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C2010-571 IBM Tivoli Process Automation Engine V7.5 Implementation

Exam Title : IBM Certified Deployment Professional - Maximo Asset Management V7.5
Exam ID : C2010-571
Exam Duration : 90 mins
Questions in test : 62
Passing Score : 44 / 62
Official Training : Maximo Workflow
Exam Center : Pearson VUE
Real Questions : IBM Tivoli Process Automation Engine Implementation Real Questions
VCE practice questions : IBM C2010-571 Certification VCE Practice Test

Platform Configuration
- Given that a Tivoli process automation engine (Tpae) product is to be installed, and install language packs so that Tpae can be used with additional languages.
- Given that the Tpae has been installed and the basic system data has been set up, configure the database objects based upon the customer's requirements so that database objects are configured.
- Given that a Tpae product has been installed and the basic system data has been setup, create a new or change an existing application screen layout based upon the customer's requirements so that the screen layout has been modified.
- Given that a Tpae product has been installed and the basic system data has been set up, analyze and tune the system so that the system performs to client specifications.
- Given that a Tpae product has been installed and the basic system data has been set up, define and set systems properties per customer configuration and system requirements so that system properties are defined.
- Given that Tpae has been installed and the basic system data has been set up, define and create item set and company set so that the sets can be used to share data across Organizations.
- Given that the Tpae has been installed and the basic system data has been set up, including sets and currency codes,define and create organizations and sites so that the organization and site can be used in the application processes.
- Given that the Tpae has been installed, the basic system data has been set up, and that the user is logged in, create a new cron task so that the cron task is created and ready to schedule jobs or tasks.
- Given that a Tpae product has been installed and the basic system data has been set up, define and create conditional expressions so that conditional expressions are defined.
- Given that a Tpae product has been installed and running, configure the appropriate attached document settings so that attachments are configured.
- Given that a Tpae product has been installed and the basic system data has been set up, define log levels so that log levels are defined.
Financial Configuration
- Given that a Tivoli process automaton engine (Tpae) product has been installed, the basic system data has been set up and the GL account components have been configured, create or modify GL accounts so that the chart of accounts is defined and GL accounts can be used in the application processes.
- Given that Tpae product has been installed and the basic system data has been set up, create or modify currency codes so that currency codes can be used in the application processes.
Security Configuration
- Given that a supported Tivoli Directory Server has been installed and configured and the Application Server has been configured for application server security, define and configure the files to enable application server security in Tivoli process automation engine (Tpae) so that system is configured to use application server security (LDAP).
- Given that the Tpae has been installed, the basic system data has been set up, set up and configure a security group so that a security group has been created with application and functional access defined.
Migration Configuration
- Given that a Tivoli process automaton engine (Tpae) product has been installed and the basic system data has been set up, use migration manager so that a migration package is created and imported.
- Given that a Tpae product has been installed and the basic system data has been set up, create a migration collection based upon the customer's requirements so that a migration collection has been created.
Start Center Configuration
- Given that the Tivoli process automation engine (Tpae) has been installed, the basic system data has been set up, configure the Start Center and portlets so that a Start Centers is available and assigned to a security group.
Process Management Configuration and Administration
- Given that a Tivoli process automation engine (Tpae) product has been installed and the basic system data has been set up, explain multi-site levels so that the purpose of multi-site levels have been defined.
- Given that a Tpae product has been installed and the basic system data has been setup, creating a new or change an existing Domain based upon the customer's requirements so that domains have been created or modified.
- Given that a Tpae product has been installed and the basic system data has been set up, configure the required resources so that resources can be used on transactional records.
- Given that Tpae product has been installed and the basic system data has been set up, configure the import and export data for user groups so that users can import and export data.
- Given that a Tpae product has been installed and the basic system data has been set up, develop automation scripts so that automation scripts have been developed to extend basic functionality.
- Given that Tpae product has been installed and the basic system data has been set up, configure Integration Framework so that the Tpae is ready to integrate with other systems.
- Given that the appropriate Tpae product has been installed, the basic system data has been set up and the JMS queue has been configured, create the e-mail listener so that the email listener has been set up to process messages.
- Given that the appropriate Tpae product has been installed and the basic system data has been set up, create or modify actions so that actions can be associated to system processes.
- Given that the appropriate Tpae product has been installed and the basic system data has been set up, create or modify roles so that roles may be associated to system processes.
- Given that the appropriate Tpae product has been installed, and the basic system data has been set up, use the Workflow Administration application so that active workflow processes can be viewed or managed.
- Given that a Tpae product has been installed and the basic system data has been set up, create a new communication templates or modify an existing one based upon the customer's requirements so that they can be leveraged in outbound communications (such as email).
- Given that the appropriate Tpae product has been installed, and the basic system data has been set up, create or modify escalations so that escalations may be associated with system processes.
- Given that the appropriate Tpae product has been installed, and the basic system data has been set up, use the Bulletin Board application so that messages can be broadcast.
- Given that a Tpae product has been installed and the basic system data has been set up, create a new launch in context or modify an existing one based upon the customer's requirements so that launch in context enables users to reach web enabled systems or applications.
- Given that a Tpae product has been installed and the basic system data has been set up, create a new calendar and/or shift or modify an existing one based upon the customer's requirements so that calendars and shifts can be applied by system processes.
- Given that a Tpae product has been installed and the basic system data has been set up, create new Interactions or modify existing ones based upon the customer's requirements so that interactions are ready to be used to integrate the system with other external systems.
Reporting Configuration
- Given that a Tivoli process automaton engine (Tpae) product has been installed and the basic system data has been set up, describe and create Key Performance Indicators (KPIs) so that KPIs can be used to track system or operational performance.
- Given that a Tpae product has been installed and the basic system data has been set up, configure reports so that reports can be generated.

IBM Tivoli Process Automation Engine V7.5 Implementation
IBM Implementation Practice Test
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Atomera Incorporated (NASDAQ:ATOM) Q2 2022 Earnings Conference Call August 2, 2022 5:00 PM ET

Company Participants

Mike Bishop - Investor Relations

Scott Bibaud - President and Chief Executive Officer, Board Director

Frank Laurencio - Chief Financial Officer

Conference Call Participants

Richard Shannon - Craig Hallum

Cody Acree - The Benchmark Company

Mike Bishop

Hello, everyone, and welcome to Atomera’s Second Quarter Fiscal Year 2022 Update Call. I’d like to remind everyone that this call and webinar are being recorded, and a replay will be available on Atomera’s IR website for one year. I’m Mike Bishop with the Company’s Investor Relations. As in prior quarters, we are using Zoom, and we’ll follow a similar format with participants in a listen-only mode. We will open the call with prepared remarks from Scott Bibaud, Atomera’s President and CEO; and Frank Laurencio, Atomera’s CFO. Then, we will open the call to questions.

If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the Events & Presentations section of our Investor Relations page on our website. Before we begin, I would like to remind everyone that during today’s call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties.

These risks and uncertainties are detailed in the Risk Factors section of our filings with the Securities and Exchange Commission, specifically in the Company’s annual report on Form 10-K filed with the SEC on February 15, 2022 and prospective supplement filed with SEC on May 31, 2022. Except as otherwise required by federal securities laws, Atomera disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regard to those events, conditions and circumstances.

Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today’s press release, which is posted on our website.

Now, I would like to turn the call over to our President and CEO, Scott Bibaud. Go ahead, Scott.

Scott Bibaud

Good afternoon, and welcome to Atomera’s second quarter 2022 update call. Once again, we've had a very productive quarter with progress I look forward to sharing. Then after discussing how the newly passed Chips Act affects us, I'll turn the call over to Frank to review our financials and outlook. In the first quarter, we saw our existing customers reinvigorated by the ability to start new wafer runs as fab capacity started to open up. The second quarter was where new customer interest in projects with existing customers have really started to grow again.

Atomera received a lot of inbound interest from customers at the industry's most important Power and RF Focus trade shows as well as the large VLSI and SEMICON West Conferences held over the last three months. These were great forums for Atomera to have the in-depth technical conversations necessary to deepen existing relationships and gain a foothold with new customers. We're starting to see the fruits of those efforts with our new addition to our customer pipeline. We expect that trend to continue as the number of targeted applications increases and R&D wafer runs become more accessible as fab capability continues to loosen up.

The bigger news is that progress with our customers in Phase 3 is going particularly well. We have a number of important wafer rounds underway with licensees, JDA partners and other customers, which hopefully will yield results encouraging them to move on to more licensing phases and ultimately into production. Although none of those lots are finished, we have been able to look at some data prior to lot completion and have been very encouraged by the promising interim test results.

