Good day everyone, welcome to the Vicor e arnings r esults for the fourth quarter and year ended December 31, 2022 conference call hosted by Jim Schmidt, Chief Financial Officer. My name is Esther, I'm your operator 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, the coordinator will be happy to assist you. I would like to advise all parties that this call is being recorded. With that, I would like to hand over to Jim. Please go ahead. Thank you. Good afternoon, and welcome to Vicor Corporation's earnings call for the fourth quarter and year ended December 31, 2022. I'm Jim Schmidt, Chief Financial Officer, and I am in Andover with Patrizio Vinciarelli, Chief Executive Officer, and Phil Davies, Vice President, Global Sales and Marketing. After the markets closed today, we issued a press release summarizing our financial results for the three months and year ending December 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 risk 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 One A of our 2021 Form 10-K, which we filed with the SEC on March 1, 2022. 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, February 23, 2023. Vicor undertakes no obligation to update any statements, including forward-looking statements made during this call, and you should not rely upon such statements after the conclusion of this call. A replay of today's call will be available beginning at midnight tonight through March 10, 2023. The replay dial-in number is 888-286-8010, followed by the passcode 99813947. This dial-in and passcode also are 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. I'll now turn to a review of our Q4 and full year financial performance, after which Phil will review recent market developments. Patrizio, Phil, and I will take your questions. In my remarks, I will focus mostly on the sequential quarterly change for P&L and balance sheet items, as well as full year-on-year changes, and refer you to our press release for our upcoming Form 10-K for additional information. As stated in today's press release, Vicor recorded total revenue for the fourth quarter of $105.5 million, up 2.3% from the third quarter total of $103.1 million and up 16.8% from the fourth quarter of 2021 total of $90.3 million. Revenue for the year ended December 31, 2022 increased 11.1% to $399.1 million from $359.4 million for the prior year. Advanced Products revenue rose 7.3% sequentially, while Brick P roducts revenue declined 4.4% from the third quarter. Revenues for Advanced Products for the year ending 2022 increased 42.9% to $243.3 million from $170.2 million the year before. Shipments to stock and distributors increased 16.4% sequentially and 3.4% year-over-year. Exports for the fourth quarter decreased sequentially as a percentage of total revenue to approximately 59.8% from the prior quarter, 70.1%. On a year-over-year basis, exports increased as a percentage of total revenue to approximately 67.6% from the prior year's 67%. For Q4, Advanced P roducts share of total revenue increased to 60.2% compared to 57.4% for the third quarter, with Brick P roducts share correspondingly decreasing to 39.8% of total revenue. Turning to Q4 gross margin, we recorded a consolidated gross profit margin of 46.6%, which is approximately a 100 basis point increase from the prior quarter. For the full year 2022, gross margin declined to 45.2% from 49.6% in the prior year. A number of factors contributed to the year-over-year decline in gross margin percentage, including less factory utilization associated with lower brick volume, increasing startup costs incurred as we equip our in-house vertically integrated manufacturing facility, higher outsourced manufacturing costs during the year, and higher freight and tariff costs. I'll now turn to Q4 operating expenses. Total operating expenses decreased 6.7% from the third quarter. For the full year 2022, total operating expenses as a percentage of revenue increased to 38.4% from 34.1% in the prior year. The amounts of total equity-based compensation expense for Q4 included in cost of goods, SG&A, and R&D was $486,000, $1,551,000, and $781,000, respectively, totaling approximately $2.8 million. For Q4, we recorded operating income of $8.1 million, representing an operating margin of 7.7%. For the full year 2022, operating income totaled $27.2 million, or 6.8% of revenue, compared to $55.6 million, or 15.5% of revenue in the prior year. Turning to income taxes, we recorded a tax provision for Q4 of approximately $1.9 million, representing an effective tax rate for the quarter of 18.8%. The tax provision for the full year 2022 was approximately $3.3 million, representing an effective tax rate for the year of 11.4%. Net income for Q4 totaled $8.1 million. GAAP diluted earnings per share was $0.18, based on a fully diluted share count of 44,859,000. For the full year 2022, net income decreased to $25.5 million from $56.6 million in the prior year. In 2022, fully diluted earnings per share declined from the prior year, decreasing to $0.57 from $1.26. Turning to our cash flow and balance sheet, cash and cash equivalents totaled $190.6 million at Q4. Accounts receivable net of reserves totaled $65.4 million at quarter end, with DSOs for trade receivables at 40 days. Inventories net of reserves increased 7.5% sequentially to $101.4 million. Annualized inventory turns were