Welcome everyone to today's webinar entitled Vicor Earnings Results for the First Quarter Ended March 31s t, 2023. My name is Trichy, and I'm your operator today. During the presentation, all attendees will remain on listen-only mode. If you require assistance at any time, please put a message in the chat box. I would like to advise all parties that this conference is being recorded. With that, I would like to hand over to Jim Schmidt, Chief Financial Officer of Vicor. Please go ahead. Thank you. Good afternoon, welcome to Vicor Corporation's Earnings Call for the first quarter ended March 31, 2023. I'm Jim Schmidt, Chief Financial Officer, and I'm in Andover with Patrizio Vinciarelli, Chief Executive Officer, and Phil Davies, Corporate Vice President, Global Sales and Marketing. 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 copy-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 1A of our 2022 Form 10-K, which we filed with the SEC on February 28, 2023. 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, Tuesday, April 25, 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 webcast replay of today's call will be available shortly on the investor relations page of our website. I'll now turn to a review of our Q1 financial performance. After which, Phil will review recent market developments, and Patrizio, Phil, and I will take your questions. In my remarks, I will focus mostly on the sequential quarterly changes for P&L and balance sheet items and refer you to our press release or upcoming Form 10-Q for additional information. As stated in today's press release, Vicor recorded total revenue for the first quarter of $97.8 million, down 7.3% sequentially from the fourth quarter of 2022 total of $105.5 million, up 10.8% from the first quarter of 2022 total of $88.3 million. Advanced products revenue declined 19.3% sequentially to $51.3 million, while brick products revenue increased 10.9% sequentially to $46.5 million. Shipments to stocking distributors increased 4.1% sequentially and 43.3% year-over-year. The decline in advanced products revenue was due primarily to constraints at our outsourced manufacturing partner. Exports for the first quarter decreased slightly on a dollar basis, but increased sequentially as a percentage of total revenue to approximately 64.3% from the prior quarter's 59.8%. For Q1, advanced product share of total revenue decreased to 52.4% compared to 60.2% for the fourth quarter of 2022, with brick products share correspondingly increasing to 47.6% of total revenue. Turning to Q1 gross margin, we recorded a consolidated gross profit margin of 47.6%, which is a 100 basis point increase from the prior quarter. While lower sales volume pressured gross margins, we did benefit from an improvement in the gross tariff rate as a percentage of revenue. During the quarter, we recovered approximately $3 million in duty drawback of previously paid tariffs. We continue to work to reduce overall tariff expense and recover previously paid duty drawback. I'll now turn to Q1 operating expenses. Total operating expense decreased 12% sequentially from the fourth quarter of 2022 to $36.1 million. The sequential reduction was primarily due to a reduction in legal fees. The amounts of total equity-based compensation expense for Q1 included in cost of goods, SG&A, and R&D was $486,000, $1.52 million, and $811,000, respectively, totaling approximately $2.8 million. For Q1, we recorded operating income of $10.4 million, representing an operating margin of 10.7%. Turning to income taxes, we recorded a tax provision for Q1 of approximately $1.1 million, representing an effective tax rate for the quarter of 9.2%. Net income for Q1 totaled $11.2 million. GAAP diluted EPS was $0.25 based on a fully diluted share count of 44,907,000 shares. Fully diluted EPS increased approximately 39% sequentially compared to $0.18 in the fourth quarter of 2022, and more than doubled from $0.11 per share earned in the same quarter a year ago. Turning to our cash flow and balance sheet, cash and cash equivalents totaled $192.9 million in Q1. Accounts receivable net of reserves totaled $61.1 million at quarter end, with DSOs for trade receivables at 35 days. Inventories net of reserves increased 5.9% sequentially to $107.4 million. Annualized inventory turns were 2.1. Operating cash flow totaled $10.1 million for the quarter. Capital expenditures for Q1 totaled $10.1 million. We ended the quarter with a construction in progress balance, primarily from manufacturing equipment of approximately $36 million, and with approximately $13 million remaining to be spent. I'll now address bookings and backlog. Q1 book-to-bill came in below one. With one-year backlog decreasing 10.9% from the prior quarter, closing at $271.3 million. Turning to our factory expansion, as expected, we recently received the final pieces of equipment necessary to complete vertical integration of our new chip fab. During the month of May, our manufacturing team will conduct pilot runs using this equipment. Through July, we expect to complete manufacturing qualification of our vertically integrated chip fab and then commence volume production. While there will still be some outsourced processing, in Q3, we expect to be vertically integrated across all of the key process steps necessary to manufacture our power modules. This marks a milestone in Vicor's history, aligning our manufacturing capacity in the first global ChiP fab with the breakthrough design technology Vicor has invented to deliver superior power density. As we said last quarter, we are looking forward to the substantial reduction in cycle time, improved manufacturing efficiency, and full manufacturing control that this facility will allow. We are anxious to leverage the completion of our ChiP fab to provide shorter and more consistent lead times to our customers. Turning to the second quarter of 2023, we expect results to be approximately flat to Q1, with a potential for a modest sequential improvement in overall results and including a moderate sequential increase in OpEx as we implement our annual merit process. With that, Phil will provide an overview of recent market developments. 