Good day and welcome everyone to the Vicor Earnings Results for the Second Quarter ended June 30, 2021 call hosted by Jamie Schmidt, Chief Financial Officer. My name is Lydia and I am your event manager. [Operator Instructions] I would like to advise all parties that this call is being recorded for replay purposes. And now I would like to hand it over to Jamie Schmidt. Please take it away, sir.

Thank you. Good afternoon. And welcome to Vicor Corporation's earnings call for the second quarter ended June 30, 2021. I'm Jim Schmidt, Chief Financial Officer, and I am in Andover with Patrizio Vinciarelli, Chief Executive Officer and Phil Davies, Vice President of Global Sales and Marketing. After the markets closed today, we issued a press release summarizing our financial results for the three months ending June 30. 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’d 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, 1995. Except for historical information contained in this call, the matters discussed on this call, including any statements regarding current and planned products, current and potential customers, potential market opportunities, expected events and announcements and our capacity expansion as well as management's expectations for sales growth, spending and profitability are forward-looking statements involving risks and uncertainties. In light of these risks and uncertainties, we can offer no assurance that any forward-looking statement will, in fact, prove to be correct. Actual results may differ materially from those explicitly set forth in or implied by any of our remarks today. The risks and uncertainties we face are discussed in Item 1A of our 2020 Form 10-K, which we filed with the SEC on March 1, 2021. This document is available via the EDGAR system on the SEC's website. Please note the information provided during this conference call is accurate only as of today, Thursday, July 22, 2021. Vicor undertakes…

Thank you, Jim. Good afternoon and thank you for joining us. First I'll address our data center business, which showed continued momentum in Q2 with next generation design wins for both point of load factorized power solutions and 48 to 12 and 12 to 48 volt bridging applications for both low power CPU servers and AI accelerator installations into legacy 12-volt rack-based servers at North American hyperscalers. We also made excellent progress in our new AC to DC front end product development initiatives, and we'll be delivering pre-production units as planned in Q3 to lead customers. Automotive OEM collaboration's continued to advance with OEMs adding additional vehicle platforms as a result of successful testing of our power modules and as their electrification strategies become firmer with larger R&D commitments. As our power density capabilities become more visible to new divisions and with higher management levels within OEMs, with which we are collaborating, we are seeing increased opportunities due to the realization of the major advantages that our high density power modules bring to an electrified vehicle power system. In Q2, we added two new collaboration projects with OEMs in Japan and Korea, and we initiated two new onboard charging projects in collaboration with a Tier 1 partner. We are on track to ship our first fully-automotive qualified modules in Q4 of this year and we continue to add to our operations, quality, reliability and front-end teams with resources that have significant automotive experience. At our annual shareholders meeting a few weeks ago, I discussed the progress and next steps of our five-layers of growth strategy, which has seen our market share and new customer acquisition accelerated in the past four years. While our layer three high growth markets of data center, AI and automotive, with a combined SAM of over $20 billion by 2026, are currently dominating our growth and conversations with shareholders. We are focused on building a broad markets business that builds on our legacy product revenues. The opportunities in the broad markets with the emerging applications are significant. With the $1 billion SAM for Advanced Products in 2026 and justify increased focus and attention as customers in emerging growth markets challenged with higher power requirements, look for smaller, lower-weight and higher performance power delivery solutions. We will be updating our progress in the broad markets in upcoming calls. With that Patrizio, Jim and I will now take your questions. Thank you.

Okay. Operator we're ready for questions.

Thank you very much. [Operator Instructions] And as I can see we have already received a couple of questions. Would you like to receive them?

Yes.

Great. Thank you. And the first one is coming from the line of Hamed Khorsand, [BWS Financial]. Please go ahead, sir. And I'm going to coin out.

Hi, just a question here is, why the lack of disclosure this time around compared to your prior results, earnings releases, you're not providing bookings numbers anymore, backlog number anymore, you're not being specific in guidance anymore. Why the change in commentary?