approximately flat sequentially at 2.59. Operating cash flow totaled $929,000 for the quarter. Capital expenditures for Q4 totaled $12.7 million. We ended the quarter with a construction in progress balance, primarily from manufacturing equipment of approximately $60.4 million, and with approximately $20.6 million remaining to be spent. I'll now address bookings and backlog. Q4 book-to-bill came in far below 1.0 and with one-year backlog decreasing 18.1% from the prior quarter and 11.9% from the same period last year, closing at $304 million at year-end. Q4 bookings included cancellation of orders, as well as new orders for our next-generation program in our high-performance compute business. The net effect was a reduction in backlog of $15 million, which contributed to the 18.1% sequential decline in total backlog. Turning to our factory expansion, our manufacturing team is working diligently to bring our in-house vertically integrated Advanced P roducts factory fully online. While we have begun to benefit from the use of certain process steps in the fabrication of our Advanced P roducts, we are not yet self-sufficient in a key plating process operation. Installation and startup of this process equipment has been delayed due to resource and material constraints of the equipment manufacturer from the first quarter of this year to what is now expected to be the second quarter. As we near the completion of our vertically integrated U.S.-based fab for Advanced P roducts, we are looking forward to the substantial reduction in cycle time, improved manufacturing efficiency, and full manufacturing control that this facility will allow, and we are anxious to leverage the imminent completion of our factory to provide shorter and more consistent lead times to our customers. Turning to the first quarter of 2023, we expect results to be approximately flat to Q4. We expect operating expenses to decline modestly sequentially and a tax rate on the order of 15%-20% in 2023. With that, Phil will provide an overview of recent market developments, and then Patrizio, Phil, and I will take your questions. I ask that you limit yourselves 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, Jim. Our low order rate for the second half of 2022, and specifically in Q4, continued to reflect the backlog that we had built in prior quarters and the transitions that are occurring to next-generation processor platforms at hyperscaler and XPU customers. While a number of processor chip companies and hyperscalers with internal ASIC developments are about to launch 5 nm-based products with FPA solutions and bus converters from Vicor, their next-generation R&D is focused on 3 nm technology. This process node will drive chip current requirements even higher, closer to 2,000 amps, and at the same time reduce core voltages down to 0.45 volts. Our prediction about the future of power delivery is playing out in real time. High-performance processors and clustered processor arrays will soon require Vertical Power Delivery, VPD, and current multiplication, both proprietary Vicor technologies. Instead of voltage averaging, Vicor chips uniquely enable processors to meet their performance requirements. In Q4, we initiated discussions with several major OEMs on how to best intersect their 3 nm products with our next-generation 5G solutions. Our FPA solutions provide the highest performance in terms of current density, low noise, and overall power system efficiency, and our Generation 5 technology will, as I have said in previous calls, be a game changer in cloud computing and machine learning with a 3x step-up in current density. The journey to smaller geometries to support ever-expanding AI processor performance requirements fully aligns to Vicor's proprietary technology. Our competitive position in HPC is growing stronger. As a result, my confidence in our HPC market position and in the customers that we have worked hard to develop in recent years is increasing. Our industrial and defense and aerospace businesses remained stable in Q4. POS and new orders with our global distributors remain strong. The addition of Avnet as a globally franchised distributor will add strength to our broad market efforts and support the identification and engagement with new customers developing advanced electrified systems across a broad set of applications. I expect the revenues from these two business units to grow in 2023 as a result of design wins in emerging high -growth markets that are being driven by electrification, automation, and autonomy. These target markets represent over $2 billion in SAM for Vicor. One exciting new opportunity spans the entire battery ecosystem that includes forming and testing cells, testing packs, using packs in electrified applications, and battery recycling. We have important design wins with leading customers in all of these high-growth markets for our high voltage modules with early revenues in 2023. Our progress in the automotive market remains very positive, with three successful OEM audits in the past 6 months, resulting in approval of Vicor as an automotive supplier. We expect to be IATF certified in Q2 2023. We will PPAP our top three flagship Advanced P roducts in Q2 with additional products to follow in Q3 and Q4. OEM and tier one engagements are strong. We expect further NRE-funded collaborations in 2023. As