Good morning, everyone. This is C.J. Muse with Evercore ISI. Thank you for joining us with our Automotive and AI Virtual Forum. Very pleased to have KLA's Executive Vice President of the company's Electronics, Packaging and Components Division, Oreste Donzella, with us today. Oreste has been with the company for 23 years and has been EVP of the EPC division for over three years, where he's now responsible for KLA's ICOS, SPTS Technologies, and Orbotech organizations. I've known Oreste for years, and he's a phenomenal speaker, knows KLA's business inside and out, and, you know, very excited to talk about automotive today. Oreste has a few prepared slides that he'll go through, and then we'll do the Q&A.
There's a chat box for you, and if you'd like to put a question in for me to ask, please do so. And if you can't figure that out, please email me directly, and I'll look at that periodically. And look forward to the next 45 minutes of really digging into KLA's automotive business, which I don't think many investors have spent much time focusing on, and I think will be excited after learning more about it. With that, I'll turn it over to you, Oreste, and welcome.
Thank you, C.J., for the kind introduction and for the opportunity to showcase KLA initiatives in automotive that. I started this initiative with my team in 2017, working with the broad automotive ecosystem, including car makers, Tier 1, Tier 2, fabless. Eventually we come up with a very differentiated solutions that are now paying off in terms of revenue and the future prospect of growth. Good morning, everyone, I'll dig into it.
Before going to the automotive initiatives, just a summary page about KLA. These are 2022 numbers. We closed calendar year 2022 at $10.5 billion. We are headquartered in Milpitas, California. We are globally located in 19 locations. We have almost 15,000 employees right now. Of course, we are proud of our innovative spirit, that there's a lot of PhDs and master's degree engineers in the organization to invent, innovate a new solution. The presence of KLA is very broad in the electronics manufacturing ecosystem. Of course, KLA, almost all investors know KLA is a world-leading semiconductor process control company. In particular, in the left side of this page, our, of course, history is of leadership in inspection and metrology solutions for wafer front-end fabrication.
However, during the last few years, through acquisitions, through some organic development of some of the solutions that we are able to show right now, we also made some good inroads in other segment of the electronics ecosystem, in particular, wafer-level packaging, components, PCB, and even flat panel display. Today I'm going to talk about automotive in details, because this is the core of the presentation, the core of the conference that Evercore ISI is organizing right now. First of all, automotive electronics. In 2017, when we started initiatives of automotive, we thought about, okay, so automotive is in front of a secular shift, so we were talking about, of course, RACE, like the autonomous, connectivity, electrification, and eventually ride-sharing.
I remember at that time we had these four pillars of the future of the automotive industry we used to call RACE. We started to participate as a KLA, to participate in many, many associations, and most of the associations didn't have any presence of semiconductor capital equipment company, so we were the only one. Now, six, seven years after the introduction in the world of automotive industry, and with a pretty massive pandemic in between, we learn quite a bit more of what the challenges of automotive are today, and they will become moving forward. We went through a massive chip shortage that eventually changed the way how the automotive automakers are approaching the semiconductor industry.
We see more and more involved in the first persona, in all the discussion about the qualification of the chips, qualification and design of the new products, introduction of new materials. I'm going to talk about silicon carbide a lot later. Again, the chip shortage really made everybody aware of the importance of semiconductor, not only to advance the technology in the cars, but also to provide and to manage the supply chain. Of course, electrification increased quite a bit. As you know, there is a pretty big inflection point right now with the EV taking a very serious lead in terms of growth, of course, relative growth, not absolute growth, in particular, everywhere in the world.
We see electrification moving forward, growing much faster than the normal ICE cars. With electrification comes a huge increase in semiconductor content, and also somehow complexity, in particular, the subset that are used for electrical vehicles. Of course, we have driver assistance, and driver assistance is also leading a new trend in automotive, in automotive semiconductor. That is the introduction of more and more advanced semiconductor devices. As you may know, automotive industry is historically a very conservative industry in adopting new stuff, because you need to have maturity in the device that are going to the car for liability reasons. For that kind of reasons, automotive, in the past, automotive has been lagging two or maybe even three technology nodes, the mobile, the PC, the laptop, the data center market.
