Core Viewpoint - FormFactor, Inc. has launched the EVOLVITY™ 300, a semi-automated engineering wafer probe system designed to enhance on-wafer probing for RF/DC modeling and device characterization, complementing its existing CM300 product line [1][2]. Group 1: Product Features and Benefits - The EVOLVITY 300 features a compact and user-friendly design, making it suitable for various applications including advanced RF measurements and DC characterization [2][3]. - It includes standard features that ensure ease of use and quick deployment, differentiating it from the modular CM300 platform [2]. - The system offers automation options that simplify operations and provide greater flexibility for users, enhancing overall efficiency [2][8]. Group 2: Design and Usability - The design of the EVOLVITY 300 focuses on reducing setup time and complexity, allowing users to concentrate on testing and development rather than setup tasks [3]. - It incorporates a spacious platen design that accommodates both RF and DC setups without space limitations, facilitating easy integration of different configurations [8]. - The system allows for quick switching between various test configurations with reconfigurable platen inserts, enhancing operational versatility [8]. Group 3: Company Overview - FormFactor, Inc. is a leading provider of test and measurement technologies throughout the IC life cycle, serving semiconductor companies to optimize device performance and advance yield knowledge [6]. - The company operates a network of facilities across Asia, Europe, and North America, supporting its global customer base [6].

Core Insights - FormFactor (FORM) is expanding its capacity in Taiwan to better serve customers in Asia, particularly in advanced packaging technologies driven by AI and high-performance computing [1] - Taiwan contributed 22.7% of total revenues, amounting to $173.5 million, reflecting a 17.4% increase compared to 2023 [2] - The company is facing weak demand in the semiconductor market, particularly in high-volume sectors like client PCs and mobile handsets, which is expected to continue into 2025 [3][4] Revenue and Market Performance - FormFactor's revenues from Taiwan reached $173.5 million, with significant contributions from other Asian markets: China ($103 million), Japan ($34 million), Singapore ($20.2 million), and Malaysia ($18.2 million) [2] - The company anticipates a reduction in demand for non-high bandwidth memory (HBM) DRAM probe cards due to export controls affecting shipments to China [4] - Despite current challenges, strong demand for HBM and Generative AI is projected to positively impact FormFactor's long-term prospects, contributing $100 million to revenues in 2024 [5] Future Outlook - The transition to new HBM4 designs is expected to drive significant growth in DRAM probe card demand starting mid-2025 [6] - FormFactor expects gross margin to contract in the near term due to a challenging product mix, with projections below the target of 47% on $850 million of annual revenues [7] - The Zacks Consensus Estimate for first-quarter 2025 revenues is $170.01 million, indicating a 0.76% year-over-year growth, while the estimate for 2025 revenues is $772.83 million, reflecting a 1.21% year-over-year growth [10][11] Stock Performance - FormFactor shares have declined 34.7% year to date, underperforming the broader technology sector and semiconductor industry [8] - Comparatively, shares of industry peers like Infineon Technologies have appreciated by 2.7%, while Nova Ltd. and Broadcom have seen declines of 2.7% and 25.8%, respectively [9]

Core Insights - FormFactor, Inc. has announced a significant expansion of its Taiwan Service Center to enhance local capabilities and customer support in the semiconductor industry [1][2][3] - The expansion includes doubling the cleanroom space and adding office areas, which will streamline repair turnaround times and increase capacity for testing and repair services [2][3] - The facility will also feature expanded probe card services and a technology demo center to support advancements in co-packaged optics technologies [3] Company Overview - FormFactor, Inc. is a leading provider of test and measurement technologies for the semiconductor industry, serving customers throughout Asia, Europe, and North America [4] - The company's products and services are essential for optimizing device performance and advancing yield knowledge, thereby accelerating profitability for semiconductor companies [4]

Group 1 - FormFactor is a $2.5 billion OEM specializing in automated wafer probe cards and testing devices for semiconductor manufacturing [1] - The company reported revenues of $763.6 million in 2024, with SK Hynix contributing 22% to the top-line [2] - Sales consensus for 2025 is projected to grow only 1.2% to $773 million, following a disappointing Q4 report [2] Group 2 - Analysts have reduced EPS estimates for 2025 by over 20%, from $1.63 to $1.26, indicating a slip below 10% annual growth [2] - FormFactor's probe cards are essential for testing various semiconductor devices, including SoCs, microprocessors, and memory types [4] - The company is facing challenges due to weaker demand in high-volume markets like client PCs and mobile handsets [6] Group 3 - For Q1 2025, FormFactor expects revenues of $170 million, which is about $20 million below prior consensus estimates [6] - The company anticipates a non-GAAP gross margin of 38% for Q1 2025 [6] - Non-GAAP earnings per share are expected to be 19 cents, down from prior estimates of 33 cents [7] Group 4 - FormFactor's manufacturing locations in Asia primarily drive its revenue, although North America has seen growth due to increased manufacturing activity [7] - The current growth slump in the semiconductor testing market suggests caution for investors, as the stock trades over 25X EPS [8] - The upcoming quarters will be critical in determining if a turnaround is possible for the company [8]