in our HPC market, automotive customers are valuing the modularity and power density that Vicor modules bring to their powertrain system designs and the competitive advantage that we enable for their vehicles. As our new factory comes online and we release our new 5G modules into production this year, our front-end team is laser-focused on our top 100 customers, securing design and production wins that will put us on track to achieve our North Star goal of $1 billion in revenues and 65% gross margins. Thank you. Patrizio, Jim, and I will now take your questions. Operator, we're ready for questions now. Thank you. Everyone, the question- and- answer session will now begin. If you wish to ask a question, please unmute your phone and press star then one on your device. If you decide to withdraw your question, just press star two. You will be advised when to ask your question, and the other lines will remain on listen only. Just to remind everyone, if you wish to ask a question, please press star then one. I can see four questions in the queue right now. The first one is coming from Jon Tanwanteng. Please go ahead. Your line is open. Hi, good afternoon, and thank you for taking my questions. My first one is Phil or Patrizio, could you give us any more color on the low orders in the quarter and the cancellations? Maybe just a bit on both. First, are your clients simply digesting the long lead time orders they had already placed, or is it they're more of a supply and ramp concern with the new factory and just to get, you know, being able to get that up on time to support new product ramps, you know, just on the order rate, number one. Number two, on the cancellations, what's going on there, if you have any more color, that'd be great. I think as Phil pointed out, we are seeing the effects of the long lead times, and growth that took place a year ago, with some key customers being concerned with respect to being able to get enough product and ordering ahead, to ensuing events involving a variety of factors from exclusion of certain products from the Chinese market to the setbacks that the industry at large has suffered with respect to, you know, contraction in the general level of activity. That coupled with general transitions with respect to older products being phased out and newer products being brought up in the right sequence has led to the particular changes that have taken place with respect to our backlog in the last quarter. Okay, great. Thank you. Then you gave some interesting stats on 3 nm and the current requirements there. I was wondering if you could give us some indication as to the level of participation you're having, or perhaps the relative market share you're having at 5 nm today on AI GPU compute. You know, we know that there's a lot of frenzy around, you know, things around, you know, the advent of ChatGPT and similar AI models and just the general requirements to train such, you know, large language models and then similar things. Has that changed the discussion at all with your customers? Are you able to participate in that this year, or is that something that's gonna have to wait for the next generation? I think that what we've spoken about in the past is that the 5 nm nodes that have, you know, the significantly higher currents, you know, our Factorized Power Architecture has, you know, significant benefits. We've got about five or six companies ramping with 5 nm nodes in 2023. We've also got other customers that have started out with IBA architectures, 48 volts down to 12 volts, and then multi-phase, that are seeing that these architectures are actually not giving them the maximum amount of performance that they can get from their processors and are looking at even respins, possibly of those boards to something that will lower their PDN voltage drops and power losses. That's also a factorized solution. We're also engaged with two or three other customers on that, sort of upgrades, if you like, to get the best processor performance, John, out of their 5 nm nodes. We see both of those going on. I think when you get to 3 nm, that's a completely different area for the high -currents and low -voltages. We feel, you know, very strongly that a 5G technology and Vertical Power Delivery is gonna do extremely well, when that starts to happen. The interest is very high, in the market in Vertical Power Delivery, from Vicor. That's what we were talking about in the prepared remarks here. Just to quantify that value proposition, looking at the test case for high-current processor rails, with a target total current requirement in the 1,000 ampere range, depending on whether you look at it in terms of steady state or transient current requirements. The value proposition of our Factorized Power Architecture solution as a lateral vertical solution is a net reduction in just PDN loss. That is the power distribution network in the copper, from about 120 watts down to pretty close to 50 watts. That reduction doesn't account other reductions in power loss that take place within the silicon itself due to a major reduction in the voltage differentials within the pin field, within the domains that are powered by each of the multiplicity of rails. In this already case, in a 5 nm type of application, to Phil's earlier point, this kind of a challenge gets elevated to a new level of difficulty, going