Good day and welcome everyone to the Vicor Vicor Earnings results for the third quarter ended September 30, 2019 conference call hosted by Doctor. Patricio Winterale, CEO and Jamie Simms, CFO. During the presentation, I'd like to remind all parties that this conference call is being recorded for replay purposes. Now with that, firstly, I would like to hand the call over to Jamie. Please go ahead, sir.
Thank you, Chris. Good afternoon, everyone, and welcome to Vicor Corporation's earnings call for the third quarter ended September 30, 2019. As stated, I'm Jamie Simms, Chief Financial Officer and with me here in Andover is Patricio Vincirelli, Chief Executive Officer. After the markets closed today, we issued a press release summarizing our financial results for the 3 months 9 months ended September 30. This press release has been posted on the Investor Relations page of our website, www.vicorpower.com.
We also filed an 8 K today related to the issuance of this press release. I remind listeners conference call is being recorded and is the copyrighted property of Vicor Corporation. I also remind you various remarks we may make during this call may constitute forward looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Except for historical information contained in this call. The matters discussed on this call, including any statements regarding current and planned products, current and potential customers, potential market opportunities, expected events and announcements, planned capacity expansion, as well as management's expectations for sales growth, spending and profitability are forward looking statements involving risks and uncertainties.
In light of these risks and uncertainties, we can offer no assurance that any forward looking statement will in fact prove to be correct. Actual results may differ materially from those explicitly set forth or implied by any of our remarks today. The risks and uncertainties we face discussed in Item 1A of our 2018 Form 10 K, which we filed with the SEC on February 28, 2019. Please note the information provided during this conference call is accurate only as of today, Thursday, October 17, 2019. Mycore undertakes no obligation to update any statements, including forward looking statements made during this call, and you should not rely upon such statements after the conclusion of this call.
A replay of the call will be available beginning at midnight tonight through November 1, 2019. The replay dial in number is 888 2868010 followed by the passcode 70495083. This dial in and passcode are also set forth in today's press release. In addition, a webcast replay of today's call, along with the transcript, will be available shortly on investor related page of our website. I'll start this afternoon's discussion with a review of our financial performance for the third quarter 9 months year to date.
And Patricio will follow with his remarks, after which we will take your questions. Beginning with consolidated results, as stated in today's press release, Vicor recorded total revenue for the 3rd quarter of $70,800,000, up 11.7% from 2nd quarter revenue of $63,300,000 but 9.3% lower than our record revenue of $78,000,000 recorded for the third quarter of 2018. Year to date revenue stands right at $200,000,000, off from 20 eighteen's 9 month total of $217,500,000 reflecting the trough and data center shipments of the first half of this year. 3rd quarter revenue growth reflected a resumption of shipments to contract manufacturers on behalf of an existing data center customer. Production is resuming after the pause of the past two quarters.
We also shipped pre production volumes of advanced products for customers to use in their own pre production activities. Quarterly revenue from Brick Products was unchanged sequentially as double digit domestic growth was offset by tariff and trade related declines in For the third quarter, the BRIC Advanced revenue split was 66% BRIC, 34% advanced, in contrast to 76 Brick24 advance for the 2nd quarter. International revenue rose 27.6 percent sequentially, reflecting the aforementioned increase in advanced product shipped to offshore contract manufacturers offset by a slight decline in exports of Brick Products. International revenue rose to 58% of revenue for Q3 from 51% for Q2. Consolidated gross margin as a percentage percent from the prior quarter's 46.
The positive impact on absorption of the quarter's increased production volume was offset by higher tariff charges, increased reserves and mix. For the year to date period, our consolidated gross profit margin stands percent compared to 48.3 percent for the 2018 9 month period, with the lower figure primarily attributable to lower absorption and higher tariffs. We discussed last quarter our development of a duty drawback program, but we now believe any recovery of tariffs paid will occur in 2020 given the backlog of applications being processed by the U. S. Customs authorities.
We also continue to pursue opportunities to use supplier that are not subject to Section 301 import tariffs and anticipate completion of certain important vendor changes in 2020. Quarterly operating expenses were flat, both sequentially
and on
a year to date basis. Noncash stock compensation expense totaled $753,000 for the quarter in line with prior quarters. Quarterly operating income rose to $6,100,000 percent and 3.8%, respectively. Year to date operating margin stands at 6.5 in contrast to the 2018 year to date figure of 11.7. Our year to date effective tax rate stands at 5.9%, down from 7.3% as of June 30.