Now, with the rise of more autonomous features and the connectivity and networking, we see, like, 500 nm semiconductor front-end technology getting in the car. Of course, these advanced technologies is not as mature as, for example, a 65 nm or 90 nm design rule, that poses new questions about reliability and process control. This is an extremely important point. The fourth thing that now, I hear more and more, in particular from the car makers is, and, we heard many of those in the last few earning calls, capitalization from software, even Tesla.
I mean, there is a possibility that more and more the car will become really an AI computer, and the real monetization in the car industry is coming from software, and the applications are going to generate in the car while you are driving and collecting data. Really, the automotive industry is being transformed, and as I said, driving a very fast growth for semiconductor. You can see strong growth auto semi forecast, considering that there is a possibility that the auto semi revenue will cross $100 billion in 2028. Also, another important point is the pie chart in the middle, because you can see the variety of device types that are getting in the cars.
We have everything from power, of course, that is the number one product that is getting in the electrical vehicles from semiconductor point of view. You see microcontroller, but also now an increasing percentage of memory, increasing percentage of sensor, MEMS, analog, RF, processors that are becoming more and more critical, in particular, going into more connectivity, autonomous features. Also there are, as I said, many, many design rules now, and the design rules of the semiconductor devices that are getting into the cars will increment the capacity that is needed by the automotive industry, in particular, in terms of new fabs. You see, multiple new fabs have been planned by 2027 across the board, across a very wide spectrum of technology nodes. As I said, also, the automotive fab profile is different.
In the past, we had automotive semiconductor only focus on the left side of this page, that is mature design rule fabs. We are talking about, in the past, 150 mm , 200 mm , and now we see more and more adoption of 200 mm . Also, starting 300 mm , in particular, microcontroller, silicon power. In the middle part of this slide, you can see the number 1 device in the vehicles, that is power semiconductor. Also power semiconductor fabs are going through massive changes, because on IGBT, that is based on silicon, we are seeing the transition from 200 to 300 mm . Of course, the big inflection point for electric vehicles is the introduction of silicon carbide for EV engines, and gallium nitride, in particular, for battery chargers, and so on.
Finally, as I already said in the previous slide, we have the introduction of the advanced logic and memory inside cars, and of course, putting more and more stress on reliability and yield due to immaturity of the technology node that is way more advanced than the ones that have been used in the automotive industry for a long time. Really, everything is changing in automotive. We have the fab profile changing, the introduction of advanced technology, the power semiconductor that is now really going through a secular shift of wafer size or new substrate with a wide-band compound semi.
This is a huge opportunity for KLA, that again, we pre-announced, like, six, seven years ago, and finally is materializing right now. Let me talk a little bit at the glance of automotive at KLA. First of all, this is the KLA revenue in automotive. This is, of course, relative scale. You can see 2017, 2018, 2019, 2020. Since 2019, of course, we added the special semiconductor process, that is the dark blue in the bar chart on the left side of this slide. You see, like, the light blue is really what KLA process control in the front-end wafer fabrication is, like inspection and metrology. In dark blue, you see the incremental revenue that has been generated by SPTS division within my organization, within my PC in the U.K.
Overall, 37% out of system revenue CAGR. I don't have service revenue in this, in this chart. You see 11% out of service revenue CAGR. Not only system revenue, actually, also the service revenue associated to our tools in automotive semiconductor fabs is increasing. The reason is, first of all, because of the incredible shortage of chips that put all these automotive fabs really under incredible pressure to have the fab operating 24/ 7, all the tools extremely reliable, available, and so on. Service is getting more and more demand of service contract, maintenance, and parts because of the capacity needs in automotive industry, in automotive semiconductor fabs. The second reason is, of course, with the advancement of technology nodes inside the automotive fabs, we see more and more advanced technology, advanced inspection metrology products to be used.