down to 3 nm with lower voltages and even higher currents, where fundamentally, the traditional solutions, the multi-phase, multi-source solution is up against the wall in terms of servicing this needs. Got it. I have a lot more, but I'll jump back in queue. Thank you. Thank you. The next question is coming from Quinn Bolton. Your line is open. Hey, guys. I wanted to follow up on the last question and Phil's response to that, but perhaps try to be a little bit more direct. Your largest GPU customer last night announced the revenue for its next -generation 5 nm GPU exceeded the revenue from its older generation GPU in just the second quarter of shipments. It's obviously a very fast ramp of the new generation 5 nm GPU. You've previously stated Vicor expects to have content on this 5 nm platform. Has anything changed recently on Vicor's opportunity with this new 5 nm GPU? If not, when would you expect to see, you know, meaningful revenue for this program ramping? Quinn, we're not going to make customer-specific commentaries. As you know, as a matter of general policy, we don't get into that. I will answer your question in general terms and Phil may supplement what I have to say. With a restatement of what we just said. We believe that our competitive position is getting stronger, particularly with our 5G, particularly with respect to our unique PDN architectures, and the demand for our solutions is rising. I can't comment with respect to specific customers, specific applications at any one point in time, again, as a matter of general policy. Phil? I mean, in terms of has anything changed? No, we're confident in the future, like you said, we're gonna go through the ramps this year with lead customers and some new customers. As I mentioned in my remarks, my confidence in our position in this market is growing, not reducing. It sounds like without speaking to specific customers, you feel good that you'll participate in 5 nm ramps with multiple customers, as I think you just mentioned. It sounds like you feel even better positioned as we get to 3 nm next-generation architectures because the current requirements just move more into your sweet spot. Yes, yes. Also I think that there will be upgrades on 5 nm nodes too. They're not getting the performance out of the IBA architectures, and there's more performance to be gained by reducing PDNs. I mean, PDNs are the significant drawback to the IBA architecture. So lateral vertical solutions and then 5G solutions from us, we can intersect in a number of places and improve the processor performance sometimes to 2x the levels that they're getting now. So I expect some of that to play out this year as well, Quinn. Understood. The second question I have, you know, obviously I understand you're going through the process of ramping the Andover facility. It sounds like if I listen to comments that you think you'll be largely independent of the outsourced, you know, provider by the end of the second quarter. I just wanted to confirm that. I guess, can you just comment how your yields have progressed as you've started to ramp this internal capacity? Have you had any meaningful yield excursions or manufacturing issues that could delay, you know, manufacturing ramps of some of these next-generation processor designs or, you know, current programs? Yields are getting better. For high volume products, typical yield of a chip is nowadays around 95%. We have chips where we're targeting raising the bar to the upper 90s, and we're pursuing the steps in a methodology to accomplish that. These advances have taken place in spite of the challenges of outsourcing. They don't yet reflect the benefits of vertical integration. Just sorry, the timing of when you'll be largely free of the dependency on the third party electroplating partner, is that sort of middle of 2023 now? I think it's based on the current schedule within Q2, specifically, the last major piece of equipment due to be installed in the month of April and coming up shortly after that. Excellent. Thank you for the detail. I'll jump back in queue. Thank you. The next question is coming from John Gruber. Please go ahead. Your line is open. Good afternoon. On the last call, it was asked about the when you're gonna have an analyst meeting, and I was under the impression that you were talking about this quarter, and I haven't seen anything about that. Also, when will you resume analyst visits and communication with and be like a real public company and communicate with the analysts and the and the owners? We participated in the Needham Conference January 12th, so that was one that we did. At this point, we haven't decided about an analyst day, John. I think, you know, our perspective is we're gonna talk again in another couple of months, so it's fairly frequent in the short term here. We're also talking about the shareholder meeting and how to handle that in June. Those are upcoming. What about analyst visits, investor visits to the company, which you're the, one of the only companies who you know, you know, won't talk to people? Yeah. I think we do that from time to time. It's a process that we take very seriously. We wanna make sure everybody is treated fairly. That's kind of the focus we have and, you know, provide the same information to everyone at the same time is our objective. Thank you. Thank you. The next