Aehr Test Systems to Acquire Incal Technology, Expanding its Addressable Market Within the Rapidly Growing AI Semiconductor Market

Rhea-AI Summary

Aehr Test Systems (NASDAQ:AEHR) has announced its acquisition of Incal Technology, Inc., a manufacturer of packaged part reliability/burn-in test solutions for AI semiconductors. The $21 million deal expands Aehr's product portfolio to include ultra-high-power capabilities for AI accelerators, GPUs, and HPC processors. This strategic move positions Aehr as a turn-key provider of reliability and testing solutions in the rapidly growing AI semiconductor market.

The acquisition combines Incal's high-power capabilities with Aehr's wafer level test solutions, addressing the unique challenges of testing very high-power AI devices. Incal's technology is already being used by leading AI industry players, and the merger is expected to accelerate growth and market share in the AI semiconductor test market.

Positive

• Acquisition expands Aehr's addressable market in the rapidly growing AI semiconductor sector
• Deal expected to be immediately accretive to Aehr's financials
• Incal's trailing 12-month revenue was approximately $12 million
• Combination of technologies positions Aehr as a turn-key provider for AI semiconductor testing
• Acquisition provides access to Incal's existing customer base in the AI industry

Negative

• Acquisition cost of $21 million may impact short-term cash reserves
• Potential integration challenges between the two companies
• Issuance of 552,355 shares of Aehr common stock may lead to dilution for existing shareholders

Insights

Financial Analyst

The acquisition of Incal Technology by Aehr Test Systems is a strategic move that could significantly boost Aehr's market presence in the rapidly growing AI semiconductor market. The financial terms—$21 million in total, with $14 million in cash and 552,355 shares of Aehr common stock—indicate a well-structured deal that balances cash outlay and equity distribution.

It's notable that Incal recorded $12 million in trailing 12-month revenue. This acquisition is expected to be immediately accretive, suggesting that Aehr anticipates positive financial contributions right from the start. This is a vital piece of information for investors, as it means the deal is likely to enhance earnings per share (EPS) immediately rather than over a prolonged period.

From a financial perspective, integrating Incal's advanced technological solutions with Aehr's global sales and manufacturing infrastructure could lead to operational synergies and cost efficiencies. This could further enhance Aehr's financial performance and shareholder value in the short and long term.

Tech Expert

The acquisition of Incal Technology brings Aehr Test Systems some unique technological advantages, especially in the realm of high-power testing solutions for AI accelerators, GPUs and high-performance computing (HPC) processors. These devices are pushing the boundaries of power consumption, reaching levels of 1,000 watts or more, necessitating specialized reliability and burn-in testing solutions.

By incorporating Incal's ultra-high-power capabilities, Aehr can now offer a more comprehensive suite of testing solutions that cater to the specific needs of AI semiconductor manufacturers. This broadens Aehr's product portfolio and allows it to better compete in the market by addressing the unique challenges posed by these high-power devices.

This is especially relevant as the AI semiconductor market is still in its early stages but is expected to grow rapidly. The ability to provide end-to-end reliability and testing solutions, from engineering qualification to high-volume production, positions Aehr as a go-to provider in this space, potentially capturing a larger market share.

Market Research Analyst

The strategic acquisition of Incal Technology by Aehr Test Systems reflects a forward-looking approach to capitalize on the booming AI semiconductor sector. With AI processors and semiconductors witnessing unprecedented growth, the need for specialized testing solutions is more critical than ever.

Incal's established relationships with leading AI industry players and its deep understanding of their technology needs give Aehr a competitive edge. This intimate customer knowledge can be leveraged to identify emerging trends and requirements, allowing Aehr to be more responsive and innovative in its product offerings.

The acquisition aligns well with market trends, as AI applications continue to expand, driving demand for more advanced and reliable semiconductor components. Aehr's enhanced capabilities to deliver high-power testing solutions not only meet current market needs but also position the company for future growth as AI becomes more integral across various industries.

FREMONT, CA / ACCESSWIRE / July 16, 2024 / Aehr Test Systems (NASDAQ:AEHR), a worldwide supplier of semiconductor test and burn-in equipment, today announced it entered into a stock purchase agreement to acquire all of the outstanding capital stock of Incal Technology, Inc., a Fremont, California-based, privately held manufacturer of packaged part reliability/burn-in test solutions used by a significant number of leading Artificial Intelligence (AI) semiconductor manufacturers.

The acquisition expands Aehr's product portfolio to include Incal's highly acclaimed test solutions, particularly its ultra-high-power capabilities for AI accelerators, GPUs, and high-performance computing (HPC) processors. AI semiconductors are among the highest power consumption devices in the entire semiconductor industry, with power levels of recent devices reaching 1,000 watts or more, well beyond any existing devices. These previously unseen power levels require new, unique test solutions that Aehr will now provide.

Incals' high-power capabilities, combined with Aehr's industry-leading lineup of wafer level test and reliability solutions, uniquely positions Aehr to capitalize on this rapidly growing opportunity within the AI semiconductor market as a turn-key provider of reliability and testing that span from engineering to high volume production.

Gayn Erickson, President and CEO of Aehr Test Systems, commented, "The rapidly growing artificial intelligence semiconductor market is still in the early stages, and we see a significant opportunity in this market for wafer level burn-in using our new high-power FOX multi-wafer production system. In addition, given the unique challenges of testing very high-power devices related to AI processors, there is a very real need for a significant amount of engineering qualification and process development as well as a significant new opportunity for production reliability screening at the packaged part level.