On the bookings front, what we decided is there's a lot of dynamics in the bookings number on a three-month basis. And our feeling is that directional indications around book-to-bill are appropriate to help the analysts and the investor community understand the business. It's just – it's a function of lead time and backlog and churn. So we feel like it's dynamic and we're going with a relative comparison to book-to-bill of one, which is actually more than many other companies provide.

And the guidance, why did you decide to go more qualitative than quantitative?

Well, I think what we wanted to point out is that there's accelerating revenue growth in the advanced products, as we've been talking about for some time. And we are going to see a sequential decline in the Bricks business.

Okay. Thank you.

Thank you very much for the question. And our next question is coming from the line of Quinn Bolton. [Needham & Company, LLC] Please go ahead sir.

Hey, guys. Nice job on the results and particularly on the gross margins. I just wanted to follow up on Hamed's question. If I look at the guidance, you're talking about accelerating growth in advanced products, which I think if I've got my numbers right, I should say advanced products grew north of 20% sequentially in the third quarter. But you talked about a decline in Bricks. Can you give us some sense; will overall revenue still increase quarter-on-quarter driven by the accelerating growth in AP? Or do you expect a fairly substantial decline in Brick Products?

I think that we're not giving specific guidance on quarter-to-quarter sequential change in revenue. I think our mission at this point is to ship advanced products, accelerate the growth there. I'd say directionally, you're not far off Quinn relative to the quarter-to-quarter change in advanced products. And we have to clear the backlog, get the component supply, ramp that business way up. So the success is materializing there. And we're dealing with a decline in Brick, which is not surprising given the strength of that business over the last year. I think net-net – we're not going to give specific guidance on revenue growth, but the momentum is there in the advanced products.

Understood. And I guess maybe a follow-up. I think it was at the shareholder meeting in late June. You mentioned the advanced products could exceed on a dollar basis, the Brick Products in the third quarter. Do you still think that, that's how it's going to shake out for Q3?

Could well be.

Got it. Okay. I will get back in the queue.

Thank you very much for the question. And our next question is coming from the line of Jon Tanwanteng. [CJS Securities] Please go ahead sir. Your line is open now.

Hi, good afternoon, and great quarter guys. Thank you for taking my question. Just wanted to clarify again with other two callers. Last quarter, you had said that you were probably going to do a 7% sequential revenue growth as you look out at the quarters through the end of the year, mostly driven by capacity limitations. Has changed from that? Is the outlook that you gave the qualitative outlook consistent with that quantitative outlook you gave a quarter ago?

Nothing has changed. So this quarter, the quarter that recently ended, we were able to achieve slightly better than the 7% limitation that we had articulated earlier in the year. I mean, that limitation is still there. That's the upper end of a sequential growth as to its magnitude. I mean to Jim's point, it's a very dynamic situation. We have just to put it in a different perspective. We are booked solid for this quarter and next quarter. So it's not lack of demand. The bookings were far above the levels one might expect. The challenge and the book of bill accordingly was substantially above 1%. The challenge is not demand. The challenge in the short term is the change in mix in an environment where component availability, particularly semiconductor component availability is an issue. So we need to navigate through that. We are together early in the year in terms of sequential growth limitations is still in place. We're striving to compose to that limit. Given again, the capacity constraints without vertical integration and component availability considerations and we'll have to wait to see what we actually do.

Got it. Thanks, Patrizio. And my second question, I think last quarter you talked about 55% gross margins as your target exiting the year. Has that changed given the change in mix and I guess component availability and all that the other issues that we're seeing in supply chain?

No. This not changed. Again, there is a goal that we're driving to internally just like the sequential increases in revenue. The goals that are challenging given our idea of considerations that have been touched upon in the last few minutes. But that has been and remains our goal. And beyond at the end of the year, as we get to start utilizing our capacity for the packaging process steps for our Advanced Products. We have plenty of opportunity to go well beyond the 55% level. So I think we are on track with respect to progress in that direction. I think if anything within the last couple of quarters, we've been doing a little better than expected and that remains our goal.

