Q4 2025 Enovix Corp Earnings Call

February 25, 2026

Speaker #1: Particularly addressing that constraint to process optimization and alternative dicing approaches. We believe in our ability to unlock higher production rates as we transition towards commercialization.

Raj Talluri: methodical addressing that constraint to process optimization and alternative dicing approaches. We believe in our ability to unlock higher production rates as we transition towards commercialization. In 2026, we are capable of qualifying other new products and customers in the very production line they will use, and meeting demand for smart eyewear customers. Our overall company focus remains on disciplined execution, advancing smartphone qualification, while expanding into adjacent markets that support earlier revenue and manufacturing scale, and leading in smart eyewear markets with our silicon battery shipment. You'll see how these pieces come together through today's presentation. Let's talk about markets. Last quarter, we introduced this framework for outlining the end applications where our technology can create a durable moat. The smartphone market represents the fastest path, the large scale, and is ideal for our technology.

In 2026, we are capable of qualifying other new products and customers. In the very production line, they will use and meeting demand for smart eyewear customers.

Our overall company Focus remains a disciplined execution advancing smartphone qualification while expanding into adjacent markets that support earlier revenue and Manufacturing scale and leading in smart. Eyewear markets with our silicon battery shipment.

You'll see how these pieces come together through today's presentation.

Now let's talk about markets last quarter. We introduced this framework for outlining the end applications where our technology can create a durable mode.

Raj Talluri: An independent study from Polaris Labs previously validated our energy density leadership in smartphone batteries. This quarter, we extended that validation through a second apples-to-apples comparison against a leading competitor using identical methodologies. The results confirmed that AI1 delivers a meaningful volumetric density advantage versus commercially available silicon-doped lithium-ion batteries. We expect AI2 and AI3 to further expand our technology lead, with performance gains well beyond historically industry advancement rates. This quarter, we updated this slide by breaking out smart eyewear and drone applications as distinct, growing, addressable markets where our engagement has progressed. Smart eyewear adoption is presently accelerating as AI workloads migrate to compact, always-on devices. We expect to ship our first smart eyewear batteries for use in AI, AR devices in the second half of 2026.

The smartphone market represents the fastest path, the large scale, and is ideal for our technology. An independent study from Polaris Labs previously validated our energy density leadership in smartphone batteries.

And this quarter, we extended the validation through a second Apples to Apples comparison against the leading competitor, using identical methodologies, the results, confirmed that ai1 delivers the meaningful volumetric density, Advantage versus commercially available. Silicon. Doped, lithium ion batteries. We expect AI to and ai3 to further. Expand our technology lead.

With performance gains well beyond historical industry advancement rates.

This quarter, we updated, this Slide by breaking out, smart eyewear and drone applications as distinct. Growing addressable markets where our engagement has progressed.

Smarter adoption is presently accelerating as AI. Workloads migrate to compact always on devices.

Raj Talluri: Exceptional growth in this market is expected to continue throughout this decade, with display-enabled architectures that significantly increase power demand and require higher energy density for constrained form factors. We believe smart eyewear battery TAM could exceed $400 million by 2030, and we are targeting meaningful participation based on early engagement with key partners and strong technical suitability. Drones represent another priority area of focus, where we see an attractive TAM and a strong competitive advantage. Western drone platforms, both defense and commercial, are increasingly prioritizing higher energy density, extended flight time, and supply chain diversification. This battery segment is projected to be approximately $1.5 billion this year. Breaking these markets out reflects growing conviction that we are well-positioned across multiple high-growth platforms. With that context, let me walk you through our smartphone qualification progress and the defined pathways we see towards commercialization.

You expect to ship our first smart eyewear batteries for use in AI are devices in the second half of 2026.

Exceptional growth in this market is expected to continue. Throughout this decade with display enabled architectures that significantly increase power demand and require higher energy density for constraint form factors.

We Believe smart eyewear battery time. Could exceed 400 million dollars by 2030 and we are targeting meaningful participation based on early engagement with key partners and strong technical suitability.

Drones represent another priority area of focus where we see an attractive time and a strong competitive advantage.

Western drone platforms, both defense and Commercial.

Are increasingly prioritizing higher energy density extended flight time and supply chain diversification.

This battery segment is projected to be approximately 1.5 billion this year. Breaking these markets out, reflects growing conviction, that we are well positioned across multiple high growth platforms.

With that context.

Raj Talluri: Turning to our smartphone commercialization plan, we remain engaged with 7 of the top 8 global smartphone OEMs by market share. Validation efforts have expanded this year with multiple leading OEMs, including those serving the US market. Our near-term focus, though, remains on 2 Asia market leaders, with Honor being our lead customer. We commenced their formal product qualification process in Q3 2025. Most of the requirements have now been met. Cycle life testing remains the primary gating item to complete qualification and move into system integration and production planning. Cycle life testing is often misunderstood, particularly for silicon anode batteries, let me spend a minute explaining what these tests actually measure and why they matter for real-world smartphone usage.

Let me walk you through our smartphone qualification progress and the defined Pathways we see towards commercialization.

Turning to our smartphone. Commercialization plan, we remain engaged with 7 of the top 8, Global SmartPhone, oems by market, share, and validation efforts have expanded this year with multiple leading oems, including your serving, the US market.

Our near-term Focus though remains on 2. Hm. Market Leaders, with honor being our lead customer

the commands their formal product qualification process in the third quarter of 2025,

most of the requirements have now been met and cycle. Life testing Remains the primary gating item to complete qualification and move into system integration and production planning.

Raj Talluri: The key point, what we want to clarify next, is that cycle life results are complex and depend heavily on test protocols, which is especially important when evaluating next-generation silicon anode technology. When we say cycle life testing, we are referring to multiple tests based on different charge and discharge rates, or C-rates. This is standardized measure how quickly a battery is discharged relative to its total capacity, where a 1 C-rate means the battery can be fully discharged in 1 hour, and a 0.2 C-rate means battery is discharged in 5 hours. This slide illustrates relative C-rate across common smartphone applications. The highest power-consuming activity is video recording, which requires approximately 0.17 C discharge rate.

Because cycle life testing is often misunderstood particularly for silicon anode batteries. Let me spend a minute, explaining what these tests actually measure and why they matter for real world, smartphone usage. The key point and we want to want what we want to clarify next is that cycle, life results are complex.

And depend heavily on test, protocols.

Which is especially important when evaluating next-generation silicon and technology.

When we say cycle life testing, we referring to multiple tests based on different charge and discharge rates are C rates. This is standardized measure how quickly a battery is discharged relative to its total capacity,

Where A 1 C rate. Means the battery can be fully discharged in 1 hour and a 2C. Rate means that batteries discharge in 5 hours.

This slide illustrates relative C across common smartphone applications.

The highest power consuming activity is video recording.

Raj Talluri: We include a host of other popular consumer applications, as well as scenario for running multiple applications simultaneously to account for use cases such as using ChatGPT while also playing a Netflix movie. When we refer to our lead customer's primary qualification requirement of 1,000 cycles, that is based on a rate of 0.2 C. As you can see that everything below this level, which is why smartphone as well as smartwatch OEMs rely on this test to ensure batteries provide a positive experience for a wide range of consumer usage patterns. A test purely based on this rate would take a year to complete, though, so most companies compress the test time to 4 months by using an accelerated 0.7 C rate for the majority of the cycles, where the battery is fully discharged in 1.4 hours.

Don't see discharge it.

We include a host of other popular consumer applications, as well as scenario for running. Multiple applications simultaneously to account for use cases, such as using chat GPT while also playing a Netflix movie.

When we refer to our lead customers primary qualification requirement of thousand cycles that is based on a rate of 0.2 c. As you can see that everything below this level, which is why smartphone as well as smartphone oems rely on this test to ensure batteries provide a positive experience for a wide range of consumer usage patterns.

A test purely based on this rate.

Would take a year to complete though. So most companies compress the test time to 4 months by using an accelerated 7c rate for a majority of the Cycles where the battery is fully discharged in 1.4 hours.

Raj Talluri: Smartphone OEMs also include in their qualification process a secondary requirement of 800 cycles for just the 0.7 C cycles, though this C-rate is well beyond any single app consumption we are aware of. For the pods shipped in December. Customer qualification testing for cycle life began in January. This testing is progressing in parallel under customer control protocols. On this slide, you can see how batteries we sent to our lead customer perform in our 0.2 C cycle test. We made improvements over our initial version submitted in July, and our internal test indicates we are now likely to exceed the requirement of 1,000 cycles at 0.2 C rate. This is a significant achievement that is indicative that our product is approaching readiness for integration into commercial products. These same batteries are not currently on track to exceed the accelerated 0.7 C target.

Smartphone oems also included in their qualification process. A secondary requirement of 800 cycles for just the point 7c Cycles.

Though this C-rate is well beyond any single app consumption we are aware of,

But the part shipped in December.

Customer qualification testing for Cycle F began in January.

This testing is progressing in parallel under customer control. Protocols

On this slide. You can see how batteries we send to our lead. Customer perform in our 0, 2 cycle test,

We made improvements over our initial version, submitted in July and our internal test indicates. We're now likely to exceed the requirement of thousand Cycles at 0.2 C rate.

This is a significant achievement. That is indicative that our product is approaching readiness for integration into commercial products.

Raj Talluri: As it is the first time a 100% silicon anode smartphone battery has been brought to the market, we are working closely with our customer on alternative pathways for testing that is more suitable for silicon anode batteries. While customer testing ultimately determines qualification, this internal data set gives us increasing confidence that the current batteries are tracking towards the required performance. Because there has been no 100% silicon battery qualified in a smartphone, there are no defined testing protocols for qualification. Based on current test results, we're discussing multiple pathways to qualification with our lead customer. The first scenario is approval based on our 0.2 C results and acceptance of the 0.7 C cycle life below their current requirement. A second scenario involves adoption of new accelerated testing protocol tailored for silicon anode batteries.

However, these same batteries are not currently on track to exceed The Accelerated point 7c target.

As is the first time a 100% silicon anode smartphone, battery has been brought to the market. We're working closely with our customer on alternative Pathways for testing that is more suitable for silicon anode batteries.

So while customer testing ultimately determines qualification, this internal data set, gives us increasing confidence that the current batteries are tracking towards the required performance.

Because there has been no 100% silicon battery qualified in a smartphone. There are no defined testing, protocols for qualification.

based on current test results, we're discussing multiple Pathways to qualification with our lead customer

The first scenario is approval based on our Point 2C: results and acceptance of the 7c cycle life below their current requirement.

A second scenario involves.

Raj Talluri: Finally, we're also continuing to develop improved electrochemistry variation to hit the 0.7 C target. While we believe our battery platform is ready for deployment, we also understand that we're entering the largest consumer electronic market in the world. Customers appropriately maintain a high qualification bar for new entrants. We look forward to meeting all the necessary standards in 2026 and transitioning into commercial production. Initial smartphone-related revenue in 2026 is expected to support system integration and launch preparation, positioning us for a larger scale commercialization in late 2026 or beginning in 2027. Let's turn to smart eyewear. We view smart eyewear as an earlier commercialization pathway for AI-1, due to shorter qualification cycles and lower durability thresholds.

