's right. Great. Given as to what's going on in the U.S. in terms of, you know, trying to migrate manufacturing and, you know, secure supply chains back into the U.S. over the next few years, even from Korea, can you talk about, you know, some of your capital planning on a multi-year basis as you enter that market, in terms of having to have some localized or regionalized supply in the Western Hemisphere to serve some of the U.S. military? Yeah, I mean, at this point, as Ryan mentioned, we were fortunate to acquire this facility in Korea last year, you know, from SolarEdge. That added, you know, 300,000 sq ft of total capacity we have, factory we have in Korea now, with a very capable team that's been building batteries for defense for, like, 20 years and industrial applications. We have a large footprint there. We are now going to invest more into that this year to, you know, get more capacity there. Again, so far, I think manufacturing in Korea or manufacturing in Malaysia seems perfectly acceptable. We will continue to see if it makes sense to bring something into the U.S., but we are quite, our customers are quite comfortable right now with those two facilities. Awesome, guys. Thanks so much. Thank you. The next question is from Jeff Osborne with TD Cowen. Please unmute to ask your question. Yeah, thank you. Appreciate all the detail on the call so far. I wanted to know, Raj, relative to the last earnings call three months ago or so, the 0.7 C metric that you mentioned, is that new? Because you referenced sort of a four-month testing period. I'm just curious, like, when the parameters changed, and then I think you referenced a four-month sort of shot clock to proceed through the testing process and procedure. If it was. Yeah. Did the four months start three months ago, and you'll know next month, or did you get that new homework assignment, so to speak, in the past few weeks? No, that's always been there as a requirement. Our thinking was that we will figure out a way I mean, we will pass that requirement also. I think what we find now is with a 100% silicon anode batteries, you know, 0.2 C requirement is something we can pass, because, you know, we have data and all that shows that. When you discharge a, you know, battery, like a 100% silicon anode battery at 0.7 C rapidly, which is not a real use case, as I mentioned, you just do it for convenience, it doesn't behave like the graphite batteries do. It behaves differently. In that sense, you know, it's one of those cases where the accelerated test itself has to be adapted a little bit for the kind of battery we are using, and we showed this to our customers, and they understand it, so we're now discussing what the right way to resolve this is, right? It's not a new homework assignment. The results is what we have now, is we've solved the 0.2 C problem, which I believe is a real problem in terms of how a battery is used in the phone. Now we are working on how to resolve the 0.2 C, 0.7 C accelerated test in a way that both us and our customers are comfortable. You think that can still be done in a four-month window that started at some point this quarter? I'm just trying to understand, like, when you. Yeah, the timing. Expect. Yeah. Knowing what you know now to pass the HONOR test, so to speak. Like I said, I think there are three pathways for us. One is we, you know, we have results now at 1.7 C that don't go all the way to the cycle life that they want, but we are talking to them about how real is this? Like, it's a proxy test. Can we get comfortable? You know, for example, get a waiver that you pass this many cycles, it's okay, as long as the 0.2 C is holding 2,000 cycles. That's one pathway. That may be the shortest one. The second one may be we come up with a different accelerated test, which we believe is more representative or better makes them comfortable that silicon anodes, if we accelerate test like this, they behave like how they would in real-world use case. We're working on that, which is a different testing protocol. The third one is, they said, "No, you just got to pass this," in which case we'll have to change the electrochemistry and find a way to pass this, which we have some ideas on how to do. The team is working on that. That might take longer. Depending upon which one we are able to convince them, we'll get how much the time is. We do believe that one of these things will be able to convince them before the end of the year and get some, get some volume. Got it. Then maybe for Ryan, just given Raj's answer on the three different outcomes there, as it relates to sort of modeling the business over the next few quarters, I know you only give formal guidance one quarter out, but I assume we should think about eyewear as the main driver outside of the Routejade facility for the next six months or so, is part A of the question. Part B, can you just remind us of what you expect seasonality to be for defense? You've got a pretty precipitous decline in Q1. Yeah. how should we think about that rebounding in Q2 to, you know, through the rest of the year? Thanks, Jeff. The first part of your question, the answer is yes. For the first, the near term, that's. You, you heard it right. Smart eyewear is the more near-term opportunity. The second part of your question in terms of seasonality, exactly right. If you look at the same pattern in terms of revenue that we had last year, Q1 tends to be soft based on the order pattern of these long-term defense contracts, and then the back half of the year tends to be much stronger, kind of evidenced by our Q4 that we just printed, which was record quarterly revenue. Got it. Maybe last one quickly for you, just CapEx for the year. Should we think about $50+ million, or what's the expectation? Apologies, we don't give guidance beyond the quarter, right? I think, you know, we gave guidance for just Q1. Just speak broadly about, you know, Q1 in general, we talked about the HVM-2 line. We've already started placing some orders for some of the long lead, but we'll reevaluate all of our plans now with K.H., who's in this new role of head of operations, who's wonderful to work with, and we'll just be smart and prudent how we phase those orders out over the year. Perfect. Thank you. The next question comes from Bill Peterson, JP Morgan. Please unmute your line