As you know, we use MSTcad with customers to predict what kind of improvements they will see. Early indications of that TCAD simulations, which showed enough potential to initiate customer wafer starts, are closely predicting the measured silicon improvements. And in many cases, the genuine results are exceeding both our expectations and those of our customers.

Results may vary when the final test data becomes available, so we must be patient. But those early results have folks very excited. Programs with all our licensees and JDA partners continues to make good progress with the exception of AKM which is still recovering from a fab fire. As you can see from this chart, we now have 26 engagements with one new addition to the first phase. One customer has been in phase two longer than normal, which reflects an extended experiment they're conducting in that face different than those done by most customers. We believe that results from this effort will lead to a deeper engagement into licensing and production opportunities.

There are two important factors determining how fast Atomera make progress with new and existing customers. Our ability to meet face-to-face to gain trust and credibility, and then our customers keep capacity to start R&D wafers in their fabs. For the last two years, we've been held back on both fronts. Today, we can travel freely in the U.S. with only a few restrictions in Europe. So far, travel in Asia has been slower to recover. But our first trips over there have gotten underway this quarter.

Industry capacity constraints are starting to soften which is a positive for Atomera, but this trend is not uniform. While memory manufacturers and mature nodes of IBM's and foundries are starting to loosen up, manufacturers of the most advanced nodes are still highly impacted. So R&D starts in that area are still hard to come by.

Our goal is to take advantage of lower travel restrictions to get MST wafer started in as many customer fabs as possible, and to build on the momentum we experienced in the first half of this year. We are seeing clear signs of interest in our technology across certain segments of the industry displaying the domino effect I've spoken about in the past. Engineers are more comfortable using a novel technology if it's being used by others. And we believe this is being initiated because of industry chatter, even before anyone has gotten into production.

In particular, our work on RF-SOI, a technology which is critically important to the 5G cellular market, is something which has interest across the sector because of its ability to solve a difficult industry problem. 5G cellular devices can have up to 10 times the content of RF components as older 4G devices. At the same time, we have consistent feedback from customers that continued improvement in key RF devices such as switches and LNAs are increasingly hard to come by with internal process tweaks. Accordingly, the payoff to customers who can implement industry leading RF device performance should be very significant. So the interest to our customers in using MST to deliver such improvements is very exciting.

Work with multiple customers is also underway with MSTSP for power devices at five volts and above. This is an area that will exhibit continuous growth over the next decade due to the emphasis on battery operation and electric cars and we believe Atomera will benefit from this trend.

Now I'd like to take a few minutes to explain a quite important new discovery of made on MST for advanced nodes. Atomera’s technology is remarkable in the number of different benefits it can bring to semiconductor devices, and it does so through several mechanisms, including, importantly, enhanced electron mobility. While the electron mobility improvements have been confirmed for many years, the underlying physics behind how MST delivers those enhancements have not been fully understood. In silicon devices, electron mobility can be impeded through three different types of electron scattering, Coulombic, phonon and surface roughness scattering.

Until recently, our assumption was that at very advanced nodes, MST primarily improved phonon scattering, leading to about a 5% overall improvement in electron mobility, which is good, but may not drive standalone adoption. Recently, we completed some characterization of MST devices at temperatures near absolute zero, which gives us a unique ability to separate out MST’s impact on each scattering component. To our surprise and delight, it showed that MST enhanced electron mobility related to surface roughness scattering by over 50% which is a massive improvement and something particularly important in the advanced notes.

Okay, this is just one factor in a complicated transistor design. But the net result is that this new ability for MST to smooth the surface can bring greater than a 15% electron mobility improvement to the most advanced semiconductor processes. As the process node gets smaller, the MST benefit gets larger, which means that MST for only a modest incremental cost could deliver a full node of performance improvement. Now that is something that would be very compelling to designers working on the latest two or three nanometer gate all around transistors.

Because this result is so new, a full peer reviewed journal article will not be available for some time. But today, we did post a white paper describing the phenomenon in much more detail on our website. And this will be used to start discussions with our advanced node partners. Although a bit technical for most investors, it does provide an excellent background on our technology, and explains the significant potential benefit for customers on advanced nodes.

When dot -- when a breakthrough in MST like this one is achieved, our team then goes to work documenting how it can be used in different applications. This is the valuable IP that forms the underpinning of Atomera’s business model. And I'm pleased to report that as of the end of Q2, we have reached 318 patents granted and pending with particularly strong growth in our foreign patent portfolio.

As the industry has come to understand the benefits of MST and how they might use it in their own future designs, it is becoming increasingly common for them to refer to our technology in their own patents. This is a positive development for Atomera, as it not only validates MST’s innovative value to the industry, but it also opens another path of dialogue for us and the customer.

Last week, Congress passed the Chips and Science Act, a $280 billion package that includes $50 billion in funding to develop and enhance domestic semiconductor manufacturing capability. Among the many reasons for passing this legislation is to make US companies better at implementing the most advanced technology nodes we've just been talking about.

But $2 billion of the Act was specifically allocated to improving legacy chip production, which is one of the key areas where MST provides a rare and much needed boost to the industry. Atomera will be working with Chips Act Administrators, and our US legacy fab partners to educate them on how our technology can Boost existing fab capacity, throughput and performance while improving the profitability.

MST can enable those legacy fabs to meet the goals of this new legislation now, not sometime in the future. And we believe Chips Act funding can help subsidize the costs of MST implementation and our fab partners. The Chips Act also initiates and strengthens several R&D initiatives important to Atomera including the National Semiconductor Technology Center, and Our Academic Partners efforts. Government advocacy for improving the US semiconductor manufacturing prowess is another tailwind in conjunction with strong industry CaPex growth plans that will be a positive for Atomera, as they both provide important catalysts for adoption of our technology.

The Chips Act is capped off three months of intensive customer and R&D progress. The many wafer runs we have underway are progressing well. And preliminary rollout results look very promising. Our team is on the road, and new customer activity is starting to pick up. Inside the company, we are meeting milestones, generating new and innovative IP and strengthening our team. I think we've accomplished a lot this year. But I also believe that the second half of 2022 will outshine the first because of the momentum we are carrying today and the customer opportunities in front of us.

Next, let's have Frank review our financials.

Frank Laurencio

Thank you, Scott. At the close of the market today, we issued a press release announcing our results for the second quarter of 2022. And this slide shows our summary financials. Our GAAP net loss for the three months ended June 30 2022 was $4.5 million or $0.20 per share, compared to a net loss of $3.7 million or $0.17 per share in the second quarter of 2021. In Q1 of this year, our GAAP net loss was $4.1 million, or $0.18 per share. The sequentially higher net loss in Q2 2022 over Q1 was mainly due to the fact that we recognize revenue in Q1 of $375,000. But we did not recognize any revenue in Q2.

At the same time, our operating expenses increased only slightly over Q1. GAAP operating expenses in Q2 were $4.4 million compared to $3.7 million in Q2 of 2021 and $4.3 million in Q1 of this year. Non-GAAP net loss for the second quarter of 2022 was $3.5 million, compared to losses of $3.3 million in Q1 and $2.9 million in Q2 of 2021.

Non-GAAP operating expenses last quarter were $3.6 million, which was unchanged sequentially over Q1 and compares to $2.9 million of non-GAAP operating expense in Q2 of 2021.

The increase in non-GAAP operating expenses in Q2 this year versus the same period last year was $697,000. This increase primarily reflects a $336,000 increase in R&D expense due to our 300 millimeter tool lease, which commenced in August of 2021. As well as increases of $170,000 in sales and marketing, and $190,000 in G&A expenses.

Our cash balance at June 30 2022 was $21.8 million compared to $24 .5 million at the end of Q1.

We commenced our at the market or ATM equity program on May 31, 2022. And during the second quarter, we sold 31,652 shares at an average price per share of approximately $11.24 resulting in net proceeds of approximately $345,000 after sales commission.

I'd like to point out that on our cash flow statement, Q2 ATM proceeds are listed as $185,000 in cash from financing activities. Because all expenses related to the initial setup of the ATM, are netted against the proceeds in that period, as required by GAAP accounting rules. Similar levels of ATM related expenses will not recur in future periods.