Adoption of new accelerated testing protocol tailored for silicon anode batteries.

Finally, we're also continuing to develop improved electrochemistry variation to hit the point 76 Target.

While we believe our battery platform is ready for deployment.

We also understand that we're entering the largest consumer electronic Market in the world.

Customers appropriately. Maintained a high qualification bar for new entrance. We look forward to meeting all the necessary standards in 2026 and transitioning into commercial production.

Initial smartphone-related revenue in 2026 is expected to support system integration and launch preparation, positioning us for a larger scale. Commercialization in late '26 or beginning in 2027,

Now, let's turn to Smart eyewear.

Raj Talluri: We believe this market represents a compelling near-term expansion opportunity for the platform, where our high energy density architecture is well aligned with product requirements. Our engagement in this category began early, and we're working with partners we believe are well positioned to lead in this market as it scales. Compared to smartphones, where an incumbent is deeply entrenched, this creates a more direct path to initial adoption. Our focus now is execution as we prepare for the initial volume shipments to lead smartwear platform later this year. Today, the eyewear market is dominated by products without displays, largely focused on audio, connectivity, and basic AI assistance. However, over the balance of this decade, we expect more than 5x unit growth as display-enabled ecosystem emerge, which translates to even higher battery TAM expansion as ASPs increase over the same time frame. Display-enabled eyewear materially increases the power demand.

The if you smart, I wear as an earlier, commercialization pathway for ai1 due to Shorter qualification cycles and lower durability thresholds.

We believe this Market represents a compelling near-term expansion opportunity for the platform where our high energy density. Architecture is well aligned with product requirements.

Our engagement in this category, began early and we're working with Partners. We Believe are well positioned to lead in this market as it scales.

Compared to smartphones where an incumbent is deeply. Entrenched this creates a more direct path to initial adoption.

Our Focus now is execution as we prepare for initial volume shipments to lead, smart Fair platform later this year.

Today, the eyewear market is dominated by products without displays.

Largely focused on audio connectivity and basic AI assistance.

However, over the balance of this decade, we expect more than 5x unit growth.

As display enabled, ecosystem emerge, which translates to even higher battery time expansion as ASP is increased over the same time frame.

Raj Talluri: Always-on AI processing, image capture, and augmented reality overlays create sustained energy draw in a highly constrained form factor. That combination, compact design and higher power consumption, is precisely where volumetric energy density matters most. Based on current engagement, which has accelerated rapidly, we expect smart eyewear to represent an earlier commercialization pathway for the AI-1 relative to smartphones. This market matures, we estimate the smart eyewear battery TAM could exceed $400 million by 2030, and we believe AI-1 is well suited to participate meaningfully in this market. This slide illustrates how our platform aligns with smart eyewear cycle life requirements. Importantly, in this segment, customers typically require less than 1,000 cycles durability at 0.2 C-rates and do not have a pure 0.7 C cycle test. Our energy density architecture is optimized for constrained space and sustained power draw.

Display enabled, eyewear material increases the power demand.

Always on AI processing image capture and augmented reality overlays create sustained energy draw in highly constrained form factor that combination compact design and higher power consumption is precisely where volumetric energy density Matters. Most

Based on current engagement which is accelerated rapidly. We expect smart are to represent an earlier commercialization pathway for the ai1 relative to smartphones.

As is Market matures, we estimate the smart eyewear battery time could exceed 400 million by 2030 and we believe A1 is well suited to participate meaningfully in this market.

This slide illustrates how our platform aligns with smart eyewear cycle requirements.

Importantly in this segment, customers typically require less than thousand Cycles. Durability at 0.2c rates and do not have a pure 73 cycle test

Our energy density architecture is optimized for constraint space and sustained power draw.

Raj Talluri: Because we architected AI-1 first for smartphones, the segment which has the highest technical qualification standards in consumer electronics, we believe extending the platform into smart eyewear is comparatively more straightforward from a performance standpoint. Once you're designed for the most demanding use case, adjacent applications become natural extensions of the same core architecture. That allows us to prioritize energy density and power efficiency while comfortably meeting eyewear durability thresholds. In addition, we expect this market will have a mix of smaller customers who address a wide range of fashion preferences and use cases that are also enabled by the budding Android XR ecosystem. This means our future sales mix may include meaningful percentage of off-the-shelf products in addition to customized products for the market leaders. We are seeing this dynamic play out already with multiple wins we announced at CES earlier this year.

And because we are A1 first for smartphones the segment, which has the highest technical qualification standards in consumer electronics. We Believe extending the platform into smart. Eyewear is comparatively more straightforward from a performance standpoint.

once you design for the most demanding use case adjacent applications become natural, extensions of the same core architecture,

That allows us to prioritize energy density and power efficiency, while comfortably meeting eyewear durability thresholds.

In addition, we expect this Market will have a mix of smaller customers who address a wide range of fashion preferences and use cases that are also enabled by the Bing and Android XR ecosystem.

Raj Talluri: Let me now turn to defense. Defense continues to provide both revenue and operational validation of our technology and manufacturing capabilities. We operate 2 differentiated defense-focused platforms across our global footprint. In Malaysia, we're advancing our 100% silicon anode architecture, our largest format AI-1 variation, optimized for high energy density applications. These batteries are well-suited for next-generation soldier systems, including augmented reality headsets and wearable power systems. We have supported US Army programs since 2021, and recently provided deliveries under the Conformal Wearable Battery program. In Korea, we have a conventional architecture platform utilizing graphite and silicon-doped anodes. This facility has an extensive operating history in Korean defense markets and supports wide range of battery sizes and configurations, optimized for high discharge rate applications, including drones, subsea systems, and munitions for several Korea's large defense contractors.

This means our future sales mix may include a meaningful percentage of off-the-shelf products in addition to customized products for the market leaders. We are seeing this dynamic play out already with multiple wins we announced at CES earlier this year.

Let me now turn to defense. Defense continues to provide both revenue and operational, validation of our Technology and Manufacturing capabilities.

We operate two differentiated, defense-focused platforms across our global footprint in Malaysia, where we are advancing our 100% silicon anode architecture. Our largest format Ai1 variation is optimized for high energy density applications.

These batteries are well suited. For Next Generation Soldier systems including augmented reality, headsets and variable Power Systems.

We have supported U.S. Army programs since 2021 and recently provided deliveries under the Conformal Variable Battery program.

In Korea, we have a conventional architecture platform, utilizing, graphite, and silicon doped anodes.

This facility has an extensive operating history in Korean defense, markets and supports wide range of battery sizes, and configurations optimized for high discharge rate applications, including drones subk systems, and Munitions for several careers, large defense contractors.

Raj Talluri: Naval munitions, specifically, were the largest growth driver in 2025. Our pipeline is increasingly focused on expanding our presence in the aerial drones market. In 2024, we kicked off a campaign to introduce our technology to US and European military contractors, who are attracted by our diverse supply chain and internal manufacturing capacity. Establishing initial programs and building a pipeline has required time, but it is starting to pay off. We enter 2026, with a global pipeline of approximately $100 million, including opportunities with multiple Tier One defense contractors. Recent design win traction in Q4 has strengthened our confidence in pipeline conversion. As programs progress, we expect to provide greater visibility into customer engagements as we convert pipeline to backlog. Aerial drones represent a compelling battery growth opportunity, with an estimated $1.5 billion TAM this year.

Naval Munitions specifically with the largest growth driver in 2025 and our pipeline is increasingly focused on expanding our presence in the aerial drones Market.

In 2024, we kicked off a campaign to introduce our technology to us and European military contractors who are attracted by our diverse supply chain and internal manufacturing capacity.

Establishing initial programs and building a pipeline has required time.

But it is starting to pay off. We enter 2026 the global pipeline of approximately 100 million dollars including opportunities with multiple Tier 1 defense contractors.

Recent design win Traction in Q4. Strengthened our confidence in pipeline conversion.

As programs progress, we expect to provide greater visibility into customer engagements as we convert pipeline to backlog.

Aerial. Drones represent a compelling battery growth opportunity with an estimated 1.5 billion dollar Tam this year.

Raj Talluri: Next generation drone platforms require higher energy density to extend flight time and strong discharge capability to support power-intensive missions. As autonomy and AI capabilities expand, power requirements will continue to increase. Our platform aligns well with these needs, enabling longer flight times, sustained high discharge performance, and diversified supply chains through our manufacturing in Korea and Malaysia. We are building on deployed defense cells and existing customer relationships to expand into next-generation silicon anode drone applications. This segment demonstrates how our architecture scales beyond smartphones and supports a diversified growth strategy. This slide highlights our energy density progress in drone applications. Today, we have deployed defense cells supporting high discharge drone programs. We are now advancing a higher energy drone cell in development, with internal testing achieving approximately 342 Wh/kg.

Next Generation drone platforms, require higher energy, density to extend flight time and strong discharge capability to support power intensive missions.

as autonomy and AI capabilities, expand power requirements will continue to increase

Our platform aligns, well, with these needs enabling longer, flight times sustained, high discharge performance, and diversified Supply chains through our Manufacturing in Korea and Malaysia.

An existing customer relationship to expand into next-generation, silicon, and/or drone applications.

This segment demonstrates how our architecture scales Beyond smartphones and supports a diversified growth strategy.

This slide highlights our energy density progress in drone applications. Today, we have deployed different cells, supporting high-discharge drone programs.

Raj Talluri: Looking ahead, our next-generation silicon anode roadmap targets energy density above 400 watt-hours per kilogram to support increasingly autonomous platforms. The roadmap shows clear progression: deployed cells today, higher energy product launches next, and next-generation silicon anode performance that expands mission capability. Now, I'll turn it over to Ryan to talk about our financials. Ryan?

we are now advancing a higher energy drone cell in development with internal testing, achieving approximately 342 Watt hours per kilogram

Looking ahead, our next Generation silicon. Anode, road map, targets, energy, density above the 400 watt hours, per kilogram to support increasingly autonomous platforms.

The road map shows clear progression deployed sells today higher energy product launches next. And Next Generation silicon anode performance that expands Mission capability.

[Company Representative] (Enovix): Thanks, Raj. First, a few highlights on the Q4 results. Q4 revenue was $11.3 million, a record for Enovix, up 16% year-over-year and above the top end of our guidance range of $10.5 million. This performance was driven by continued strength in defense and industrial shipments out of Korea. non-GAAP gross profit was $2.9 million for a non-GAAP gross margin of approximately 26%. While margins can fluctuate quarter-to-quarter based upon product mix, Q4 benefited from higher volumes and operational improvements in Korea. non-GAAP operating expenses were consistent with our planned investment levels, reflecting continued investment in smartphone and smart eyewear qualification programs, as well as Fab Two readiness. non-GAAP loss from operations was $28.9 million, modestly better than the guidance range of $30 to 33 million.