to ask your question. Yeah. Hi, good afternoon. Thanks for all the information. I wanted to come back to the question about your Korean operations. Can you give us a sense for what the combined two Routejade and the other one can support in terms of megawatt hours or revenue? just trying to get a sense of the run rate you could support at sort of max capacity. How much capacity do you plan to add, and you know, what can you give us any sort of sense on what investment you're considering? I'll take that or you want me? I'll go. Again, with that, we haven't given out specific, you know, numbers in terms of megawatts, but we've. I think we've talked publicly about how this is a facility that will support, you know, significantly higher revenue streams, maybe 2x. We're investing. You know, we're making decisions in terms of deploying capital right now, which would incrementally add to that. Again, I don't want to quote an exact number, but we recognize what a, what a great opportunity we have here with some of these markets that we've talked to, and we've got a great team to support, so we're starting to invest dollars. Again, I think you can see the type of numbers that we've invested in Korea over the last couple of years compared to the dollars that we're investing in PEP-2, they're relatively small, but they're really important in terms of the ROI that they can return, both in terms of dollars and strategic return. One other color I'd add is, we have a much larger facility now. Like I said, we have a fairly large facility that we acquired with a lot of machines, so we will be adding incrementally and in a scalable manner. Some of it with, that we acquired is usable. For example, we have a huge coater that we acquired from there, that coating capacity we don't have to add new capacity, and coater is very expensive. We can add more to the, you know, the dicing and stacking in a scalable manner. We don't have to do it all at once. The facility is there, so we can prudently add it as and when we see the demand and the qualifications materialize. It's been very fortunate us that we got this facility, and now the demand is coming to us. I appreciate that. Then, coming to the key, I guess, your first smartphone customer, trying to get a sense for the key learnings from the, you know, the chemistry reformulation process, and how many more, I guess, options do you have with this customer? And you give, I guess, a pretty clear, you know, example of cycle life. I guess, is there differences in requirements between the various customers? Anything you can kind of give us to better understand what, I guess, opportunities you have ahead? Yeah, I mean, look, the learning here is this for me, right? I think the learning is, you know, we wanted to give a lot more color on this call, you know, and our report on exactly what it is. What we've learned over this is the smartphone requirements are very, very difficult because this is the largest market for portable batteries and consumer electronics. Great margins because they provide clear value, huge TAM. When you make a battery for that, the rest of the markets are much easier because this is the toughest one. To replace an existing graphite battery ecosystem with a 100% silicon anode battery, one, is meeting all the requirements. Second is, you know, helping and learning with the customers on accelerated tests or other tests that they've put together have to be updated a little bit, for this particular kind of technology. It's kind of like thinking about, you know, when you started to add, I don't know, I remember in my past, we added fingerprint sensors to phones, now you go to Face ID. It's completely different, right? You know, it's still a biometric authentication system, but the test cases are different and the way it used is different. Whenever you introduce a new technology, you have to work with the customer in enabling that. The reason that the customers are interested in, although it's different, is because we can provide an energy density roadmap that's not possible to do by just graphite batteries. That is an absolute requirement. As I mentioned when I first took this job, the AI use case is only getting more and more, and the demands are getting higher and higher. Now, as I mentioned, I think a few calls ago, that I expect these batteries to go to 10,000 mAh, and now you see that. They can't keep getting bigger because the phones can't get any bigger. The customers are highly motivated to help us get this technology to market. When you totally change, you know, the graphite anode to silicon anode, we have to work with them to make that to qualify. If you look at the progress we made, it's tremendous. I mean, I think we showed we have specs of like 75 different specs, and we passed most of them. We are converging, and, you know, it's been a fantastic learning. At the same time, other markets like, eyewear are much easier to do because of this. There are so many other markets like that are much easier, like, you know, if you think about wearable cameras and so many other markets where AI at the edge is really creating, there are great opportunities for us once we get this smartphone battery done, or even before, as we've gained a lot of technology advancements in the last few years working with our smartphone customers. Our next question comes from Derek Soderberg with Cantor Fitzgerald. Please unmute your line to ask your question. Yeah. Hey, guys. Thanks for taking the questions. I was curious if switching out the dicing technology sort of resets any part of the battery qualification process. You know, obviously, your customers want to make sure you guys can scale, and, you know, putting aside any of the cycle life testing, you know, might the change to the dicing technology push back that qualification process at all? You know, look, anytime you have a customer qualify one particular product, if you change some steps within it, we will need to communicate what those steps are and what it changes, and we will need to run, you know, some form of qualification again. That's just the way it is. Even when you move from one fab to the other, you got to do that. The way we would do it is, these are all by different zones. For example, dicing is Zone 0, and then Zone 1 is Zone 1, and then stacking is Zone 2. There's