Good day, ladies and gentlemen, and welcome to the Vicor 2008 second quarter earnings result conference call. My name is Lutrice and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this call. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Mr. Jamie Simms, Chief Financial Officer. Please proceed, sir.

Thanks. Good afternoon, everyone, and welcome to Vicor's quarterly conference call. As mentioned, I am Jamie Simms, Chief Financial Officer; and with me today is, our Chief Executive Officer, Patrizio Vinciarelli, and our Chief Accounting Officer, Dick Nagel. Earlier this afternoon, we issued a press release outlining our financial results for the quarter ended June 30, 2008. This press release is available on the Investor page of our website, www.vicordepower.com. We also have filed a Form 8-K with the Securities and Exchange Commission in association with issuing this press release. Before we begin, I remind all of you, today's conference call is being recorded and is the copyrighted property of Vicor Corporation. Any rebroadcast, reproduction or other transmission of this conference call in whole or in part without the prior written consent of Vicor is prohibited. In addition, I also remind you various remarks we may make during this call about future expectations, trends, plans, prospects for the Company and its business constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are denoted by such words as will, would, believes, should, expect, outlook, estimate, plan, anticipate, and similar expressions that look toward future events or performance. These forward-looking statements merely reflect our current beliefs, expectations and estimates, which we share with you during our quarterly conference calls. Forward-looking statements are based on current information that, by its nature, is dynamic and subject to rapid and even abrupt changes. Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected or implied in our statements. Such risks and uncertainties discussed in today's press release as well as our most recent reports on forms 10-K and 10-Q filed with the SEC. A replay of this conference call will be available beginning shortly upon its conclusion through August 26, 2008, by calling 888-286-8010 and using the pass code 44989156. In addition, a webcast replay of the conference will be available on the Investor Relations page of the Company's website, beginning shortly upon its conclusion. However, the information provided during this call is accurate only as of the date of this call. Vicor undertakes no obligation to update any of the statements made during this call, and you should not rely upon them after the conclusion of this call. Patrizio and I have each prepared remarks, after which we will take your questions. Patrizio?

Thank you, Jamie. Good afternoon, everyone, and welcome to our second quarter conference call. As you may have seen, we announced earlier today the appointment of Jason Carlson to our Board of Directors. Jason will serve on the Board's Audit and Compensation Committees. Jason is currently CEO of Emo Labs, is set up here in the Boston area, doing some quite innovative things in audio speaker technology. Prior to joining Emo Labs in 2006, he was President and Chief Executive Officer of Semtech Corporation, an important vendor in analog and mix signal semiconductors, largely for power management applications. Earlier in his career, he had leadership roles with Cirrus Logic, the inventor of analog and mix signal semiconductors for consumer industrial applications. Jason has a track record of accomplishment, ranging from his role as a private company executive to being part of entrepreneurial teams that have built successful companies. Because he understands power electronics and technological innovation, two defining characteristics of Vicor, we are quite pleased to have Jason join us. Jason, I know you are listening, so allow me to publicly welcome you to Vicor. I will now turn to Vicor's performance in the second quarter and our outlook for each of the business units. As anticipated, due to booking trends in Q1 and early Q2, Vicor's revenue for the second quarter declined as the global economy softened. Revenue from our Brick Business Unit experienced a 6% decline sequentially. However, bookings in July came in 35% ahead of April levels, pointing to improved demands for our expanding brick product line. I am particularly pleased to report the achievement of a milestone in the evolution of our brick business with the recent booking of a $3.2 million order for the VIBricks. As you may recall, VIBricks combined the optical attributes of…

