Phil Davies : Yeah.
Quinn Bolton : Okay, my next question, last quarter you talked about cancellations this quarter I haven’t heard you mentioned cancellations. Just wondering if you saw any meaningful cancellations to backlog or whether you think the cancellation activity has largely subsided at that point.
Phil Davies : Yeah, we haven’t seen cancellations, Quinn. Backlog looks very good.
Quinn Bolton : Perfect. And the last one for me just you mentioned the last few pieces of equipment I think being delivered in May and qualified in June and July. Does that get you to the full $1 billion run-rate or are those pieces of equipment just bringing you to the sort of the full vertical integration capability but to the extent you want it to ramp to 500 or 750 or a billion dollars you would need several additional lines of whatever equipment was delayed until late-April or May.
Phil Davies : So in April, we took receipt of the equipment. Vertical integration through plating of the copper which is the critical process that we had outsourced. First step was half of the 18,000 panels per month round there capacity where we have the ability to install. And we’ll install the balance as we need it but the plating operation and the vertical integration should position us for, as Patrizio said about a $1 billion capacity. Do you have anything to add?
Quinn Bolton : Yeah just —
Phil Davies : Go ahead.
Quinn Bolton : Okay, so it sounds like you’ve got half of the equipment —
Jim Schmidt : I don’t want to give the wrong impression. We’ve got — the equipment lined up to do the plating operation where we’ve installed just for as a matter of starting the process. Half of the total capacity we can install. So the next tranche of capacity is very easy to put in. There’s no problem at all expected with that. In May, we’ll do the pilot runs June-July, will qualify all the equipment and will have essentially the capacity in place to generate the panel output that we need to get to that level. Now there will be one minor outsourced process that’s very simple to accomplish. And that will not be a capacity bottleneck in the future.
Quinn Bolton : Okay, maybe let me see if I can clarify with this question. It sounds like with the exception of this one small process, it will remain outsourced, you’ll have vertical integration capacity to do about $500 million of revenue by the end of the third quarter.
Jim Schmidt : More than that.
Patrizio Vinciarelli : And Quinn, to give you a little bit more color with respect to this. What Jim was referring to is one of the processes that are vertically integrated or about to be vertically integrated. There is many processes in the chip fab, that being vertically integrated, and whose capacity can support the billion dollar revenue in terms of powers per week, powers per month, powers per year. Also, what should be considered is that, depending on the mix between on the one end, datacenter AI, where the panels are very thin. They’re going to be with 5G, 1.6 millimeters thin, or automotive chips, which are considerably thicker, those are front end products typically 7.4 millimeter thick. The capacity of these equipment scales, in effect in inverse proportion to the thickness of the panel, it’s a little bit like in a worker foundry capacity being function of the number of masks or layers.
So we have actually more capacity in terms of powers per week, datacenter or OEM applications that we would have for frontends high power automotive type of chips. But generally speaking, looking at the bulk of the capacity, we are going to be as of Q2 in a position to support the lion’s share of a billion dollars worth of revenues per year.
Quinn Bolton : Understood. Thank you.
Operator: Thank you. We have no further question in the queue.
Jim Schmidt : Operator, I think this will be our last question as we’re at the top of the hour.
Patrizio Vinciarelli : I think she said that, that there are no more questions.
Jim Schmidt : Okay, fine. Okay, thank you very much. We’re ready to conclude the call then operator.
Operator: All right. Thank you. Thank you, everyone. This marks the end of your webinar. Thank you for joining and have a nice day.