The effective tax rate for the third quarter on a stand alone basis was 4.3% essentially unchanged from the rate similarly calculated for the second quarter. Net income attributable to Vicor totaled $5,900,000 for the third quarter, representing a fully diluted GAAP EPS figure of $0.14. This is in contrast to Q2 2019 net income of $2,600,000, representing fully diluted GAAP EPS of $0.06. Our fully diluted share count for the Q3 EPS calculation which is the sum of both common share classes consisting of approximately 28,500,000 registered and listed common shares approximately 11,800,000 Class B common shares, which are neither registered nor listed and approximately $1,900,000 equivalents sequentially rose by $9,700,000 to $81,200,000 primarily due to a positive shift in working capital. Trade receivables net of reserves totaled $39,800,000 at quarter end, up sequentially 4% with DSOs at 44 days a slight improvement sequentially.
All balances are current. Inventories net of reserve decreased 9% sequentially to $49,700,000 with declines in raw materials, WIP and finished goods. Portion of the decline was associated with the shipment of finished goods originally scheduled to be shipped last quarter, chain conditions. We hope to achieve further efficiencies in inventory management, improving our annualized turns metric, which today stands at 3. Capital expenditures for Q3 totaled $3,300,000, an increase of 28% sequentially.
Turning to headcount, our employee total as of September 30th stood at 1023, up 4 from the prior quarter's 2019. Regarding our capacity expansion, we facility during the current fourth quarter. Construction over the winter months will be limited to activities such as excavation grading, paving and the like. We expect to begin construction As stated before, we anticipate internally funding both the construction and the plan 2 phases of equipment installation. Turning to the fourth quarter, we are positive about our near term prospects in AI acceleration and supercomputing.
But cautious regarding the timing plicity of design wins and expect orders in Q4 for production volumes to be delivered across the first half of twenty twenty. With that, I'll turn the call over to Patricia.
As Jamie suggested, current booking patterns continue to reflect U. S. China trade tariffs, macro uncertainty and weak demand visibility. Bookings for the third quarter totaled slightly over $60,000,000, essentially unchanged from the prior quarter. 4th quarter bookings are forecasted to increase by about 30%.
Advanced Products rose in bookings 40% sequentially in Q3 driven by the resumption of serve production by a major customer. We expect further substantial orders from these customers. We also received orders for initial builds of next generation GPUs from another major customer. Additional orders are expected as this customer accelerates roll out of its next generation platform. As Jamie mentioned, we also expect orders associated with other design wins beginning in Q4.
However, given lead times, shipments from these orders will not occur until 2020. We're well positioned with leading innovators in artificial intelligence, offering power system solutions, that enable advances in computing power. We expect these innovations will provide growth beginning in 2020. Turning to Automotive. Current booking activity includes notable design wins from automotive OEMs, planning to use 48 volt power system solutions to improve the performance of mild hybrid and full EV vehicles.
Autonomous driving systems are also converting to 48 volt to power sub-one volt ASICs with current levels approaching 1000 amps. To enable the compute power and intelligence necessary to make autonomous driving safe. As these are this involves substantial investment in our propriety solutions through NRE payments, We see them as evidence of a long term commitment to Vicor and to our highly differentiated solutions. As with AI and supercomputing, automotive power system architects are turning to Vygo for a matched performance that in turn differentiates the performance of their end products. Having faced challenging conditions since about this time last year, VICO has uniquely positioned itself for long term growth and profitability by penetrating key will now take your questions.
Thank
you.
And we have our first question coming from the line of John. Please go ahead. Your line is open.
Hi, good afternoon, Patricio and Jamie. Thank you my question. Nice to see things get back on track a little bit this quarter.
Thank you.
My first question is on the orders and bookings that you've seen. Do they indicate that your fourth quarter will be up to what you previously expected generating some growth with some new designs ramping? Or is that pushed out a little bit into 2020?
So for the fourth quarter, we are willing at this point to provide guidance with respect to bookings, which I suggested in my prepared remarks, We expect to be up by about 30%. But we do not want to give guidance with respect to revenues because the actual revenue number will be, affected to a significant degree by turns business within the quarter, which is not that easy to predict. Last quarter, we made, or provided guidance with respect to revenue, which we have lived up to this quarter, we are providing guidance with respect to bookings but it's hard to do that with respect to revenues.
Okay. Understood. And then, for the large data center customers that resumed taking your product this quarter, was that a was that because of their spending patterns, something to do with the contract manufacturer transition out of China or some other factors such as CPU shortages being believed?
