Good day, everyone, and welcome to the Vicor earnings results for the first quarter conference call. My name is Wanda, and I will be your event manager today. During the presentation, your lines will remain on listen only. If you require assistance at any time, please press star zero on your telephone and the coordinator will be happy to assist you. I would like to advise all parties that this conference is being recorded. With that, I would like to hand over to Dick Nagel. Please proceed. Thank you. Good afternoon, and welcome to Vicor Corporation's earnings call for the first quarter ended March 31st, 2021. I'm Dick Nagel, Chief Accounting Officer, and I hand over our Patrizio Vinciarelli, Chief Executive Officer, Phil Davies, Vice President of Global Sales and Marketing, and Kemble Morrison, Vice President and Corporate Controller. After the markets closed today, we issued a press release summarizing our financial results for the three months ending March 31st. This press release has been posted on the investor relations page of our website, www.vicorpower.com. We also filed a Form 8-K today related to the issuance of this press release. I remind listeners this conference call is being recorded and is the copyrighted property of Vicor Corporation. I also remind you various remarks we make during this call may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Except for historical information contained in this call, the matters discussed on this call, including any statements regarding current and planned products, current and potential customers, potential market opportunities, expected events and announcements, and our capacity expansion, as well as management's expectations for sales growth, spending, and profitability, are forward-looking statements involving risks and uncertainties. In light of these risks and uncertainties, we can offer no assurance that any forward-looking statement will in fact prove to be correct. Actual results may differ materially from those explicitly set forth in or implied by any of our remarks today. The risks and uncertainties we face are discussed in Item 1A of our 2020 Form 10-K, which we filed with the SEC on March 1st, 2021. This document is available via the EDGAR system on the SEC's website. Please note the information provided during this conference call is accurate only as of today, Thursday, April 22nd, 2021. Vicor undertakes no obligation to update any statements, including forward-looking statements made during this call, and you should not rely on such statements after the conclusion of this call. A replay of today's call will be available beginning at midnight tonight through May 7th, 2021. The replay dial-in number is eight eight eight-two eight six-eight zero one zero, followed by the passcode six six six nine three three six seven. This dial-in and passcode are also set forth in today's press release. In addition, a webcast replay of today's call, along with a transcript, will be available shortly on the investor relations page of our website. As noted in our press release dated April 6th, 2021, we announced the appointment of Jim Schmidt as Chief Financial Officer effective June 1, 2021, succeeding James A. Simms. Jim will also join the Vicor Board of Directors and serve as the corporate company's Treasurer and Secretary. We are looking forward to having Jim join the company. I'll now turn to a review of our Q1 financial performance, after which Phil will review recent market developments, and Patrizio and Phil will take your questions. In my remarks, I will focus mostly on the sequential quarterly change for P&L and balance sheet items and refer you to our press release or our upcoming Form 10-Q for year-over-year comparisons. As stated in today's press release, Vicor reported total revenue for the first quarter of $88.8 million, up 5.3% from the fourth quarter total of $84.3 million. Quarterly advanced products revenue rose 2.2% sequentially. This growth was constrained by limited component availability due to global semiconductor supply allocation issues experienced during the quarter. Brick products revenue rose 7.6% sequentially, reflecting a resumption of shipments to our European customers after the pandemic-related trough of 2020, while Asian customers grew 18% from Q4 2020. These increases offset a modest sequential decline in shipments to North America. Shipments to stocking distributors rose 79% sequentially, primarily due to an increase in brick products shipments. Turns volume also increased sequentially. Exports for the first quarter increased sequentially as a percentage of total revenue to approximately 69% of consolidated revenue from the prior quarter's 64%, reflecting the factors just mentioned regarding Europe and Asian shipments. For Q1, advanced products share of total revenue declined slightly to 39%, compared to 40% for the fourth quarter, with brick products share correspondingly increasing to 61% of total revenue. We believe advanced product sales, though, will expand significantly as a percentage of total revenues, especially once new manufacturing capacity comes online, given the high-growth segments we have penetrated with our 48-volt technology, including AI, data center, and automotive, in contrast to the maturity of the segments we serve with brick