As of June 30 2022, we had 23.5 million shares outstanding. As Scott mentioned in his remarks, we've made good progress with our JDA customers and other engagements. At this time, we're not yet in a position to predict when we may reach revenue generating milestones under our second JDA, which we announced last quarter. We're very happy their preliminary results are promising. And we have increased -- and increased our confidence that this JDA will result in us reaching paid licensing phases and recognizing revenue.

Since we cannot yet predict this timing, our guide for Q3 revenue is zero. And consistent with our past practice, we're not providing revenue guidance beyond the current quarter. On the last update call in May, I guided the full year of non-GAAP operating expenses for 2022 would be in the range of $15.25 million to $15.75 million.

I'm happy to announce that we've added two new engineering headcount in July, and we're catching up on our plans to grow our team. But as a result of these hiring delays, our expenses are trending lower than we originally planned. And I'm reducing the full year guidance for non-GAAP operating expenses to a range between $14.75 and $15.25 million.

With that, I'll turn the call back over to Scott for a few summary remarks. Before we open the call for questions. Scott?

Scott Bibaud

Thanks, Frank. The past three months had been very positive for Atomera with solid progress on the customer front and breakthroughs coming in R&D. Our team is growing and the pace of innovation is exceptional. Within person customer visits back underway, we expect to Boost on the results we have delivered in the first half of the year. And our team is hard at work making that happen. The macro trends in the industry, including strong CaPex in combination with the new Chips and Science Act continued to provide a very favorable environment for MST adoption. We definitely believe we'll be reporting more good news soon. And I look forward to sharing it with you in the future. Mike, we can take questions now.

Question-and-Answer Session

Operator

[Operator Instructions]

Mike Bishop

All right. Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the zoom window then feel free to type in your question and I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button, and we may call on you to ask your question live.

And right now, our first question comes from Richard Shannon of Craig Hallum.

Richard Shannon

Great, thanks, Mike. Can you hear and see me?

Mike Bishop

Yes, we can.

Richard Shannon

Excellent. Thanks, Scott and Frank, for having me on here. A lot of interesting commentary from the call, in no particular order here. One thing I did want to get was an update on the JDA contracts. And Frank gave us a brief comment about not sure when the second JDA will necessarily get to revenues here. But maybe you can talk about the progress here. And I guess my two specific questions here with the first JDA, I think you're just working with a single business unit after having transitioned out of work with a central engineering organization wondering if in progress there or multiple business units. And then I guess with the second JDA here, it sounds like you're, you've made some progress overall here, maybe you can just kind of add a little bit more colors to what progress you have made with the second one.

Scott Bibaud

Yes, so let me I'll start with the second one. So we, I think we mentioned when we talked about, originally talked about JDA that we would be working with a kind of a lead business unit that was going to be pushing to move very quickly. And we have been pleased at the pace that things have been going. Industry is still somewhat impacted.

So we had a really -- we had more capacity available, I think we would have expected to move even faster but good progress so far. But as I said, in my commentary, we haven't gotten to final results. So we don't really have a good insight into what will happen next, we got most of the legal work done with - sorry, I'm getting some echoes here. We got most of the legal work done before we signed that JDA. And so we believe that we will move pretty quickly once we go from here.

On the first JDA, we probably - I can't supply a lot of details about where we are with specific business units until they reach a milestone that we can announce something with them, I can tell you that we continue to work with that first JDA customer pretty intensively. And we're hopeful that we'll be able to get to a point where he can make some announcements of it later this year, but I can't really supply me much more insight than that.

Richard Shannon

Okay, fair enough. Scott, thanks for that. In the early part of your prepared remarks, Scott, you talked about some data from recent wafer runs that haven't been quite completed here. I guess one specific in a leading question that Topic here is I don't think you mentioned it characterizing the technology or know that you were working on. And whether this was on Atomera or customer infrastructure.

Scott Bibaud

Yes, I didn't talk about that. But generally speaking, I'd say it's almost always on customer infrastructure, we can do kind of phase two type of setup and material characterization work with our customer on our equipment. But if it go, if we're doing phase three, it really has to be on their equipment in their fab. And so that's really where it's been underway.

Richard Shannon

Okay. And how long before you get the full data and can it fully characterize what that really means here?

Scott Bibaud

Yes, it's, I don't want to talk about specific schedules, I'd say we're getting close, I'd expect to learn a lot more this quarter, it might go out into Q4. But - and by the way, we're not just talking about one wafer run, we have number of different wafer runs with different customers. And so I expect that we'll be seeing, getting some data out this quarter and some of that will be coming later on. Hopefully, that will turn into more wafer run from there.

Richard Shannon

Okay. Fair enough. In terms of the discussion that you had on the advanced nodes and the white paper that came out, I brought it up, but probably read about two sentences before the call started here. This sounds like, it's fairly early stage in terms of engagement here. Is that a fair characterization of what's going on? Or is it more advanced than what I guess my interpretation?

Scott Bibaud

I would say that the testing work, the R&D work is pretty advanced. It's - we've gotten a lot of data. And I think we have enough to make these type of assertions which we're not making, we don't just make them flippantly, they are based on a lot of simulations and so forth. But we don't have any ability to actually run wafers in the most advanced nodes to run experiments. We have to work with customers for that. So yes, I would say it's quite early in our engagements with customers on this. Now, we have been talking to customers in the advanced notes about our technology, because it can be used in many ways. But this is a new phenomenon that we didn't know about before that we think will be very interesting to people.

Richard Shannon

Okay. All right, that's helpful. In the past few quarters, and I know for just reviewing the transcript from last quarter, you've talked about this specifically in terms of RF-SOI. And I think the comment you made on today's call was that if I caught this incorrectly, please correct me. But it sounds like you're having nearly full engagement across the industry for RF-SOI. Is that fair? And then also, have you still see that as a good candidate for the technology that takes you first across the finish line to volume production?

Scott Bibaud

Yes, I don't know if I would say across the entire industry, but across a lot of the industry, absolutely. The word is out on our technology for RF-SOI, and we're solving a problem that you've been struggling with for years. And everybody's trying to figure out that is a very, very fast-growing market, lot of innovation happening, and everybody's trying to figure out how to get the next leg up. So we're talking about as a real potential game winner there.

Your second question about whether it would be the first to production? I've always said that we have been working on our power technology longer than RF technology. And so some of our customers that are doing power work or are longer in the tooth, but we'll see. So I don't want to make a prediction. But I'd say it would probably be one of those two that might be early to production.

Richard Shannon

Okay. That's fair. Perhaps this is my last question here. I'll think through this, as I'm hearing your answer here. But one of your more interesting comments was that you think a lot of the interests coming into Atomera here recently is coming from industry chatter. I assume is more kind of anecdotal. But maybe can just share why you said that, what you're hearing and kind of the benefit that you're that receiving from that?

Scott Bibaud

Yes, well it's inevitable that we've been working in the industry for a while. If you're working at one customer and you're bringing them a big potential solution for their problem, there's going to be a number of engineers in that company that know about it, they might change companies, they might have friends, they might go to trade shows, they might actually see our presentations and start just chatting among them in a specialty that certain engineers will have chat rooms and things set up around.

And so we are seeing that people from companies are kind of reaching out to us unexpectedly, because they heard from some other sources. And then - and hopefully, that will lead us to some new engagements and some good opportunities. That's the type of thing that we expected to really happen once we got into volume production because customers are really risk averse. But we're starting to see it happen just based on chatter.

Richard Shannon

Okay, interesting comments. I think that might be it for me, I'll jump out a line, maybe I entry here, but congratulations, guys on what sounds like some great progress and keep up the good work. That's all for me.

Scott Bibaud

Thanks Richard.

Mike Bishop

All right. Thanks Richard. And Cody Acree from Benchmark has his hand raised. Cody, feel free to go ahead.

Cody Acree

Yes. Thanks, Scott. So I guess maybe if we can start with Scott, just on the capacity comments that you made for your 200 and 300 millimeter infrastructure. How is that running? I guess you're – then you talked about utilization being a key driver to engagement. So are you still running available capacity? Or are you at limitations now?

Scott Bibaud

Yes, I mean, I would say in general, I'm speaking more about our customers capacity than our capacity to the extent that they want to run wafers with us, we find a way to make that happen with our infrastructure of epi tools that we have in our two different epi facilities. But what, as I was saying on the call, it, if our customers fab is completely full, it's very hard for them to run any R&D wafers, we are starting to see that loosen, but more so in the older nodes and the legacy nodes. And also in the memory area. Obviously, there's, it's a well-documented kind of slowdown in memory area.

But for the most advanced notes, they're still really, really full and it's hard to make as faster as we would like with them.