That means also the service revenue is increasing as a % of the system price of the tool. You can see we were able to triple, more than triple the CAGR of the auto semiconductor revenue in terms of power, silicon over silicon carbide, and this is an extremely proud number from my side. We were able to achieve $300 million, more than $300 million in silicon carbide revenue in 2022. Six years ago, when we started this initiative, it was pretty much zero. We were able to go, like, from near zero to $300+ million, in a few years.
This is thank to all the differential solutions that we have developed in these years, targeting this particular market of power devices. In particular, on SPTS, that again, is the dark blue in the bar chart on the left side of this chart, you can see that more than 35% of the revenue of SPTS came from automotive sector, so is very exposed to automotive. When I say what were the drivers, M&A, of course, because SPTS was an M&A that increased quite a bit our presence in automotive. Increasing process control intensity because of the more and more focus on reliability, quality, and yield in these fabs, and of course, the introduction of silicon carbide.
There are two drivers that I would like to dig a little bit more in detail. One is the enablement of the zero-defect policy that has been known in the automotive industries for a long time, but now it's really paramount. It's really the zero defect or whatever we call minimizing the escape of at the functional and electrical test. Of course, the biggest driver behind the zero-defect policy is the automakers want to absolutely minimize, down to zero, the possibility that a defect coming from a wafer is going to escape every single functional test, electrical test, final test, burn-in, that the fabs are doing either before or after singulation. Eventually, this defect becomes a so-called latent failure.
It gets into automotive supply chain, eventually in a car, driving a huge and expensive recall that the automakers don't really want to handle. That's the reason why they are pushing more and more this philosophy of zero defect, to make sure they don't get really exposed to this very, very expensive recall and eventually liability and credibility issue. This is what a latent reliability defect or a test escape is. As you know, the semiconductor manufacturing is fully automated process, that there is multiple checks in terms of in-line inspection and metrology, generally are done on sampling base, and then every single wafers, every single chip, is tested electrically. Sometimes there are escapes at test, because the test is not infallible, the test can have some escapes, and this is what the automakers are really worried about.
The second one is even trickier. This is what we call latent reliability defect. A defect that eventually can pass all the tests, can get in the car, and because of the harsh environmental conditions that a car is subject to in terms of temperature, humidity, pressure, this defect becomes killer, or it's latent because it was almost hidden, dormant, and then eventually, because of the stress that the chip is submitted in a car, start pretty much making this defect like a killer defect, a liability defect, and it when it's already inside a vehicle. These are the two big nightmares of the car makers. This is what they want to avoid. When they call KLA in 2016, 2017, we started thinking about, "Okay, what do we have to do with automotive?" I mean, we sell tools.
We figured, I say, "Well, first of all, we can make our tools more customized for the automotive semiconductor industry." We got some tools like, for example, what we call broadband plasma imaging tool, and unpatterned wafer inspection, and the macro wafer inspection tools, and we customize, we tailored to the need for automotive semiconductor. In general, they want to have less escape, be less immune to noise, find defects that are more critical in the certain part of the die or the wafer. We also developed, invented, developed, patented, and released the so-called I-PAT, that really is the core of this reliability screening strategy that I'm going to focus in the next couple of slides. What is I-PAT?
When we responded to this automotive request about, "Okay, I really need to limit, to neutralize, minimize all these potential latent reliability defects or test escapes." We thought about it, say, "Okay, so we have inspection in the wafer fabs. We have metrology." Unfortunately, we don't do inspection 100% of the wafer, 100% of process steps. It would be extremely expensive for the wafer fabs. There is a certain sampling, we have data. We don't have access to test data, we don't have access to reliability data, because of course, this is proprietary of our customers.
We had an idea to aggregate all this information from KLA, from other inspection tools, other metrology tool, from tester, from prober, from reliability, from failure analysis and really develop a neural network model based on AI that give the perception, give pretty much the guidance to the wafer fabs, which particular process step, which particular defect, which particular die is more, and part of the die, circuit in the die, is more exposed to potential latent defects. Sometimes the defects, the same kind of defects that are generating yield loss can be latent until they get into the car. We may know, based on AI, which circuit or which part of the die, or which part of the process step or process flow is more exposed to this. We went to the automakers, went to the Tier 1, and they pretty much, of course, under incredibly restricted non-disclosure agreement, a firewall in the fab, we get access to this data.