Thank you, Patrizio. Company revenues for the second quarter of $49.3 million, decreased 7.8% on a sequential basis from $53.5 million for the first quarter of 2008, but increased from 54.4% from $47.2 million for the corresponding year-ago period. As Patrizio mentioned, our Brick Business Unit experienced a roughly 6% decline in revenue from the first quarter of '08, but generated roughly the same level of revenue it had in the second quarter of '07. As stated, there was no particular product, market, region, or customer that was noticeably or notably weak for the second quarter, and our belief is that revenue decline due to broadly-based economic weakness. Notably our Power Systems business conducted largely through our Vicor integration architect units has experienced improved performance for the first half of the year with both revenue growth and margin improvement. While we benefited somewhat from the decline of the relative value of the U.S. dollar in 2007, our international sales as a percentage of sales actually declined slightly from 43.4% to 41.8% from the first to the second quarter. In contrast, international sales represented 37.6% of sales for the second quarter of 2007. I should point out that the decline of the dollar is a two-edged sword, as we have operations and personnel around the world, and the associated in-country costs are, of course, denominated and paid in local currencies. The book-to-bill ratio for the second quarter of 2008 was just above unity at 1.01 to 1, a slight improvement over the 0.99 to 1 ratio for the first quarter of 2008, but below the 1.09 to 1 ratio for the second quarter of 2007. Our backlog at the end of the second quarter of 2008 was $46.3 million as compared to $46.1 million at the end of the first quarter…

Good afternoon.

Good afternoon.

The prospect of doubling V-I Chip revenue for this year, does that include an assumption that the large order that had been pushed out will come in during the second half? Or is it possible that you would double the V-I Chip revenue without that order?

We expect to double the V-I Chip revenue without that order.

Is that order still potentially in place?

Yes. The timing of it, though, slipped out at the beginning of this year and the prospect with respect to that is still uncertain. So, in our current plans, we are not factoring in any immediate business from that particular program. But fortunately, other programs have been progressing at the fastest pace; and in fact, it has our forecast, still looking for an essential double in top line for V-I Chip for the year.

Does this represent -- will this be going to the markets that you have been talking about in general?

Yes. It has to do with the markets where we have achieved early penetration and not respectively on a program or program basis, some programs progress faster than expected and other programs take at least some temporary setbacks.

And I'm wondering if you would be willing and/or able to expand on the comment in the press release about confidence being based on ongoing expansion of relationships with licensees. Specifically, with respect to continuing prospect for license revenue this year and any other color that you could give us concerning those licensees and partners?

There is progress on several fronts. There has been no change with respect to our outlook since we last spoke at the end of the first quarter. There are activities on different fronts with different licensees and these initiatives bode well for the medium and the long-term. There is no appreciable current income from any of the licensing initiatives that we have in place. In one instance, or a couple of instances, the accounting treatment for some initially can be such that they get spread out over a 15-year timeframe. So, we're looking at the opportunities with respect to these initiatives as bearing fruit as time progresses.

Thanks. I'll get back in the queue.

And our next question comes from the line of Jim Bartlett. Please proceed, sir.

Yes, just a follow-up on Ron's question, so I understand that the deferred order, you said you do not expect to get it this year. Do you still expect that to come to fruition?

We expect a reception of activity with respect to that particular program, the timing, as I mentioned in answer to Ron's question, is uncertain. We can only speculate that the economic environment plays a role with respect to that particular program. Even though with respect to other programs in a similar market, things have actually progressed better than anticipated. And I would also like to point out that the expectation of doubling revenue for V-I Chip this year is taking place, again, in spite of the setback in that particular program. So, it is suggested that on average, our expectations were pretty much on track.

Great. Just to follow up on the VIBricks, certainly that $3 million order is a terrific order. Was that one you referred to was an early adopter in the last conference call that for some time in October, I believe, it was mentioned?

Yes, I think in the last conference call, we made some vague reference to two prospects for brick products based on V-I Chips under the hood. And we've, in the month of July, received a first order. I think in the last quarterly call, I had anticipated a production start in October and it now looks like the production start is going to be in September.

Great. You also mentioned that you'd had tremendous interest in the website activity on VIBricks and were hopeful that it was genuine customer interest. Could you just give us a time line on what you think for the VIBrick revenues in terms of one with the existing product line you have now? And then also maybe a sort of a time line on what other products do you need to flesh out the Brick V-I product line?