products. Turning to Q1 gross margin, we recorded a consolidated gross profit margin of 50.3%. Higher volumes and improved mix contributed to higher profitability, as did a reduction in cost variances and tariff charges. Gross margin dollars rose 11% sequentially. While margins remain under the pressure of high tariff charges, the Q1 charge declined approximately 33% from Q4's charge of approximately $1.5 million. We expect to see further improvement through 2021, in part reflecting our ongoing efforts to reduce component imports from China. I'll now turn to Q1 operating expenses. Total OpEx rose just under 4% sequentially, but consistent with longer-term trend, reflecting periodic swings in discretionary spending. The amounts of total equity-based compensation expense for Q1 included in cost of goods, SG&A, and R&D were approximately $228,000, $853,000, and $490,000 respectively, totaling $1.6 million. For Q1, we reported operating income of $14.7 million, representing an operating margin of 16.6%. The sequential 27% increase in operating income reflects the operational leverage in our model. Turning to taxes, we recorded a net benefit for Q1 of $143,000, representing an effective tax rate for the quarter of -1%. Net income attributable to Vicor for Q1 totaled $15.1 million. GAAP diluted earnings per share was $0.34 based on a fully diluted share count of 44,841,000. Before I turn to our financial position, just a brief update about COVID-19 and our workforce. As previously discussed, as a designated essential manufacturer, using masks and practicing social distancing from the onset of the pandemic, we have continuously operated three shifts at our Andover manufacturing facility. While we have seen a small increase in cases again recently, cases are below the levels experienced in the December through January timeframe, and absenteeism has declined. Nevertheless, because much of the potential influence of the COVID-19 pandemic is associated with risks outside of our control, we cannot estimate the extent of such influence on our financial or operational performance or when such influence might occur. Turning to our cash flow and balance sheet. Cash, cash equivalents, and short-term investments totaled $223 million at Q1, a sequential increase of 5%. Accounts receivable, net of reserves, totaled $47.7 million at quarter end, an increase of 16.3% over Q4, with DSOs for trade receivables steady at 38 days. All balances are current. Inventories, net of reserves, declined 5.3% sequentially to $54.3 million. Annualized turns improved to 3.1 months. Reflecting the positive operating results, operating cash flow totaled $17.6 million for the quarter. Capital expenditures for Q1 totaled $9.3 million. We ended the quarter with a construction and progress balance of $19 million, leaving approximately $38 million of our capital budget scheduled to be spent through the year. Our factory expansion project is proceeding on schedule and on budget. I'll now address bookings and backlogs. Q1 bookings totaled $99 million, an 8.1% sequential increase. The overall book-to-bill was approximately 1.1, with advanced products at 1.4 and brick products at 1.0. Q1 bookings largely reflected the same circumstances we saw with shipments, growth in Europe and Asia, with a modest decline in North America. At year-end, one-year backlog totaled $157.1 million, an increase of 6.5% sequentially. Turning to our outlook for the second quarter of 2021, we expect revenue growth. We continue to address the sources of gross margin pressure and are forecasting improvement in product-level profitability. We do not anticipate any meaningful increase in operating expenses. While substantial further improvements in gross margins will have to await production from our new vertically integrated factory. We expect incremental revenue to drive earnings per share given the scalability of our operating model. With that, Phil will provide an overview of recent market developments, and then Patrizio and Phil will take your questions. I ask that you limit yourself to one question and a related follow-up so that we can respond to as many of you as we can in the limited time available. If you have more than one topic to address, please get back in the queue. Phil? Thank you, Dick. We're off to a great start in 2021, with bookings increasing across a range of markets and regions globally. Our legacy product bookings were strong, as was our data center, supercomputer, and AI customer demand. To reflect the supply chain challenges that the industry is facing, we have recently increased lead times to 32 weeks for advanced products and 26 weeks for legacy products. Our manufacturing capacity for Q2 and Q3 is essentially filled. New orders subject to standard lead times are being booked into Q4 and beyond. We continue to engage with existing and new data center, HPC, and AI customers for our 48-volt point-of-load power delivery solutions, driven by rapidly escalating demand for higher currents that will enable next-generation GPU and ASIC performance enhancements. We are also taking to the next stage our OEM licensing initiative to enable OEMs to develop alternate sources without risk of OEM systems using infringing power modules being excluded from importation into the United States. Our robust automotive