Ryan Benton: Thanks, Raj. First, a few highlights on the Q4 results. Q4 revenue was $11.3 million, a record for Enovix, up 16% year-over-year and above the top end of our guidance range of $10.5 million. This performance was driven by continued strength in defense and industrial shipments out of Korea. non-GAAP gross profit was $2.9 million for a non-GAAP gross margin of approximately 26%. While margins can fluctuate quarter-to-quarter based upon product mix, Q4 benefited from higher volumes and operational improvements in Korea. non-GAAP operating expenses were consistent with our planned investment levels, reflecting continued investment in smartphone and smart eyewear qualification programs, as well as Fab Two readiness. non-GAAP loss from operations was $28.9 million, modestly better than the guidance range of $30 to 33 million.

Now, I'll turn it over to Ryan to talk about our financials, right?

Thanks, Raj. First, a few highlights on the fourth quarter results.

Fourth quarter revenue was $11.3 million, a record for Enovix, up 16% year-over-year and above the top end of our guidance range of $10.5 million.

This performance was driven by continued strength and defense and Industrial shipments out of Korea.

Non-GAAP gross profit was $2.9 million for a non-GAAP gross margin of approximately 26%.

while margins can fluctuate quarter to quarter based upon product, mix Q4 benefit from higher volumes and operational improvements in Korea,

Non-gaap operating expenses were consistent with our planned investment levels.

Reflecting continued investment in smartphone and smart eyewear qualification programs, as well as Fab 2 readiness.

[Company Representative] (Enovix): Non-GAAP net loss per share attributable to Enovix was a loss of $0.14, also better than the guidance range of a loss of between $0.16 and $0.20. With respect to the balance sheet, we ended the year with approximately $621 million in cash equivalents, and marketable securities, providing substantial liquidity to execute on our commercial plans, as well as enabling us to evaluate strategic opportunities from a position of strength. Additionally, the board authorized a share repurchase program, reflecting confidence in our long-term strategy and adding another tool to our capital allocation framework as we focus on long-term shareholder value. Turning to the full year results. For the full year 2025, revenue totaled $31.8 million, a record for the company, representing 38% year-over-year growth.

Ryan Benton: Non-GAAP net loss per share attributable to Enovix was a loss of $0.14, also better than the guidance range of a loss of between $0.16 and $0.20. With respect to the balance sheet, we ended the year with approximately $621 million in cash equivalents, and marketable securities, providing substantial liquidity to execute on our commercial plans, as well as enabling us to evaluate strategic opportunities from a position of strength. Additionally, the board authorized a share repurchase program, reflecting confidence in our long-term strategy and adding another tool to our capital allocation framework as we focus on long-term shareholder value. Turning to the full year results. For the full year 2025, revenue totaled $31.8 million, a record for the company, representing 38% year-over-year growth.

Non-gaap loss from operations was 28.9 Million modestly better than the guidance range of 30 to 33 million.

Non-GAAP net loss per share attributable to Enovix was a loss of $0.14. Also, better than the guidance range of a loss between $0.16 and $0.20.

With respect to the balance sheet, we ended the year with approximately $621 million in cash, cash equivalents, and marketable securities, providing substantial liquidity to execute on our commercial plans as well as enabling us to evaluate strategic opportunities from a position of strength.

Additionally, the board authorized the share repurchase program reflecting confidence in our long-term strategy.

And adding another tool to our Capital allocation framework as we focus on long-term shareholder value.

Turning to the full-year results.

[Company Representative] (Enovix): This growth reflects sustained execution in defense and industrial markets, while new products in the smartphone and smart eyewear markets advanced towards commercialization. Full-year non-GAAP growth margin improved to 23%, benefiting from higher volumes and demonstrating substantial progress in manufacturing execution. Capital expenditures for the year were disciplined and aligned with our staged manufacturing expansion plans. Overall, we exited 2025 in a stronger financial and operational position than we entered it, with growing revenue, improving margins, and substantial liquidity to execute upon our roadmap. Now turning to Q1 2026 guidance. For Q1, we expect revenue in the range of $6.5 to 7.5 million, reflecting normal seasonality and program timing of defense shipments. We expect non-GAAP loss from operations between $29 and 32 million, reflecting continued investment in product qualification and manufacturing readiness.

Ryan Benton: This growth reflects sustained execution in defense and industrial markets, while new products in the smartphone and smart eyewear markets advanced towards commercialization. Full-year non-GAAP growth margin improved to 23%, benefiting from higher volumes and demonstrating substantial progress in manufacturing execution. Capital expenditures for the year were disciplined and aligned with our staged manufacturing expansion plans. Overall, we exited 2025 in a stronger financial and operational position than we entered it, with growing revenue, improving margins, and substantial liquidity to execute upon our roadmap. Now turning to Q1 2026 guidance. For Q1, we expect revenue in the range of $6.5 to 7.5 million, reflecting normal seasonality and program timing of defense shipments. We expect non-GAAP loss from operations between $29 and 32 million, reflecting continued investment in product qualification and manufacturing readiness.

For the full year 2025 Revenue. Total 31.8 million a record for the company representing 38% year-over-year growth.

This growth reflects sustained, execution and defense and Industrial markets. While new products in the smartphone and smart eyewear markets Advanced towards commercialization

Fully your non-gaap growth margin improved to 23%.

Benefiting from higher volumes and demonstrating substantial progress in manufacturing execution.

Capital expenditures for the year were disciplined and aligned with our staged manufacturing expansion plans.

Overall, we exited 2025 in a stronger financial and operational position than we entered it with growing Revenue, improving margins and substantial liquidity to execute upon our road map. Now turning to q1 2026 guidance.

for q1, we expect Revenue in the range of 6.5 to 7.5 million, reflecting normal seasonality and program timing of Defense shipments,

We expect non-gaap loss from operations between 29 and 32 million.

[Company Representative] (Enovix): We expect capital expenditures between $9 and $11 million, primarily related to Fab Two equipment. Actual cash payments in Q4 were lower than previously guided due to the timing of equipment and vendor payments. The majority of those payments are expected to occur in the first half of 2026. This is primarily timing, though we also made a couple of intentional near-term adjustments. Coincident with the operations leadership transition, we made two adjustments to our capital plan. First, we deferred initiation of the NPI line in Korea to allow Kate's time to fully evaluate priorities and sequencing. Second, given the high demand for products from our Korea factory, we are accelerating, adding incremental capacity there. This is a relatively modest investment, supported by high customer demand and opportunities.

Ryan Benton: We expect capital expenditures between $9 and $11 million, primarily related to Fab Two equipment. Actual cash payments in Q4 were lower than previously guided due to the timing of equipment and vendor payments. The majority of those payments are expected to occur in the first half of 2026. This is primarily timing, though we also made a couple of intentional near-term adjustments. Coincident with the operations leadership transition, we made two adjustments to our capital plan. First, we deferred initiation of the NPI line in Korea to allow Kate's time to fully evaluate priorities and sequencing. Second, given the high demand for products from our Korea factory, we are accelerating, adding incremental capacity there. This is a relatively modest investment, supported by high customer demand and opportunities.

Reflecting continued investment in product qualification and Manufacturing readiness.

We expect Capital expenditures between 9 and 11 million primarily related to Fab 2 equipment.

Actual cash payments and Q4, were lower than previously guided due to the timing of equipment and vendor payments.

The majority of those payments are expected to occur in the first half of 2026.

This is primarily timing.

Though, we also made a couple of intentional near-term adjustments.

Coincident with the operations leadership transition, we made two adjustments to our capital plan.

First we deferred initiation of the NPI line in Korea to allow K's time to fully evaluate priorities in sequencing.

Second given the high demand for products from our Korea Factory, we are accelerating adding incremental capacity there.

[Company Representative] (Enovix): On the M&A front, to provide a little bit more color there, we continue to actively evaluate a range of opportunities, both smaller and larger, that could accelerate commercialization or strengthen our manufacturing and technology position. We will only deploy capital with a focused and disciplined approach, especially with respect to strategic fit and price. With that, I think we're ready to take questions. Operator?

Ryan Benton: On the M&A front, to provide a little bit more color there, we continue to actively evaluate a range of opportunities, both smaller and larger, that could accelerate commercialization or strengthen our manufacturing and technology position. We will only deploy capital with a focused and disciplined approach, especially with respect to strategic fit and price. With that, I think we're ready to take questions. Operator?

This is a relatively modest investment supported by high customer demand and opportunities.

And larger that could accelerate commercialization or strengthen our manufacturing and Technology position.

We will only deploy capital with a focused and disciplined approach, especially with respect to strategic fit and price.

And with that, I think we're ready to take questions, operator.

Operator: We will now begin the Q&A session. Please note that this call is being recorded. Before we go to live questions, we are going to read the two most highly voted questions submitted by shareholders ahead of this call during the call re-registration. The first question is: How does your current strategy differentiate Enovix from competitors?

We will now begin the Q&A session.

Before we go to live questions, we're going to read the two most highly voted questions submitted by shareholders ahead of this call, during the call registration.

The first question is, how does your current strategy differentiate at a vix from competitors?

Raj Talluri: Thank you for that question. Enovix, we use 100% active silicon anode. Most of our competitors use graphite for the anode. Silicon anodes can store much more lithium, so we are able to provide much higher energy density because of that. You know, one of the problems with replacing graphite with silicon is that the silicon tends to swell, you know, when using a battery, when doing a charge and discharge. We've got an architectural advantage where we figured out how to enable the silicon anode from not swelling while maintaining the energy density advantage. That is our main advantage. That is how we differ from most of our competition, because we provide much higher energy density due to using 100% active silicon anodes.

Thank you for that question. Um,

Active, silicon anode. Uh, most of our computers use a graphite for the anode uh, silicon anodes can uh store much more, uh, lithium. So, we are able to provide much higher energy density because of that,

you know, 1 of the problems with, uh, replacing graphite with the Silicon is that the Silicon tends to swell, um, you know, when using a battery, when doing a charge and discharge, uh, we've got an architectural Advantage where we figured out how to enable, uh, the Silicon anode from not swelling while maintaining the energy density advantage, that is our main advantage. That is how we differ from, uh, most of our competition, because we provide much higher energy.

Density due to using 100% active silicon anodes.

Operator: Thanks. The second question is: At our current burn rate, how long is our cash runway? Under what conditions will we need to raise additional capital?

Thanks.

And other work conditions will be need to raise additional capital.

[Company Representative] (Enovix): I'll take that one, of course. First, we ended the year with approximately $621 million in cash equivalents, and marketable securities. We're operating from a position of strength, in my opinion. Second, I'd caution against thinking about runway purely in terms of static burn rate, because our spending is tied to a very specific qualification and commercialization milestone set. As those programs progress, the working capital and capital expense profiles will evolve as well. As we said in the prepared remarks, we believe we have substantial liquidity to execute on our commercialization strategy without needing to raise capital in the near term. That said, as we've discussed before, beyond that, we will always evaluate capital allocation options such as strategic M&A, opportunistically, but with process rigor.