many ways, in my experience, we've done this. We establish equivalence, we show similar performance, we can do a subset of the qual. There's many different ways to do it, but it's still a little bit early. Right now, you know, you know, we are doing laser dicing on all of them. When we do some other form of dicing, you know, we'll work with the customers to gradually phase it in. Got it. Just a quick follow-up. Are there any remaining technical milestones to shipping commercial volumes, in the back half of the year for the augmented reality market? Thanks. Any technical milestones was your question? For smart eyewear. Yeah. I mean, look, we now have seen the products from our customers with our battery in them. Very exciting. You know, we saw a few at CES. We saw a lot more in private demos. The performance is fantastic. They really like it. They really like what it's able to do and what the AI is able to do. We don't see any big technical obstacles, but, you know, this is a new market, it's a new application, so the applications are evolving. They are doing testing of different applications, and as and when they find them, you know, we'll figure out how to adjust it. We did learn about one thing after we first sampled in terms of how to, different rates and different pulses and so on, and we quickly adapted that, and now we have a new battery that meets that. My team is very capable of quickly reacting to those now. Right now, the battery we have, we feel meets all the requirements. That's why we got. That's great. You know, a production PO. Yeah. Thank you. Next question is from Alec Valera with Loop Capital. Please unmute to ask your question. Hey, guys. Thank you for taking my question. This is Alec on for Nanda. My first question is, what is a good way to think about the cadence of testing and production over the next few years for smartphone, eyewear, PCs, and drones? Additionally, what do the capacity needs look like over that timeframe? I have a quick follow-up. A cadence of testing, how do you mean by that? Maybe you can ask a little bit better in terms of timing, you mean, how long it takes, or? Yeah. I guess, what's the timing of the phases of the testing? You know, my experience in the last three years has been that, typically, we provide a standard-sized cell to the customers, that one we have, and they give us a set of requirements in terms of, you know, cycle life, energy density, you know, rate of charge, discharge, swelling requirements, and so on. They'll do a bench level test of that. That takes a few months. When they're comfortable with that, they come back to us and ask us, "Hey, we want a particular." If they're happy with that particular size, then they put it in a product, then there's a product level testing that takes a few more months. If they want us to change the size, you know, it'll take us multiple months to come up with a different size, like when it says size dimensions, X, Y, Z, and so on, to fit in that. That becomes a long pole, you know, maybe three to four months to build that. Then they will put it in the product and do the testing again. Then, when all of them have passed, they place the PO. They do system-level testing now. They put it inside a product, test to make sure the product is performing like it's how it's supposed to perform, and then they go to production. That whole cycle, you know, can take anywhere between a year to a year and a half for a brand-new customer starting from scratch. If the requirements are not as stringent and we already have a technology that meets those requirements, for example, it can be much shorter because we don't really have to change anodes and cathodes and electrolytes and so on. Like, for example, when we have a product that meets the smartphone requirements, we were able to quickly react and make small adjustments and meet the smart glass market, smart eyewear market. Now that, you know, it's much shorter. If your cycle life is 1,000 cycle requirement, well, that testing takes, like, four months. If your cycle life is only 300 cycles, it takes much lot shorter time. It depends based on the end application, whether you need a custom cell or not, whether you can use a standard technology or not. It's, the question, you know, may be a little long-winded answer, but that's just the nature of this lithium-ion batteries in custom applications. Drones? Drones, I think, can be much shorter. Yeah. Yeah, sorry, go ahead. No, no, sorry. Go ahead. Apologies. No, I was just saying drones, very similar, but like I said, the cycle life requirements are much shorter, and the space requirement is not as bad in the sense that there's more room there, so you don't need to exactly make this exact dimension of the cell. Sometimes they stack multiple cells to get the performance, so they may be able to use the cells that we have and stack multiple of them to meet the power. So that time of making a custom cell will come down. I appreciate the detail. Super helpful. Actually, just a quick follow-up and on that same note. You mentioned the drones, and I believe you said that's one of the products that can handle a little bit more swelling. Can you speak to other markets besides drones that are maybe similar like this, where you get a little bit more swelling? Is there any markets there that seem attractive that you may wanna penetrate in the future? Yeah, I mean, I would say industrial markets that have large space, you know, for example, I don't know, think about forklifts, you know, stuff like that, where there's a lot more room to put the batteries in, and you put it inside a big pack, and you can design the pack to enable some amount of, you know, room inside that, right? Those are the kind of markets. If it's a small form factor, like, you know, earphones or smart glasses or cameras or a consumer, they're a lot less forgiving. I would say industrial and defense are probably a little bit more forgiving. Okay. No, that's great to know. Thank you, guys. Appreciate it. Absolutely. Good question. There are no further questions at this time. With that, I'd like to turn it over to Dr. Raj Talluri for closing remarks. Yeah. Thank you. Thank you all for your attention today to listen to the call. I really appreciate all the support, and we look forward to talking to you guys next quarter. Thank you.