There is consensus that a major component of our VIBrick product line is going to be a product that we expect to have late this year that involves an AC/DC capability in both V-I Chip and VIBricks form. When it comes to the big marketplace that AC/DC product capability greatly expands the market opportunity, not just in terms of an AC/DC system, but also in terms of providing empowered connectivity from the wall plug to the point of load through a complete Factorized Power system capability. So, we anticipate that that is going to be a very significant product introduction and product development in terms of the big market.

And you said you expect that both for the brick and the V-I Chip later this year?

Yes.

Great. Thank you very much.

And our next question comes from the line of Steven Glass from STG Capital. Please proceed.

My question has been answered, but thank you.

And our next question comes from Mr. Baxter from Ardour Capital. Please proceed.

Thank you. You had talked about rolling out some of the new V-I Chip inside or in the brick business. How long do you see it taking before most of the brick business has the new products rolled out?

Until most of the brick…

However much of the brick business you are focusing on rolling out with new V-I Chip technology, how long do you see this rollout occurring over the next three, four, five quarters or…?

Okay, so to be clear, with respect to our legacy big business, we don't anticipate any significant change with respect to that. And we don't anticipate any cannibalization of that business. That business inherently has a very long time scale associated with it as we all recognize, given our -- in effect, how long the product life cycle has been for our legacy bricks. So, what we are talking about here is an expansion of capabilities associated with a VIBrick power line that builds up on V-I Chips through a V-I Chip inside or a V-I Chip under the hood strategy. What's been rolled out thus far are very early products that are based on having on the inside our very first generation V-I Chip. And these are only full chips. There is no half chips or double chips. They are only first generation chips in the realm of AC to DC power conversion. As mentioned earlier, in answer to the earlier question, we anticipate that the AC to DC V-I Chip and VIBrick capability by providing a level of connectivity that does not exist today will greatly expand the market opportunity. That is an imminent event. It's an imminent event in a variety of ways, in terms of bricks that perform the basic AC/DC function as well as configurable products that at the system level leverage the V-I Chip capability. And we expect that JAW capability to begin to be a factor in terms of expanding the reach of the Brick Business Unit in calendar 2009.

All right, thank you. And I guess one other follow-up, the Cool-ORing with Picor was described as a first step in this roadmap. Can you just give some broad brushstrokes of that roadmap going forward?

Well, I wouldn't want it to in effect take the wind out of the sails of Picor with respect to their roadmap from a competitive perspective or other perspective. So, we are going to have to be patient and wait until after the product gets announced and released and to make additional disclosures with respect to that. Suffice it to say that from my point of visibility, this is a very exciting product roadmap, but as suggested in the press release, is very complementary in many ways to other initiatives that were in place leveraging capabilities on a scale that is smaller than V-I Chip's and quite complementary to it.

All right, thank you.

And our next question comes from the line of [John Dillon with JB Associates]. Please proceed, sir.

Patrizio, a follow-up question to your AC to DC comments. Just the other day, I had a micro-TSA chassis and it had an external 350 watt power supply. And the 350 watt AC to DC power supply was about 88 cubic inches or 11 inches by 4 inches by 2 inches. Is your brick business going to be able to significantly reduce the size and weight of those power supplies?

Yes. As you can infer from what has been disclosed already with respect to our focal point in terms of the AC/DC effort, which has been flat-panel display applications in the 300 watts range, what we're able to do in terms of thickness and overall volume and power and density far exceeds the capability of some conventional technology. So, those same developments, as relevant as they are in the consumer electronics space with respect to 13 displays in different ways and to some extent, for other reasons, are significant in other end markets, the industrial market, other markets, where a denser, more efficient AC/DC power system capability has long been needed.

Are you talking about cutting that size in half or by down to (inaudible) about one-quarter of the size of this thing?