Ryan Benton: I'll take that one, of course. First, we ended the year with approximately $621 million in cash equivalents, and marketable securities. We're operating from a position of strength, in my opinion. Second, I'd caution against thinking about runway purely in terms of static burn rate, because our spending is tied to a very specific qualification and commercialization milestone set. As those programs progress, the working capital and capital expense profiles will evolve as well. As we said in the prepared remarks, we believe we have substantial liquidity to execute on our commercialization strategy without needing to raise capital in the near term. That said, as we've discussed before, beyond that, we will always evaluate capital allocation options such as strategic M&A, opportunistically, but with process rigor.

I'll take that one, of course. Um, first, we ended the year with approximately $621 million in cash, cash equivalents, and marketable securities. So we're operating from a position of strength, in my opinion.

Second.

I'd caution against thinking about Runway purely in terms of static, burn rate because our spending is tied to a very specific qualification and commercialization Milestones set

As those programs progress, the working capital and capital expense profiles will evolve as well.

As we said, in the prepare remarks, we believe we have sustained liquidity substantial liquidity to execute on on our commercialization strategy without needing to raise capital in the near term.

That said, as we've discussed before, beyond that, we will always evaluate capital allocation options such as strategic M&A opportunistically, but with process rigor.

Operator: We will now go to the queue. If you'd like to ask a question, please use the Raise Hand feature on your screen. If you're dialed in via phone, please use star nine to raise your hand and star six to unmute yourself. Questions will be answered in the order they are received. Please ask one question and one follow-up question at most. We'll now pause a moment to assemble the queue. Our first question comes from Mark Schutter with William Blair. Please unmute to ask your question.

We will now go to the next question.

Thank you. If you would like to ask a question, please use the raised hand feature on your screen. If you have dialed in via phone, please use star 9 to raise your hand and start to extend yourself.

Questions will be answered in the order they are received. Please ask 1 question and 1, follow-up question at most. We'll now pause a moment to assemble the cube.

Our first question comes from Mark shooter with William Blair please unmute to ask some questions.

Mark Schutter: Hey, Raj. Can you hear me?

Raj Talluri: Yeah, Mark, go ahead.

Hey, Rush. Um, can you hear me?

Mark Schutter: Great. Thank you, guys. I appreciate you getting into the details and geeking out with us a bit on the smartphone C-rate test requirements. The 0.7 C-rate life cycle test is definitely overkill for smartphones, but it's an incumbent standard, and they're notoriously sticky and difficult to change once established. I'm wondering, in your engagements with Honor, how receptive were they when you suggested the change? Given that, you know, cycle life and energy density are always paired trade-offs, would Honor take a formulation that hits that 0.7 rate cycle life spec with a slightly lower energy density?

Yeah. Go ahead. Great. Thank you guys. So I appreciate you getting into the details and geeking out with us a bit on the smartphone crate, test requirements. Um, the 0.7 C rate. Uh, life cycle test is, is definitely overkill for smartphones, but if an incumbent standard and they're notoriously sticky and difficult to change once you established. So I I'm wondering in your engagements or the honor how receptive were they when you suggested the change, uh, and given that, you know, cycle life and energy density are always paired to trade-offs.

Would Honor take a formulation that hits that, uh, 7 rate, um, cycle life spec, with a slightly lower energy density?

Raj Talluri: Yeah. Thanks a lot. Thanks for the question. Yeah, you know, I think the first thing is to, you know, the reason I showed some of the material in this talk is to actually show that most of the use cases in the smartphones, as the batteries get bigger and bigger and more and more capacity, are under 0.2 C discharge. Which basically means that we have a battery that now we believe under 0.2 C, you know, average discharge rate, goes over 1,000 cycles. We essentially, we feel we have a battery that meets the requirements of the smartphone market.

Thanks a lot. Thanks for the question. Uh, yeah. You know, um, if I think the first thing is to, um, you know,

As I as the reason I showed some of the material in this talk is to actually show that most of the use cases, uh, in the smartphones as the batteries, get bigger and bigger and and more and more capacity.

Raj Talluri: No, as I said, one of the challenges is if you want to test if the battery, you know, meets the requirements at the, you know, how the normally battery is used in the phone, it's gonna take you a year to actually, at least to run that. If you run it 0.2C, it takes a long time. Customers typically use higher rate of discharge, like 0.7C, to cut the amount of time it takes to test. This is very similar to people used to use a burn-in test, for example, for chips, you know, high temperature ovens, you know, try to find the early failures. When you change technology from graphite batteries to silicon anode batteries, silicon anode batteries behave differently when you discharge them very fast, in this 0.7C.

Are under point to see discharge which basically means that we have a battery that. Now we believe under point to see, you know, average discharge rate goes over thousand Cycles. So we essentially we feel we have a battery that meets the requirements of the smartphone market.

Is a higher rate of discharge like 7 C to cut the amount of time. It takes to test. This is very similar to people used to use the burning test. For example, for chips, you know, high temperature ovens, you know, try to find the early, uh, failures.

When you change technology from graphite batteries to Silicon anode batteries, silicon anode batteries behave differently. When you discharge them very fast,

Raj Talluri: Honor and our other smartphone customers, we have talked to them. They understand that, they realize that this test is a proxy and an accelerated test and not a true test. like you said, this is the test they have been using. we are in discussions with them. you know, we see 3 pathways forward. You know, one is we're able to convince them that this is not a real-life test, and the real-life test is really 0.2 C, and we can get a waiver on less cycle life for 0.7 C, for example. By the way, this has got nothing to do with energy density. It's purely about cycle life testing. it's not like they need to take a lower energy density.

Um, in this point 7c, so, honor and our other smartphone customers, we have talked to them. They understand that they realize that this test is a proxy and an accelerated tests and not a true test. Uh, but like you said, this is the tests they've been using. We so we are in discussions with them. Uh, you know we see 3 Pathways forward, you know, 1 is we're able to convince them that this is not a real life test. And the real life test is really 0.2 C and we can get away with it and less cycle life for 73, for example.

Raj Talluri: They just have to take a lower cycle life on 0.7 C, which is not a real test, an accelerated test. The second one is we have to find, together with them, another accelerated test that is more representative, if you will, for silicon anodes. We have some ideas on what that is, and we are discussing with them on that. You know, the third one is we'll just have to modify our electrochemistry just to pass this test at 0.7 C. We are working on all three of those. Ultimately, there is a lot of interest from our customers in wanting to use our batteries because of the higher energy density we provide, and the roadmap, even higher energy densities because of a 100% silicon anode, and those conversations are going well.

By the way, this has got nothing to do with energy density. It's purely about cycle life testing so it's not like they need to take a lower energy density, they just have to take lower cycle life on 7 C which is not a real test on accelerated test.

The second one is, we have to find—together with them—other accelerated tests that are more representative, if you will, for silicon anodes. And we have some ideas on what that is, and we are discussing with them on that.

Raj Talluri: Ultimately, we need to solve this, you know, passing of this test to a way where they and us both are comfortable, that in the real-life use case, when ultimately the battery is put in the phone, it's gonna do really well and everyone's happy with the performance.

You know, the third one is we'll just have to modify our electrochemistry just to pass this test at 0.75.

Mark Schutter: Thanks, Trish. I appreciate all the color there. If I can switch over to the opportunity in smart glasses. In the presentation, you gave a lot of information there on the TAM as well. The, the performance advantage with the Novus cell and technology goes up, but the battery and the application requirements get easier. I can see how this is your faster commercialization path. You did mention the, a initial production demand in your, in the release statement. I mean, should we think about that as a, as a purchase order, or is that a next step? Can you frame what the revenue opportunity might be for 2026, or is this a 2027 story? Thanks.

I appreciate all the color there. If I can switch over to the opportunity, in smart glasses in the presentation, you gave a lot of information there on the Tam as well. Um, the performance Advantage with the notice of cell and Technology goes up, but the battery in the application requirements, get easier. So I can see how this is a your faster commercialization path. But, um,

Raj Talluri: Yeah, good question. You know, as you alluded, when the battery gets smaller, but still the energy requirements or capacity requirements are high, we have a disproportionate advantage because the smaller it is, you know, the efficiency we have is more better compared to our competition, because the additional stuff we put in there for holding the cell from not expanding is not as much of a penalty, right? That's why I think We are much more competitive there. Also, the cycle life requirements are much lesser. You know, they don't need to do 1,000 cycles because people probably change their glasses much quickly. Those two are very good. Also, the battery, you know, in smart glasses is the limiting factor.

You did mention a initial production demand in your, in the release statements. So I mean should we think about that as a as a purchase order or is that a next step? And and can you frame, what the revenue opportunity might be for 26? Or is this uh 27 story, thanks?

Yeah, good question. So um, you know, as as as you alluded when the battery gets smaller, uh, and but still the energy requirements are capacity. Requirements are high, we have a best proportional Advantage because the smaller it is, you know, the the efficiency we have is more better compared to a competition because the additional stuff we put in there for holding the cell from not expanding um is not as much of a penalty, right? So that that's why I think it's a it's much we are much more competitive there and also the cycle life requirements are much much lesser you know they don't need to a thousand Cycles because people probably change their glasses much quickly.

Raj Talluri: I mean, if you guys actually buy some of the smart glasses in the market today and start using them, you'll find that almost none of them come all day. Smartphones come all day, but most of these things will die in multiple hours. A better battery makes the product. That's why there's a lot of interest from our customers on using our battery. Also there's lots of different kinds of applications, lots of different kinds of products. This is what I mean by, you know, there could be sport glasses, there could be utility glasses, there could be fashion glasses. You know, as I mentioned, when Android XR ecosystem comes, you know, there'll be even more products using that.

Raj Talluri: That's why the TAM is now suddenly much larger we expect it to be in the next few years than we ever thought before. I think that's why we are very excited by this market and the fact that we can get there. Yes, you absolutely should think of the question you asked as a purchase order, and we are manufacturing them now to our lead customer. We are very excited by that. The whole team. I was in Penang last week. The whole team is focused on executing that and building the, those products and sending it out. Initial volumes will be lower, you know, just because they're just starting. I think that 2027, 2028, we expect the market to really grow and be meaningful for us. We're excited by that.

So those 2 are very good and also the battery, you know, in smart glasses is the limiting factor. I mean, if you guys actually buy some of the smart glasses in the market today and start using them, you'll find that almost none of them come all day, smartphones, come all day. But most of these things will die in multiple hours. So a better battery makes the product. That's why there's a lot of interest from our customers on using our battery. And uh, also there's a lots of different kinds of uh, application. Lots of different kinds of products. This is what I mean by, you know, there could be sport glasses. So there could be utility glasses. There could be fashion glasses. And, you know, as I mentioned when Android XR ecosystem, comes, you know, under, there will be even more products using that. So, that's why the Tam is now suddenly much larger. We expect it to be in the next few years than we ever thought before.

[Company Representative] (Enovix): Yeah, if I can just jump in and chime in. You know, I had an old boss used to say, all dollars are not equal. It's a very important order for us.

Ryan Benton: Yeah, if I can just jump in and chime in. You know, I had an old boss used to say, all dollars are not equal. It's a very important order for us.