Great. I'll get back in the queue. Great quarter.

Thank you.

Thanks.

Thank you very much for the question. And the next one is coming from the line of John Dillon. [D&B Capital] Please go ahead sir.

Hi, guys. Congratulations. Good quarter. I got a question and then a follow-up, Phil, in the last conference call in response to a question from Quinn. You mentioned the next generation product technology. I'm just wanting if you can elaborate on that a little bit.

Sorry, John, the next product generation technology and sort of what area that's we…

I think it was an automotive, but I am not sure.

Yes. As I said, there's a lot of new product – next generation product technology under development. I think, in terms of data center, it's a vertical power delivery. In automotive, we've got a lot of innovation and product development going on there in the charging area, bridging area, 48 volt conversion areas. AC-DC is a big initiative for us, of course, with expanding our SAM in the markets the both data center and then some of the industrial segments that we're targeting now in the broad markets. So there's a lot really going on, John and it's quite exciting to be in the middle of it.

If you look around in the hood, so to speak, under the hood of the power modules. We are converging on our next generation control silicon that advances the level of integration, the cost effectiveness, dynamic performers, frequency capability, scalability of all the power modules addressing the variety of markets that Phil just pointed to. So that's also exciting. It's not just development of next generation modules. It's also development of the core silicon control systems and packaging technology further advances in packaging technology with advances in material science are quite relevant to power components that will enable further step up in the key attributes of our products density, efficiency, speed, low noise, and last but not least cost effectiveness.

Great. Thanks, Patrizio. I think that's what I was looking for, because yes, I think it was had to do with the size and everything. And I'm just wondering in regards to that, are you accelerating away from your competition? Are you still moving away from your competition with these advancements?

So frankly, when it comes to competing our performance at technology, we look ahead. We don't look in the rearview mirror at competition that tends to be packed in an old predicament of two stage power conversion with limited opportunity. It is something that's been refined to the health, not to say that further performance are possible. But from our perspective, it's pretty much a dead end road when it comes to what we see as the future of our system technology.

You mean the competition's at a dead end road? Is that what you mean?

Certainly, the competition is [indiscernible] regard as the dead end.

Great. I have got some more questions. But I will back in the queue. Thank you so much. Congrats again.

Thank you.

Thank you very much for the question. And our next one is coming from the line of Alan Hicks. [Ainsley Capital Management] Please go ahead, sir. Your is open now.

Yes. Congratulations on the quarter, especially the gross margins. I think those are the highest since around 1996. So my question is – so on the BBU unit, I know you've been saying it's going to flatten in decline eventually. How fast can we expect that not – it's a big part of your revenue still. What kind of decline do you expect over time? And I know you've got some good end markets are like semiconductor equipment, I would think you'd want to keep those updated projects for those markets.

Yes. This is Phil. So in terms of – as you said, the BBU or the Brick revenue. The Brick revenue and the Brick bookings are very cyclical. They're sort of very macroeconomic based. They go up and down with time and with quarters and so forth. And recently, because of lead time extensions and supply constraints and tariffs and the whole trade thing with China that's been going on, that Brick bookings and revenue just has been moving up and down. But to your point, it's still relatively steady when you average it out over two years, three years or four years. The line sort of flattens as it were. So it's still in good shape. As I mentioned on the Annual Shareholders Meeting, it's still an important business to us, although declining in terms of its share – overall share of our revenue. But we are working with those customers to convert them to our new advanced products, and that is actually going really well and has been doing well for a couple of years now. So that legacy customer base is still important to us, and we want to convert them over to new technologies and also build new customers on top of that with a bigger focus on the broad markets, which is what I talked about earlier.

Yes. That's actually what I was wondering if you were going to convert those to new more advanced technology. And would that then fall into advanced products? Or would it still fall under BBU?