Well, that to some extent depends on power levels. Because the figures are made of AC/DC power conversion are very much dependent on power level. So to get a little bit more quantitative, low power levels, a power density of 5 watts or 10 watts per cubic inch may be considered state-of-the-art today at higher power levels, the power density with conventional technology might extend out to 20 watts per cubic inch. With V-I Chip technology, we can enable power densities far in excess of either of the above.

Okay. I'm looking forward to seeing that, because the market really needs something like that. Can you give us an update on the LCD status? Has anything changed on that since last call?

No, things are progressing along. We recently made some very good progress in terms of simplification and cost reduction, the attainment of the application, performance goals. And so, things are progressing well.

What was the first flat channel display (inaudible)?

As we discussed in the last quarterly call, the earliest that would have happen would be in the 2009 timeframe. And with respect to more specific plans and forecasts with respect to that, we're going to have to take a little bit of a wait-and-see attitude.

Okay. In regard to that, you were talking about with the LCD market, you had a power supply that could actually put out different voltage levels. And it seems like there is a real need for the market in that, because you have the current FPGA's which can take a couple of different voltage levels and associated memories can take a couple more. Will you have a chip that will be available for, let's say, a micro-TSA card or a PCI express card that will be able to be cost-effective and have multiple voltage levels?

Well, with the LCD TV application, we have targeted a chip set solution that comprises an AC/DC chip that is referenced as the PFN, and the multiple output regulator chip, [DMOR] that provides a multiplicity of as many as five outputs. And this targeted the class of applications again in the LCD TV space. When it comes to other application requirements, that technology can be adapted to address those requirements. The PFN is common than any other chip, is a common denominator devised that we expected to establish a de facto standard in the marketplace. The point of low device that confers the output of the AC/DC V-I Chip into a single app with our multiplicity of outputs that are required by specific applications, that is dependent on the application requirements. And for that particular purpose, depending on the volume of the application, if the volume isn't large enough to justify the development of a tailored chip, or standard PRM, BTM based solutions can be deployed to deliver the required voltage. And in some cases that maybe attainable even without involving a BTM just from the applicator appearing. So, depending on the application requirements, Factorized Power systems can be deployed to advantage in order to provide whatever multiplicity or outputs are required by the application. And depending on the volumes, there is the ability to achieve economies of scale by developing a tailored chip, particularly when it comes to a multiple app requirement.

Thanks.

And our next question comes from the line of Don McKenna with D.B. McKenna & Company. Please proceed, sir. Don McKenna - D.B. McKenna & Company: Patrizio, I wanted you to go back if you would, to the brick business and if you took out that $3.2 million order that you received, would I be reading that right that the rest of the business would be running about 10% ahead so far this quarter from what you normally anticipate?

I'm not sure I can interpret that. You're referencing the July bookings rate? Don McKenna - D.B. McKenna & Company: Yes.

The July bookings rates being 35% ahead of April. So, you have netted out the 3.2. Don McKenna - D.B. McKenna & Company: Right.

I don't have a specific percentage increase. I think your back of the envelope math is probably as good as I could make out in real-time here. But I can tell you, in general terms, that even in the absence of that order, the bookings rate for what you might call legacy products took a turn for the better in July. And in fact, as I look at what we call the field factor for Q3 and Q4 and the balance of the year, because of the level of activity in July, which was quite robust overall, it is much improved relative to where we stood at this time last quarter. Don McKenna - D.B. McKenna & Company: Thank you. And on the V-I Chip, if we expect to still double, that would anticipate then about a 50% increase in revenues in the second half over the first?

It would anticipate, let's see, I don't have a precise number on the top of my head…

It's supposed to grow but it's not a double.

I think at this quarter it represents roughly a 50% to 60% increase from the Q2 level. Don McKenna - D.B. McKenna & Company: Great. Well, thank you very much.

And our next question comes from the line of Ron Opel from Marston Capital. Please proceed sir.

Patrizio, do you see the possibility or the likelihood of applying your well established mass customization capability to VIBricks and V-I Chips?