pipeline continues to grow with new 48-volt and 400/800-volt modular power solutions for OEMs. The automotive market is not only undergoing a major shift with the electrification of vehicles, but as OEMs look for innovative and cost-effective solutions for higher power electrified systems, they are also looking towards new suppliers who can deliver solutions and value without the traditional tier one margin stack. These market shifts are opening up more opportunities for Vicor with new partners on our automotive business development. A very quick update on the satellite market opportunity. In Q1, we started delivery of evaluation boards from our initial family of radiation-tolerant power modules to customers in Europe and North America who have been eagerly awaiting their delivery. We'll have more to say on this initiative in future quarters as we begin to build this business out. Overall, I'm pleased with the progress we made in Q1 on a number of important initiatives with a level of exciting new customer engagements and new opportunities that we are creating. The power systems market is rapidly changing, and our holistic high-density modular power component strategy has us in the right place at the right time. We plan to maximize the substantial opportunities that are ahead of us, while also asserting and monetizing the intellectual property that effectively protects our pioneering innovations. Thank you. Operator, we will now take questions. All right, everyone, your question-and-answer session will now begin. If you wish to ask a question, please press star one on your telephone. If you then decide to withdraw your question, simply pres star two. Thank you. We have some upcoming questions. The first one is coming from Hamed Khorsand. Please go ahead. Hi. First off, could you just talk about the timing that you experienced in North American shipments in advanced products and the feedback you're getting from those customers as far as the decline that you experienced in Q1? As we have commented in the prepared remarks, we've been constrained with respect to advanced products by the capacity within our existing factory and with external partners for those process steps that are not vertically integrated yet. There have also been some component availability limitations due to the state of the semiconductor industry. Our customers understand the capacity constraints. We're working with them very closely. They appreciate the efforts to address their needs. We are catching up with their requirements. We expect in Q2 to have a significant step up in advanced product deliveries, and that trend will continue into Q3 and Q4 at an accelerating pace. As we progress towards the end of this year, we're going to begin to deploy the expanded capacity and reduce cycle time that are enabled by our expanded manufacturing facility with all of the packaging process steps vertically integrated. Okay, are you still testing out your advanced products with these customers, or is this purely at the deployment level? Well, it depends on which advanced product we're talking about. Some of these advanced products are being made and shipped literally by the millions Other advanced products at the other end of the spectrum are still being sampled, the initial prototype or pilot quantities. There is a wide range of volumes, depending on when the engagement began with a particular customer, what particular type of advanced product we're talking about. With our very unique packaging technology, we have a very broad range of capabilities that apply somewhat differently, but also in a related way across the type of markets that are very unique, our component methodology addresses. There's a whole range of volumes involved, depending on the customer, the application, and when that particular product happened to have been introduced. Okay. Thank you. You're welcome. The next question is coming from Quinn Bolton. Please go ahead. Hi, Patrizio and Phil. Congratulations on the nice results and outlook. Patrizio, I just wanted to follow up on that last question. Obviously, you're highlighting some manufacturing capacity constraints as well as component availability constraints, and I'm just trying to reconcile the comment that you had in the press release about revenue growth would be limited to 7% sequentially. Is that a comment on overall revenue will be up 7% quarterly for Q2, Q3, Q4? Is that the way we should interpret the comment in the press release? Within that growth, are you mostly constrained on advanced products, or are you also constrained on brick products? The primary constraints are on advanced products, and given near-term capacity, we see the revenue growth overall, based on the ability to scale up the quantities of advanced products, it being limited to about 7% for this quarter and the quarter after that and the fourth quarter of this year. Once we get past this timeframe and we begin to deploy the additional capacity and the shorter cycle time of the expanded factory with vertically integrated processes, those constraints will go away. Needless to say, the rate of bookings, demand, book-to-bill, would have us, absent the capacity constraints, step up revenues at a faster rate quarter -to -quarter. In the short term, the capacity constraints are a limiting