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 possible in the limited time available. If you have more than one topic to address, please get back in the queue. Phil? Thank you, Jim. I'll begin with an update on our satellite market business development initiatives, which we haven't discussed for a while. In December of 2022, we announced that Vicor's radiation-tolerant Factorized Power chipset was on board the launch of Boeing's O3b communication satellite, powering the communication ASICs. This was a critical milestone for us by proving to other satellite customers that Vicor power modules could improve signal integrity, efficiency, and power density while meeting the tough environmental and quality demands of space applications. Building a space heritage opens up an available market opportunity of $175 million with Boeing and other customers. Our initial radiation-tolerant chipset is being expanded with additional input and output voltage modules critical for other customers and applications. In early Q3, we will introduce a reference design for AMD's first space-grade Versal adaptive SoC, which delivers reprogrammable AI inferencing and high-bandwidth signal processing for satellite and space applications. Turning to our automotive market opportunity, at the World Congress event in Detroit last week, Vicor presented four papers on how our power modules solve the toughest power delivery and conversion challenges in electric vehicle power systems, which are increasingly transitioning to a 48-volt power distribution architecture. Broader adoption of 48-volt power distribution bodes well for us, given that the 48-volt architecture is one that Vicor has pioneered and innovated around for over 15 years, developing proprietary and patented power distribution networks, topologies, control systems, and packaging to deliver the highest power density 48-volt solutions. The chips and applications presented at WCX and on display at our booth are the foundation of our expanding OEM and Tier 1 collaborations and design wins. In Q1, we signed a supplier agreement with a major Tier One and expanded our design win pipeline at existing OEMs with additional platforms and applications. We also started three new collaborations and added a major design win with an SOP date of 2026. High-voltage power systems designed with our power modules are proving to be 3x to 10x smaller and lighter than DC/DC converters built with silicon carbide or GaN power switches. We are also on track to achieve automotive-level qualification for several of our power modules in Q2. In Q1, the high-performance computing market saw the introduction of artificial intelligence chatbots using large language models, which have significantly stimulated the market for AI systems at hyperscalers and social media companies globally. These new chatbot capabilities open up completely new areas of AI to the masses and have a much higher customer satisfaction than traditional search engines. Our Factorized Power solutions are being used to power the rollout of this exciting new technology. As higher-performing processes are introduced, our lateral vertical solutions will provide the higher current density and lower PDN losses that these next-generation AI processes demand, with increasing current levels and lower operating voltages. As I commented in our last call, new 5 nm processes being introduced to the market using lateral power conversion solutions are hindered with high PDN loss, which limits performance from otherwise achievable levels. Lateral vertical Factorized Power enables the full potential of AI processes by reducing processor and PDN losses. On the product development front, our Gen 5 technology continues to make excellent progress and is on schedule for introduction to major customers this year. These next-generation point-of-load solutions enable scalable, cost-effective VPD, or vertical power delivery, which will be a game-changer for the industry and enable next-generation processes that would otherwise be handicapped by the power conversion and delivery challenges of multi-phase technology. All of our four business units are seeing expanding opportunities and major customer engagements across our top 100 customers as electrification, autonomy, and artificial intelligence requirements rapidly expand. Account managers for our top 100 accounts are setting up visits to our new chip fab for Q3 and Q4 as part of our operational excellence initiatives to provide our target customer base worldwide visibility to our scalable capacity and to introduce them to the superior power system capabilities of our Gen 5 chips. That concludes my remarks. Patrizio, Jim, and I will now take your questions. Operator, we're now ready to take questions. Thank you. Everyone, your question-and-answer session will now begin. To ask a question, please click on the Raise Hand icon at the bottom of your screen. If you joined via a phone line, please press Star and three. It'll take a moment to assemble the queue. We have received a couple of questions already. The first one is coming from Quinn Bolton. I will unmute you now. Please go ahead. Please go ahead, Quinn. Hello, Quinn, are you there? Hi, Patrizio, Jim, Phil, can you guys hear me? Yeah, now we can hear