question is coming from John Dillon. Your line is open. Hi, everyone. How are you doing? Good, John. Good. I've got a question. Phil, we're pretty far into the quarter. I'm just wondering how bookings are so far this quarter. I don't think we can get specific about that, right? We're talking about, you know, halfway through the quarter here. Yeah. Certainly the rates are— Well, let's not get into specifics, that the general policy we don't get into. Again, I think both Phil and I have emphasized in the strongest terms that we believe we have the winning technology. Our technological gap to the competition is widening, not shrinking. That's something that applies to HPC. It applies to automotive, as we heard earlier from Phil. It also applies to some of the industrial markets and other markets. We feel very strongly that we're going to use up the capacity that we're putting in place, second little longer than anticipated, but it's a major undertaking, and we see the returns on that investment taking place in years to come. As to what is happening this month with respect to bookings or what is going to happen this quarter beyond the general guidance that Jim provided earlier, I don't think we're going to get into any specifics. Okay. Thanks for that explanation. It actually helps. I'm wondering if you can help me with my math a little bit here. If you still have $300 million in backlog, it would appear for me from the outside, and again, I don't understand the inside, but it would appear you'd be able to ship more than, you know, $105 million a quarter, 'cause you're gonna book and ship something during the quarter. You're gonna have additional bookings. Are you being super conservative with that, saying that's revenue's gonna be flat for the near term? I think that's the guidance as of now, and I wouldn't characterize it, as being conservative, optimistic or anything else. That is, you know, our best guidance, as of now. Okay. Okay, one last question for Jim. You had mentioned that you expect incremental GM improvements, you know, as the factory starts coming online. Can we expect to see some GM improvements this quarter? I would say, you know, the guidance is approximately flat. It could be slightly better, we'll see. There is incremental improvements by way of less spending on the outsource manufacturing side of things, real time. As we bring up the production line, that'll increase. There's the opportunity for some improvement there. I think beyond that, we're looking for significant efficiency out of our own factory. Yeah. We don't have to wait too long. Much shorter cycle times, much better efficiencies. Great. Thank you guys very much. I'll try and get back in the queue. Thank you. Thank you. The next questioner is Jon Tanwanteng. Your line is open. Hi, guys. Thanks for the follow-up. My question was around the returned inventory and product that you took back last quarter, w ere you able to place that? That's number one. W as it at a margin or is it at a price that was satisfactory to you guys? If it hasn't happened yet, are you pretty close to doing so? It's been put back in inventory and some of it has been shipped out. Okay, great. That's good to hear. Second, can you give us a layman's commentary on just the current legal efforts you have, the recent decisions that we've seen? Just tell me where exactly you are and what we can expect next. Jon, you're talking about legal activity here? Yes. Yep, correct. Like the Cyntec update. There's no update there. We're going through the post-trial briefing, nothing of significance. Okay, great. Then finally, just the sales in R&D, you know, expense jumped up quite a bit in the quarter. Is that indicative of any new wins or projects that are getting close in the pipeline? Is that a run rate that we should be using going forward? Jim, I think you said— Yeah? To expect a little bit deeper. I'm not sure exactly what magnitude and kind of the year. You might be looking at it without including the $6.5 million litigation related to accrual in third quarter. The OpEx did come up from third quarter when you exclude that, and it was mostly associated actually with legal expense because the trial and the activity was in fourth quarter. That caused a piece of the increase in spend. R&D expense did increase 9% sequentially in fourth quarter. I think it's important to note that Vicor is increasing the rate of R&D spend, and it's aimed at new products, and it's aimed at getting the factory online. Got it. Thank you. You mentioned NRE revenue coming in this year. Just, how much of, or, you know, how much do you expect that to fund, just in terms of cost development? Well, that's a factor for. Again, it's strategically the types of customers we engage with and want to engage with on the collaborative efforts of new product development or new systems development in automotive. You know, we've got a lot of opportunities to do that. We really look to engage with leaders in the marketplace. You know, these engagements range from hundreds of thousands of dollars to sometimes millions of dollars. It's difficult to put a number on it, Jon. Okay, great. Last one. Just any thoughts on the Brick Products and legacy businesses and how you expect those to trend this year? Did you give a split on Advanced Products versus legacy and at all? I didn't catch in your prepared