We aggregated all the data, eventually we come up with some neural network model that is predicting which kind of defect is more exposed to the possibility to become a reliability-related failures when it enters the automotive supply chain. This is what we have done with I-PAT. Just to give an idea about I-PAT, I-PAT is now written in the spec of the Automotive Electronics Council. KLA is a member of the AEC that aggregates pretty much all the most relevant players in the automotive semiconductor ecosystem. The AEC mention suggesting the automotive semiconductor fabs to adopt I-PAT methodology. We also have one automaker that put in their electronic specs, our I-PAT is a recommended methodology for screening chips in the wafer fabs. This is what I-PAT is.
It's a deep learning, machine learning, artificial intelligence methodology applied to the massive quantity of data that is generated in the fab by using, in particular, inspection results from KLA. We are adopting right now the I-PAT on the 89xx Series. That is our macro inspection tool, but we are extending to other platforms of inspection in KLA, and also in the software that we have as an analytical hub in every single wafer fabs that is called Klarity. The combination of the hardware from our inspection tool and the software that is already in almost every single wafer fab, together with the artificial intelligence algorithms are giving now the possibility of screening a potential reliability failure in fab when the defect occurs, instead of waiting for the defect to enter the automotive supply chain. This is one.
The second trend that I would like to talk is silicon carbide. As you know, there is a huge shift right now for the electrical vehicles from silicon power to wide-bandgap compound semiconductor, like silicon carbide. The reason is, of course, the power efficiency, the possibility to control thermal conductivity better. These substrates are either silicon carbide or gallium nitride, although silicon carbide is the perfect substrate for electrical vehicle engines, are really pretty much overtaking silicon in the future. However, there is an issue.
The silicon carbide has significant cost issues. The cost issues are coming from poor yield, and the poor yield starts from the substrate. What we call bare silicon wafer, that generates an incredible yield, is very, very clean. When you want to build power devices built on silicon carbide substrate, you just started with 60% yield, because 40% is completely lost on the substrate without even putting your device on. This is a huge limiting factor right now, for example, to scale beyond the 6-in, 150 mm. You can see there are also other areas of yield losses, not only substrate, but also wafer yield, fab, probe yield, and so on, packaging as well.
At the end of the day, we have a great opportunity in silicon carbide, either in process and inspection and metrology, process with SPTS division, of course, inspection and metrology with the Semi PC organization, to be a relevant player. To help our customers to identify and eventually solve the most critical defects in inspection and metrology, and with process, to design more robust, more stable deposition and etching process that can stand this yield in a much better way. That's the reason why the combination of SPTS in process and Semi PC inspection and metrology tools are making an incredible inroads in the silicon carbide power fabrication right now, and give us a nice boost of revenue, as I said, in 2022 and then moving forward.
As I said, this really, the solution are central to the silicon carbide cost reduction. Everybody know the biggest focus for silicon carbide manufacturers is cost. The cost, again, is derived from a low yield. We can help across the board, improving the yield, migrate the technology, innovating in the methodology for substrate fabrication. Of course, also driving what is going to be believed in the next couple of years, that is the transition from 150 mm to 200 mm silicon carbide power devices. In summary, I would like to, first of all, to explain also another big milestone of our automotive initiative.
A couple of weeks ago, we announced the so-called STAR, that is a Semiconductor Talent Automotive Research, is a new consortium that is based in Ann Arbor, in Michigan, a few miles from Detroit, from Motor City. This is going to be a collaboration between KLA, imec, and a few other entities that I'm going to present in the next slide, just to advance two things. First of all, to make sure that we develop a pipeline of engineering talents in automotive and semiconductor in the region, in all Midwest of United States. The second thing is advancing the technology roadmap for automotive, and not only stopping wafer fab, but also including eventually packaging integration.