factor, and that's what's projected in the statements of the press release. I guess my follow-up on that is, will most of the growth come from advanced products over the next three quarters, such that advanced products will grow faster than 7% sequentially, but overall revenue is constrained to 7%? Brick products perhaps more flattish with higher growth in advanced products, with the net result is overall top line growing about 7% Q2, Q3, Q4. Yeah. Your interpretation is correct. As you know, advanced products are, to time them, tens of years. They are decades old, right? As suggested in the prepared remarks, they're serving mature applications in relatively mature markets, and there's no growth with the classic products. They are essentially a stable component of our revenues in dollars. All of the unit growth and revenue growth is being generated by the advanced products, which before too long are going to make the classic bricks and the standard products for all practical purposes fade into the sunset, right? The combined revenue growth is essentially driven by advanced products, which will step up at a rate considerably faster than 7% this quarter, next quarter, and the one after that. Thank you, Patrizio. I'll get back in the queue. Operator, do we have another question? Okay. As I can see, there is a question in the queue. Able to speak is Alan Hicks. Your line is open. Please go ahead. Yeah. Good afternoon. Good afternoon. I had a question about the brick revenues. It sounded like they were up 7.6%, which would put them around $54.5 million, I think, which would be about a 10-year high. I think the book-to-bill last quarter was 0.9. What explains that such strong strength in BBU? It also implies advanced products were only up around 3% or so. What's the strength in the brick products and going through the year, would we expect that to stay at that level? Again, the fact that from Q4 of last year to Q1 of this year, brick revenues rose should not be interpreted to suggest that there is substantial growth in brick products. The big component of our revenues, but for quarterly fluctuations may have to do with a variety of factors like capacity or particular demand. That component in dollars and units is essentially constant. It's not really going anywhere, as suggested earlier. In Q1, because of the constraints with certain semiconductor components and general capacity constraints, the advanced products could not grow as fast as the demand would have allowed, which is something that is suggested earlier, we are focused on effectively addressing in Q2, Q3, and Q4. You should expect that in this quarter, following quarters this year, the revenue growth will come entirely out of advanced products. Okay. Will brick products remain at this level rest of the year, around $54.5 million, or expect that to fall? Well, I wouldn't try to pin it down to three significant digits, right? They're going to stay at essentially the same level. Okay. That's pretty positive for the brick customers that they're ordering. Like I said, it was about a 10-year high, I think, for brick revenues. Yeah. Again, I wouldn't read into that any sustained growth in brick products. The action is all to do with the advanced products. The brick products have been remarkably. Long-lasting, and they'll continue to be that way. They're not going anywhere, but they're not going up. Okay. You don't expect them to fall off? We don't expect it to either fall off or go up. Almost entirely about advanced products. The bricks will fade away in terms of their relevance to our financial performance. Okay. Over time, do you expect them to stay relatively, say, in the $15 million range? Yeah. Over several years. To be essentially constant in dollars. A tiny percentage of our total revenues. Yeah. I think it's pretty positive that those products are continuing to sell well. Okay, thank you. I'll get back in the queue. Thank you. This is Wanda, the operator speaking. I'm sorry for the technical issue. It seems to be okay now. The next question is coming from the line of John Dillon. Please go ahead. Hi, guys. Really congratulations on some great numbers. Really good. Thank you. You're welcome. Phil, in your prepared remarks, you talked about OEM licensing for alternative sources. Can you expand on that a little bit? I didn't quite catch the gist of what you were saying in that. Yeah. I'll let Patrizio take that one. Yeah. We have a strategy with respect to addressing OEM requirements for a multiplicity of sources, that obviously respects intellectual property, but accommodates the needs of OEMs for more scalable capacity and alternate sources. That's been the subject of conversations and discussions and negotiations with a growing number of OEMs. We are seeing a good deal of pressure in the marketplace given escalating demands for current high power density in a variety of applications and end markets. That's a market pressure that in our mind, it needs to be addressed with an intelligent strategy that satisfies market needs, while providing us with an opportunity to get a return on investment, both based on revenue growth with escalating quantities of advanced products and with licensing income to be derived from royalties. That OEMs will pay for the privilege of being able to access