Cody Acree

And you mentioned that you could only really run wafer characterization through phase two.

Scott Bibaud

So phase two, actually, it's good question because I mentioned a customer that is in phase two, and has been there for a while. So typically, our definition of phase two, a customer sends us their wafers, we deposit MST on there. And then both we and the customer look at how MST physically integrates onto their wafer. And in most cases, this is a step that only takes a month, maybe a month and a half, you deposit some and make a few tweaks, and then it works fine. And you move forward with moving into phase three and running wafers. But some customers want to do much more complicated structures or patterns on their wafers. And they want to see how the MST deposits there. And in some cases, we needed to do work with them to get it to turn out to work exactly the way that they would like it to. So yes, typically, characterization of the MST itself is done in phase two. And from there, we know that we're going to have a good deposition in, on our phase three rounds.

Cody Acree

Your comments on MSTcad, how important is this progress that you called it out in the press release? And that are you seeing more recent improvements in the characterization of -- at your results? Or is this something that's been consistent? And you just call it out here on a specific program?

Scott Bibaud

Yes, it's the type of thing that we did, we announced our first major release of MSTcad, I think, a year and a half ago. And but it's been continuously improved and improved. And some people in the industry can be skeptical of the results that you get on TCAD, it's such a complicated process that typically process engineers that work in the factories, they say, let me just run wafers and look at the results. Because TCAD can be all over the place, and tell me, I'm going get a big improvement. And then when I run the wafers, I get a reduction instead. But what we have been seeing is that our TCAD that we've been working on so hard is actually validating the improvement that we're showing beforehand. And that's always what you need to build credibility in your simulation tools. And so yes, so that's been really, really gratifying to see. Because we can do a quick simulation with a customer before they run any wafers and show them what kind of benefits they can get. And then if we can say, okay, this works for the last 10 times, we tried it. And so this is very accurate prediction, that's very helpful.

Cody Acree

Are you getting them to, I guess, accept your results as validation? Or are they still at a stage where they're going to need their own internal wafers to check your results?

Scott Bibaud

I think it's going to always be like a precursor to real wafers being run. But when you run wafers, you typically have, you try a lot of experiments. So if you don't believe the simulation, you could try 1,000 experiments and still miss what you're trying to do, because you need to do 2,000, right. But if you use TCAD, it can help to narrow that down. So you need a lot fewer experiments to actually see the result that you're going after. And of course, to believe that and narrow down your set of experiments, you need to have faith in the TCAD results themselves.

Frank Laurencio

Yes, I can jump in on that. Because I've sort of observed the dynamic that we've seen recently and that we talked about in the release, and on the call about our TCAD, you may have a situation where a customer feeling marginal about the cost benefit of doing another set of wafers, particularly recent times when capacity is tight, and it's difficult to justify R&D runs. And as they see that the TCAD predictions are actually being validated in the experiments they do run, then it helps to build more trust in our models, and if there's someone who is needs to be convinced, or they're -- they want sort of further evidence to continue to run experiments in a particular direction. I think it's helped us to gain a lot more credibility with customers around trying other experiments with MST than they would have previously so they are seeing, they'll always want to see it validated in silicon but that dynamic helps to, helps our engagement with customers a lot. We've seen that in in playing out in real life.

Cody Acree

Thanks Frank. And then lastly, for you, I guess, just with the Chips Act, with there being a size, sizeable portion toward R&D and legacy development. Do you, you mentioned on the remarks about endorsement or funding to your customers to reimburse or to cover their implementation costs? But is there any opportunity in the Chips Act that you understand that would be a direct beneficiary to you?

Frank Laurencio

I think that it can -- the approach, the allocation of a certain amount, specifically called out for what they call sort of mature technology nodes in the Chip Act can be interesting. And in these tend to be ones where if you can find an application that addresses an industry, that's of great concern to the domestic economy, like automotive products, which many of them are legacy technologies, I think that we could do that. We're still relatively small. So we're not of a scale where we engage in directly lobbying a politician. So from my standpoint, the work for us begins more now in talking to folks about where, as you know, as I understand the process, you get into not just the approval of the funds, but now the appropriations bills to allocate that into specific programs. And so I think that that's where we could be a direct beneficiary. So I think that we're going to be only ramping up our efforts there even more.

Mike Bishop

Thanks Cody. And I don't see any raised hands at this point in time. But we do have a number of questions that came in on the Q&A chat. And the first one is just basically a review of what the phases mean. And so maybe, Scott, if you could review what the phases are for that we'd display in our charts?

Scott Bibaud

Absolutely. Yes, I do have, we do have formal definitions. But let me just talk them through planning. So planning is not like a big opening on a customer funnel that you would think of in a traditional sales funnel. Planning is once we have worked with a customer long enough that they have, number one, they've signed an NDA with us, meaning that they're going to start telling us about their manufacturing process. And believe it or not, these customers are very hard to get an NDA done with because they're very protective of their technology. Number two, they have to be actively planning on doing a wafer run with us. So they're in engineering discussions between their team and our team. Many cases, in phase one, they've started running TCAD with us, so there's a lot of work going on there. They're not just any customer we've spoken about on the street. Phase two is when they've actually started wafers in their fab to send to us. And then we do our first deposition of MST on wafers. And then they characterize that like through physical characterization, and not so much electrical characterization, but more physical characterization. Generally, these two setup is pretty short three months or so. But in some cases, they can do much longer experiments.

Phase three is the big, unpredictable phase where a customer starts wafers, they typically send them to us. And we do the MST deposition on those wafers. And then we send them back to them. And they build the wafers to the end of the line. And then they can test to see what impact MST had. And it's very typical for customers to do many of those wafer runs. Once they've done enough wafer until they feel comfortable, they move to phase four, which is where we supply them a like a manufacturing license at that point. So they can get our secret sauce to installing MST onto their fab tool in their fab. And then they can do the deposition themselves. So they start the wafers and then they just run it right through the MST deposition in their factory. And they can continue their development until they're ready to go into qualification. So qualification is when a customer has decided to go to production and so they are setting up their production line. And they need to make sure that they can manufacture these wafers very uniformly. Qualification is a standard process that everyone in the semiconductor industry uses. It takes about six to nine months. And at the end of the qualification phase, you're in production. So that's the definition of our phases.

Mike Bishop

All right, Scott, thanks. And I'm going to combine a couple questions here. The first one is, how many tools are at customer sites that can create the MST layers on wafers? And then also, can existing tools be used with modifications? Where do they need to go to order and install tools to go to production?

And then there's another question in there is, will apply materials be selling epi tools that already come with MST capabilities? So maybe, can you address the number of customer sites that create MST and also talk about --?

Scott Bibaud

Yes. Let me take all them. First of all, we have one customer site with an epi tool, one epi tool at our first JDA customer has had MST installed on it. We have three more epi tools, or just so there's no confusion. We have three more epi chambers, because we have one tool with two chambers. And that tool can do a 200 millimeter wafer and a 300 millimeter wafer. And we have another epi tool that can do 200 millimeters. We have been working with Applied Materials, and ASM on their epi tools for more than a decade now, if a customer called up Applied Materials and said, hey, we want to buy a tool for Atomera to do MST deposition apply. Applied would say okay, we understand what that is. It's one of their standard tools. But it does -- it will -- you have to get hooked up to different gas lines. But that's always the case, when you set up an epi tool. There's different gas configurations, you can set it up for, they know all about ours. They've done safety checks to make sure there's no problems with multiple gases mixing together. And they're fully prepared to do that setup. It's basically a standard setup of an epi tool when someone orders it and then we can help the customer do installation and setup MST. It's a very straightforward process. And the same would be true for an ASM tool.

Mike Bishop

All right, thank you, Scott. Had a question on the foundry license from Q1. Can you elaborate on what kind of progress has been made?

Scott Bibaud

This is the sorry, the first JDA or JDA? Oh, I am sorry.

Frank Laurencio

The licensee. [Multiple Speakers]

Scott Bibaud

Sorry. Okay. Yes. Foundry licensee that we announced in Q1. Thanks a lot. Yes, it continued. They're running wafers. We, it's another case of some wafers that are in the fab that we haven't gotten final results on. But we have seen some preliminary results there as well. And they look promising, as we mentioned in our remark, so they're going pretty well. I wish that they could run a little bit faster. And I think they do too. But it's, again, it's, although the capacity in the industry is starting to loosen up, but it's still not loose enough that we can get super-hot lots that go through very, very fast. So we're waiting on results, but things going well.