Well, the mass customization capability would be a logical attribute for VIBricks, not a logical attribute for V-I Chips. A way of thinking about this is that the chips require very significant development. And the good news is that once that investment is made, they become common denominator building blocks for a variety of power system requirements. And that is where the mass customization opportunity of VIBricks comes about. So, mass customization is really to do with, in effect, taking common denominator out of V-I Chips and configuring them through higher level assemblies, i.e. VIBricks, into the complementary requirements to meet an application that can leverage those devices in a brick-like format, or in a configurable product platform.

I realize this is possibly competitively sensitive, but can you say whether or not that $3.2 million order for VIBricks is for a consumer electronics market?

No, it is not for the consumer electronics market but I cannot say anything beyond that. So, it is not for consumer electronics.

Okay. And just one final question, you haven't mentioned there's not been a lot of conversation in the recent past about -- or in the press release, let me put it that way, about automated testing markets. Do you still have strong expectations for applicability of the new technology in these markets? And do you see the likelihood of orders coming in?

Yes. We see activity as mentioned I think most recently in the Q1 conference call. We see strong activity with most significant companies in that space, in the U.S., in Japan, it is a national fit for V-I Chips and Factorized Power. It enables capabilities that competitively are very attractive to every one of these companies. As you know, that is a very competitive marketplace. And enabling faster throughput at lower noise levels, greater capabilities is very important. And that is one reason why it is being targeted early on by the V-I Chip marketing team as an important market for early adopters and early penetration.

And have you identified any new potential high-volume V-I Chip applications over the course of the last quarter or so?

In the test market?

No, in general.

In general? I would have to think a little while, probably longer than I can in real time here…

I don't think anything that wasn't already on the whiteboard.

Yes. I think pretty much we've had a good sense of where the early opportunities lie in the order progression. I think our marketing team is exercising, our V-I Chip marketing team, good discipline with respect to going after these markets and these opportunities in an orderly fashion, as implied by earlier remarks with respect to the level of adding expenses. We have made significant hires, particularly on the applications engineering front, a lot of new people and a lot of talented additions to expand their bandwidth with respect to holding customer's hands and supporting the application efforts and computing in the test market and the other markets that are being prioritized by the V-I Chip marketing team.

Okay, thanks very much.

And your next question comes from the line of Jim Bartlett from Bartlett Investors. Please proceed, sir.

Just following up on the new hires you mentioned. What was the headcount at the end of the second quarter and how would that compare with the first quarter and year-end?

I don't have headcount for V-I Chip in front of me. But I can tell you off the top of my head that in terms of the applications engineering people, they more than doubled in the last eight or nine months. In fact, I had lunch today with one new hire that just joined us. We have been investing in good resources, greater capabilities there because of the need for that bandwidth to expand the rate of progress with respect to a variety of customer applications.

And what's the absolute number?

For the applications group or in general for V-I Chip?

Yes, V-I Chip and the applications group.

Well, the growth in the applications group has been on a percentage basis far greater than for V-I Chip as a whole. And the underlying reason is simple, we feel that that's important in order to accelerate the rate of growth and be able to keep up with customer needs. Overall for V-I Chip has been a more modest increase. I can't be very confidant with respect to that. But percentage wise, for V-I Chip as a whole, it's not been all that significant for the applications engineering team; it's been over 100%.

And one of the areas that you've been very, very positive on is the high end server market. When you're referring to that, could you give us an idea of what kind of price point are you talking about and unit volume in that market?

Well, I'm not sure…

Price points for us or price points…?

No, price point of the server market that you're serving. When you say high end servers, how are you defining that?

Well, those are basically large systems with a relatively high price tag, in the multimillion dollar category.

This is your high availability, high performance computing, typically a blade architecture. And the systems themselves are $50,000 plus type price points.

Okay. You're saying over $50,000, then?

Right.

In notable cases, well above that

Yes. No, I understand that as you're defining that.