alternate sources for certain of these products. Does this mean that you're close to a licensing deal with someone? I'm not going to speculate with respect to the timing of any deal. We are having discussions. We are looking to establish certain standards with respect to OEM license agreements that we're going to be able to apply consistently and fairly at each stage of an engagement. There can be a progression with respect to stage. Generally speaking, our methodology rewards early adopters, and commercially puts late adopters at a relative handicap with respect to the royalty rates. This is a strategy that is very well structured, and which we're going to take the time necessary to fully implement. That sounds good. Do you have a target of hopefully closing a deal within this calendar year then? Is there some kind of internal target for that? We don't feel pressured. We believe that with the passage of time, the value of these licenses, in terms of royalty rates, is going up. It's not going down. Fundamentally, when it comes to applications like AI, we don't believe there is any way, there is no alternate technology that can address the solutions with the level of performance that competitive pressures in that market require. We don't see the value of technology going down. We see it going up, and we're prepared to take the time necessary to make the most out of it. Great. I'll get back in the queue. Congrats, guys. Thank you. The next question is coming from Jon Gruber. Please go ahead. Yes. The new addition to the Andover facility, when does revenue kick in? How much will that be? How soon will you have all the machines moved in there? What's the status of that addition to Andover? The building is up. It's not quite fully enclosed, but it's about to be. Some of the initial equipment is moving in next month, and there's going to be a progression through the balance of the year. We're going to begin to get some initial capacity as we get towards the latter part of the year. The entire deployment will not come together until the beginning of next year. In terms of the total capacity out of the building, we believe that we can ship upwards of $750 million in yearly product revenues out of the expanded facility with its vertically integrated capabilities. That will take care of us for a while. We're beginning to look at the next increment of capacity. Referring back to the earlier discussions regarding OEMs and licensing deals, we're also entertaining the possibility of some joint venture to expand capacity working in concert with certain OEMs. The 7% you're seeing, not addition, the 7% increase in revenue in Q2, Q3, Q4 does not include this extra $250 million. That's more in 2022, is that correct? Yeah, the 7% this quarter, next quarter, the quarter after that's coming out of getting more capacity before we get to take advantage of the equipment that is being installed into the new facility. As I mentioned earlier, some of the equipment is going in in May, and more equipment will go in as the months progress in the second half of the year. Obviously, this equipment, in addition to being installed, needs to be qualified. We need to do some pilot runs. We're not going to be, in effect, turning on the additional capacity in earnest until the very end of the year, beginning of next year. The increase in capacity that are being brought about this quarter, next quarter, and for the most part, the quarter after that, you should think of them as being brought about based on improvements in capacity utilization from equipment that is accessible to us today. Thank you. The next question is coming from Richard Shannon. Please proceed. Well, good afternoon, guys. Thanks for taking my questions as well. A quick question on following up on the topic of constraints here. You've talked about on the capacity side, I think you've also had some constraints in inputs here. I think you've described them as semiconductors. Are these commodity or custom products, and do they affect both advanced and bricks or just advanced products? They affect primarily advanced products. They're semiconductor components in effect of our own making, but working with fab partners and other back-end partners. Part of our plan going forward is to become also more vertically integrated with respect to, in particular, the back-end. That's not going to happen at Federal Street. It's going to happen in a campus that will provide the next incremental capacity, and that's still some time away. Needless to say, the semiconductor industry is becoming more challenged, as you know, in terms of demand for capacity, and we're mindful of that, and we're looking to become more vertically integrated with respect to those dependencies. Okay, your vertical integration is going to ease or eliminate these constraints on commodity parts, then? Is that what you're saying? Excuse me, on the semiconductor parts. Not in the near term, but we do have a plan with respect to vertically integrating the back-end processes, which are very much a bottleneck right now. That's been the primary constraint over the last 12 months. The timeframe by which that is relieved, is that coincident and highly correlated with your capacity additions and then getting those online per what you just answered for Mr. Gruber? No. What