Yes. It's advanced products. We call those products, DCMs. DC/DC converters, they're chip products. They're not the plated products that you see in the sort of data center AI space. They're the molded package, the black molded package. And that's been going really well. It's just that the classic industrial markets and the legacy customers. They take a while to move to the new technology. The gestation periods are quite long. But the same story applies once you're in for a long, long time with those customers. And I'm pleased with the progress that we're making in conversion in Layer 1, as we call Layer 1 legacy customers.

Okay. So would you say you're actually increasing your penetration with existing customers with some new advanced products and BBU to [indiscernible]?

Yes.

Okay.

Yes. Because in several market segments within the legacy customer base, those markets have been expanded. For example, high-performance rail for example, right? I mean, you're starting to see high speed trains, electrification of all sorts of systems in the train railway market and we had a significant – we have a significant share in there with our bricks. That's all being converted over to more advanced products. As I speak, we were getting some great wins there and customers love density because it's almost 10X better in density and performance than our older bricks and more cost effective as well. So it's a big value proposition to convert to advanced products.

Yes. There are more cost effective to the customer and considerably higher margins providers.

So the BVU revenue line could decline over time, but you're actually increasing your revenues to those existing customers.

That's correct.

Yes. But the demise of the new revenue line, which has been forecasted to happen for decades now is not about to happen. It's just going to become irrelevant because of the growth of products, it's cyclical.

Okay. Thank you.

Thank you very much Alan for the question. And our next one is coming from the line of Richard Shannon [Craig-Hallum Capital Group]. Please go ahead, Richard.

Well, thanks for taking my question as well, guys and congrats on nice numbers here. Maybe a question on advanced products, so you talk about an acceleration here in the third quarter. You talked about historically in terms of three buckets: data center, AI acceleration, and HPC. I wonder if you can kind of delineate if there's any of those three buckets growing faster or slower than the others in the third quarter. And maybe if you can extend that into the next couple of quarters even a year, it'd be great to hear kind of the dynamics you are expecting there?

Hi this is Phil. So that the growth in the end markets there; AI, HPC, data center being driven by AI in the interim period here, although we've seen some new projects kick in on the HPC side as well, adding to that growth. And then the new rollout of the Intel CPUs and AMD – epic CPU's being used in 48-volt data centers where the bridging 48 to 12 is going into quite a substantial market opportunity for us. I talked about that as a $500 million SAM as five years from now. So that's an important piece and we're playing in it. And that piece is growing as well and will continue to grow over the rest of this year. And into next we'll see a ramp-up in opportunities there as those CPU platforms from Intel and AMD starts to get really rolled-out into these hyperscale data centers, but AI is dominating right now.

Okay, perfect. My follow-up question is on supply constraints. Just want to get your update on the state of this, if it's gotten worse or improved so much. And when do you see again a visibility on when this is going to end for you?

So it doesn't gotten worse in terms of the supply constraints but the demand has gotten bigger. And so fundamentally the challenge is to meet rapidly growing demand while with respect to some components being on a fixed allocation.

Okay, perfect. That's all for me. Thank you.

Thank you.

Thank you. And we had a follow-up question coming from the line of Quinn Bolton [Needham & Company]. Please go ahead, sir.

So I'm wondering actually that the follow-up on your comments there on the bridging opportunity. I was kind of looking recently at some of the Intel TDP requirements for the next generation Sapphire Rapids and beyond processors. And I think you're seeing TDP just on a standard servicing key-up like 350 watts maybe higher, and I think pretty close to where Nvidia AI, sorry, Nvidia GPU's are today. I mean, as you look out that bridging opportunity, how quickly do you think we're going to see the broader hyperscalers be forced to convert from 12 to 48 volts. I mean, do you think that this that the rollout of these new higher power standard server CPU's is really going to drive that transition over the next couple of years? Or do you think it's still takes a longer period of time?