But this is not your garden variety white box business. This is sophisticated high end performance, high availability computing. In some cases, we are talking to customers in the realm of fault tolerance, and these are very expensive, mission-critical applications that they're being sold into.

It would be fair to say that you're talking with or have programs with a multiple number of vendors?

We have expanded into a longer list of customers in that space. So, as you might expect, success is spelled success. And looking at it from a different perspective, what is good for one customer in terms of figures of merit of relative performance advantages that Factorized Power can bring about, tends to be good for further applications and other customers. So, as we're seeing with the test market, suggested in an earlier answer, a broadening set of applications with a broadening customer base.

Great. Thank you.

And our next question comes from the line of John Dillon with JB Associates. Please proceed, sir.

Patrizio, your gross margins for the next couple of quarters, do you expect those to continue to increase?

Well, let's look at it by business units. The big business unit actually expanded its margins in Q2 in spite of a temporary setback in the top line. So, with an expanding top line subject to the vagaries, as pointed out by Jamie in his earlier prepared remarks of product mix -- subject to that, I would expect because of this expansion top line and further expansion in gross margin, which are quite good for a matured business such as legacy bricks. With V-I Chips, as suggested in the prepared remarks, a 50%, 60% increase in throughput should make for a significant improvement in terms of absorption of fixed costs, infrastructure costs in establishing a step in the right direction in terms of material usage and material cost efficiencies, even though the timescale for that particular development and not the absorption of the overhead, but the material component, that's obviously a longer timescale, because what is really going to make a difference with respect to that is not a 50% change in the volume of materials but a 10-fold change in the volume of materials. So, given also the economics when it comes to building material costs in the electronics marketplace.

Do you have target TM for, let's say, the fourth quarter?

I don't think it would be wise for us to pick any particular number. I think that the earlier comments about it being a positive trend in both the Brick business unit and V-I Chip is as far as we can go at this point.

Okay, thank you.

And our next question comes from the line of Dick Feldman with Monarch Capital. Please proceed.

I have a question about VIBricks. One, what would the gross margins be on VIBricks compared to the legacy product? And I have a couple of follow-ons.

So, there are two components to that. There is the V-I Chip margin component and then there is the VIBrick component, if you will. That has to do with, in effect, turning the bare chips into a break. So, I can tell you that the margin contribution from the second element should be good from the very beginning. The margin contribution from the V-I Chip is no different than it is for any other V-I Chip. And there the same comments that I made in answer to the preceding question would apply. Greater volumes lead to absorption of fixed costs, which is a good thing with respect to one of the significant cost components. And then there is the bill of material where the larger economies of scale will come in place to get the margins to where we expect them to be. So, net-net, in the short-term, VIBricks will do relatively better than bare V-I Chip's. And over time, we expect them both to do quite well.

This raises an accounting issue, how do you treat the sale of a V-I Chip that goes into a VIBrick?

Well, it takes place at an eternal transfer price of which, in effect, the nets out of our consolidated financial statements. So, the sale of V-I Chips, the big business unit is a sale to a preferred customer at prices that are commensurate to a best customer price. And that's the basis for doing business between or among business units.

Okay. One last question and that is, when you combine the V-I Chip with the capabilities of mass customization that are inherent in the architecture of the brick business, many years ago, you had said you thought the brick business was reasonably mature. With this additional capability, how would you characterize the potentials of the brick business?

So the comments about the brick business being reasonably mature were on point, and they're still accurate today. And to be sure we're all on the same page with respect to that, I think what is realistic with respect to our big business based on legacy bricks whose architecture or whose design is literally 20, 25 years old. It is a steady business with good margins, the cash cow that we're all relying upon in order to finance the great opportunities we have with novel technology products. Now, when it comes to VIBricks, that's an example of that opportunity. We can combine the great attributes of the brick business model, which are as valid today as they were 10 years or 20 years ago, once they can leverage a contemporary, leading edge technology such as V-I Chip under the hood. So, you can surmise from that that the opportunity is quite significant, because with respect to each of the key figures of merit, power advances, efficiency, transfer response, and so on and so forth. A V-I Chip inside the strategy leads to bricks and configurable products that are far superior from a performance perspective to what we have been able to do with our older technology bricks, and system products, configurable products of one form or another. So, with that V-I Chip inside strategy, as initially demonstrated by the order we recently received, there's a great opportunity to blend a mass customization model at which we are very well advanced, and a brick business model that is still very, very valid today, operating within the context of a brick paradigm that today represents a $2 billion-plus world market with an established sets of standards and capabilities and customer expectations. That all bodes very well in terms of the VIBrick opportunity.