you. Okay. Okay, perfect. Hey, guys, wanted to start with just clarification, a quote from the press release where you said bookings will or may remain weak until AI OEMs capture the benefits of advanced PDN with lateral vertical solutions. Can you give us some sense of timing? When do you expect to ramp those lateral vertical solutions? Is that going to be in calendar 2023, or do you expect that to potentially move out to 2024? We don't know with a high degree of confidence when this would happen. It could happen later this year. It could happen in Q1 of next year. Okay. Last fall, you talked about, I think, roughly five or six design wins with 5 nm ASICs, or other systems, that you expected to contribute to bookings this year. Can you say, are those wins using just pure lateral solutions, or were some of those wins, using vertical? We seem to have some interference on the line with some background noise, Quinn. Yeah, Phil, did you understand? I think I got most of it, Quinn. Yeah. Yeah, I think that what I talked about last time was that we have design wins ongoing with lateral solutions to about four or five companies. We're also engaging with other companies that have higher current processes that will require, we believe, lateral vertical or even pure vertical with our Gen 5 technology. There's a lot actually happening in the market right now with different process nodes and different current levels. I expect lateral vertical and pure vertical to be part of the portfolio going through the end of this year and into next year. Quinn, did you get that? Quinn? There appears to be a connectivity issue. Yeah. All right, I'll drop off and you can see if I can dial in on a phone and see if that helps. Thanks, Quinn. Thanks. Operator, let's go to the next question, please. Yes. Thank you. The next question is coming from Jon Tanwanteng. Please go ahead with your question. I will unmute you now. Please also unmute yourself from your end. My first one is, what are your biggest customers telling you about the competitiveness of your product, stack, you know, compared to a year ago, specifically in the markets competitiveness of the products. What are you... What are our customers telling us with respect to where do we stand competitively vis-à-vis... Okay. Jon, I think that it's clear that, you know, the multi-phase technology is advanced with current density. But it's still not at the levels that we're at in terms of the density of the product and the ability of the product, which in lateral vertical is very important, is to be very thin. You need to have a very, very thin package that you can place on the back of the board in any sort of GPU, ASIC, CPU type application. That's number one. I think that with Gen 5 technology, which is where we're focusing the majority of our product development here now, that's a complete game changer in terms of the 3x improvement in current density that Patrizio has spoken about, that changes things dramatically with regards to power delivery for high current GPUs and also optical networking backbone processes. That's what we're looking at currently. Lateral vertical is certainly superior to a multi-phase lateral approach. Let me add. It's been nearly 40 years when Vicor introduced its first products. We took converters, which at the time were about 1 W per cubic inch to 10, 15 W per cubic inch, at the much higher operating frequency. Our lead in terms of power density, current density, key figures are made in demanding applications, has persisted for four decades. It's not about to fade. As Phil just suggested, it's about to take a major leap forward. Got it. Thanks, Patrizio and Phil. Just regarding the customers, and maybe specifically on the ones that you're waiting for to ramp solutions that are using your lateral vertical solutions, are they simply waiting for your new facility to qualify before giving you orders, or is it more of a product timing situation? Can you just give us a little more color as to the status of when you expect those orders to come in, and maybe the reasons why they're maybe a little bit more delayed than we thought it would be? A change from lateral to lateral vertical is a change in PDN or Power Distribution Network architecture. There are many facets to this challenge, having to do with the PDN architecture itself, what needs to happen in terms of reclaiming some of the real estate within the processor socket that historically has been dedicated to capacity bypassing to, in fact, keep up with the dynamic requirements of this processor, which entail very quick changes in current, up to 10,000 amps per microcycle. Managing the combination of PDN dynamic requirements and making it happen with in the mechanical thermal management constraints and other constraints of the application is a complex challenge. There are intellectual property aspects to this, that there is know-how that is not generally available. To make a long story short, this is not an easy transition. It requires, as of now, a close collaboration between the OEM and Vicor, with respect to bring to fruition a solution that meets all the requirements. One of the major advances with 5G is that this whole process is going to become much more scalable, and OEMs are going to be in the driver's seat with respect to their designing. As of now, with 4G building blocks and the know-how that is available, it is a bit of a tedious process. This, in my opinion, is and has been for a while, the obstacle to faster adoption of more advanced PDN architectures. Great. Thank you. It's not a facility issue or anything like that, or just waiting for that to ramp and qualify? No. Lateral vertical can be done, as Phil suggested earlier, with with our 4G