So definitely the higher power CPU's are obviously adding to the power in the rack, but what you're also seeing is the addition of AI in those – in those data centers. And so the overall power budget is going significantly up, it's on both fronts. The GPUs or the AI current are – I would say in that 500-amp sort of TDC type of range, that would peaks up to 650, 700 and next generation is way, way above that. But in terms of the conversion of the other hyperscalers to 48 volts that started in terms of what I've – what we see in terms of internal programs within those companies. And I would expect rack systems to start getting installed two to three year time period within the other hyperscalers that haven't converted fully over the 48 volts like Google has. So that is definitely ongoing initiatives. Because those guys are all developing their own AI-A6 as well for, for their workloads and those AI-A6 are high current that need the 48-volt interface. So having a 48-volt rack based system makes a lot of sense when they want to integrate your own chips along with the CPU base.

And conversely it makes no sense to deliver power from end dilute a power from front-end at 12-volt to rack distributed with [indiscernible] power distribution losses only to boost it back up to 48 to the end PowerPoints of load devices, right, that's clearly nauseous.

Yes. Although we're happy to take the business.

Right. I guess that's sort of the follow-up question to that is, if I know the AI processors and the GPU's are consuming more power and probably more likely to have 48 volts. But if the power consumption on the standard server processors are going up and you've got 48-volt in a rack, do you see an opportunity to do 48-volt point of load for the standard CPU's? In addition to the AI means that that $500 million bridging that's, that's just the 12 to 48. Is there a server CPU point of load or is that in the $1 billion control retainment you talked about at the shareholder meeting?

Not for the crunch generational products, but going back to the rough estimate earlier to our next-generation silicon that opens up new kinds of opportunities because of its scalability. And I think a combination of factors would want to converge on that opportunity. Again, greater scalability with our national silicon and a trend towards higher power levels as Phil pointed out earlier with those CPU's.

Okay. Thank you.

Thank you very much, Quinn for the question. And our next one is coming from the line of Jon Tanwanteng [CJS Securities]. Please go ahead, sir.

Hey guys, thanks for the follow-up. The first one I wanted to ask was, you guys are obviously a domestic success story and critical to a lot of these AI and Evy efforts. And on top of other industries like the military and the satellites, are you able to take advantage of these U.S. semiconductor funding programs that are out there. Is there something out there for you as you think about the next step in capacity expansion?

We certainly hope so, Jon and we're watching it very closely. The chips act has to go through the house of representatives, that's $50 billion, once that's approved by President Biden we intend to be part of that, and we have reached out to some experts in the field locally here who have the right contacts for us to pursue. We're a poster child for the kind of investment we – I think the U.S. government would want to participate in, where local company were critical as you said, Jon, to infrastructure and electrification. So we fully intend to get our share of that.

Got it. And what kind of benefit would that bring you? What kind of strings would be attached to that is just the low interest rate or is it like free money. How should we think of it?

We're in the early stages of finding that out. We've had some calls with local experts here and as well in DC. But we have to kind of dig into the details of how that would play out over time. Let's get the Bill passed and I'd ask all of us to do our best to pressure yes, powers the fee to get that through. So but we intend to participate in that and we have the right contacts lined up.

Okay. Fair enough and good luck on that.

Thanks.

Thank you very much. And our next question or comment is coming from the line of Gus Richard [Northland Securities]. Please go ahead, sir.

Yes. Thanks for taking my questions. Just, I want to make sure I understand that the Brick Business is roll-over a little bit. Is it just slows summer seasonality’s is attributable to no aero or industrial or is it a function of your customer is not being able to get parts, can you give a little bit more color as to sort of the slow down you're seeing?