Um, so I think that's why we are very excited by this market and the fact that we can get there. Yes. You absolutely should think of the, the question you asked as a purchase order and we are manufacturing them. Now to our lead customer, we're very excited by that. Uh, the whole team I just, I was in Penang last week. The whole team is focused on executing that and building those products and setting it out. Uh, initial volumes will be lower, you know, just because they're just starting. Um, but I think that uh, 2728, uh, we expect the market to really grow and be meaningful for us so. So we're excited about that. Yeah. If I can just jump in and chime in and you know, had an old boss used to say all dollars are not equal. It's a very important order for us.

Mark Schutter: Great. Thank you, gentlemen.

Great. Thank you, John.

Operator: The next question comes from George Gianarikas with Canaccord Genuity. Please unmute to ask your question.

The next question comes from George G in America, he's unmute to ask your question.

George Gianarikas: Hi, both of you. Thank you so much for taking my questions and for the incredible level of detail and presentation. Appreciate it. Maybe first question, you pointed to sort of a little bit of an issue with the electrode dicing and the manufacturing process getting yields up there. How much have you been talking with your potential piece of customers around fixing that issue maybe together, in anticipation for having production towards the end of this year? Thank you.

Hi both of you. Thank you so much for taking my questions, and, for the incredible level of detail and presentation, appreciate it. Um, so maybe first question and you, you pointed to sort of, uh, little bit of an issue with the electrode. Dicing in the manufacturing process, getting yields up there. How much have you been?

Talking with your potential piece of customers around fixing that issue maybe together uh and anticipation of branding production towards the end of the show. Thank you.

Raj Talluri: Yeah. You know, I think, firstly, as I mentioned, the yields on almost all steps are above 80%, as you saw in our 80% or above, as I mentioned. On the dicing side, they're close to 80%, not quite there in Q4. This quarter to date, you know, we're at 80%, we feel confident that as we make progress, it'll sort itself out. That, you know, that's because we just started making two batteries, right? We just started making a smartphone battery and a smart eyewear battery. We've been sampling a lot of batteries last year. We're now focused on two of them, one on Agility Line, one on high volume line.

Raj Talluri: We'll continue to work on each state to get it better. You know, our customers have visited our factories. They have seen it. You know, we've got men through multiple customer audits. You know, we have enough supply to meet all the requirements for 2026, we're looking at various options to increase the throughput and get even more cost effective than laser dicing methods to actually get the volumes up. A lot of focus on that, we are working with our customers on that.

Yeah. Um, you know, uh, I think, uh, firstly as I mentioned, um, the yields are almost, uh, on all, all all, um, steps at about 80%. As you saw in our 80% there about, as I mentioned on the dicing side, they're close to 80%, but not quite there in fourth quarter, uh, but this quarter today, you know, we're at 80%. So we feel confident that, uh, as we make progress, uh, it'll it'll, uh, it'll start itself out. Uh, but that, you know, that's because we just started making 2 batteries, right? We just started making the smartphone battery and, uh, and uh, uh, smart. I wear battery. We've been sampling, a lot of batteries last year. We're not focused on 2 of them. 1 on agility Line 1 on H, volume line, high volume line and uh we'll continue to work on each day to get it better, you know, our customers have visited our factories, they have seen it, you know, we've got men men through multiple customer audits, um, you know, where we have enough Supply to meet all the requirements for 2026. And uh, we're looking at various

Options to increase the throughput and get, uh, even more cost effective than laser dicing, uh, methods to actually get the volumes up. So,

Yeah, a lot of lot of focus on that, and, uh, we are working with our customers on that.

George Gianarikas: Thank you. Maybe, with regard to the growth opportunity, can you sort of talk about the different variations of chemistries that you have to work with? I'm assuming these are silicon-doped cells, not 100% silicon, like you had protein market, of course. How many different chemistries do you need to approach that market? Do you need, like, any additional salespeople to sort of attack it? Thank you.

Thank you and maybe uh with regard to the growing opportunity. Can we sort of talked about

The different variations of chemistries that you have to work with them. I'm assuming these are silicon, doped cells, not 100% silicon, Health coaching Market with person. So how many different chemistry do you need to approach that market? And do you need like any additional sales people to sort of attack it? Thank you.

Raj Talluri: Yeah, great question. You know, we have been making, you know, we haven't really talked about it too much in the past. We've been making very high performance, high rate of discharge cells because, you know, because we were selling into a lot into the Korean military from our Nonsan facility. Some of the requests came from drone batteries, and we started making those. What we find now is with the market expanding fast, you know, because as you guys have seen in the more recent political situations, there's lots of drones being deployed both in commercial and also in military.

Yeah, great question. Um, you know, this we have been making, you know, we haven't really talked about it too much in the past. Um, we've been making, um, very high performance High rate of discharge cells because, you know, for, because we were selling into a lot into the Korean military, from our uh, nonsan facility and uh, some of the requests came from drone batteries and we started making those. Um, what we find now is, uh, with the market expanding fast. You know, because as you guys have seen in the more recent,

Raj Talluri: We have now combined, used some of our knowledge on using 100% silicon anodes with our Nonsan team, and now we dope those batteries also with silicon anode, with silicon, the graphite with silicon, and to increasing amounts. You know, as I mentioned before, when we put more and more silicon, the cells, the batteries swell. That problem hasn't gone away. Since they are inside things like drones, even if they swell 10, you know, swell 10, 15% or more, there's space inside to accommodate that. We have now find that we can make, you know, high gravimetric energy batteries that do swell a little bit, but still good within the application. Whereas in a smartphone, if you swell, it's not acceptable because, you know, it's very space constrained. So they're both...

Political situations. There's lots of drones being deployed, um, both in commercial and also in in military, uh, we have now combined, uh, used some of our, uh, knowledge on, uh, using 100% silicon anodes with our nonsan team. And now we dope, those batteries. Also with silicon anode, uh, with silicon, the graphite with silicon and to increasing amounts. Um, you know, as I mentioned before, when we put more and more silicon the cells, the batteries. Well, so that problem hasn't gone away.

But since they're inside things like drones, even if they swell 10, you know, swell 10–15% or more, the space inside can accommodate that. So we have now found that we can make, you know, high—

Raj Talluri: In that sense, I think it's been a really good thing for us. As I mentioned, we have a strong roadmap now, and you'll see us sampling much higher, you know, watt-hours per kilogram cells this year and just continuing to increase that through next year. We have a lot of customers now helping us with that too.

Gravity energy batteries that do swell a little bit, but still good within the application. Where is in a smartphone? If you smile, if you swell, it's not acceptable because, you know, it's very space constrained. Um, so they're both. So in that sense, I think it's been a really good thing for us. As I mentioned, we have a strong road map now, um, and you'll see a sampling much higher, um, you know, what hours per kilogram sells this year and just continuing to increase that through next year and we have a lot of customers now. Helping us with that too.

George Gianarikas: Thank you.

Thank you.

Operator: Our next question comes from Colin Rusch with Oppenheimer. Please unmute to ask your question.

Colin Rusch: Thanks so much. Can you guys hear me okay?

Hi, nice. Question comes from Colin. Rouge with Oppenheimer? Please unmute to ask your question.

[Company Representative] (Enovix): Yes, sir.

Ryan Benton: Yes, sir.

Thanks so much. Can you guys hear me, okay?

Raj Talluri: Yeah, Colin, go ahead.

Colin Rusch: Guys, exciting that you're moving into the drones. Can you talk a little bit about the form factors that you're working on there, as well as the diversity of electrolyte and binder materials and binder processes that you can, you know, you feel comfortable talking about at this point? I just want to get a sense of the full ecosystem here, and potential product, you know, diversification that you might see within that opportunity.

Yes, sir. Yeah, call me. Go ahead. Okay.

Raj Talluri: Yeah, sure. You know, all drone again, like I said, it's a pretty big market, and all of them are not the same, right? There are sub C drones, there are aerial drones, there are big aerial drones that, you know, carry a lot of weight. There are smaller ones that carry some munitions and maybe one-time use or just use for a few times. You know, we have different chemistries and different electrolytes to address that market. Here, this is one of those areas where we can trade off cycle life, you know, for energy density, for weight, and so on. Because, you know, you don't need to charge them 1,000 cycles, right? That's really not a requirement here. 300 is plenty.

So guys exciting that you're moving into the drones, can you talk a little bit about the form factors that you're working on there as well as the the diversity of, uh, electrolyte and, and binder materials and binder processes? Um, that you can um, you know, you feel comfortable, um, talking about it. This point, I just want to get a sense of the, the full ecosystem here, uh, and potential product, um, you know, diversification that you might see within that that opportunity.

Raj Talluri: Suddenly, a lot more opportunities open up for us in terms of the electrochemistries we use. Our team in Korea has been doing this for a long time, so we have multiple chemistries going after that. Some purely graphite, some graphite doped with silicon, you know, different kind of of cathodes. Multiple form factors, multiple products, but we understand this market pretty well. You know, the other important thing is in this market, having your own factory is a really big deal because manufacturing, that's something that our customers tell us that the fact that we own our factories and we can make them in Korea or Malaysia is a big advantage compared to, you know, some of our competition who actually have to use contract manufacturing in China and other places.

Different chemistries in different electrolytes to to address that market. Uh here. This is 1 of those areas where we can trade off cycle life, you know, for energy density for weight and uh, and so on because you know, you don't need to charge them thousand Cycles, right? So, so that's really not a requirement here. 300 is plenty. So suddenly a lot more opportunities open up for us. Uh, in terms of electrochemistry, we use and our team in Korea, has been doing this for a long time. So we have multiple chemistries going after that, some purely graphite, some graphite doped with uh with with silicon, you know, different kind of uh of cathodes. Uh, so uh multiple form factors multiple products. Um, but we understand this Market pretty well. And, you know, the other other important thing is um, in this market

Raj Talluri: These are sensitive equipment, you know, areas where having our own captive manufacturing helps us quite a bit.

[Company Representative] (Enovix): I'll add to it. I was just gonna say part of the question. I do expect that we'll add to the sales and business development organization to support that, so it's kind of the time to build that group out.

Ryan Benton: I'll add to it. I was just gonna say part of the question. I do expect that we'll add to the sales and business development organization to support that, so it's kind of the time to build that group out.

Having your own factory is a really big deal, uh, because the manufacturing—that's something that our customers tell us. Um, the fact that we own our factories and we can make them in Korea or Malaysia is a big advantage compared to, you know, some of our competition who actually have to use contract manufacturing in China and other places. So, these are sensitive equipment, you know, areas where having our own captive manufacturing helps us quite a bit.

And I'll add to it. I think it's part of

Raj Talluri: That's right.

Colin Rusch: Right. Given what's going on in the US in terms of, you know, trying to migrate manufacturing and, you know, secure supply chains back into the US over the next few years, even from Korea, can you talk about, you know, some of your capital planning on a multi-year basis as you enter that market, in terms of having to have some localized or regionalized supply in the Western Hemisphere to serve some of the US military?

I was just gonna say part of the question. I I do expect that we'll add to the sales and Business Development organization, to support that. So it's, it's kind of the time to build that group out.