building blocks. Doing full vertical with 4G, it can be done, but it entails stacking chips or stacking certain functionalities, with regard to which Vicor holds IP, relevant IP. It's got complexities that with 5G, we are doing away with in terms of leveraging the much higher density to facilitate BPD in a very simple and cost-effective way. Great. Thank you. I'll jump back in queue. Thank you, Jon. Okay. Sure. Next, we have a question from the line of John Dillon. Please go ahead. I will unmute you now. Please also unmute yourself from your end. I also have a question on the lateral vertical, in particular with the 4G. Are you still planning on doing 4G with lateral vertical, and would that be this year, or is that also would that also slip out to next year? Can you give us a little color on the customers that are looking at your 4G technology for lateral vertical? Existing designing activity for lateral vertical is as of now still based on 4G modules, existing 4G modules. Before too long, any incremental activity and expanding level of activity will be enabled by 5G building blocks. As of now, it's still with existing 4G modules. Those 4G module opportunities, do you expect them to go to production later this year then? Again, you know, we don't have perfect visibility. There could be a production ramp with a lateral PDN, a significant production ramp with lateral PDN, using 4G modules, or it could be that the production ramp awaits the lateral vertical solution because of its significant improvements in power capability, reduction in loss within the silicon and within the PDN itself. You still might have some new 4G lateral opportunities to come the second half of the year. Is that what you're saying? Yes, John, that's correct. Okay, great. Do you have any kind of guesstimate on the timing of that? I mean, is that again this year, or is that also maybe next year? I think John, Patrizio put it well earlier. It's, you know, we're working through all this stuff. It's, it's complex, complicated, but we're making good progress and, you know, we'll be able to talk about that a little bit more in future calls. Okay. My follow-up question is, you know, Patrizio, I've been invested with you for about 25 years, and, you know, when I reflect back, you know, we've had a lot of successes, we've had some setbacks, but I can't remember Vicor being positioned for consistent long-term growth better than you are today. Then again, I've been surprised before when I thought that before. Am I correct in my views that you are better positioned now than you have been? If so, you know, what makes it different from the past where we've had these successes and also setbacks? Well, that's a very good question. I can tell you personally, I feel that way. I think in terms of articulating why I feel that way, I think I suggested in the press release it has to do with the combination of factors. You know, first of all, we are very close to the first global foundry for chips. There is nothing that comes close or can come close. It is enabling in that it provides scalability in terms of volume, cost, very low cost structure, you know, from very low power levels to applications ranging up to literally hundreds of kilowatts in automotive applications. Whether it's a fast charger for an electric vehicle in the hundreds of kilowatts or a current multiplier in the 1,000 amp or several thousand amp range on a multiplicity of rails for a future GPU or XPU. Our ChiP fab, Converter housed in Package foundry, gives us an unparalleled, unique capability to provide not just the highest power density or current density solution as the case may be, you know, the modern systems or AI, data center type applications, but enables us to do that with the lowest cost point. We're not going to be missing any of the essential ingredients necessary to take full advantage of the general adoption of the 48 volt infrastructure that Vicor itself has pioneered. That, that's the simple story of where we are. I understand that, Historically, it hasn't been easy to bring all this about. It's taken a great deal of focus in terms of the complex facets of the puzzle as a whole, ranging from power conversion engines, control systems, unique components, packaging technology that is underlying the converter housing package, skeletal methodology. There's wafer-like engine and wafer foundry, and the foundry itself that we've invested upwards of $100 million to bring about to give us the capacity for about $1 billion in revenues. That-that's the simple reason why we think we're well-positioned for the market demands for high power density, high current density, in a variety of growth end markets. John, if I could just add one quick thing to that. I second everything Patrizio just said. I think that from my tenure here, the 12, 13 years, we've never had a quality set of customers that we're engaged with like we have now. That's really critical, right, to who are you working with, and what does the future hold for those customers in their markets? Are they leaders? It can't just be in high-performance compute with a couple of big companies, hyperscalers or GPU guys. It's got to be right across the 4 business units that we are now developing, you know, long-range revenue plans for and are engaged with great customers right across the globe. Just to add that to Patrizio's comments. Yeah. I get it. It, it seems to me like you've always had the performance card, but now the customers actually need your performance. They have to have it. It's not a wanna have. Then on top of it sounds like you've got the cost card to go along with it, which is a nice combination where they need your product, and you're also very cost competitive. From