There was an MOU sign off with the Michigan governor, our CEO, Rick Wallace, the CEO of imec, Luc, and then there was participation, of course, from University of Michigan, from Washtenaw Community College. The, the state of Michigan was very well present here, and you can see on the right side also, General Motors is part of the consortium as well. MEDC is also the Michigan Economic Development Corporation. Again, we are getting more and more inside the automotive ecosystem, also with real initiatives that the automotive industry can benefit in the future. In summary, of course, a huge, huge secular shift in the automotive industry, in particular relative to electronics and semiconductor. We work very, very closely with automotive ecosystem. We develop absolutely customized product and software solution, and the future is bright. We have a possibility to make even a better impact with silicon carbide introduction and, of course, the advancement of technology nodes inside the vehicles. With that, I'll stop here, and I'm open for Q&A.
Perfect. Thank you, Oreste. Great overview. I'm sure everyone's appreciative of that. I was hoping to hit on a few things. The first one was to really help investors understand kind of the size today and growth going forward. You know, I think roughly $700 million in total auto revenues in 2022 for KLA, so that's about 7% of revenues. Is there a way to kind of unpack that in terms of, you know, silicon carbide, process control? You know, however you'd want to kind of slice and dice it, what's the best way to kind of think about that?
Yeah, I showed the revenue portion in one of my slides in the left side, and I split the process control and process in that slide. I would say process control right now is maybe process is 30% and process control is 70% of the entire automotive revenue that we generated in 2022, and we are generating 2023. I think the percentage will stay the same, like 70/30, 75/25. Mostly is, of course, in the semiconductor process control, where we have a huge presence in the market with many, many products. The SPTS growth is incredible as well, as you saw from the previous slide.
When you split the silicon carbide and silicon, $300 million was in silicon carbide, and $400 million was in silicon. You see pretty fast growth of silicon carbide. I think, as I said, few years ago, silicon carbide was zero. We see silicon carbide getting the fastest potential growth in the market. This is why I would like to split. I would say 70/30, process control, process. Process means SPTS, and I would say 60/40 right now, silicon versus silicon carbide.
Perfect. From a growth perspective, I think over the last seven years, including your outlook for 2023, you know, you're talking about a growth CAGR for you of about 30%, versus auto semis. I don't know, you know, hard to call precisely, but, definitely your number are far better than that. How are you thinking about kind of the growth rate going forward? Obviously, not asking for a specific guide, but are you expecting that kind of continued outperformance, and what would be the key drivers underlying that outperformance?
Good question. First of all, I hear as well, 9% automotive semi revenue increase. I believe this estimate is a little bit conservative. I'll tell you why: because it doesn't account that automotive industry is getting also the leading-edge technology, and whenever you have a leading-edge technology, let's assume it's 5 nm and 7 nm , maybe 3 nm , not now, but 5 nm is already in the car. Sometimes you don't qualify this technology, this output, as automotive. Sometimes, you know, it gets into the 5 nm pile that goes somewhere else. I believe that 9% is a slightly conservative estimate for the semiconductor revenue associated with automotive.
Now, as regards KLA, I believe we will outperform this number and will outperform the broader equipment spending in the automotive semiconductor. The reason is. There are multiple reasons. First of all, as I said, the silicon carbide is requiring completely different set of process and process control tools, and we are very much in the silicon carbide process with SPTS. As I mentioned, in silicon carbide, we are retooling, really, products to make sure that they can satisfy the needs of this market. The second thing, as I said, the advanced semiconductor. I mean, again, it's impossible to think about having a 5 nm , 7 nm technology in the car, and the car makers don't, not pushing for more I-PAT, for example.
Because they have been used to N - 2, N - 3 for a long time, now they get to the end product, the end technology node, and they will be extremely anxious with the potential reliability failure. There will be a process control intensity for these nodes in automotive industry as well. That's the reason why I believe that, again, the +9% for semiconductor automotive revenue can be slightly underestimated. I believe it's going to be more than that, because of the end drivers, and KLA will outperform the broad market because of these reasons I said.
Fantastic. Relative, I guess, to process control, you have a very kind of broad portfolio, pattern inspection for R&D, separate tool for HVM. You've got the unpatterned Surfscan. You also talked on the call around I-PAT. I guess kind of as you think of that portfolio, and as you think about your access to utilize kind of internal OEM fab data, you know, how, I guess, are you thinking about process control intensity over time for the automotive world?