One more question as it relates to the VIBrick. I think when you initially tried to put V-I Chips into the bricks, you were dealing with the same footprint. Has the footprint changed? In other words, are you able to go to greater miniaturization on the VIBrick?

Yes. As you might recall from a comment that was made in an earlier conference call, I think late last year, we were able to take the packaging concept in terms of mechanical thermal management beyond the initial concept of which, as you might recall, had been inspired by a customer engagement. We went beyond that and have developed a proprietary packaging technology that makes the most of the V-I Chip attributes in terms of electrical performance with a shell that adds on to the V-I Chip capability, great mechanical thermal management capabilities. And this flexibility not just at the single chip level, but it is very scaleable in terms of being able to combine in one package a multiplicity of chips. They can be like chips, as is the case for the first order we recently received, or they can involve combination of different types of chips, like PRMs and VTMs or PFMs and PRMs or half-size chips and full-size chips. So, there is tremendous flexibility in the packaging concept and the thermal management system to, in effect, leverage up a disruptive power component such as the V-I Chip into a sustained technology product opportunity such as bricks and configurable products.

Would you say that looking at this versus a year and a half ago that this development meaningfully expands the market that you can address?

I believe that this represents a very realistic opportunity to achieve a significant multiple of the baseline big business that we have enjoyed. And that statement is predicated on the size of the brick market, the significance of the V-I Chip capabilities within the brick market. I believe that the combination of AC to DC chips and the variety of Factorized Power component chips for point of load application greatly expands the reach of the brick paradigm within an established market, particularly with respect to expanding it in the AC to DC area. So, it is very reasonable to expect that two developments should take place. One, we should be able to expand the size of the brick market from its current world level, and capture a greater share of that market for the Micro Brick Business unit. And that's a very significant market opportunity. But to caution everybody, that will not happen overnight. It will take time. The gestation period for these kinds of developments, you see years, several years.

Well, thank you and good luck.

And our next question comes from the line of Daniel Gorman. Please proceed.

My question has been answered. Thank you.

Your final question comes from the line of Jim Bartlett from Bartlett Investors. Please proceed, sir.

Yes. In the consumer electronics show, you mentioned that you introduced an LCD TV of about 1 inch, and then at the (inaudible) show in Japan of about one-half inch. Were those prototypes basically for the same customer?

So, to be clear, the 1-inch demonstration at CS early this year that was a live LCD TV that was assembled using our first generation PFM or AC/DC V-I Chip capability. The one-half inch 300-watt capability that we demonstrated in Japan in May that was not an actual TV set. It was the power system for a TV set with the capability to achieve for the TV set as a whole an overall thickness one-half an inch. That still involved a V-I Chip capability that, however, leveraged a second generation development to, in effect, combine in a single chip that which we were only able to perform with a combination of two chips in the January time frame. This is part of the cost reduction initiatives that you have heard about being critical to achieve the cost expectations for what happens to be a very cost-sensitive, very high-volume marketplace. So, this has been the sequence of developments with respect to demonstrating capabilities for actual LCD TVs or a skeleton capability using more advanced chips that have been in development. And those are the ones that are now coming to fruition for introduction later this year.

Okay, thank you.

Thank you.

There no further questions in queue at this time.

Thank you everyone. Thanks to everyone for joining us for this call. And we'll talk to you next quarter.

Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.