Mike Bishop

And the corollary to that is of the wafers you're running with your four customers, are they predominantly 200 millimeter or 300 millimeter wafers?

Scott Bibaud

Yes, I would say today, they're predominantly 300 millimeter, but we do have a lot of 200 millimeter wafers. And just to clarify that a little bit more in the semiconductor industry, if you're making a technology at smaller than 130 nanometer node, you're probably using 300 millimeter wafers. If you're using a technology that's older than 130 nanometers, you're probably using a 200 millimeter wafer. And then at 130 nanometer, there's a mixture.

A lot of our customers in power and in RF are using 200 millimeter. Some of our customers in power and RF are using 300 millimeter. And anybody that we work with on any more advanced note is always on a 300 millimeter wafer.

Mike Bishop

Okay, and then there's a follow up to the number of fabs question and that is the second JDA does not have their own epi tool or do they?

Frank Laurencio

Yes, so I can take that it because it kind of dovetails also around revenue generating milestones that customer does have epi tools. But they have not taken a manufacturing license, which is what we charge customers for when we deliver the MST recipe for them to install in tool. So that would be an important milestone to reach. And as we talked about with the first JDA, that was a, the sort of the first revenue milestone was when we delivered the MST recipe to them, and they installed it in the tool. And second JDA customer does have a tool to receive the recipe. And we are hopeful that they'll get to that milestone soon, and they'll be depositing MST in their own fab.

Mike Bishop

Okay, and just to recap, this is for Scott, how long do you wafer runs take?

Scott Bibaud

Yes, so a typical wafer run, where they're sending us wafers to do deposition takes around nine months, the fastest we've ever done has been a six month run, where everything went very, very fast on both sides. These days with the capacity issues, we haven't seen a wafer run that quick, quite a while. Some of them can last longer. But that, but it's fairly typical that it's about nine months from starting the wafers until we get test results.

Mike Bishop

All right, great. And at this point, Scott, I'll turn the call to you for closing comments.

Scott Bibaud

All right. Thanks a lot, Mike. And I want to thank everyone today for attending today's presentation. It was great to be able to share with you our recent momentum, and to supply you a feeling of the excitement we're experiencing inside at Atomera. Please continue to look for our news, articles and blog posts to keep you up to date on our progress, which are available along with investor alerts on our website atomera.com. We look forward to seeing some of you during our scheduled marketing activities, including the Oppenheimer Technology Internet and Communications Conference, and the Needham SemiCap and EDA Conference. Should you have additional questions, please contact Mike Bishop who’ll be happy to follow up. Thank you again for your support and we look forward to our next update call.

Mike Bishop

All right, thank you, Scott. At this point, you may disconnect from the call.

Tue, 02 Aug 2022 14:25:00 -0500 en text/html https://seekingalpha.com/article/4528926-atomera-incorporateds-atom-ceo-scott-bibaud-on-q2-2022-results-earnings-call-transcript
Killexams : Atomera Incorporated (ATOM) CEO Scott Bibaud on Q2 2022 Results - Earnings Call Transcript

Atomera Incorporated (NASDAQ:ATOM) Q2 2022 Earnings Conference Call August 2, 2022 5:00 PM ET

Company Participants

Mike Bishop - Investor Relations

Scott Bibaud - President and Chief Executive Officer, Board Director

Frank Laurencio - Chief Financial Officer

Conference Call Participants

Richard Shannon - Craig Hallum

Cody Acree - The Benchmark Company

Mike Bishop

Hello, everyone, and welcome to Atomera’s Second Quarter Fiscal Year 2022 Update Call. I’d like to remind everyone that this call and webinar are being recorded, and a replay will be available on Atomera’s IR website for one year. I’m Mike Bishop with the Company’s Investor Relations. As in prior quarters, we are using Zoom, and we’ll follow a similar format with participants in a listen-only mode. We will open the call with prepared remarks from Scott Bibaud, Atomera’s President and CEO; and Frank Laurencio, Atomera’s CFO. Then, we will open the call to questions.

If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the Events & Presentations section of our Investor Relations page on our website. Before we begin, I would like to remind everyone that during today’s call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties.

These risks and uncertainties are detailed in the Risk Factors section of our filings with the Securities and Exchange Commission, specifically in the Company’s annual report on Form 10-K filed with the SEC on February 15, 2022 and prospective supplement filed with SEC on May 31, 2022. Except as otherwise required by federal securities laws, Atomera disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regard to those events, conditions and circumstances.

Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today’s press release, which is posted on our website.

Now, I would like to turn the call over to our President and CEO, Scott Bibaud. Go ahead, Scott.

Scott Bibaud

Good afternoon, and welcome to Atomera’s second quarter 2022 update call. Once again, we've had a very productive quarter with progress I look forward to sharing. Then after discussing how the newly passed Chips Act affects us, I'll turn the call over to Frank to review our financials and outlook. In the first quarter, we saw our existing customers reinvigorated by the ability to start new wafer runs as fab capacity started to open up. The second quarter was where new customer interest in projects with existing customers have really started to grow again.

Atomera received a lot of inbound interest from customers at the industry's most important Power and RF Focus trade shows as well as the large VLSI and SEMICON West Conferences held over the last three months. These were great forums for Atomera to have the in-depth technical conversations necessary to deepen existing relationships and gain a foothold with new customers. We're starting to see the fruits of those efforts with our new addition to our customer pipeline. We expect that trend to continue as the number of targeted applications increases and R&D wafer runs become more accessible as fab capability continues to loosen up.

The bigger news is that progress with our customers in Phase 3 is going particularly well. We have a number of important wafer rounds underway with licensees, JDA partners and other customers, which hopefully will yield results encouraging them to move on to more licensing phases and ultimately into production. Although none of those lots are finished, we have been able to look at some data prior to lot completion and have been very encouraged by the promising interim test results.

As you know, we use MSTcad with customers to predict what kind of improvements they will see. Early indications of that TCAD simulations, which showed enough potential to initiate customer wafer starts, are closely predicting the measured silicon improvements. And in many cases, the genuine results are exceeding both our expectations and those of our customers.

Results may vary when the final test data becomes available, so we must be patient. But those early results have folks very excited. Programs with all our licensees and JDA partners continues to make good progress with the exception of AKM which is still recovering from a fab fire. As you can see from this chart, we now have 26 engagements with one new addition to the first phase. One customer has been in phase two longer than normal, which reflects an extended experiment they're conducting in that face different than those done by most customers. We believe that results from this effort will lead to a deeper engagement into licensing and production opportunities.

There are two important factors determining how fast Atomera make progress with new and existing customers. Our ability to meet face-to-face to gain trust and credibility, and then our customers keep capacity to start R&D wafers in their fabs. For the last two years, we've been held back on both fronts. Today, we can travel freely in the U.S. with only a few restrictions in Europe. So far, travel in Asia has been slower to recover. But our first trips over there have gotten underway this quarter.

Industry capacity constraints are starting to soften which is a positive for Atomera, but this trend is not uniform. While memory manufacturers and mature nodes of IBM's and foundries are starting to loosen up, manufacturers of the most advanced nodes are still highly impacted. So R&D starts in that area are still hard to come by.

Our goal is to take advantage of lower travel restrictions to get MST wafer started in as many customer fabs as possible, and to build on the momentum we experienced in the first half of this year. We are seeing clear signs of interest in our technology across certain segments of the industry displaying the domino effect I've spoken about in the past. Engineers are more comfortable using a novel technology if it's being used by others. And we believe this is being initiated because of industry chatter, even before anyone has gotten into production.

In particular, our work on RF-SOI, a technology which is critically important to the 5G cellular market, is something which has interest across the sector because of its ability to solve a difficult industry problem. 5G cellular devices can have up to 10 times the content of RF components as older 4G devices. At the same time, we have consistent feedback from customers that continued improvement in key RF devices such as switches and LNAs are increasingly hard to come by with internal process tweaks. Accordingly, the payoff to customers who can implement industry leading RF device performance should be very significant. So the interest to our customers in using MST to deliver such improvements is very exciting.

Work with multiple customers is also underway with MSTSP for power devices at five volts and above. This is an area that will exhibit continuous growth over the next decade due to the emphasis on battery operation and electric cars and we believe Atomera will benefit from this trend.

Now I'd like to take a few minutes to explain a quite important new discovery of made on MST for advanced nodes. Atomera’s technology is remarkable in the number of different benefits it can bring to semiconductor devices, and it does so through several mechanisms, including, importantly, enhanced electron mobility. While the electron mobility improvements have been confirmed for many years, the underlying physics behind how MST delivers those enhancements have not been fully understood. In silicon devices, electron mobility can be impeded through three different types of electron scattering, Coulombic, phonon and surface roughness scattering.