I'm referencing in terms of vertically integrating back end, these semiconductor packaging processes, that's the next opportunity for vertical integration beyond the packaging processes which we're vertically integrating in the expanded Federal Seed facility. The next area of opportunity, which is in the works as we speak and which will be realized by the end of this year, that has to do with the Vicor packaging technology, the Converter housed in Package technology, which is quite unique, heavily patent protected, and the heart of the so-called golden products that you've seen in a variety of applications. That's the vertical integration, which is currently being implemented and for which we've been relying on external partner with significant constraints. The back-end processes with respect to the semiconductor components that we use inside our packages, that's a next area of opportunity, and that's still frankly, at least a year away. Got it. Okay, thanks for that detail, Patrizio. Just one follow-on question on your licensing. Is this related to both or just with the automotive segment, or do you also see this in data center and supercomputing and other segments, too? We see it in both of those end markets. Okay, perfect. Thank you much for the detail. That's all for me. Thank you. The next question is coming from Gus Richard. Please go ahead. Yes, thank you very much for taking the question. I just wanted to see if I could get a little color. As you bring on your new facility, can you talk about at least quantitatively or qualitatively what the margin profile, how that will be affected? Will there be a hit in depreciation at first and then it'll expand? Any color there would be very helpful. Even before we bring on the expanded facility with this vertical integration, our internal goal is to get to approximately 55% gross margin as a run rate gross margin at the end of this year and beyond that next year. The vertical integration of the expanded facility, they will play a role with respect to getting us beyond that 55%. To your implicit point, as we bring on the new facility, we're going to start depreciating a significant amount of equipment that we're going to be deploying, and that's obviously a factor with respect to the overall margin opportunity. I think as we comment in the past. The total cost of performing all the process steps that are at the heart of our packaging technology through external partners were fundamentally our panels, which are the equivalent of wafers in the semiconductor industry, type of fab. Our panels have to travel from a Fellow Seed facility to some place in New Hampshire to another place in Massachusetts. They put on hundreds of miles, and they require weeks of cycle time, which are all going to get collapsed into a much shorter cycle time within a facility where the panels, that is the equivalent of wafers, are only going to have to travel maybe from one floor to another. The economies of scale, the efficiency, the reduction in cycle time, the improvement with respect to yields, are going to weigh heavily with respect to the margin opportunity. That's going to start playing out in 2022. Got it. That's very helpful. Just in terms of the strength in gross margin in Q1, there was a couple of factors, I think higher utilization and mix. Could you talk a little bit about the factors, the puts and takes on gross margin? Is there a delta between the gross margin of advanced products and brick products, or are they similar, or does it even vary within brick and advanced? To your point, capacity utilization by itself, more revenues, irrespective of which particular mix makes up that revenue, contributes because of the leverage of the model. We have significant costs associated with overhead. Needless to say, that overhead cost in dollars is not expanding nearly at the rate of the revenues, and that's a factor with respect to margin improvement. Getting through cycles of learning with respect to, in particular, the advanced products, learning how to refine the process parameters and improve the yields, is another factor. We're getting better and better at that, getting yields from the 80s into the 90s. Needless to say, those are points of margin that go to the bottom line, go into the gross margin of the products, and help lift those margins. With larger quantities, we also can achieve reduced costs for the components, even though of late, that's been impeded, that progress, by the current demand for capacity, particularly in the semiconductor area, where we've had to accommodate some cost challenges. Overall, all these factors contribute to the near-term margin improvement, with revenue growth being a significant driver. Got it. Thank you so much. Thank you. We have the next question from Quinn Bolton. Please go ahead. Hey, Gus. Wanted to ask, I think it was on the last call, you talked about your engagements with new and existing customers on their next-generation architectures. I'm wondering if you could comment whether those next-generation designs are still on track, or have some of the component shortages and manufacturing capacity constraints affected the timelines of some of those next-gen products? I've got a follow-up on automotive. This is Phil. Hi. No, we're still very actively engaged on the next-gen