Yeah. Let me specify the OEM or fab data are used to develop the machine learning model that is the base of I-PAT. We don't have access to this data outside the firewall. These are extremely protected data that the automaker says, and they've been used only for the purpose of developing neural network model for I-PAT. We don't have full access, that we know all this data, this is not true. It's only firewalled for silicon carbide. People are using more advanced process control tools. That, of course, give us a boost in the ASP because these are newer tools and, of course, higher ASP, more complex technology.
We have really, I would say, it's not the fact that we have access to the data from other OEM or Tier 1 or data, because, again, we don't have full access to this data. It is in the collaboration and the solution that we provide to the industry that we see the possibility to increase the process control intensity and move to next generation inspection metrology tools in automotive semiconductor fabs.
The quality is obviously a priority, in particular in the automotive industry, and, you know, you talked about working closely with OEMs. Curious, you know, if that's something where your work there is causing the OEMs to push on the manufacturers to adopt more process control.
Yes.
O r your conversations with, you know, your direct customers that they understand that they need it as well. How do you kind of think about that process?
That's very good. I would say both, C.J. On one end, of course, by directly working with the, with some of the automakers or Tier 1, of course, we let them understand the importance of process control and what we can offer in this field. They push their suppliers, of course, to adopt more and more process control, and at the same time, we go directly to our customer, their suppliers, to promote the value of solutions like I-PAT or solution like C205, BBP pattern inspection, or the new bare wafer for automotive or 89xx. We do both. We do both. We talk to OEM and Tier 1 to promote the value, and they understand, they push their supply chain. In the same way, we partner with our direct customers to make sure we can provide the value they need.
This might be difficult to answer, but if you think about kind of process control intensity overall for KLA, I think you guys as a company have stated that lagging edge is kind of at the lowest end of the rank order. On this call today, I think you talked about silicon carbide as an important driver, actually maybe driving that higher. You know, is there a framework, or is there a potential outlook looking ahead where, you know, this part of the market could actually push meaningfully higher in terms of intensity? If so, what would be the key driver behind that?
I think it's pushing higher as well, already. I believe if... it's very hard because there are plenty of fabs doing automotive devices, and some of them are not dedicated, and... I believe, from my gut feel and what I see in the market, is the process control intensity has already increased in the automotive semiconductor. One indicator I have is, of course, the 89xx tool. This tool is the tool that actually we use together with the software Klarity in the fab and the I-PAT methodology to screen potential reliability failures. This tool was originally the micro inspection tool for memory logic and foundry. We retooled this particular product to become like the automotive tool for excellence, in particular for screening.
Last year, we had an explosive growth of this particular product, KLA, and in fact, Gartner confirmed that in the micro inspection space, we gain a few points of share. Another important tool that is also an indication how pretty much process control intensity is growing, is a tool that we use from our GSS organization for qualifying silicon carbide substrate at the substrate level, before you form the device. This was another explosive growth of this particular technology. These are really clear indicators of process control intensity going up. By the way, I mentioned GSS, I mentioned SEMI PC, of course, EPC. C.J., as you know, KLA is split in three business groups. I manage EPC, and then SEMI PC from Ahmad, and Brian is managing GSS. Automotive is across the board. Is across the board. There is no silo, no barrier. The work that we are doing with automotive is involving everybody at KLA, every single business group, and we work very, very well together, developing whatever the customer and their customer needs.
Perfect. I wanted to move over to SPTS, if we could. You talked about the split for overall auto revenues. Within SPTS, how should we think about silicon carbide versus silicon today, then how do you think that evolves, you know, over the next kind of five years?
Today is pretty similar. Last year, 2022, was two-third and one-third. Two-third was still in silicon, one-third was in silicon carbide. The percentage is going to change. Silicon carbide is going to take over. I believe there is going to be a crossing point in next two, three years, that silicon power and silicon carbide, the power revenue generated by SPTS is going to be equal. Because the silicon carbide is growing much faster, and we have dedicated solution for silicon carbide that are right now pretty much the leading technologies in the field in terms of deposition. In particular, PVD, that is our plasma vapor deposition tool, sputtering tool, and the silicon carbide trench etch. Again, right now, last year was two-third, one-third. I believe it's going to cross the point, 50/50, in the next couple of years. Silicon carbide will grow faster than silicon power.