Until recently, our assumption was that at very advanced nodes, MST primarily improved phonon scattering, leading to about a 5% overall improvement in electron mobility, which is good, but may not drive standalone adoption. Recently, we completed some characterization of MST devices at temperatures near absolute zero, which gives us a unique ability to separate out MST’s impact on each scattering component. To our surprise and delight, it showed that MST enhanced electron mobility related to surface roughness scattering by over 50% which is a massive improvement and something particularly important in the advanced notes.

Okay, this is just one factor in a complicated transistor design. But the net result is that this new ability for MST to smooth the surface can bring greater than a 15% electron mobility improvement to the most advanced semiconductor processes. As the process node gets smaller, the MST benefit gets larger, which means that MST for only a modest incremental cost could deliver a full node of performance improvement. Now that is something that would be very compelling to designers working on the latest two or three nanometer gate all around transistors.

Because this result is so new, a full peer reviewed journal article will not be available for some time. But today, we did post a white paper describing the phenomenon in much more detail on our website. And this will be used to start discussions with our advanced node partners. Although a bit technical for most investors, it does provide an excellent background on our technology, and explains the significant potential benefit for customers on advanced nodes.

When dot -- when a breakthrough in MST like this one is achieved, our team then goes to work documenting how it can be used in different applications. This is the valuable IP that forms the underpinning of Atomera’s business model. And I'm pleased to report that as of the end of Q2, we have reached 318 patents granted and pending with particularly strong growth in our foreign patent portfolio.

As the industry has come to understand the benefits of MST and how they might use it in their own future designs, it is becoming increasingly common for them to refer to our technology in their own patents. This is a positive development for Atomera, as it not only validates MST’s innovative value to the industry, but it also opens another path of dialogue for us and the customer.

Last week, Congress passed the Chips and Science Act, a $280 billion package that includes $50 billion in funding to develop and enhance domestic semiconductor manufacturing capability. Among the many reasons for passing this legislation is to make US companies better at implementing the most advanced technology nodes we've just been talking about.

But $2 billion of the Act was specifically allocated to improving legacy chip production, which is one of the key areas where MST provides a rare and much needed boost to the industry. Atomera will be working with Chips Act Administrators, and our US legacy fab partners to educate them on how our technology can Boost existing fab capacity, throughput and performance while improving the profitability.

MST can enable those legacy fabs to meet the goals of this new legislation now, not sometime in the future. And we believe Chips Act funding can help subsidize the costs of MST implementation and our fab partners. The Chips Act also initiates and strengthens several R&D initiatives important to Atomera including the National Semiconductor Technology Center, and Our Academic Partners efforts. Government advocacy for improving the US semiconductor manufacturing prowess is another tailwind in conjunction with strong industry CaPex growth plans that will be a positive for Atomera, as they both provide important catalysts for adoption of our technology.

The Chips Act is capped off three months of intensive customer and R&D progress. The many wafer runs we have underway are progressing well. And preliminary rollout results look very promising. Our team is on the road, and new customer activity is starting to pick up. Inside the company, we are meeting milestones, generating new and innovative IP and strengthening our team. I think we've accomplished a lot this year. But I also believe that the second half of 2022 will outshine the first because of the momentum we are carrying today and the customer opportunities in front of us.

Next, let's have Frank review our financials.

Frank Laurencio

Thank you, Scott. At the close of the market today, we issued a press release announcing our results for the second quarter of 2022. And this slide shows our summary financials. Our GAAP net loss for the three months ended June 30 2022 was $4.5 million or $0.20 per share, compared to a net loss of $3.7 million or $0.17 per share in the second quarter of 2021. In Q1 of this year, our GAAP net loss was $4.1 million, or $0.18 per share. The sequentially higher net loss in Q2 2022 over Q1 was mainly due to the fact that we recognize revenue in Q1 of $375,000. But we did not recognize any revenue in Q2.

At the same time, our operating expenses increased only slightly over Q1. GAAP operating expenses in Q2 were $4.4 million compared to $3.7 million in Q2 of 2021 and $4.3 million in Q1 of this year. Non-GAAP net loss for the second quarter of 2022 was $3.5 million, compared to losses of $3.3 million in Q1 and $2.9 million in Q2 of 2021.

Non-GAAP operating expenses last quarter were $3.6 million, which was unchanged sequentially over Q1 and compares to $2.9 million of non-GAAP operating expense in Q2 of 2021.

The increase in non-GAAP operating expenses in Q2 this year versus the same period last year was $697,000. This increase primarily reflects a $336,000 increase in R&D expense due to our 300 millimeter tool lease, which commenced in August of 2021. As well as increases of $170,000 in sales and marketing, and $190,000 in G&A expenses.

Our cash balance at June 30 2022 was $21.8 million compared to $24 .5 million at the end of Q1.

We commenced our at the market or ATM equity program on May 31, 2022. And during the second quarter, we sold 31,652 shares at an average price per share of approximately $11.24 resulting in net proceeds of approximately $345,000 after sales commission.

I'd like to point out that on our cash flow statement, Q2 ATM proceeds are listed as $185,000 in cash from financing activities. Because all expenses related to the initial setup of the ATM, are netted against the proceeds in that period, as required by GAAP accounting rules. Similar levels of ATM related expenses will not recur in future periods.

As of June 30 2022, we had 23.5 million shares outstanding. As Scott mentioned in his remarks, we've made good progress with our JDA customers and other engagements. At this time, we're not yet in a position to predict when we may reach revenue generating milestones under our second JDA, which we announced last quarter. We're very happy their preliminary results are promising. And we have increased -- and increased our confidence that this JDA will result in us reaching paid licensing phases and recognizing revenue.

Since we cannot yet predict this timing, our guide for Q3 revenue is zero. And consistent with our past practice, we're not providing revenue guidance beyond the current quarter. On the last update call in May, I guided the full year of non-GAAP operating expenses for 2022 would be in the range of $15.25 million to $15.75 million.

I'm happy to announce that we've added two new engineering headcount in July, and we're catching up on our plans to grow our team. But as a result of these hiring delays, our expenses are trending lower than we originally planned. And I'm reducing the full year guidance for non-GAAP operating expenses to a range between $14.75 and $15.25 million.

With that, I'll turn the call back over to Scott for a few summary remarks. Before we open the call for questions. Scott?

Scott Bibaud

Thanks, Frank. The past three months had been very positive for Atomera with solid progress on the customer front and breakthroughs coming in R&D. Our team is growing and the pace of innovation is exceptional. Within person customer visits back underway, we expect to Boost on the results we have delivered in the first half of the year. And our team is hard at work making that happen. The macro trends in the industry, including strong CaPex in combination with the new Chips and Science Act continued to provide a very favorable environment for MST adoption. We definitely believe we'll be reporting more good news soon. And I look forward to sharing it with you in the future. Mike, we can take questions now.

Question-and-Answer Session

Operator

[Operator Instructions]

Mike Bishop

All right. Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the zoom window then feel free to type in your question and I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button, and we may call on you to ask your question live.

And right now, our first question comes from Richard Shannon of Craig Hallum.

Richard Shannon

Great, thanks, Mike. Can you hear and see me?

Mike Bishop

Yes, we can.

Richard Shannon

Excellent. Thanks, Scott and Frank, for having me on here. A lot of interesting commentary from the call, in no particular order here. One thing I did want to get was an update on the JDA contracts. And Frank gave us a brief comment about not sure when the second JDA will necessarily get to revenues here. But maybe you can talk about the progress here. And I guess my two specific questions here with the first JDA, I think you're just working with a single business unit after having transitioned out of work with a central engineering organization wondering if in progress there or multiple business units. And then I guess with the second JDA here, it sounds like you're, you've made some progress overall here, maybe you can just kind of add a little bit more colors to what progress you have made with the second one.

Scott Bibaud

Yes, so let me I'll start with the second one. So we, I think we mentioned when we talked about, originally talked about JDA that we would be working with a kind of a lead business unit that was going to be pushing to move very quickly. And we have been pleased at the pace that things have been going. Industry is still somewhat impacted.

So we had a really -- we had more capacity available, I think we would have expected to move even faster but good progress so far. But as I said, in my commentary, we haven't gotten to final results. So we don't really have a good insight into what will happen next, we got most of the legal work done with - sorry, I'm getting some echoes here. We got most of the legal work done before we signed that JDA. And so we believe that we will move pretty quickly once we go from here.