remarks. Yeah. I think Jim did. On a go-forward basis? Not on a go-forward basis, but the last quarter you did, right? Yeah. 60% or something. Yeah. I gave the breakdown of the percentages. So the legacy business isn't going away. But, you know, as we've been discussing for quite some time, it's becoming, over time, to a greater degree irrelevant. So it wasn't that long ago that it was the majority of our revenues. It's a reducing minority. But it is a business that has lived in terms of characteristic timescale for the last 15 or 20 years, some of it 25 years, and that attests to its longevity isn't going to go away next month or next year Okay, thank you. Thank you. Our next questioner is Richard Shannon. Richard, you are live now. Great, thanks, guys, for taking my question. I think going back to the statement here in the press release about only supporting essentially flat quarterly revenues in the near term, obviously, that refers to the March quarter. It would seem to suggest also beyond that in June or maybe longer, maybe if you can give some language to how long you expect that near-term flatness to occur or visibility into when that how long that'll take. Here again, I don't think we wanna stick our neck out beyond the level that is reflected in the press release. I think it's near term, and that could be this quarter, it could be also next quarter. Obviously, you know, visibility, given a variety of factors at play, diminishes as we get further out. That's part of the rationale to provide guidance with the caveats that we should all understand. Is this the timeframe by which you hope to get better visibility? Is this contingent on new applications you're hoping to win or when they get scheduled, or is this potentially contingent on standing up your manufacturing facility, which I think you said you're hoping to get done sometime in the second quarter? The former two, not the latter. I think we have a high degree of visibility with respect to the completion of vertical integration, the capacity, availability, the results from that. We have, as you might imagine, less visibility with respect to the timing of new programs and their ramps. You know, frankly, given the challenges that Phil described earlier with these programs and the specific technical commentary I made with respect to, in particular, PDN losses getting in the way of being able to extract the anticipated level of performance out of even 5 nm silicon, there is a lot of uncertainty with the customers themselves. Frankly, they don't understand to a high degree what they got, and we're helping them understand what they can get. That's part of the source of uncertainty with respect to timing, programs, and revenues. Is that uncertainty about PDN issues here as we go down nodes here, is that reflecting customers who haven't yet adopted Vicor solutions or also ones who have done it in the past? Well, all of the above. Vicor solutions have gotten to a deeper level of capability with respect to this, with our invention of Vertical and lateral vertical. Part of this advance is set to do with the density of our modules, the current density, which is being ahead of the pack by a certain percentage. With 5G, that advance is becoming 3 times greater. It's not just a module density, current density or power density play. It's also a power distribution architecture at play. For a variety of reasons, there are constraints on the competitive alternatives with respect to, you know, what they can do in terms of power distribution networks. One of our greater opportunities, aside from, again, the density of the modules and the advantages of Factorized Power Architecture, have to do with, are enabling ways to deliver that power that bring about much greater efficiency in the power distribution that is the copper layers, let's say, within a board. Relating to that, the much greater control of the voltages within, domains in the silicon itself, which is an issue that frankly many customers don't yet fully appreciate. They see the silicon running red hot. They see themselves not being able to deliver the level of performance that was anticipated. It is because of the handicap of the power system, in particular, the power distribution network, and it's both direct and indirect, both in terms of the drops that take place within the copper and within the silicon itself. This is a process of education. There are challenges associated with carrying this process to fruition because frankly, the level of understanding isn't what it could be. It's incumbent on us in particular to work with our customers to unleash the full potential of their silicon. Okay. Thanks for that detail. I'll have to review that. A lot of stuff to unpack there to digest. Thanks for that. Maybe last question, I'll jump out of line here related to the automotive opportunity. I think earlier this year, you stated a bit of a delay from prior expectations to kinda ramping around the middle of next year. When do you expect to get the orders and, you know, maybe more detailed forecasts that to help you understand what that could look like for next year? That's towards the end of this year, Richard. Really the ramps for that stuff is towards the middle of 2024. I mentioned there'd been some delays because of the COVID issues that hit a lot of the R&D teams in different OEMs and tier