Core Insights - The partnership between FormFactor, Inc. and Delft Circuits aims to enhance scalability and performance in quantum computing through the integration of high-density cryogenic cabling solutions [1][2][4] Company Overview - FormFactor, Inc. is a leader in precision test and measurement solutions, providing essential technologies throughout the IC life cycle, including characterization, modeling, and production testing [5] - Delft Circuits specializes in dedicated quantum hardware, focusing on high-density I/O cabling solutions for the quantum industry, and has established itself as a trusted partner for various leading organizations [6] Partnership Details - The collaboration will integrate Delft Circuits' Cri/oFlex® cabling into FormFactor's cryogenic test systems, allowing for up to 160 channels per port and a total of 1920 channels, significantly improving performance and scalability [2][8] - This integration is particularly beneficial for space-constrained environments, facilitating seamless integration in compact quantum computing setups [8] Industry Impact - The partnership is positioned to transform quantum computing interfacing by combining precision measurement with advanced cabling technology, thereby accelerating the scalability and reliability of next-generation quantum systems [4][3] - The collaboration addresses the increasing computational requirements in quantum technology, which necessitate higher channel densities [2][8]

Core Viewpoint - FormFactor, Inc. (NASDAQ: FORM) recently reported its Q4 earnings, prompting analysis of the company's financial performance and short-term outlook [1]. Financial Performance - The company has released its Q4 earnings, which are under review for insights into its financial health and future prospects [1]. Investment Strategy - The investment approach discussed emphasizes a long-term horizon, typically between 5 to 10 years, focusing on a balanced portfolio that includes growth, value, and dividend-paying stocks, with a particular inclination towards value stocks [1].

Core Insights - FormFactor, Inc. has successfully closed its acquisition of FICT Limited in partnership with MBK Partners, enhancing its access to advanced probe card technologies and strengthening its long-term collaboration with FICT [1][3] - The acquisition is expected to bolster the semiconductor test supply chain, particularly in the context of the growing demand for advanced packaging technologies [3] Financial Summary - FormFactor invested approximately $60 million for a 20% non-controlling stake in FICT and secured a seat on FICT's board of directors [2] - This investment is not anticipated to have a significant impact on FormFactor's operating results [2] Strategic Implications - The acquisition is aimed at solidifying the collaboration between FormFactor and FICT to develop world-class test and packaging consumables [3] - The partnership is positioned to support the rapidly accelerating adoption of advanced packaging in the semiconductor industry [3] Company Overview - FormFactor, Inc. is a leading provider of essential test and measurement technologies throughout the semiconductor product life cycle, serving customers globally through its facilities in Asia, Europe, and North America [3]

Business Segments and Operations - FormFactor, Inc. operates in two reportable segments: Probe Cards and Systems, with sales from probe cards and analytical probes included in the Probe Cards segment[16]. - The company maintains manufacturing facilities in the U.S. and Europe, including locations in California, Oregon, and Germany, to support its production capabilities[39]. - The company operates in two segments: Probe Cards and Systems, with sales of probe cards included in the Probe Cards segment[173]. Revenue and Customer Concentration - The company reported that SK hynix Inc. represented 22.0% of quarterly revenues for the quarter ended December 28, 2024, while Intel Corporation accounted for 17.1% for the same period[35]. - Approximately 14% of FormFactor's fiscal 2024 revenue was derived from sales to customers in China, subject to expanded export license requirements imposed by the U.S. government[48]. - Two customers accounted for a combined 33.5% of total revenues in fiscal 2024, highlighting significant revenue concentration risks[82]. - International sales accounted for 76%, 74%, and 83% of revenues for fiscal years 2024, 2023, and 2022, respectively[113]. Financial Performance - Net income for fiscal 2024 was $69.6 million, a decrease from $82.4 million in fiscal 2023, primarily due to a reduced gain on the sale of business[174]. - Fiscal 2024 revenues increased by 15.2% to $763.6 million compared to $663.1 million in fiscal 2023[193]. - Gross profit margin improved to 40.3% in fiscal 2024 from 39.0% in fiscal 2023, with gross profit totaling $307.9 million[192][200]. - The company reported a decrease in Systems product revenue by 16.7% to $137.6 million in fiscal 2024, primarily due to the absence of metrology systems revenue following the sale of the FRT Metrology business[193][196]. - Operating income decreased to 8.5% of revenues in fiscal 2024 from 12.4% in fiscal 2023, with net income at 9.1% compared to 12.4%[192]. Market and Competitive Landscape - The probe card market is highly competitive with primary competitors including Chungwa Precision Technology, Feinmetall GmbH, and Japan Electronic Materials Corporation[49]. - The company believes it competes favorably in advanced probe card markets, particularly for high-frequency testing needed for 5G applications and high bandwidth memory testing[52]. - The semiconductor industry is experiencing rapid technological changes, which may impact the company's ability to meet customer needs effectively[78]. - The semiconductor industry has experienced a cyclical downturn since the second half of fiscal 2022, impacting demand for foundry & logic and DRAM products[88]. Research and Development - The company continues to invest in proprietary probe card design tools and processes to enhance customization and meet customer requirements[21]. - FormFactor's commitment to research and development is integral to maintaining its competitive position, with significant resources allocated to new product introductions and technology enhancements[41]. - Research and development expenses for fiscal 2024 were $121.9 million, a 5.3% increase from $115.8 million in fiscal 2023[205]. Risks and Challenges - The company faces risks from increased competition, which may lead to price reductions and loss of market share[74]. - The company anticipates that the loss or reduction of orders from key customers could significantly reduce revenues due to the custom nature of its products[82]. - Changes in customers' testing strategies could decrease demand for the company's products, affecting revenue[86]. - The company faces challenges in forecasting demand due to the custom nature of its probe cards, which can lead to excess or obsolete inventory[91]. - The company relies on sole or limited source suppliers for key components, which poses risks of production delays and increased costs[100]. - The company has incurred significant research and development expenses to introduce new product architectures, with uncertain returns on these investments[87]. Environmental, Social, and Governance (ESG) Matters - The company is committed to fostering a culture of diversity and inclusion, believing it enhances innovation and employee engagement[68]. - Stakeholders are increasingly focused on ESG matters, impacting the company's reputation and operational costs[126]. - The company has made voluntary disclosures on ESG initiatives, including energy usage and greenhouse gas emissions, which are still developing and may expose it to reputational risks[127]. Stock and Corporate Actions - The company authorized a stock repurchase program of up to $75.0 million to offset potential dilution from stock issuances[162]. - A total of 419,952 shares were repurchased at an average price of $38.50 during the period from October 27, 2024, to November 23, 2024[164]. - The trading price of the company's stock has been volatile, ranging from $37.66 to $62.22 per share during fiscal 2024[131]. Cybersecurity and Operational Risks - The company has not experienced material cybersecurity incidents, but it maintains a proactive risk management strategy to address potential threats[144]. - The Chief Information Officer oversees cybersecurity risk management, ensuring alignment with business objectives and operational needs[150]. - The company engages third-party experts for cybersecurity assessments, enhancing its strategies and compliance with standards[142]. Economic and External Factors - Adverse global economic conditions, including geopolitical tensions and trade barriers, could negatively impact demand for the company's products and overall financial performance[109]. - The company faces significant risks from climate change, including potential increases in operational costs and damage to facilities due to extreme weather events[108]. - External factors such as natural disasters and pandemics could adversely affect operations and supply chains, impacting sales[102].