On the first JDA, we probably - I can't supply a lot of details about where we are with specific business units until they reach a milestone that we can announce something with them, I can tell you that we continue to work with that first JDA customer pretty intensively. And we're hopeful that we'll be able to get to a point where he can make some announcements of it later this year, but I can't really supply me much more insight than that.

Richard Shannon

Okay, fair enough. Scott, thanks for that. In the early part of your prepared remarks, Scott, you talked about some data from recent wafer runs that haven't been quite completed here. I guess one specific in a leading question that Topic here is I don't think you mentioned it characterizing the technology or know that you were working on. And whether this was on Atomera or customer infrastructure.

Scott Bibaud

Yes, I didn't talk about that. But generally speaking, I'd say it's almost always on customer infrastructure, we can do kind of phase two type of setup and material characterization work with our customer on our equipment. But if it go, if we're doing phase three, it really has to be on their equipment in their fab. And so that's really where it's been underway.

Richard Shannon

Okay. And how long before you get the full data and can it fully characterize what that really means here?

Scott Bibaud

Yes, it's, I don't want to talk about specific schedules, I'd say we're getting close, I'd expect to learn a lot more this quarter, it might go out into Q4. But - and by the way, we're not just talking about one wafer run, we have number of different wafer runs with different customers. And so I expect that we'll be seeing, getting some data out this quarter and some of that will be coming later on. Hopefully, that will turn into more wafer run from there.

Richard Shannon

Okay. Fair enough. In terms of the discussion that you had on the advanced nodes and the white paper that came out, I brought it up, but probably read about two sentences before the call started here. This sounds like, it's fairly early stage in terms of engagement here. Is that a fair characterization of what's going on? Or is it more advanced than what I guess my interpretation?

Scott Bibaud

I would say that the testing work, the R&D work is pretty advanced. It's - we've gotten a lot of data. And I think we have enough to make these type of assertions which we're not making, we don't just make them flippantly, they are based on a lot of simulations and so forth. But we don't have any ability to actually run wafers in the most advanced nodes to run experiments. We have to work with customers for that. So yes, I would say it's quite early in our engagements with customers on this. Now, we have been talking to customers in the advanced notes about our technology, because it can be used in many ways. But this is a new phenomenon that we didn't know about before that we think will be very interesting to people.

Richard Shannon

Okay. All right, that's helpful. In the past few quarters, and I know for just reviewing the transcript from last quarter, you've talked about this specifically in terms of RF-SOI. And I think the comment you made on today's call was that if I caught this incorrectly, please correct me. But it sounds like you're having nearly full engagement across the industry for RF-SOI. Is that fair? And then also, have you still see that as a good candidate for the technology that takes you first across the finish line to volume production?

Scott Bibaud

Yes, I don't know if I would say across the entire industry, but across a lot of the industry, absolutely. The word is out on our technology for RF-SOI, and we're solving a problem that you've been struggling with for years. And everybody's trying to figure out that is a very, very fast-growing market, lot of innovation happening, and everybody's trying to figure out how to get the next leg up. So we're talking about as a real potential game winner there.

Your second question about whether it would be the first to production? I've always said that we have been working on our power technology longer than RF technology. And so some of our customers that are doing power work or are longer in the tooth, but we'll see. So I don't want to make a prediction. But I'd say it would probably be one of those two that might be early to production.

Richard Shannon

Okay. That's fair. Perhaps this is my last question here. I'll think through this, as I'm hearing your answer here. But one of your more interesting comments was that you think a lot of the interests coming into Atomera here recently is coming from industry chatter. I assume is more kind of anecdotal. But maybe can just share why you said that, what you're hearing and kind of the benefit that you're that receiving from that?

Scott Bibaud

Yes, well it's inevitable that we've been working in the industry for a while. If you're working at one customer and you're bringing them a big potential solution for their problem, there's going to be a number of engineers in that company that know about it, they might change companies, they might have friends, they might go to trade shows, they might actually see our presentations and start just chatting among them in a specialty that certain engineers will have chat rooms and things set up around.

And so we are seeing that people from companies are kind of reaching out to us unexpectedly, because they heard from some other sources. And then - and hopefully, that will lead us to some new engagements and some good opportunities. That's the type of thing that we expected to really happen once we got into volume production because customers are really risk averse. But we're starting to see it happen just based on chatter.

Richard Shannon

Okay, interesting comments. I think that might be it for me, I'll jump out a line, maybe I entry here, but congratulations, guys on what sounds like some great progress and keep up the good work. That's all for me.

Scott Bibaud

Thanks Richard.

Mike Bishop

All right. Thanks Richard. And Cody Acree from Benchmark has his hand raised. Cody, feel free to go ahead.

Cody Acree

Yes. Thanks, Scott. So I guess maybe if we can start with Scott, just on the capacity comments that you made for your 200 and 300 millimeter infrastructure. How is that running? I guess you're – then you talked about utilization being a key driver to engagement. So are you still running available capacity? Or are you at limitations now?

Scott Bibaud

Yes, I mean, I would say in general, I'm speaking more about our customers capacity than our capacity to the extent that they want to run wafers with us, we find a way to make that happen with our infrastructure of epi tools that we have in our two different epi facilities. But what, as I was saying on the call, it, if our customers fab is completely full, it's very hard for them to run any R&D wafers, we are starting to see that loosen, but more so in the older nodes and the legacy nodes. And also in the memory area. Obviously, there's, it's a well-documented kind of slowdown in memory area.

But for the most advanced notes, they're still really, really full and it's hard to make as faster as we would like with them.

Cody Acree

And you mentioned that you could only really run wafer characterization through phase two.

Scott Bibaud

So phase two, actually, it's good question because I mentioned a customer that is in phase two, and has been there for a while. So typically, our definition of phase two, a customer sends us their wafers, we deposit MST on there. And then both we and the customer look at how MST physically integrates onto their wafer. And in most cases, this is a step that only takes a month, maybe a month and a half, you deposit some and make a few tweaks, and then it works fine. And you move forward with moving into phase three and running wafers. But some customers want to do much more complicated structures or patterns on their wafers. And they want to see how the MST deposits there. And in some cases, we needed to do work with them to get it to turn out to work exactly the way that they would like it to. So yes, typically, characterization of the MST itself is done in phase two. And from there, we know that we're going to have a good deposition in, on our phase three rounds.

Cody Acree

Your comments on MSTcad, how important is this progress that you called it out in the press release? And that are you seeing more recent improvements in the characterization of -- at your results? Or is this something that's been consistent? And you just call it out here on a specific program?

Scott Bibaud

Yes, it's the type of thing that we did, we announced our first major release of MSTcad, I think, a year and a half ago. And but it's been continuously improved and improved. And some people in the industry can be skeptical of the results that you get on TCAD, it's such a complicated process that typically process engineers that work in the factories, they say, let me just run wafers and look at the results. Because TCAD can be all over the place, and tell me, I'm going get a big improvement. And then when I run the wafers, I get a reduction instead. But what we have been seeing is that our TCAD that we've been working on so hard is actually validating the improvement that we're showing beforehand. And that's always what you need to build credibility in your simulation tools. And so yes, so that's been really, really gratifying to see. Because we can do a quick simulation with a customer before they run any wafers and show them what kind of benefits they can get. And then if we can say, okay, this works for the last 10 times, we tried it. And so this is very accurate prediction, that's very helpful.

Cody Acree

Are you getting them to, I guess, accept your results as validation? Or are they still at a stage where they're going to need their own internal wafers to check your results?

Scott Bibaud

I think it's going to always be like a precursor to real wafers being run. But when you run wafers, you typically have, you try a lot of experiments. So if you don't believe the simulation, you could try 1,000 experiments and still miss what you're trying to do, because you need to do 2,000, right. But if you use TCAD, it can help to narrow that down. So you need a lot fewer experiments to actually see the result that you're going after. And of course, to believe that and narrow down your set of experiments, you need to have faith in the TCAD results themselves.

Frank Laurencio

Yes, I can jump in on that. Because I've sort of observed the dynamic that we've seen recently and that we talked about in the release, and on the call about our TCAD, you may have a situation where a customer feeling marginal about the cost benefit of doing another set of wafers, particularly recent times when capacity is tight, and it's difficult to justify R&D runs. And as they see that the TCAD predictions are actually being validated in the experiments they do run, then it helps to build more trust in our models, and if there's someone who is needs to be convinced, or they're -- they want sort of further evidence to continue to run experiments in a particular direction. I think it's helped us to gain a lot more credibility with customers around trying other experiments with MST than they would have previously so they are seeing, they'll always want to see it validated in silicon but that dynamic helps to, helps our engagement with customers a lot. We've seen that in in playing out in real life.