GPU, ASIC, and high-performance CPU projects with a number of the hyperscalers and chip manufacturers globally, actually, not just in North America. No, that's been going really well. We've got a next-generation product technology that they're really interested in because of the current density that we offer. The currents are just continuing to go up. Actually, this quarter, I would say that we've seen an uptick in the 48-volt interest from some of the companies, the hyperscalers that have been lagging behind, if you like, in converting data centers to 48 volts. We've got a couple of really great conversations going on right now. They're early, but I'm confident that they will turn into opportunities for Vicor. It's really nice to see that the 48-volt prediction is finally coming to bear in the marketplace. It's been an exciting quarter. Great. Phil, I wanted to follow up. You had made some comments on the automotive design pipeline. Seems like you continue to expand your engagement. Should we still be thinking about calendar 2023 as when you start to see some of the initial revenue ramp? I know you're probably shipping some sample revenue today, but in terms of the meaningful ramp, is that still a calendar 2023 program, or could there be opportunities, say, in things like charging stations that might even ramp before then? Yeah, the charging station, well, the charging opportunity for us is really on vehicle. That's what we're really focused on. Yeah, you're right. It's really towards, I would say, middle to end of 2023 in terms of the early ramps with some of the early customers that we have, and then picking up through 2024 and 2025. The opportunities that the team is developing for the company are very exciting. I mentioned in some of my remarks, the market's changing, too. The electrification challenge has always been there, and it's picking up. The OEMs are really looking at the supply chains very hard and looking to the companies that can bring the next-generation technology to them, but at the right value. That's changing the supply chain, too. I think as we go through this year, we'll probably be announcing some engagements with partners that will help us bring the automotive opportunity, I think, even bigger than the one from just supplying modules. Great. Thank you. The next one is coming from Jonathan Tanwanteng, I think. Please go ahead. Hi, guys. Nice quarter, and thank you for taking my question. I just wanted to address the new facility and how you've been limited or will be limited this year to that 7% sequentially. Do you immediately break through that limitation as you get the new facility online in Q1? Or is there some other constraint that we should be thinking about that maybe you're not going to be able to go past that? No. With the turn-on of capacity after completion of validation, after all the equipment is installed, the step-up in capacity from the new facility is going to be on a relative scale, major, right? We're talking about whether we measure it in number of panels or units, which obviously depends on the devices within a panel. It's a major step-up. Again, maybe the best way to relate to it from the financial perspective is in aggregate revenue dollars. We have a $750 million bogey with respect to that capacity, the facility capacity with vertical integration. I would say that number could be conservative. There could be opportunity to, with all the equipment that is going into the new wing, to get maybe a little beyond the $750 million. That obviously represents a lot of headroom relative to what we're going to be at the end of this year. Okay, great. Thank you. I just wanted a little more color on the licensing discussions that you're having. Have they been received well, or are they combative or are they constructive? I'm just trying to get an overall sense of the direction you think those discussions are going. Well, I think that they are the way they should be under the circumstances. I think averaging across a number of discussions that have taken place, I would say that OEMs recognize that we have a huge investment in very unique technology. It's a decade-old investment. It adds up to well over a half a billion dollars in R&D and immeasurable creativity. They understand that we have a very comprehensive power portfolio that covers many critical facets of advanced power systems, both in terms of the engines, the control system, the packaging technology, the power distribution architecture. And they appreciate the fact that logically, we would want to get a return on that investment, that we would not allow unscrupulous competitors to step into our turf. At the same time, we understand that we have to use intellectual property in an intelligent, considered, and cooperative way with OEMs that logically want to be sure that they don't have all their eggs in one basket, that they can have the incremental capacity they need to take care of their growth needs. Those are legitimate requirements, and I think there is a way to have win-win relationships with these OEMs that satisfy all these objectives. Okay, great. Thank you for that color. Just one more, if I could. Is there any risk of your customers delaying shipments because of supply constraints on their end? Maybe a bottleneck might pop up, and