Core Insights - FormFactor (FORM) reported fourth-quarter 2024 adjusted earnings of 27 cents per share, missing the Zacks Consensus Estimate by 6.90%, but showing a 35% increase from the previous year [1] - Revenues for the quarter were $189.5 million, which missed the Zacks Consensus Estimate by 19% and increased by 12.7% year over year, driven by a 77.2% surge in the DRAM probe-card business [2] Financial Performance - Probe card revenues reached $150.6 million, up 18.6% year over year, while Foundry & Logic revenues were $83.3 million, down 0.6% year over year [4] - DRAM revenues accounted for 33.6% of total revenues at $63.6 million, marking a record-setting quarter, whereas Flash revenues fell 49.3% year over year to $3.7 million [4] - Systems revenues were $39.2 million, down 4.9% year over year [5] Geographic Revenue Breakdown - Revenues from Malaysia, Taiwan, China, the rest of the world, South Korea, and Europe saw significant year-over-year increases of 66.7%, 45.4%, 43.3%, 40.7%, 26.5%, and 1.1%, respectively [5] - Conversely, revenues from the United States, Singapore, and Japan declined by 26.6%, 16.9%, and 11%, respectively [5] Operating Metrics - The gross margin contracted by 190 basis points year over year to 40.2%, while non-GAAP operating expenses increased by 7% year over year to $55.2 million [6] - The non-GAAP operating margin compressed by 40 basis points year over year to 11% [6] Cash Flow and Balance Sheet - As of December 28, 2024, cash and cash equivalents, along with marketable securities, totaled $360.0 million, up from $354.5 million as of September 28, 2024 [7] - Cash generated from operating activities was $35.9 million in the reported quarter, significantly up from $9.2 million in the previous quarter [7] - Free cash flow increased to $28.8 million from $20 million in the previous quarter, driven by higher operating cash flows and reduced working capital outflows [8] Future Guidance - FormFactor anticipates first-quarter 2025 revenues of $170 million (+/- $5 million), which is below the Zacks Consensus Estimate of $192.72 million, indicating a cautious outlook due to weaker demand in high-volume markets [9] - The company expects a non-GAAP gross margin of 38% (+/- 1.5%) and earnings of 19 cents (+/- 4 cents) per share, compared to the Zacks Consensus Estimate of 33 cents per share [10]

Operator Thank you, and welcome, everyone to FormFactor's Fourth Quarter 2024 Earnings Conference Call. On today's call are Chief Executive Officer, Mike Slessor; and Chief Financial Officer, Shai Shahar. Before we begin, Stan Finkelstein, the Company's VP of Investor Relations will remind you of some important information. Stan Finkelstein Thank you. Today the company will be discussing GAAP P&L results and some important non-GAAP results intended to supplement your understanding of the company's financial ...