ones. I would think this is probably more of a, you know, end of 2024, early 2025, sort of a ramp for us. All right. Perfect. That's all for me. Thank you. Thank you. Our next questioner is Doug Campbell. Your line is open. Yes. Hi, guys. Just if you could clarify, you know, looking back at my notes and my thoughts, you know, it's probably the end of Q2 last year, we talked about 80% to 90% fully integrated, vertically integrated at the new warehouse, the new manufacturing plant by the end of December of last year. It seemed to continually get pushed out, and last week there was some speculation that you guys had some contamination issues. If you could kinda clear that up, and then I'll follow up with that. I mean, Can you just be a little more specific about the delays in the fab, chip fab plant going up? Suggestions by competitors of contamination are pure bullshit. That's what I wanted to hear. Okay, well, that's what it is. With respect to the timing of bringing the vertically integrated facility to fruition, there've been some delays. We've kept you appraised of what has been happening with respect to this complex endeavor. Again, not to overstate the complexity, but in one way of looking at this, what we're bringing together is the first fab for chips, as in converters, as in package. A unique Vicor technology, heavily protected, first of its kind. The fab to make these kinds of products with vertically integrated processes has got a number of novelties and complexities that we're bringing together for the first time. I guess in hindsight, the fact that the delivery of some of this equipment got delayed by, I think, five or six months, all told, given the cycle time for developing the equipment and manufacturing it may not be all that surprising. The good news is that, as I pointed out earlier in answer to an earlier question, we're now in the end of February, and we're looking at the last commit date from the vendor in Europe for the last major piece of equipment, you know, to be delivered in April. That's really only two months away, which implies. Well, I'm not— Yeah? I'm not trying— There's a lot of optimism to go around. I'm not trying to be a wise guy, but we've kind of heard that before, so it's getting a little unnerving as an investor that there seems to be a delay, a delay, a delay. Like Quinn said, you won't talk about NVIDIA, but NVIDIA seems to be working through their inventory and ramping up in all areas. AI's been a real buzzword over the last couple of weeks. I know you guys are involved with AI. As an investor, I'm getting a little nervous that the race has started and you guys are falling behind. No matter how good your technology is, I mean, Monolithic Power Systems is an execution machine, and they keep talking all sorts of trash across the board, but they're executing. I'm just getting a little nervous that you guys are falling behind. I'm not, you know. I, you know, I, look, I can't, I can't blame you for getting nervous. I guess if I were in your shoes, I might. There have been delays with respect to the first fab for chips. I don't mean to make excuses for the delays, but, you know, we've had a number of equipment vendors involved, across the globe, from Japan to Europe to the U.S. Some piece of equipment have taken some number of months beyond expectation. I don't think you've heard me say before that we're in February. Yeah. The last piece of equipment is due to, you know, to be delivered in April. I don't mean to be a wise guy either, we have a high degree— No, I hope that comes true. I hope that comes true. Yeah. Yeah. You know, 'cause I also go back to. It's purely equipment delivery that's been delayed, 'cause I remember you talking about the outsourcing process and the plating process that your guys were at the outsourcers basically mastering the process that you planned on bringing efficiencies that you thought you could improve upon the process when you brought it in-house. It's not like a training issue. It's strictly the equipment's not there. That's right. Yeah. It's equipment. A lot of the equipment has been delivered, has been qualified, it's up and running, and as Jim pointed out earlier, we're already using it, and it's beginning to reflect itself in greater capacity and greater predictability with respect to cycle time and lead times. There are a few pieces of equipment that are still to be delivered, but we are very close to their being delivered. Needless to say, with that little time left, the degree of predictability gets to be greater. I would be very surprised if there were to be further delays. I think we are line of sight to being vertically integrated. Well, that's great to hear, and I'll finish with a positive. I greatly appreciate that you guys attended the Needham Conference, because it's sort of what we talked about last year. We wanna hear the story. We think it's a great story. We wanna be in contact with you guys, and I hope that continues this year, and I'll get back in the queue. Thank you. Thank you. Our next questioner is Alan Hicks. Your line is open. Yeah, good afternoon. I wanna approach that a little differently than the last question. Seems like the gating factor in getting your revenues going again has been, one, the plating, and then two, the 5G technology products. Once the plating is done, can we expect a step up in