they won't want to take your product until they can get more into their factories that might not be related to yours at all. We don't see that. It's not to say that the survivor factor capacity constraints aren't impacting customers in a variety of ways. As suggested in the prepared remarks, we're sold out for Q2. We're nearly sold out for Q3. We've had to impose some allocation with respect to the capacity that is available. Even if some customers, some application is otherwise constrained, there's a few behind that customer that will gladly pick up any spare capacity that becomes available. Got it. That's good to hear. Thank you very much. You're welcome. We have another question from Alan Hicks. Please go ahead. Yes. Could you give us an update on the new front-end products you've been working on? A good deal of progress. We have two leading applications for that. One has up to about a $13 million revenue opportunity starting later this year, and that's for LED lighting on a massive scale. The other one is in a supercomputer, wafer scale supercomputer application. I would say, from my perspective, it is the most advanced AI machine in our front end, the new front end, which is liquid cooled, will enable a major advance in capability for that customer and that application environment. We're very excited about this. We have interest from some of the hyperscalers with respect to these kinds of liquid cooled front ends that achieve unprecedented levels of density. Those engagements are not going to result in revenue near term. The early implementations are literally state-of-the-art, very advanced, not necessarily the most cost-effective, but we're looking at follow-on improvements that will enable these kinds of front ends to become extremely cost-effective. The technology is there for us to deliver those kinds of capabilities. We still view these kind of front-end modules, which are, by the way, manufactured with the same converter housing packaging technology, the same panel methodology, the same equipment that is going into the expanded facility. We see these front-end capabilities, which also have opportunities not just in stationary applications, but also in vehicle applications. We see them as longer term, making up essentially half of the revenue opportunity. Another way of saying this is that while all the action in recent times has been at the point-of-load, for every ampere or watt at the point-of-load, there's an additional stage of power processing because the power comes ultimately from the AC utility, that we can capture with very unique capabilities that are truly state-of-the-art. Okay. You have some initial revenue opportunities by, say, the fourth quarter, and then next year would begin to ramp more broadly? Yes. Okay. Thank you very much. With that, if there is one more brief question, we'll take it, and then we wrap up. Operator? I'm sorry, sir. You can take one more question? Yeah, if it is a brief one, yes. Okay. All right. It's coming from John Dillon. Please go ahead. Hi, guys. Thanks for taking this last question. You've talked about NRE funding from customers and how it really shows their commitment to Vicor. I'm just wondering, is that progressing? How is it progressing? Is there any pushback from the customers on that? No, there's no pushback. I think it is progressing, and we look at it in effect as what you might call proof of love with respect to customers wanting to have us do something that is unique for them, right? It takes skin in the game to justify dedicating resources to a particular requirement. Our packaging technology and general system capability provide some high degree of flexibility with respect to addressing unique customer requirements within the general scalability of those technologies. We need to be selective with respect to which particular projects we pursue, because we have otherwise a lot more projects that we have bandwidth to support. NRE is an effective filter with respect to having customers demonstrate that this development worth taking on. You're seeing that increasing still? Yes. Yeah. With more customers come more opportunities. When those opportunities can't be addressed with standard products, then NRE is appropriate. One final comment with respect to this. Because of the fact that there's a good deal more scalability with standard products, because obviously those standard products can address a multiplicity of customer requirements, we're putting more and more emphasis on those developments. Both at the point-of-load and with respect to front-end products, we're going to, with next generation deployments, with what we call our fifth generation, which is coming on late this year, early next year, with those developments, we're looking to leverage standard building blocks more than we might have in the past by, in effect, capturing common denominator requirements in a more comprehensive way. That's great, because that gives you more opportunities with less work. That's right. Great. All right, guys. Thank you so much. Thank you. We appreciate it, and with that, we'll wrap it up. We'll talk to you in a few months. Thank you. Thank you very much. Everyone, that concludes your conference call for today. You may now disconnect. Thank you for joining, and enjoy the rest of your day.