Cody Acree

Thanks Frank. And then lastly, for you, I guess, just with the Chips Act, with there being a size, sizeable portion toward R&D and legacy development. Do you, you mentioned on the remarks about endorsement or funding to your customers to reimburse or to cover their implementation costs? But is there any opportunity in the Chips Act that you understand that would be a direct beneficiary to you?

Frank Laurencio

I think that it can -- the approach, the allocation of a certain amount, specifically called out for what they call sort of mature technology nodes in the Chip Act can be interesting. And in these tend to be ones where if you can find an application that addresses an industry, that's of great concern to the domestic economy, like automotive products, which many of them are legacy technologies, I think that we could do that. We're still relatively small. So we're not of a scale where we engage in directly lobbying a politician. So from my standpoint, the work for us begins more now in talking to folks about where, as you know, as I understand the process, you get into not just the approval of the funds, but now the appropriations bills to allocate that into specific programs. And so I think that that's where we could be a direct beneficiary. So I think that we're going to be only ramping up our efforts there even more.

Mike Bishop

Thanks Cody. And I don't see any raised hands at this point in time. But we do have a number of questions that came in on the Q&A chat. And the first one is just basically a review of what the phases mean. And so maybe, Scott, if you could review what the phases are for that we'd display in our charts?

Scott Bibaud

Absolutely. Yes, I do have, we do have formal definitions. But let me just talk them through planning. So planning is not like a big opening on a customer funnel that you would think of in a traditional sales funnel. Planning is once we have worked with a customer long enough that they have, number one, they've signed an NDA with us, meaning that they're going to start telling us about their manufacturing process. And believe it or not, these customers are very hard to get an NDA done with because they're very protective of their technology. Number two, they have to be actively planning on doing a wafer run with us. So they're in engineering discussions between their team and our team. Many cases, in phase one, they've started running TCAD with us, so there's a lot of work going on there. They're not just any customer we've spoken about on the street. Phase two is when they've actually started wafers in their fab to send to us. And then we do our first deposition of MST on wafers. And then they characterize that like through physical characterization, and not so much electrical characterization, but more physical characterization. Generally, these two setup is pretty short three months or so. But in some cases, they can do much longer experiments.

Phase three is the big, unpredictable phase where a customer starts wafers, they typically send them to us. And we do the MST deposition on those wafers. And then we send them back to them. And they build the wafers to the end of the line. And then they can test to see what impact MST had. And it's very typical for customers to do many of those wafer runs. Once they've done enough wafer until they feel comfortable, they move to phase four, which is where we supply them a like a manufacturing license at that point. So they can get our secret sauce to installing MST onto their fab tool in their fab. And then they can do the deposition themselves. So they start the wafers and then they just run it right through the MST deposition in their factory. And they can continue their development until they're ready to go into qualification. So qualification is when a customer has decided to go to production and so they are setting up their production line. And they need to make sure that they can manufacture these wafers very uniformly. Qualification is a standard process that everyone in the semiconductor industry uses. It takes about six to nine months. And at the end of the qualification phase, you're in production. So that's the definition of our phases.

Mike Bishop

All right, Scott, thanks. And I'm going to combine a couple questions here. The first one is, how many tools are at customer sites that can create the MST layers on wafers? And then also, can existing tools be used with modifications? Where do they need to go to order and install tools to go to production?

And then there's another question in there is, will apply materials be selling epi tools that already come with MST capabilities? So maybe, can you address the number of customer sites that create MST and also talk about --?

Scott Bibaud

Yes. Let me take all them. First of all, we have one customer site with an epi tool, one epi tool at our first JDA customer has had MST installed on it. We have three more epi tools, or just so there's no confusion. We have three more epi chambers, because we have one tool with two chambers. And that tool can do a 200 millimeter wafer and a 300 millimeter wafer. And we have another epi tool that can do 200 millimeters. We have been working with Applied Materials, and ASM on their epi tools for more than a decade now, if a customer called up Applied Materials and said, hey, we want to buy a tool for Atomera to do MST deposition apply. Applied would say okay, we understand what that is. It's one of their standard tools. But it does -- it will -- you have to get hooked up to different gas lines. But that's always the case, when you set up an epi tool. There's different gas configurations, you can set it up for, they know all about ours. They've done safety checks to make sure there's no problems with multiple gases mixing together. And they're fully prepared to do that setup. It's basically a standard setup of an epi tool when someone orders it and then we can help the customer do installation and setup MST. It's a very straightforward process. And the same would be true for an ASM tool.

Mike Bishop

All right, thank you, Scott. Had a question on the foundry license from Q1. Can you elaborate on what kind of progress has been made?

Scott Bibaud

This is the sorry, the first JDA or JDA? Oh, I am sorry.

Frank Laurencio

The licensee. [Multiple Speakers]

Scott Bibaud

Sorry. Okay. Yes. Foundry licensee that we announced in Q1. Thanks a lot. Yes, it continued. They're running wafers. We, it's another case of some wafers that are in the fab that we haven't gotten final results on. But we have seen some preliminary results there as well. And they look promising, as we mentioned in our remark, so they're going pretty well. I wish that they could run a little bit faster. And I think they do too. But it's, again, it's, although the capacity in the industry is starting to loosen up, but it's still not loose enough that we can get super-hot lots that go through very, very fast. So we're waiting on results, but things going well.

Mike Bishop

And the corollary to that is of the wafers you're running with your four customers, are they predominantly 200 millimeter or 300 millimeter wafers?

Scott Bibaud

Yes, I would say today, they're predominantly 300 millimeter, but we do have a lot of 200 millimeter wafers. And just to clarify that a little bit more in the semiconductor industry, if you're making a technology at smaller than 130 nanometer node, you're probably using 300 millimeter wafers. If you're using a technology that's older than 130 nanometers, you're probably using a 200 millimeter wafer. And then at 130 nanometer, there's a mixture.

A lot of our customers in power and in RF are using 200 millimeter. Some of our customers in power and RF are using 300 millimeter. And anybody that we work with on any more advanced note is always on a 300 millimeter wafer.

Mike Bishop

Okay, and then there's a follow up to the number of fabs question and that is the second JDA does not have their own epi tool or do they?

Frank Laurencio

Yes, so I can take that it because it kind of dovetails also around revenue generating milestones that customer does have epi tools. But they have not taken a manufacturing license, which is what we charge customers for when we deliver the MST recipe for them to install in tool. So that would be an important milestone to reach. And as we talked about with the first JDA, that was a, the sort of the first revenue milestone was when we delivered the MST recipe to them, and they installed it in the tool. And second JDA customer does have a tool to receive the recipe. And we are hopeful that they'll get to that milestone soon, and they'll be depositing MST in their own fab.

Mike Bishop

Okay, and just to recap, this is for Scott, how long do you wafer runs take?

Scott Bibaud

Yes, so a typical wafer run, where they're sending us wafers to do deposition takes around nine months, the fastest we've ever done has been a six month run, where everything went very, very fast on both sides. These days with the capacity issues, we haven't seen a wafer run that quick, quite a while. Some of them can last longer. But that, but it's fairly typical that it's about nine months from starting the wafers until we get test results.

Mike Bishop

All right, great. And at this point, Scott, I'll turn the call to you for closing comments.

Scott Bibaud

All right. Thanks a lot, Mike. And I want to thank everyone today for attending today's presentation. It was great to be able to share with you our recent momentum, and to supply you a feeling of the excitement we're experiencing inside at Atomera. Please continue to look for our news, articles and blog posts to keep you up to date on our progress, which are available along with investor alerts on our website atomera.com. We look forward to seeing some of you during our scheduled marketing activities, including the Oppenheimer Technology Internet and Communications Conference, and the Needham SemiCap and EDA Conference. Should you have additional questions, please contact Mike Bishop who’ll be happy to follow up. Thank you again for your support and we look forward to our next update call.

Mike Bishop

All right, thank you, Scott. At this point, you may disconnect from the call.

Tue, 02 Aug 2022 14:25:00 -0500 en text/html https://seekingalpha.com/article/4528926-atomera-incorporateds-atom-ceo-scott-bibaud-on-q2-2022-results-earnings-call-transcript
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