It did some, you can call it seasonality. I mean, North America started off a little quieter. It's now picking up defense and aerospace. Europe is being relatively flat, China sort of up and down, depending on quarter-to-quarter. We had big growth in China in 2018, and again at the end of 2019 there due to the trade and the tariffs situation. So again, coming back to that business, it's very cyclical, very seasonal as we want to call it, but it's as, as I say if you average it out over a longer period of time, it sits relatively, relatively flat. Now one of the things that we're obviously looking to do there with some of those older products is to have a pricing strategy that makes sense and take opportunities where we can for increased prices and better margins for that business. And while treating, obviously the customer base the right way, but we are looking at those opportunities and we constantly do so.

Got it. And then for my follow-up, just on the auto business, you have been working with the auto manufacturers for a while now. I was just wondering when you think he might start to get your first revenue and sort of what you see is your content per vehicle, that would be helpful? Thank you.

Sure. So revenue right now is mostly NRE based revenue, which is quite healthy because we have got quite a few collaborations ongoing. But in terms of the revenues, those won't really start until the end of 2023 with the first OEM partnership that we put together above and almost 18 months ago. Content per vehicle depends on whether you look at mild hybrid, plug-in hybrid or pure electric rages from about $100 up to $800 for a very high performance electric vehicle. We've got content as high as $1,500, $1,600. So it varies across the different platforms, but it's certainly very healthy.

Got it. Thank you so much.

Welcome.

Thank you very much. And we have a follow-up question coming from the line of John Dillon. Please go ahead sir.

Hey, Phil. Again, on the last conference call you were talking about auto and you were talking about by core, it might be able to supply more than just modules to the auto industry. I'm just wondering what that means. Can you give us somewhat color on that?

Well, our primary business is to supply modules to the automakers. John and also to Tier 1s who can then take that and build the systems out of it. But in some instances what we're looking at doing is on the reference design side of things and providing some early reference designs provides a good NRE opportunities and early pre-production. They're not meant for production at this point in time, we’re not aiming to get into the full systems business at this point. So our focus right now is on modules and working with OEMs and direct partnerships and also with Tier 1s.

And how is the licensing coming along for both data centers and auto?

So we are in discussions, yes, on a few fronts. Again, as suggested in the past we need to keep key objectives in mind, apply a consistent set of methodologies and that's why we're proceeding.

Okay, great. Okay. Thank you very much.

Thank you.

Thank you very much, John. Our next question is coming from the line of Christopher Hillary. Please go ahead, sir.

Thank you. The previous question was pretty much my question, but maybe I'll ask it a different way. As you have all these end markets and you have your SAM growing. Do you start to contemplate what your next round of capacity expansion might then look like, particularly if some of the licensing agreements are hard to predict?

So if I understood your question [Technical Difficulty] capacity expansion, and if I understood you correctly, how licensing plays into that. So if that's the question, as we’ve discussed, we are now bringing in the equipment in the expanded Federal Street facility to get to what’s been estimated to be a total aggregate capacity of about $750 million on a yearly revenue basis. I happen to think that’s on the seller side, we may be able to get more than $750 million out of the facility. We have been looking at a very preliminary level at a campus different site both in New Hampshire, not far away from our existing facility, as well as on a very premier basis in some of the Southern U.S. states – any decision regarding the next increment or capacity on a different site is still several months away. We need to continue to be focused on bringing to fruition the capacity of the Federal Street, there is a lot riding on that. We obviously suffer capacity right now and that’s the top priority. And with that, we're going to get a substantial step up again, I believe more to the $750 million level. So that will take care of us for a while and give us the being room necessary to make a judicious choice with respect to the next incremental capacity. Regarding licensing, which I think was part of your question. Any licensing opportunity will not detract from the need for incremental capacity for our own modules. The kinds of licensing we’re pursuing, which is licensing OEMs to enable OEMs to source otherwise infringing products from third-party manufacturers, that kind of licensing while providing OEMs with continuing to supply assurance from module makers that could otherwise put them in a very difficult spot, it doesn't really detract from the opportunities for own modules and power system capabilities. So I would view this as very complimentary developments without any kind of interference.