the sounds of it, Gen 5 is gonna be even lower cost competitive down to the commodity server level, which is really exciting because that really opens up a huge market for you. Yeah, the vertically integrated factory that Patrizio mentioned, that's really critical for us, right? Yep. Okay, I'll get back in the queue. Thank you so much. Thank you. Next, we have a question from an anonymous participant who joined via a phone. I will unmute you now. Please press also star and six to unmute yourself from your side and state your name and go ahead with your question. Hello, we can't hear your question. Either that or there's a latency in, you know, polling. Star six. Operator, please remind questioner if they have to hit star six to unmute themselves. Yes, from their side as well. Okay. Let's go to the next question then, operator. All right. All right. Next, we have another question from Jon Tanwanteng. Please go ahead and unmute yourself from your side as well. Hi. Thanks for the follow-up. My question is, Phil, just where do we stand today in the migration to 48 volts, data centers as a whole? What ending are we in? How much are you seeing that play out in your bookings and pipeline? Definitely other hyperscalers that we've been waiting for are working on 48 volt native rack systems. In the meantime, we've talked about this, they are buying basically power distribution boards, incorporating our MBMs to do the 12 Volt native to 48 Volt level necessary for the advanced AI systems. We are seeing native rack developments now at the hyperscalers in North America and also overseas because of the power levels that these the addition of AI, chatbots, whatever, into the data centers are requiring 48 Volt power distribution. In the supercomputer area, you know, it's even higher. It's up at the 380 Volt range where we sell high voltage bus converters. The power levels just keep going up, Joh. You know, we have the technology to do the down conversion to 48, and then the 48 to point of load, either with bus converters for low power CPU systems or Factorized Power for very high power GPUs and ASICs and optical network processors. we're sitting really well with technology migration in our customers and being able to follow that and even be ahead of that with now our Gen 5 solutions coming along later this year. Got it. One thing I've been surprised with is just the total power consumption of these next gen CPUs, that they're approaching the levels that, you know, the last generation AI processors that they use your lateral solutions are at. Do you see the CPU markets ever going to your, you know, finding your product necessary to drive the power usages that they're starting to run at? Yeah. I think Gen 5 actually opens up CPU, you know, higher power CPU applications for us. Who knows, maybe even lower power CPUs as the rack goes to 48 Volts. Direct conversion from 48 Volts with Gen 5 can be very cost effective and very dense. We're gonna go after that market as well when Gen 5 comes along. Make no mistake, any system today, high-end system, let's say high-end GPU, you know, powered from 48 Volt through a lateral PDN, is handicapped by the power system. It cannot deliver its compute capability because of the limitations of power system. Understood. If I may ask a question on the quarter, what caused the constraints of your supplier? I know they've been pretty spotty in the past. Is that going to continue in Q2? Just give us a little color as to what happened in the quarter compared to where you thought you were going to be. Yeah, go ahead. I think, you know, Joh, as we said, it was mostly a function of the outsourced manufacturing partner, which is, you know, we're in the final stages now of bringing the production in-house. You know, in some cases, the supply wasn't as prompt as we needed it for the quarter anticipating the output. You know, we're, as I described, we're into May now with qualification, June, July qualification, so, you know, facilitating the equipment in May that we brought in. I think as we get into the third quarter, we'll be clearer about, you know, our ability to generate the output we need. Okay, great. Jim, just one more follow-up. Do you expect these tariff clawbacks to be relatively continuous as you go forward, or will they still be spotty and kind of unpredictable? How should we think about that and then kind of what's in the backlog for you to claim? In the short term, we're sort of expecting the same level for this quarter. That's our anticipation. Then it'll kind of throttle down a bit because we've basically been clawing back what amounted to years ago worth of, you know, tariff payments. That'll feather down over the course of the year. Okay, great. Thank you. Okay, operator, next question. Yep. We have again, the person who was about to ask a question earlier through the phone line. Please unmute yourself using star and six. I will also unmute you from our end. Please state your name and go ahead with your question. Hi, this is Richard Shannon with Craig-Hallum. Can you hear me? Hi, Richard. We can, yes. Excellent. Excellent. I'm glad I was able to make it in this time. Thanks for taking my questions, guys. We're not trying to block you out. It happens. I was blaming my input skills on my phone here, not you guys. Let's see, I guess I wanted to kind of ask a follow-up to a few different past questions, including starting with Quinn's, about how to think about when you're seeing an inflection points and kind of the characteristics of when that happened. Patrizio, I understand your response on a couple of those has been, you don't have complete clarity on that. Let me kind of ask a multi-parter on this, and I'll let you kind of go