Can you speak a little more around your Omega tool for trench etch, Sigma tool for PVD? I guess, you know?
Yeah, yeah.
What drives that leadership position there?
This is actually, great point because we said we have differentiated technology, and of course, the investors or the customers ask us why. Let me simplify here. There are SPTS is, of course, a specialty semiconductor. When I say specialty semiconductor, is mostly power for automotive, RF for 5G, MEMS, and so on, all these IoT devices. We develop a customized process technology for these particular markets in deposition and etch. In deposition, the leading product is a PVD, that means plasma vapor deposition. What we do is we deposit metal. We do metallization. Our PVD platform is called the Sigma in SPTS, is very well-differentiated in silicon power for a few reasons.
For high deposition rate, that is really what is driving the throughput of the machine and eventually lowering the cost, increasing productivity. We have the very good control of defects, in particular for what we call thick aluminum sputtering. That means when you sputter, when you deposit a very, very thick layer of aluminum, we have the best defect control, and this is for front-side metallization. The good news about silicon power, and also silicon carbide power, is you don't normally sputter metal on the front side of the wafer, but also on the back side, to pretty much compensate for stress and control the warpage of the wafer.
We have differentiated solution, also sputtering a metal from the back side of the wafer by tune the stress and have edge contact grip that doesn't really damage the front side of the wafer when you are depositing layer on the back side. Really, it's the beauty of SPTS, that we learn more and more after the acquisition, is the incredible knowledge and also ability of the SPTS organization to really go down in the details of the tailoring of the tool that a specific industry needs. In this case, of course, silicon and silicon carbide power for automotive.
Etch, we don't use much etch in silicon power, but the silicon carbide power, the Omega product, is giving us a new opportunity, and the opportunity is all about how you control the bottom of the trench of the silicon carbide material. At the certain point, you need to build a trench structure, and the control of the bottom of the trench, the rounding of the bottom, is extremely important, and we have a patented solution that give us the best control of this bottom of the trench in the silicon carbide etching space. Again, really customized solution for what the market needs. SPTS will never serve the 3-nm foundry technology or 5 nm because this is not the goal of this organization. The goal of this organization is to excel in customized solution for specialty markets like, for example, silicon and silicon carbide power for automotive.
We've got two minutes left, unfortunately. I got plenty more questions for you, but I think we're running out of time. In the last two minutes, I would be remiss if we didn't hit on your Ann Arbor, Michigan facility. And would love to hear from you in terms of how that's helping you with your customer engagements, and whatever other benefits that you see, as the final question.
Yeah, we decided to invest in Michigan for our headquarters, too, in Ann Arbor. Actually, in the land of University of Michigan, that has been a fantastic partner with us. Recently, we got this opportunity to do something more specific for automotive, and in particular, in having the collaboration of a consortium like imec, this is incredibly innovative consortium, give us the possibility to space a little bit outside our current definition of automotive initiative. Talking a little bit more about, for example, very advanced chiplet integration of semiconductor packaging for automotive, or doing the next level of investment in the wide-band gap devices like silicon carbide, gallium nitride.
We got this idea, and of course, the idea was highly supported by the University of Michigan, by the other regional universities from the Michigan Economic Development Council, from the State of Michigan, and General Motors look at the opportunity and say, "Oh, this looks interesting." Now we have General Motors in our consortium, and we call consortium STAR, because on top of the automotive research, we want also to develop more and more engineering talent pipeline in the Midwest, and we just started. We signed the MOU, and we are working on SOW right now, and I'll let you know a little bit more the next few months which kind of initiatives we are going to drive in specific.
Perfect. Well, thank you. Thank you very much for your time, really appreciate it, and best of luck to all the investors out there. I hope you enjoyed the time, and I guess we'll leave it there.
Thank you for the opportunity. Thank you.