"We believe that Incal's new family of ultra-high-power solutions have significant technological and commercial advantages over other solutions, enabling Aehr to capture an even larger share of the AI semiconductor test market. In addition, Incal is in a unique position with intimate knowledge and working relationships with a significant number of AI industry leaders, providing a front-row seat to the technology needs of these customers. Incal is shipping systems today for use by a broad range of companies and their subcontract manufacturing and test houses for reliability testing for AI, GPU, network, and HPC processors, with many of these companies projecting needs to move to high volume, production level burn-in of these devices.

"Both Aehr and Incal believe there is a tremendous opportunity to grow this business substantially. Incal has world-class system hardware and software architecture and customers that have a high degree of customer loyalty for their products. Aehr brings worldwide sales and support infrastructure as well as high volume manufacturing that together we feel will quickly address customer demand of very high global growth rate of AI and other high-power semiconductors. We also bring R&D resources, technology and processes, and the financial resources to be able to enhance and accelerate new needs that customers may ask for. This unique combination strongly positions Aehr to capitalize on the significant opportunity within the AI semiconductor market."

Alberto Salamone, President and CEO at Incal, stated, "We believe Aehr's manufacturing capabilities and capacity together with their global applications and support resources can immediately benefit Incal's customers and help them accelerate their adoption of our systems and meet their quality/reliability and production burn-in capacity needs. We are thrilled to join the Aehr Test family and combine our unique technology to capitalize on the incredible growth in AI processors and semiconductors worldwide."

Under the terms of the agreement, Aehr will acquire all the outstanding capital stock of Incal Technology, Inc. for a purchase price of $21 million, consisting of $14 million in cash and 552,355 shares of Aehr common stock at $12.673 per share, the average closing price of Aehr stock for the ten (10) trading days ending on the first (1st) trading day immediately preceding the date of the Agreement, payable at closing and subject to certain post-closing adjustments with respect to working capital. For the period ended June 30, 2024, Incal recorded trailing 12-month revenue for test and burn-in systems, consumable burn-in boards and device electrical sockets and accessories of approximately $12 million. Aehr Test expects the acquisition to be immediately accretive. The transaction has been approved by the board of directors of both companies and is not subject to any financing condition. The acquisition is expected to close within the next 60 days.

About Aehr Test Systems

Headquartered in Fremont, California, Aehr Test Systems is a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and package part form, and has installed thousands of systems worldwide. Increasing quality, reliability, safety, and security needs of semiconductors used across multiple applications, including electric vehicles, electric vehicle charging infrastructure, solar and wind power, computing, data and telecommunications infrastructure, and solid-state memory and storage, are driving additional test requirements, incremental capacity needs, and new opportunities for Aehr Test products and solutions. Aehr has developed and introduced several innovative products including the FOX-P^TM families of test and burn-in systems and FOX WaferPak^TM Aligner, FOX WaferPak Contactor, FOX DiePak^® Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full wafer contactor capable of testing wafers up to 300mm that enables IC manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time. For more information, please visit Aehr Test Systems' website at www.aehr.com.

Safe Harbor Statement

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Aehr's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "going to," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of these words or other similar terms or expressions that concern Aehr's expectations, strategy, priorities, plans, or intentions. Forward-looking statements in this press release include, but are not limited to, future requirements and orders of Aehr's new and existing customers; Aehr's ability to receive orders and generate revenue in the future, as well as Aehr's beliefs regarding the factors impacting the foregoing, including the growth of the markets referred to herein; Aehr's ability to integrate Incal efficiently; the timing and extent to which the acquisition is accretive; the closing of the acquisition; and the growth of the markets referred to herein. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in Aehr's recent Form 10-K, 10-Q and other reports filed from time to time with the Securities and Exchange Commission. Aehr disclaims any obligation to update information contained in any forward-looking statement to reflect events or circumstances occurring after the date of this press release.

Contacts:

Aehr Test Systems
Chris Siu
Chief Financial Officer
csiu@aehr.com

MKR Investor Relations Inc.
Todd Kehrli or Jim Byers
Analyst/Investor Contact
(323) 468-2300
aehr@mkr-group.com

SOURCE: Aehr Test Systems

View the original press release on accesswire.com

FAQ

What is the value of Aehr Test Systems' acquisition of Incal Technology?

Aehr Test Systems is acquiring Incal Technology for $21 million, consisting of $14 million in cash and 552,355 shares of Aehr common stock valued at $12.673 per share.

How does the Incal Technology acquisition benefit Aehr Test Systems (AEHR)?

The acquisition expands Aehr's product portfolio to include ultra-high-power test solutions for AI semiconductors, positioning the company as a turn-key provider in the rapidly growing AI semiconductor market and is expected to be immediately accretive.

What was Incal Technology's revenue for the period ended June 30, 2024?

Incal Technology recorded trailing 12-month revenue of approximately $12 million for test and burn-in systems, consumable burn-in boards, and device electrical sockets and accessories.

When is the Aehr Test Systems (AEHR) acquisition of Incal Technology expected to close?

The acquisition is expected to close within 60 days from the announcement date of July 16, 2024, subject to customary closing conditions.