Well, thank you for the detailed answer. And if I may one other, you referenced in the press release the increasing demands in the AI and automotive markets. Is this a – would you describe it as continuing along the same continuum of challenges or as these systems continue to progress? Does it create a new set of challenges that you're trying to solve with your products?

So I would say that in AI, a vast computing in general, there are escalating challenges, there is an insatiable appetite for more and more current lower voltages and fundamentally the value proposition there is, give me as much current as you can, because it translates directly into performance and customers there in order to have advanced solutions are willing to go to extremes with respect to satisfying their power needs. And that's the rationale for a number of initiatives we've had for some time, ranging from – for the advances with respect to our point of load power components to vertical power delivery, to sacking of chips within panels and so on and so forth. So AI in particular and it's rapidly escalating demand for car or suspecting our challenges that we think Vicor is equipped to address – uniquely equipped to address, because of the investments we made in developing all of the key facets of our technology in terms of our conversion engines, control systems, unique components and processes, and last but not least packaging technology. I think on the automotive front, detecting our challenges are not nearly as pressing as they are in AI, but without power component methodology, while the key benefits is that we have in effect common other engines, common other control systems, commonly other components and processes and packaging technology. So inherent in that is the opportunity to – as we make advances to address the same demands in AI in particular. We also get to leverage those kinds of developments, the same developments for applications in other end markets, where the technical challenges may not be as demanding at least at this point in time, but the opportunity in other ways is right for the same kinds of solutions.

Thank you.

Thank you for the question, Christopher. And our next one is coming from the line of James Liberman. Please go ahead, James.

Great. These are wonderful numbers and a terrific indication of how you're positioned in the marketplace. I wonder if you could comment on the opportunities evolving in the low altitude 5G satellite internet business down the road.

Sure. So as we said in our press release earlier, we engaged with Boeing to develop first chipset that for that particular marketplace. So those products are starting to ship and roll out, and I think the company that Boeing is aligned with is announced they would be putting satellites up towards the end of this year and then rolling out, I think it's about eight satellites in total for the O3b platform over next year. And obviously we've been taking that in the early chipset to other companies that participate in that same Leo constellation market. Boeing is actually a meal, but taking them to the Leo guys which have much higher numbers, larger constellations at the lower earth orbits. And there is been a lot of interest in the product family due to its density, its low noise for these very sensitive networking ASICs. So we're seeing really good customer engagement there and we're continuing to look at advancing those products to the next level of performance for that marketplace and engaging with other customers and other collaborations. So that's going well. Hopefully we can make further announcements on that early next year.

That's great information. Thank you again.

Thank you very much. And our last question in the queue now is coming as a follow-up from Alan Hicks. Please go ahead, sir.

Yes, just had a quick question on when do you expect to book significant revenues from your front-end products?

So we already booked significant revenues for our front-end products. We have a $13 million project that is shipping within the next 12 months. And there is going to be quite a bit more coming. As suggested earlier, these product capabilities in terms of the relative merits selves apart from competitive offerings in a dramatic fashion, again, in terms of density and other key attributes. So in particular, when it comes to density, our solution – front-end solution can be about one 10 the size of competing alternatives. And that's very attractive in a number of end markets coming back to in particular, our computing AI – there are opportunities there with systems now that was part of the answer that requires liquid cooling in particular. Again, the drive to more and more performance demanding higher and higher costs and high and higher power levels are in solutions that have from a packaging perspective, the key ingredients, including density and terms of management requiring liquid cooling, those represent very right opportunities for us and our front-end systems.

Did I hear you say $50 million customer?

Yes, $13 million, one, three. It actually started out of 10, has become 13 and that’s about to go into production in next few months.

Okay. So that would ship over the next 12 months.

Yes, it will all shipped by I think the middle of July of next year.

Okay. Thank you.

Thank you.

Okay, thank you. Operator, I think we're ready to conclude.

Thank you everyone. You may now disconnect. That concludes the call for today, and please enjoy the rest of your day.

Thank you.

Thank you. Bye-bye.