Raj Talluri: ... Yeah, I mean, at this point, as Ryan mentioned, we were fortunate to acquire this facility in Korea last year, you know, from SolarEdge. That added, you know, 300,000 sq ft of total capacity we have, factory we have in Korea now, with a very capable team that's been building batteries for defense for, like, 20 years and industrial applications. We have a large footprint there, and we are now going to invest more into that this year to, you know, get more capacity there. Again, so far, I think manufacturing in Korea or manufacturing in Malaysia seems perfectly acceptable.

That's right, right and and give us what's going on in the US. In terms of, you know, trying to migrate manufacturing. And, you know, say secure Supply chains back into the us over the next few years even from Korea. Can you talk about, you know, some of your Capital planning on a multi-year basis, as you enter that market in terms of having to have some localized or regionalized Supply in, in the Western Hemisphere to, to serve some of the US Military.

Yeah. I mean, at this point as a, as Ryan mentioned, um, we, we were fortunate to acquire this facility in, uh, in Korea last year, um, you know, from a solar Edge that added, you know, 300,000 square foot of, uh, total capacity. We have, uh, Factory. We have in Korea now with a very capable team. That's been building batteries for defense for like, 20 years and Industrial applications. So we have a large footprint there and we are now going to invest, uh, more into that this year to, you know, get more capacity there. And, uh, again, uh, so far

Raj Talluri: We will continue to see if it makes sense to bring something into the US, but we are quite, our customers are quite comfortable right now with those two facilities.

Bill Peterson: Awesome, guys. Thanks so much.

I think manufacturing in Korea, uh, or manufacturing in Malaysia seems perfectly acceptable. All countries—to see if it makes sense to bring something into the US. But we are quite, uh, our customers are quite comfortable right now with those two facilities.

[Company Representative] (Enovix): Thank you.

Ryan Benton: Thank you.

Awesome guys, thanks so much.

Operator: The next question is from Jeff Osborne with TD Cowen. Please unmute to ask your question.

Thank you.

Jeff Osborne: Yeah, thank you. Appreciate all the detail on the call so far. I wanted to know, Raj, relative to the last earnings call 3 months ago or so, the 0.7 C metric that you mentioned, is that new? Because you referenced sort of a 4-month testing period. I'm just curious, like, when the parameters changed. I think you referenced a 4-month sort of shot clock to proceed through the testing process and procedure. If it was-

The next question is from Jeff Osborne. TD Cohen he's unmute to ask your question.

Yeah, thank you. Um, appreciate all the detail on the call so far. Um, I wanted to know Raj relative to the last earnings call 3 months ago or so, the 0.7 C metric that you mentioned is that new because you you referenced sort of a 4-month

Raj Talluri: Yeah.

Jeff Osborne: Did the four months start three months ago, and you'll know next month? Did you get that new homework assignment, so to speak, in the past few weeks?

Raj Talluri: No, that's always been there as a requirement. Our thinking was that we will figure out a way, I mean, we will pass that requirement also. I think what we find now is with 100% silicon anode batteries, you know, 0.2 C requirement is something we can pass, because, you know, we have data and all that shows that. When you discharge a, you know, battery, like 100% silicon anode battery at 0.7 C rapidly, which is not a real use case, as I mentioned, you just do it for convenience, it doesn't behave like the graphite batteries do. It behaves differently.

Testing period. I'm just curious like, when the parameters changed and then when that, I think you referenced a 4-month sort of shot clock uh to proceed through the testing process and procedures. So it was yeah, did the 4 months, start 3 months ago and you'll know next month or did we did you get that new homework assignment so to speak uh, in the past few weeks?

No, that that's always been there as a requirement. Um, and, uh, out thinking was that, uh, we will figure out a way to. I mean, we will pass that requirement also. Um, but I think what we find now is, uh, with 100% silicon anode batteries,

Raj Talluri: In that sense, you know, it's one of those cases where the accelerated test itself has to be adapted a little bit for the kind of battery we are using. We showed this to our customers, and they understand it, so we're now discussing what the right way to resolve this is, right? It's not a new homework assignment. The results is what we have now, is we've solved the 0.2 C problem, which I believe is a real problem in terms of how a battery is used in the phone. We are working on how to resolve the 0.2 C, 0.7 C accelerated test in a way that both us and our customers are comfortable.

Jeff Osborne: You think that can still be done in a 4-month window that started at some point this quarter? I'm just trying to understand, like, when you...

You know, 0.2 requirement is something we can pass uh because you know that's we have data. Now that shows that when you discharge, you know, battery like a 100% silicon battery at 7 C rapidly which is not a real use case. As I mentioned, you just do it for convenience. It doesn't behave like the graphite batteries, do it behaves differently. Um so in that sense, uh you know, it's 1 of those cases where the accelerated test itself has to be adapted a little bit for the kind of battery. We are using and we showed this to our customers and they understand it. So we're not discussing um what the right way to resolve this is, right? So it's not a new homework assignment. The results is what we have now is we've solved the point 2, C problem, which I believe is a real problem in terms of how the battery is used in the phone. Now, we are working on how to resolve the point to see 7c accelerate test in a way that both us and our C. Our customers are comfortable.

Raj Talluri: Yeah.

Jeff Osborne: - expect-

Raj Talluri: Yeah.

Jeff Osborne: - expect-

Raj Talluri: Yeah

Jeff Osborne: ... knowing what you know now, to pass the Honor test, so to speak.

Raj Talluri: Yeah, like I said, I think there are three pathways for us. One is we, you know, we have results now on 0.7 C that don't go all the way to the cycle life that they want, but we are talking to them about how real is this? Like, it's a proxy test. Can we get comfortable? You know, for example, get a waiver that you pass this many cycles, it's okay, as long as the 0.2 C is holding to 1,000 cycles. That's one pathway. That may be the shortest one. The second one, maybe we come up with a different accelerated test, which we believe is more representative or better makes them comfortable that silicon anodes, if we accelerate tests like this, they behave like how they would in real-world use case.

And you think that can still be done in a 4-month window that started at some point this quarter. And I'm just trying to understand, like, when you expect—knowing what you know now—to pass the honor test, so to speak.

Raj Talluri: We're working on that, which is a different testing protocol. The third one is, they say, No, you just got to pass this, in which case we'll have to change the electrochemistry and find a way to pass this, which we have some ideas on how to do. The team is working on that. That might take longer. Depending upon which one we are able to convince them, we'll get how much the time is. We do believe that one of these things will be able to convince them before the end of the year and get some, get some volume.

Just like it's a proxy test. Can we get comfortable? And, you know, for example, get a waiver that you pass this many cycles—it's okay, as long as the point 2C is holding 2,000 cycles. That's one pathway; that may be the shortest one. The second one, maybe we come up with a different accelerated test, which we believe is more representative or better makes them comfortable that silicon anodes, if we accelerate test like this, they behave like how they would in a real-world use case. They're working on that, which is a different testing protocol.

Jeff Osborne: Got it. Maybe for Ryan, just given Raj's answer on the 3 different outcomes there, as it relates to sort of modeling the business over the next few quarters, I know you only give formal guidance 1 quarter out, but I assume we should think about eyewear as the main driver outside of the Routejade facility for the next 6 months or so, is part A of the question. Part B, can you just remind us of what you expect seasonality to be for defense? You've got a pretty precipitous decline in Q1.

And the third one is, they said, no, you just got to pass this, in which case we'll have to change the electrochemistry and find a way to pass this, which we have some ideas on how to do. The team is working on that; that might take longer. So, depending upon which one we are able to convince them of, we'll get how much the time is. So, we do believe that one of these things, we'll be able to convince them before the end of the year and get some, uh, get some volume.

[Company Representative] (Enovix): Yeah.

Ryan Benton: Yeah.

Jeff Osborne: How should we think about that rebounding in Q2 to, you know, through the rest of the year?

[Company Representative] (Enovix): Yeah, thanks, Jeff. The first part of your question, the answer is yes. For the first, the near term, that's... You heard it right. Smart eyewear is the more near-term opportunity. The second part of your question in terms of seasonality, exactly right. If you look at the same pattern in terms of revenue that we had last year, Q1 tends to be soft based on the order pattern of these long-term defense contracts, and then the back half of the year tends to be much stronger, kind of evidenced by our Q4 that we just printed, which was record quarterly revenue.

Ryan Benton: Yeah, thanks, Jeff. The first part of your question, the answer is yes. For the first, the near term, that's... You heard it right. Smart eyewear is the more near-term opportunity. The second part of your question in terms of seasonality, exactly right. If you look at the same pattern in terms of revenue that we had last year, Q1 tends to be soft based on the order pattern of these long-term defense contracts, and then the back half of the year tends to be much stronger, kind of evidenced by our Q4 that we just printed, which was record quarterly revenue.

Got it. And then maybe for Ryan just given Roger's answer on the 3 different outcomes there as it relates to sort of modeling the business over the the next few quarters. I know you only get formal guidance, 1 quarter out but I assume we should think about eyewear as the the main driver outside of the the route 8 facility for the next 6 months or so. Uh, is part A of the question and Part B? Can you just remind us of what you expect seasonality to be for defense? You've got a pretty precipitous decline in q1, uh, how should we think about that rebounding in Q2 to, you know, through the rest of the year?

Yeah, thanks. Yeah. The first part of your question, the answer is is yes. So for the first, the near term, that's you heard it, right? It's a smart. Eyewear has been more near-term opportunity. Um, and then the second part of your question, in terms of seasonality. Uh, exactly right? So if you look at the same uh, pattern in terms of Revenue that we had last year, uh, q1 tends to be soft based on the order pattern of these long-term defense contracts and then the back after the year tends to be much stronger.

Jeff Osborne: Got it. Maybe last one quickly for you, just CapEx for the year. Should we think about $50+ million, or what's the expectation?

Kind of evidenced by our Q4 that we just printed, which was recorded quarterly revenue.

[Company Representative] (Enovix): We don't give. Apologies, we don't give guidance beyond the quarter. I think, you know, we gave guidance for just Q1. Just speak broadly about, you know, Q1 in general, we talked about the HVM-2 line. We've already started placing some orders for some of the long lead, but we'll reevaluate all of our plans now with KH, who's in this new role of head of operations, who's wonderful we work with, and we'll just be smart and prudent how we phase those orders out over the year.

Ryan Benton: We don't give. Apologies, we don't give guidance beyond the quarter. I think, you know, we gave guidance for just Q1. Just speak broadly about, you know, Q1 in general, we talked about the HVM-2 line. We've already started placing some orders for some of the long lead, but we'll reevaluate all of our plans now with KH, who's in this new role of head of operations, who's wonderful we work with, and we'll just be smart and prudent how we phase those orders out over the year.

Got it. And then maybe last 1 quickly for you, just capex for the year. Should we think about 50 plus million or what's the expectation?

Jeff Osborne: Perfect. Thank you.

We don't give uh, apologies or don't give uh, guidance beyond the the quarter. I I think, uh, you know, we gave guidance for just q1 and just speak. Broadly about, you know, q1 in general. We talked about in the hbm2 line. We've we we've already started placing some orders for some of the long lead, but we'll, we'll reevaluate all of our plans. Now with KH, who's, who's in this new role of head of operations? Who's, who's wonderful? We work with and we'll just be smart and prudent, how we phase those orders out over the year,

Perfect, thank you.