where you'd like to, as I think you'll get the gist of my question here. You're not exactly sure when that will be. It sounds like it could be either with lateral vertical. I'm assuming these are with AI accelerator type applications. Could you characterize whether these are designs that are done and completed and just haven't been greenlit at the time, or are they still designs in flight? Maybe just kind of help, clarify the dynamics here along those lines, please. We're working with a number, as you point out, of AI accelerator card companies. They're all in different stages. Some of them are actually in early sort of pre-production. Others are in qualification. Others are also, you know, got advanced developments going on that will be qualification later this year and then ramps later this year, maybe more like early next year. It's, it's across the board, Richard, really. It's a mix of applications, but most of it is lateral. Then we've got some lateral vertical activity going on as well. Okay, perfect. That is helpful. Maybe let's ask an automotive question here. I may have missed all of your comments about kind of the latest update here in the last quarter. Maybe I'll ask you kind of to do a two-parter here again, which is, repeat what you said about those designs and maybe kind of give us the top down here and how many designs you have, you know, and what functionalities. Your comments on the press release talk about applications up to 150 kiloVolts, which seem to apply in inverters in EVs. Maybe you can kind of characterize what functionality you're supporting then. Just to clarify, this, it sounds like calendar 2025 is the timeframe to expect material revenues there. Is that accurate? That was kilowatts, not kilovolts. Yeah. Yeah. My apologies. If you look at the chipset that we showed basically the power module family that's making up most of the solutions that we're bringing forward, because as we talked about before, this is a very scalable technology, right? You can have a five, 10 kW, 800 Volt to 48 Volt system, and then you can add more modules to scale it to 15, 20 kW and so forth. That's really loved by the automotive OEMs and also some of the tier ones that we're now working with. The applications are 800 Volts to 48, 800 Volts to 48 to 12. You can go 400 Volts to 48 to 12 or 400 Volts to 12. Different types of car platforms that useThat down conversion capability that we can offer in two or three power modules. On the other side, Patrizio mentioned the 150 kW. That's for an onboard charger for rapid charging. It's a 400 Volt, 800 Volt bi-directional buck-boost, if you like, converter system with 98%, 99% efficiency. You can hold it in the palm of your hand, and you can get 30+ kW out of it. We showed it at WCX last week in actually in a module form that can achieve, I think it was 150 kW in the stack that we had. In a stock of right now with some OEMs, five modules going down to four modules, going down to three modules. Yes. With the power density, that's literally 5x better in terms of volume and weight than any competitive alternative. Richard, in Q1, I mentioned here just briefly again, we had a supplier agreement with a major tier one. We signed that, expanded design wins at OEMs we've started working with almost two years ago, with additional platforms and new applications like the onboard charger example. We also had three new collaborations in the quarter, and added a major design win with an SOP in 2026. Those are from my comments earlier. We've got quite a number of collaborations going on now globally, but all of them center around that 800 Volt down conversion to 48 or 12 or 400 Volt down conversion, 48 to 12, and then also 48 to 12 applications with wire harness type companies, and then also these rapid charge onboard charger systems at very high power levels with a number of OEMs and tier ones. It's quite a mix. You know, as I said before, I'm very excited about it. We're really engaged with a very high class level of OEMs and tier ones now. It's very exciting. Okay. A lot of detail there to unpack. I think I got some good notes there. I think I will jump on the line here, though. Thank you very much, guys. Okay. Thank you. Thank you. The next question is from Doug Campbell. Please go ahead. I will unmute you now. Please also unmute yourself from your end. You can go ahead now. Can you hear me guys? Yes. Hey. Okay. Just a couple of quick questions. First of all, Patrizio, congratulations on the Forbes article. I thought it was really great to see you talking to a broad span of people. Obviously, Forbes is a great publication, and I thought it was well written and explained the story pretty well. I thought it was a very handsome photo of you as well, so congrats on that. I guess my only question is, with the drawdown in the backlog and some of the time frames you've given for new products and new OEM contracts and all of the above, with the new factory pretty much not being online till July, August or in that time frame, I've kind of viewed this year as a transition year. Do you see the backlog being significantly drawn down? I don't wanna say to zero, but, you know, as we enter Q3, Q4, I mean, will the backlog just be eliminated at this point? It's hard to tell exactly what's going to happen. In terms of bookings, we believe that the low point took place in Q4 with an improvement in Q1 and further improvement in Q2 expected. Because of the uncertainties with respect to some of these programs ramping, which is really something we can't control, it's hard to predict exactly what is going to happen through the balance of the year with respect to backlog. Our revenues in Q1 were now limited by backlog. You know, we're still