revenues right away? Then 5G, when are those coming out, and what can we expect from that? We expect. Let me start with what has already been done. We have begun to expose 5G capabilities to a very, very limited test case of customers, very few instances and in a very controlled way to in effect get market validation for are being aligned with needs that are coming our way with further advances in silicon lithography and general market trends. What I can tell you is that we're getting great traction with respect to 5G providing what customers and real world applications need and are going to need over years to come. I'm very, very confident with respect to the fact that as it has happened before, we've had the vision to anticipate where the market is going and what is needed in order to enable performance out of critical applications. We have some 5G modules operating on the bench. The full complement of capabilities is coming together with the availability of some control silicon that is taking place over the next 12 months, and we expect to be able to start sampling customers in Q4 of this year. As we get further along with the validation, we're going to expose the capabilities to a growing list of customers. We have unique tools that are being developed and have to some degree, been developed already to enable customers to, in effect, get behind the driver's seat with respect to controlling their destiny, with system solutions and PDN methodologies that meet their real requirements. We feel very good about this. This is a 2023 development with respect to the 5G technology coming together. I think what's particularly noteworthy is that in terms of resetting the level, resetting the bar of expectations in terms of power density, current density, and the critical needs, in computing, automotive, and other major applications, I think is well beyond the step up in performance that Vicor was able to achieve with prior generations of products. These are coming together of a lot of technologies, both with respect to unique components, the packaging technology, the power distribution architectures all playing together for the first time to deliver a major step up in performance. We're very excited about that. Do you think customers are perhaps delaying until they get their hands on 5G? No. No, that's not the way it works, right? Trains leave the station on the best schedule that can be achieved. You know, needless to say, if not all the capabilities are in place, they still have to leave the station. There are trends that follow the earlier ones. There's an opportunity to intersect with 5G from a designing process perspective, starting this year. We're already engaged in a few instances with the kinds of customers that we can be engaging at this stage of 5G capability, which is really still preliminary because while we do have target specs for a very comprehensive product portfolio, the target specs are not final yet. While we work on some of the last elements, enabling elements to fall in place. Our 4G technology is ramping right now with 5 nm nodes, as we spoke earlier, both for Factorized Power Architecture and bus converters. The 4G is ramping through this year. It will, you know, hit some peaks next year, and then we'll move on to 3 nm. We've got good design-ins on the 4G stuff, and there'll be opportunities to pick up other 5 nm nodes, as I've mentioned, to get the performance out of those processes using what we're calling lateral vertical with our 4G technology. That all happens before we transition into that 5G. Okay. Do you think 5G will significantly expand your markets? Absolutely. Absolutely. Yes. Both in terms of higher currents and even lower currents, because our line is going to get a lot finer. We're going to not only take the 1,500 amp or 2,000 amp rails, but we're also going to take the 100 amp rails. Okay. Finally, back on the plating, do you expect a step-up in revenue once you get that completed? A step-up in... Will that unleash a bigger logjam for more shipments using your in-house plating? Yeah. As suggested earlier, as suggested in the press release, as of this moment, we are not capacity constrained with respect to revenue. It's, as of now, limited by history of bookings and backlog for the near term. Okay. So, basically flat this next quarter and possibly the same second quarter? And i n the second half, maybe improve? It's your interpretation of near term. Again, I don't mean to be a wise guy either. We just wanna be sure that we are very clear with respect to, you know, what to expect and not encourage any potentially misleading expectation. Okay. Thank you very much. Thank you. Well, thank you, everyone. Operator, I think we could, I think if we have time for maybe one more question. Thank you. The last question is coming from Quinn Bolton. Your line is open. Thanks for squeezing this last question. Phil, I guess the lateral vertical ramping with your 4G technology, does that start this year, or is that more of a 2024 event based on sort of your current expectations? Our goal is to have that ramping this year. Perfect. Okay. Thank you. Okay. Thank you, everyone. Operator, I think we're ready to close the call now. Thank you. Thank you. Everyone, that concludes your conference call for today. You may now disconnect. Thank you for joining. Enjoy the rest of your day.