Operator: The next question comes from Bill Peterson, J.P. Morgan. Please unmute your line to ask your question.

Bill Peterson: Yeah. Hi, good afternoon. Thanks for all the information. I wanted to come back to the question about your Korean operations. Can you give us a sense for what the combined, the two Routejade and the other one, can support in terms of megawatt hours or revenue? Just trying to get a sense of the run rate you could support at sort of max capacity. Then how much capacity do you plan to add? You know, what, can you give us any sort of sense on what investment you're considering?

The next question comes from Bill Peterson, J.P. Morgan. Please unmute your line to ask your question.

Yeah, hi good afternoon. Thanks for all the information. Um, I wanted to come back to the question about your Korean operations. Can you give us a sense for what the, the combined, the 2 route Jade and the other 1 in support in terms of megawatt hours, or or Revenue, um, just trying to get a sense of the Run rate, you could support, um, at sort of Max Capacity. And then how much capacity do you do you plan to add? And you know what, what can you give us any sort of sense on what the investment you're considering?

[Company Representative] (Enovix): I'll go. Again, with that, we haven't given out specific, you know, numbers in terms of megawatts, but we've I think we've talked publicly about how this is a facility that will support, you know, significantly higher revenue streams, maybe 2x. We're investing. You know, we're making decisions in terms of deploying capital right now, which would incrementally add to that. Again, I don't want to quote an exact number. But it's we recognize what a great opportunity we have here with some of these markets that we've talked to, and we've got a great team to support, so we're starting to invest dollars. Again, the I think you can see the type of numbers that we've invested in Korea over the last couple of years compared to the dollars that we're investing in PEP-Two.

Ryan Benton: I'll go. Again, with that, we haven't given out specific, you know, numbers in terms of megawatts, but we've I think we've talked publicly about how this is a facility that will support, you know, significantly higher revenue streams, maybe 2x. We're investing. You know, we're making decisions in terms of deploying capital right now, which would incrementally add to that. Again, I don't want to quote an exact number. But it's we recognize what a great opportunity we have here with some of these markets that we've talked to, and we've got a great team to support, so we're starting to invest dollars. Again, the I think you can see the type of numbers that we've invested in Korea over the last couple of years compared to the dollars that we're investing in PEP-Two.

I'll go. Um again with that we we haven't given out specific, you know, numbers in terms of megawatts but we've we I think we've talked publicly about how this is a facility that will support, you know, significantly higher revenue streams, maybe 2X and we're investing, you know, we're making decisions in terms of deploying Capital right now which would incrementally add to that. Again, I don't want to quote a

[Company Representative] (Enovix): They're relatively small, but they're really important in terms of the ROI that they can return, both in terms of dollars and strategic return.

Ryan Benton: They're relatively small, but they're really important in terms of the ROI that they can return, both in terms of dollars and strategic return.

Raj Talluri: Yeah, one other color to add is, we have a much larger facility now. Like I said, we have a fairly large facility that we acquired with a lot of machines. We will be adding incrementally and in a scalable manner. Some of it that we acquired is usable. For example, we have a huge coater that we acquired from there, that coating capacity, we don't have to add new capacity, and coater is very expensive. But then we can add more to the, you know, the dicing and stacking in a scalable manner, so we don't have to do it all at once. The facility is there, so we can prudently add it as and when we see the demand and the qualifications materialize.

An exact number. Um but it's we recognize what a what a great opportunity we have here or some of these markets that we've talked to and we've got a great team to support. So we're starting to invest dollars but again the I think you can see the type of numbers that we've invested in Korea over the last couple of years compared to the dollars that we're investing in pep 2. They're relatively small but they're but they're really important in terms of the ROI that they can return both in terms of dollars and strategic returns.

Raj Talluri: It's been very fortunate us that we got this facility and now the demand is coming to us.

Yeah. 1 of the color I added is, um, we, we have a much larger facility. Now, like I said, we have a fairly large facility that we acquired with the, a lot of machines. So we will be, uh, adding incrementally and in a scalable manner. So some of it that we acquired is usable. For example, we have a huge quarter that we acquired from there that coding that we don't have to add new capacity and quarter is very expensive. Um, but then we can add more to the, you know, uh the dicing and stacking in, you know, you know, you know, scalable manner. So we don't have to do it all at once. Uh, the facility is there so we can currently add it as and when we see the demand and the qualifications materialized. So it's been very fortunate as that we got this facility and now the demand is coming to us.

Bill Peterson: I appreciate that. Coming to the key, I guess, your first smartphone customer, trying to get a sense for the key learnings from the, you know, the chemistry report reformulation process. And how many more, I guess, options do you have with this customer? You gave, I guess, a pretty clear, you know, example of cycle life. I guess, is there differences in requirements between the various customers? Anything you can kind of give us to better understand?

From the, you know, the chemistry report, reformulation process, um, and and how many more I guess options. Do you have with this customer? And you, you give, I guess a pretty clear, you know, example of, of cycle, life I guess is their differences and requirements between the various customers. Um,

Raj Talluri: Yeah.

Bill Peterson: I guess, opportunities you have ahead?

Raj Talluri: Yeah, I mean, look, the learning here is this for me, right? I think the learning is, you know, we wanted to give a lot more color on this call, you know, and our report on exactly what it is. What we have learned over this is the smartphone requirements are very, very difficult because this is the largest market for portable batteries and consumer electronics. Great margins because they provide clear value, huge TAM. When you make a battery for that, the rest of the markets are much easier because this is the toughest one. To replace an existing graphite battery and existing graphite battery ecosystem with a 100% silicon anode battery, one, is meeting all the requirements.

Anything you can kind of give us to better understand what, I guess, opportunities you have ahead?

Yeah, I mean, I look at the learning, the learning here. Is this for me, right? I think the learning is, you know, we wanted to give a lot more color on this call, um, you know, and our report on an exactly what it is and what we've learned over. This is the smartphone requirements are very, very difficult because this is the largest market for a portable batteries and consumer electronics, great margins, because they provide clear value, uh, huge Tam. Um, but when you

when you make a battery for that, the rest of the markets are much easier because these are the toughest 1

and to replace an existing graphite battery and existing graphite battery ecosystem, with a 100% silicon, anode battery. Um,

Raj Talluri: Second is, you know, helping and learning with the customers on accelerated tests or other tests that they've put together, have to be updated a little bit for this particular kind of technology. It is kind of like thinking about, you know, when you started to add, I don't know, I remember in my past, we added fingerprint sensors to phones, so now you go to Face ID. It's completely different, right? You know, it's still a biometric authentication system, but the test cases are different and the way it used is different. Whenever you introduce a new technology, you have to work with the customer in enabling that. The reason that the customers are interested in, although it's different, is because we can provide an energy density roadmap that's not possible to do by just graphite batteries.

1 is meeting all the requirements. The second is,

You know, helping and learning with the customers on accelerated tests and other tests that they have put together have to be updated a little bit. Um, for this particular kind of, uh, kind of Technology. It's kind of like, thinking about

Raj Talluri: That is an absolute requirement. As I mentioned when I first took this job, the AI use case is only getting more and more, and the demands are getting higher and higher. Now, as I mentioned, I think a few calls ago, that I expect these batteries to go to 10,000 milliamp hours, and now you see that.

You know, when you started to add, um, I don't know—I remember in my past we added, uh, fingerprint sensors to phones. So now you go to Face ID, it's completely different, right? So, you know, it's still a biometric authentication system, but the test case is different and the way you use it is different. So whenever you introduce a new technology, you have to work with the customer in enabling that. Uh, the reason that the customers are interested in it, although it's different, is because we can provide an energy density roadmap. That's not possible to do by just graphite batteries.

Bill Peterson: Mm.

Raj Talluri: They can't keep getting bigger because the phones can't get any bigger. The customers are highly motivated to help us get this technology to market. When you totally change, you know, the graphite anode to silicon anode, we have to work with them to make that to qualify. If you look at the progress we made, it's tremendous. I mean, I think we showed we have specs of, like, 75 different specs, and we passed most of them. We are converging, and, you know, it's been a fantastic learning. At the same time, other markets like eyewear, are much easier to do because of this. There are so many other markets like that that are much easier.

And that is an absolute requirement. As of, as I mentioned, when I first took this job, the AI use case is only getting more and more. And uh the demands are getting higher and higher. And now as I mentioned, I think a few few calls ago that I expect these batteries to go to 10,000 milliamp hours. And now you see that, and they can't keep getting bigger because the phones can't get any bigger. So, the customers are highly motivated to help us, uh, get this technology to Market. But when you totally change, uh, you know, the graphite anode to Silicon anode,

Uh you will have to work with them to make that the qualify. So

Raj Talluri: Like, you know, if you think about wearable cameras and so many other markets where AI at the edge is really creating, there are great opportunities for us once we get this smartphone battery done, or even before, as we've gained a lot of technology advancements in the last few years working with our smartphone customers.

If you look at the progress we made, it's tremendous. I mean, I think we showed we have specs—like, 75 different specs—and we passed most of them. So we are converging, and, uh, you know, it's been a fantastic learning. But at the same time, other markets, like, uh, like, uh, uh, eyewear, are much easier to do because of this, and there are so many other markets like that, uh, that are much easier, like, um, you know,

If you think about wearable cameras and, uh, so many other markets where AI at the edge, uh, is really creating great opportunities for us. Once we get this, uh, smartphone battery done, or even before, as we've gained a lot of, uh, technology advancements in the last few years working with our smartphone customers.

Bill Peterson: Mm.

Operator: Our next question comes from Derek Soderberg with Cantor Fitzgerald. Please unmute your line to ask your question.

Our next question comes from Derek with Canaccord. Gerald, please unmute your line to ask your question.

Derek Soderberg: Yeah. Hey, guys, thanks for taking the questions. I was curious if switching out the dicing technology sort of resets any part of the battery qualification process. You know, obviously, your customers want to make sure you guys can scale, and, you know, putting aside any of the cycle life testing, you know, might the change to the dicing technology push back that qualification process at all?

Yeah. Hey guys, thanks for taking the questions. Um, I was curious if switching out the dicing technology sort of resets any part of the B battery qualification process. Um, you know, obviously your customers want to make sure you guys can scale, um, and, you know, putting aside any of the cycle life testing, you know, might the change to the dicing technology, um, push back that qualification process at all.

Raj Talluri: You know, look, anytime you have a customer qualify one particular product, if you change some steps within it, we will need to communicate what those steps are and what it changes, and we will need to run, you know, some form of qualification again. That's just the way it is, even when you move from one fab to the other, you got to do that. The way we would do it is, these are all by different zones. For example, dicing is zone zero, and then zone one is zone one, and then stacking is zone two. There's many ways in my experience we've done this. We establish equivalence, we show similar performance, we can do a subset of the qual. There's many different ways to do it, but it's still a little bit early.