playing catch up with respect to the backlog. Even in Q2, we're going to be playing catch up. In one way of looking at it, in terms of taking care of customer needs in the short term, the monkey is not on the back of the front end of the business, it's still on the back end in terms of operations stepping up to the bar, given the challenges with outsourcing of some of the chip processes, which has still been a factor in recent months. Right. Getting the output within the quarter. Well, two things. I have to believe that you guys are counting the seconds before you can produce everything in-house, because I know as investors, I'm not gonna say we're so tired of hearing about the outsourced manufacturing problems. You know, when you guys control this, it's gonna be a game changer. I guess I was thinking the drawdown was going to occur because, you know, you talked about, I guess, new orders or new projects in Q4, maybe heading into next year. I was thinking that the bulk of the revenue for the next few quarters would come out of that backlog. I do realize it's significant, but with the book-to-bill, again, you don't give specifics, but I know it was significantly below one. It's improving. If it stays, let's say, below 0.6 or 0.7, that backlog's going to draw down pretty quick. I mean, have any of your conversations talked about economic weakness or the, you know, the most forecasted recession that we've ever seen before? I mean, it hasn't hit yet, but everyone's pointing to it. That also makes me a little antsy in that your plant's about to come online, and you have all these great industries and all these great, you know, potential customers. I'm also concerned about the macro, and I'm concerned about, you know, how deep will the recession be, if there's a recession. Do we have a, you know, do we have a repeat of Q4 of 2018, where certain OEMs just shut off the order flow for a certain period of time? I know you can't predict that, but I'm wondering if you're getting any feedback from any of these larger guys. I mean, Microsoft's quarter was great today. Alphabet was better than expected. I'm wondering what you guys are hearing? I'm not really concerned about these factors. Obviously, they are there, and they have a certain degree of unpredictability. You know, I feel I'm in a safe harbor because of the technology, the products, the fab, the scalability, the cost effectiveness, the diversification with respect to end markets, the general intensification, the intensification, with EVs converging on 48 Volt as an infrastructure for power distribution. All of these things, at the end of the day, will bring about more demand than our fab will be able to supply, which is a substantial multiple of our current revenues. I love it. That's what I wanted to hear. I love it. I don't have a perfect level of visibility, none of us has, but I'm not losing any sleep with respect to our ability to fill the fab. Well, I'll just finish with this because I took enough time. I have no doubts about your future. I'm just concerned with the present. That's, as an investor, that's all I'm concerned with. Your future to me two, three, four years out, I have no doubts where the company will be. Just the last couple of quarters and the next couple of quarters for me as a fund manager, it's a little tricky, that's all. Understood. Thank you, Doug. I think, by the way, your choice of words, this year being a transition year, I think that's very much on point. It is a transition year for a number of reasons. You know, the year is progressing. Got it. We're going to be getting to the end of the year before we realize it, and all these critical elements are going to be in place. Well, the future in all these industries has panned out exactly as you forecasted years ago, so I hope we all make a boatload of money, you know, on top of it all. Thank you. Okay. Thank you. Next question is from another caller. Please unmute yourself from your end using star and six, and I will also unmute you from our side. Hey, this is Quinn Bolton from Needham. Can you guys hear me? Yes. Hi, Quinn. Yes. Hey. Hopefully, this is a better connection. Just wanted a couple of follow-ups. Last quarter, you talked about the ability to potentially come in on some redesigns where processors had shipped initially using multi-phase, and you saw the opportunity to redesign those boards with Vicor components. Can you just give us an update whether you still see that opportunity? If you do, are those going to be the lateral or are those lateral vertical designs? Some of these solutions suggested earlier are severely handicapped by their lateral PDN. A Vicor solution that is still lateral within, you know, in effect, the constraints of the lateral PDN offers performance advantages in terms of lower noise, some increase in power density, but not on the scale of a lateral vertical solution, and even less so on the scale of a fully vertical. The transition in terms of the architecture I suggested earlier is not as quick and simple as some of us would like it to be because of the nature of the design process with 4G components, and the novelty in terms of a different kind of PDN that customers, OEMs struggle with in terms of appreciating the benefits through the various stages of the design process. That's what has led to delays and some level of instability. I can generally say that there is growing recognition of major benefits. It's not just slashing the PDN losses. OEMs are coming to realize that there is as much of a power saving in the silicon itself, because frankly, the handicap results into large voltage differentials within domains, the primary rail and auxiliary rails that require a significant increase in power dissipation within the silicon itself. The advance that is brought about by a lateral vertical PDN, even before we get to fully vertical PDN, it gets measured not just by 50, 60, 70 W worth of reduction in PDN loss. There is just about as much of a reduction in power loss within the silicon and better functionality of the silicon, and a lower noise floor. No, I understand, Patrizio, that the benefits of lateral vertical and vertical only out in the future. I guess what I'm trying to, and I think a number of investors, in the company and many on this call are trying to ask is, do we effectively need to wait for next generation 3-nm XPUs before we see the significant ramp of lateral vertical or vertical-only solutions? Can you ramp lateral vertical on existing 5-nm processors, you know, over the next year? As we said earlier in the call, we believe that there may well be a ramp with the lateral solution because of certain benefits, even though the PDN is still handicapped. We believe that before too long, there's going to be a ramp for a lateral vertical alternative that has got distinct advantages all around. All these are developments that are based on current silicon, they are not contingent on the 3-nm nodes that Phil made reference to in our most recent prior conference call. What he was pointing to there is those developments making it, practically speaking, impossible for lateral solution to hang around and creating the sort of requirements for our 5G type of solution. There was some feedback on the line, Quinn. Yeah. Hopefully you caught that. Hello, Quinn? Operator, are you there? Hey, guys. I'd had been muted because of the background noise. Hopefully you can hear me again. Yes. Okay. My next question was last quarter you talked about seeing some cancellations. This quarter, I haven't heard you mention cancellations. Just wondering if you saw any meaningful cancellations to backlog or whether you think the cancellation activity has largely subsided at this point. Yeah. We haven't seen cancellations, Quinn. Backlog looks very, very good. Perfect. The last one for me, just, you mentioned the last key pieces of equipment, I think, being delivered in May and qualified in June and July. Does that get you to the full $1 billion run rate, or are those pieces of equipment just bringing you to the sort of the full vertical integration capability, but to the extent you wanted to ramp to $500 million or $750 million or $1 billion, you would need several additional lines of whatever equipment was delayed until late April or May? In April, we took receipt of the equipment for vertical integration through plating of the copper, which is the critical process that we had outsourced. First step was half of the 18,000 panels, per month around there capacity, we have the ability to install, and we'll install the balance as we need it. The plating operation and the vertical integration should position us for, as Patrizio said, about a $1 billion capacity. Do you have anything you want to add? Got it. Go ahead. Okay. It sounds like you've got half of the equipment. No, I don't want to give you the. Yeah, okay. I don't want to give you the wrong impression. We've got the equipment lined up to do the plating operation, what we've installed just for as a matter of starting the process, half of the total capacity we can install. The next tranche of capacity is very easy to put in. There's no problem at all expected with that. In May, we'll do the pilot runs. June, July, we'll qualify all the equipment, and we'll have essentially the capacity in place to generate the panel output that we need to get to that level. Now there will be one minor outsourced process that's very simple to accomplish, and that will not be a capacity bottleneck in the future. Okay. Maybe let me see if I can clarify with this question. It sounds like with the exception of this one small process that will remain outsourced, you'll have vertical integration capacity to do about $500 million of revenue by the end of the third quarter. more than that. you know. More than. Okay. To give you a little bit more color with respect to this. What Jim was referring to is one of the processes that are vertically integrated or about to be vertically integrated. There is many processes in the chip fab that have been vertically integrated and whose capacity can support the $1 billion revenue in terms of panels per week, panels per month, panels per year. Also, what should be considered is that, depending on the mix between, on the one end, data center AI, where the panels are very thin, they're going to be with 5G 1.6 mm thin or automotive chips which are considerably thicker. Those are front-end products, typically 7.4 mm thick. The capacity of this equipment scales in effect in inverse proportion to the thickness of the panel. It's a little bit like in a wafer foundry, capacity being function of the number of masks or layers. We have actually more capacity in terms of panels per week for data center or AI applications than we would have for front-end high power automotive type of chips. Generally speaking, looking at the bulk of the capacity, we are going to be, as of Q2, in a position to support the lion's share of $1 billion worth of revenues per year. Understood. Thank you. Thank you. We have no further question in the queue. operator, I think so this will be our last question as we're at the top of the hour. Mm-hmm. I think she said that there are no more. Oh, okay. Okay, fine. Okay. There were no more. Okay. Thank you. Thank you very much. We're ready to conclude the call then, operator. All right. Thank you. Thank you, everyone. That marks the end of your webinar. Thank you for joining, and have a nice day.