Raj Talluri: Right now, you know, you know, if we are doing laser dicing on all of them, when we do some other form of dicing, you know, we'll work with the customers to gradually phase it in.

Uh, you know, look, anytime you have a customer qualify one particular product, if you change some steps within it, uh, we will need to communicate what those steps are and what it changes, and we will need to run, um, you know, some form of qualification again. That's just the way it is. Even when you move from one Fab to the other, you got to do that. Um, but, uh, the way we would do it is, uh, these are all by different zones. For example, dicing is Zone 0, and then Zone 1, Zone 1, and then stacking is Zone 2. So there's many ways, in my experience, we've done this. We establish equivalence, we show similar performance, we can do a subset of the qual. So there's many different ways to do it, but it's still a little bit early right now, you know? Um, you know, we are doing laser testing on all of them. When we do some other form of dicing, you know, we'll work with the customers to gradually phase it in.

Derek Soderberg: Got it. Then just a quick follow-up. Are there any remaining technical milestones to shipping commercial volumes in the back half of the year for the augmented reality market? Thanks.

Got it. Um, and then just a quick follow-up. Are there? Any remaining technical Milestones to shipping commercial volumes um, in the back half of the year for the augmented reality Market. Thanks.

Raj Talluri: Any technical milestones was your question?

Derek Soderberg: For smart eyewear.

Raj Talluri: Yeah. I mean, look, we now have seen the products from our customers with our battery in them. Very exciting. You know, we saw a few at CES. We saw a lot more in private demos. The performance is fantastic. They really like it. They really like what it's able to do and what AI is able to do. We don't see any big technical obstacles, but, you know, this is a new market. It's a new application, so the applications are evolving. They are doing testing of different applications, and as and when they find them, you know, we'll figure out how to adjust it.

Any technical Milestones technical? Yeah, so, I mean, look, we we now have seen the products, uh, from our, uh, customers with our battery in them, uh, very exciting. You know, we saw a few at CS, we saw a lot more in private demos. The performance is fantastic. Uh, they really like it. They really like what it's able to do and what the AI is able to do. Um,

Raj Talluri: We did learn about one thing after we first sampled in terms of how to, different rates and different pulses and so on, and we quickly adapted that, and now we have a new battery that meets that. My team is very capable of quickly reacting to those now. Right now, the battery we have, we feel meets all the requirements. That's why we got a, you know, a production PO. Yeah. Thank you.

we don't see any big technical, uh, obstacles. But, you know, this is a new market and it's a new, um, application. So the applications are evolving. So they're doing testing of different applications. And as, and when they find them, you know, we'll figure out how to adjust it. We did learn about 1 thing after we first sampled in terms of how to, um, different rates and different pulses, and so on, and we quickly adapted that. And now we have a new battery that meets that. So my team is very capable of quickly reacting to those now. Uh, but right now the battery we have we still meets all the requirements.

That's why we got a, you know, a production PO. Yeah.

Thank you.

Operator: Our next question is from Alec Olero with Loop Capital. Please unmute to ask your question.

The next question is from Alex ERA with L Capital. He's on mute—Alex, please unmute to ask your question.

Alec Olero: Hey, guys. Thank you for taking my question. This is Alec on for Nanda. My first question is, what is a good way to think about the cadence of testing and production over the next few years for smartphone, eyewear, PCs, and drones? Additionally, what do the capacity needs look like over that time frame? I have a quick follow-up.

Hey guys. Uh, thank you for taking my question. This is Alec on Fernando. So my first question is, what is a good way to think? About the Cadence of testing and production over the next few years. For smartphone, I wear PCS and drones, additionally, what do the capacity needs look like over that time frame?

I have a quick follow-up.

Raj Talluri: A cadence of testing, how do you mean by that? Maybe you can ask a little bit better in terms of timing, you mean, how long it takes or?

Alec Olero: Yeah, I guess, what's the timing of the phases of the testing?

Cadence of testing—um, how do you mean by that? Maybe you can ask a little bit better in terms of timing. Do you mean how long it takes, or...

Raj Talluri: Yeah. I, you know, my experience in the last three years has been that, typically, we provide a standard-sized cell to the customers that one we have. They give us a set of requirements in terms of, you know, cycle life, energy density, rate of charge, discharge, swelling requirements, and so on. They'll do a bench level test of that. That takes a few months. When they're comfortable with that, they come back to us and ask us, Hey, we want a particular... If they are happy with that particular size, and then they put it in a product, and then there's a product level testing that takes a few more months.

Yeah, um, I I, I guess how, how what's the the timing of the, the, the faces of the testing?

Raj Talluri: If they want us to change the size, you know, it will take us multiple months to come up with a different size, like when it says size dimensions, X, Y, Z, and so on, to fit in that. That becomes a long pole, you know, maybe three to four months to build that. Then they will put it in the product and do the testing again. Then, when all of them are passed, they place the PO. They do system-level testing now. They put it inside a product, test to make sure the product is performing like it is how it is supposed to perform, and then they go to production. That whole cycle, you know, can take anywhere between a year to a year and a half for a brand-new customer starting from scratch.

Yeah, so so um, I I, you know, my experience in the last 3 years has been that um, typically we provide a standardized sell to the customers, uh, that 1 we have and they, they give us a set of requirements in terms of, uh, you know, cycle life energy density, you know, rate of charge discharge swelling, requirements, and so on. And they'll do a bench level test of that that takes a few months. Um, when they're comfortable with that, they come back to us and asked us, hey, we want a particular if they are happy with that particular size and then they put it in a product and then there's a product level testing that takes a few more months.

But if they want us to change the size, you know, it will take us multiple months to come up with a different size. Like, when I say size—dimensions, X, Y, Z, and so on—to fit in that, that becomes a long pole. You know, maybe three to four months to build that, and then they will put it in the product and do the testing again. Uh, and then, when all of them have passed, they place the PO and they do system-level testing. Now they put it inside a product test to make sure the product is performing, like, it's how it's supposed to perform. And then they go to production.

Raj Talluri: Now, if the requirements are not as stringent and we already have a technology that meets those requirements, for example, it can be much shorter because we don't really have to change anodes and cathodes and electrolytes and so on. Like, for example, when we have a product that meets the smartphone requirements, we were able to quickly react and make small adjustments and meet the smart glass market, smart eyewear market. Now that, you know, it's much shorter. Now, if your cycle life is 1,000 cycle requirement, well, that testing takes like 4 months. If your cycle life is only 300 cycles, it takes much lot shorter time. It depends based on the end application, whether you need a custom cell or not, whether you can use a standard technology or not.

So, if you and that whole cycle, you know, can take anywhere between year to year and a half for a brand, new customer starting from scratch.

Raj Talluri: The question, you know, may be a little long-winded answer, but that's just the nature of this lithium-ion batteries in custom applications.

Derek Soderberg: Drones?

Raj Talluri: Drones, I think, can be much shorter. Yeah. Sorry, go ahead.

Alec Olero: No, no, sorry. Go ahead. Apologies.

Now, if the requirements are not as stringent, and we already have a technology that meets those requirements, for example, it can be much shorter because we don't really have to change anode and cathodes, and electrolytes. And so on, uh, like for example, when we have a product that meets the smartphone requirements, we were able to quickly react and make small adjustments and, uh, and meet the smart glass markets, smart eyewear market. So that that. So now that, you know, it's much shorter. Now, if your cycle life is thousand cycle requirement. Well, that testing takes like 4 months, but if your cycle life is only 300 Cycles, it takes much a lot shorter time, so it's a, it depends on the end application. Whether you need a custom cell or not, whether you can use a standard technology or not. So, it's a, the question, you know, maybe a little longer and the answer, but that's just the nature of these, uh, these with you and batteries in customer applications and drones and drones I think can be much shorter. Yeah, sorry. Go ahead.

Raj Talluri: No, I was just saying drones, very similar, but like I said, the cycle life requirements are much shorter, and the space requirement is not as bad in the sense that there's more room there, so you don't need to exactly make this exact dimension of the cell. Sometimes they stack multiple cells to get the, get the performance, so they may be able to use the cells that we have and stack multiple of them to meet the power. That time of making a custom cell will come down.

Alec Olero: I appreciate the detail. Super helpful. Actually, just a quick follow-up and on that same note.

No, no sorry. Go ahead apologies. Now just saying drones very similar, but like I said, the cycle life requirements are much shorter. And, uh, the space requirement is not as bad in the sense that there's more room there. So you don't need to exactly make this exact dimension of the cell, sometimes the stack multiple cells to get the, get the performance. So they may be able to use the cells that we have and stack multiple of them to meet the Power. So that time of making a custom cell, will come down

Alec Olero: I appreciate the detail. Super helpful. Actually, just a quick follow-up and on that same note.

Raj Talluri: Mm-hmm.

Alec Olero: You mentioned the drones, and I believe you said that's one of the products that can handle a little bit more swelling.

Raj Talluri: Mm-hmm.

Alec Olero: Can you speak to other markets besides drones that are maybe similar like this, where you get a little bit more swelling? Is there any markets there that seem attractive that you may wanna penetrate in the future?

Raj Talluri: Yeah, I mean, I would say industrial markets that have large space. You know, for example, I don't know, think about forklifts, you know, stuff like that, where there's a lot more room to put the batteries in, and you put it inside a big pack, and you can design the pack to enable some amount of, you know, room inside that, right? Those are the kind of markets. If it's a small form factor, like, you know, earphones or smart glasses or cameras or consumer, they're a lot less forgiving. I would say industrial and defense are probably a little bit more forgiving.

Uh, I appreciate the detail super helpful and uh, actually just a quick follow up and on that same note. So you mentioned the drones and I believe you said that's 1 of the products that can handle a little bit more. Swelling. Can you speak to other markets besides drones that are maybe similar like this? Where you could uh get a little bit more swelling? Uh is there any markets there? That seem attractive that you may want to uh penetrate in the future?

Charge space, you know, for example, I don't know, think about forklifts, you know, stuff like that, where there's a lot more room to put the batteries in and, uh, and you put it inside a big pack and you can design the pack to enable some amount of, you know, room inside that, right? Uh, that that those are the kind of markets, but if it's a small form factor like, you know, earphones or smart glasses or cameras or consumer, they're a lot less forgiving.

Alec Olero: Okay. No, that's great to know. Thank you, guys. Appreciate it.

I would say Industrial in different are probably a little bit more forgiving.

Raj Talluri: Absolutely. Good question.

Okay, no that's uh, that's great to know. Thank you, guys, appreciate it.

Absolutely good question.

Operator: There are no further questions at this time. With that, I'd like to turn it over to Dr. Raj Talluri for closing remarks.

Uh no further questions at this time with that. I'd like to turn it over to Dr. Raj to Lori for closing remarks,

Raj Talluri: Yeah. Thank you. Thank you all for your attention today to listen to the call. I really appreciate all the support. We look forward to talking to you guys next quarter. Thank you.

Yeah, thank you. Thank you all for uh, for for your attention today, to listen to the call, I really appreciate all the support and we look forward to talking to you guys. Uh next quarter, thank you.

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