I think all of the above in, I think some varying combination as functional time. Everything you mentioned has been a factor. I mean, clearly, if we go back to this time last year, Given the climate of the industry at that point in time, I think there was demand that may have gotten ahead of what was needed in part because of serious shortages, very long lead times with respect to key components. So I think many companies got ahead in terms of their orders. And then we saw a contraction that was fundamentally driven by in organizing the appraisal of what they actually needed over the several quarters, some inventory that had to be absorbed.
But more recently, to your point, there have been other factors at play, including, relocating our production lines from China to Taiwan. And in some instances, lack of availability of certain processors that got delayed or issues that caused the delays.
Okay, great. You mentioned a major GPU customer ordering more product. Is that related to orders that you took last year? Or is this for a new one? And what happens to those old orders now that if it is a new generation coming up?
So these are new generation coming up and we started to receive significant orders for that new generation. And based on the forecast that we expect that that to staff ramping over the next few months. And so I can say at this point in time.
Okay. Last one for me. Jamie, you mentioned some tariff, I guess, refunds or clawbacks, what was the amount that you may have expected in the quarter? Was it material?
Well, we didn't expect it this quarter but we are anticipating that when, in fact, we get through the queue, that we have to deal with because there are many companies that are seeking similar refunds. That we're going to have a multimillion dollar refund coming.
That's right. Okay. Okay, great. I'm sorry, one more last one. Can you talk about the status of any manufacturing partnerships you may be pursuing to secure future growth?
So whatever in discussions, as I mentioned, in prior calls, we're taking a very long term look with respect to these we want to work with the right licensee under the right conditions. So we'll We'll let you know once something comes to fruition, but I don't have anything to say today about it.
Okay, great. Thank you so much.
You're welcome.
Next question is coming from the line of Jeff. Please go ahead. Your line is open.
Good day, gentlemen. James, I had a question. You talked about the OpEx kind of being flat. It was sequentially and even improved as a percentage of sales, quite substantially, sequentially in Q3 over Q2, but was up about 300 basis points roughly, year over year. What is it going to take to really start moving this OpEx line down to the lower 30, given now we're starting to see a, what sounds like a re ramp of new products that are going to add to the top line What's going to be the contributor there?
Are you going to be able to pull back investment now that you started winning these new products? Or how are we going to start seeing more fall to the bottom line? Given the investments the company has made in the power on package and advanced product lines?
Let me take that. So as discussed in the past, the phone line, in our case, will leverage economies of scale with respect to 2, 1st of all, production rates in the top line. With operating expenses in Partiga R&D, which is obviously significant element or OpEx, not scaling in the proportion of revenue growth, but far below that, because we believe that with the infrastructure and fixed costs, in R&D, we are in a good position to and have only support all of the advancement that we've accomplished but also to continue to raise the bar with respect to performance of power and package products, front end products, the whole power system, infrastructure is necessary for, a future players in the power system industry to succeed. We believe we can accomplish that without significant growth in operating expense levels in terms of dollars. And as a percentage, as the revenues grow, those percentages will come down.
So that is an element that will contribute to your point in terms of reducing OpEx as a percent of revenue contributing to the bottom line. Most significantly, on the gross margin front, as we discussed in the past, there too, we have a cost model that has got a very large component that is fixed. We believe that with increased production rates We're going to see better gross margins and the bottom line will be driven by expanding gross margins reduce operating expenses as a percentage of revenue. Some of similar comments apply to other operating expenses that will not scale in proportion to the top line.
Patricia, thank you for that answer. I was just wondering kind of what are the assumptions given the fixed cost nature of the improvements in gross margin, what's your utilization factor at those levels? In terms of where we need to be at utilization levels to start kind of seeing that improvement on the fixed, on the leverage of the fixed costs in the gross margin.
So there is no magic threshold. I think fundamentally incremental revenues with incremental production rates, contributed to to the margins and contributes to the bottom line. I think what we've been seeing of late, as suggested in Jamie's prepared remarks, in terms of margin in the neighborhood of 46%, 47%. That's been We've talked a moment ago about the fact that we expect to be able to call back some of those tariffs, obviously, those elements are not reflected in what we're reporting for costs because we have not gotten that money back. But going forward, again, we expect to see because of initiatives we take and with respect to alternate sources outside of China and so on and so forth.
We expect to see the impact of tariffs mitigated. And more significantly, the impact of increased production rates contributing to margins rising above 50% and what beyond that.
Okay. Thank you. I'll just try to get a couple of quick ones in here. How, where are we in the process of moving, some of the, the, supply chain into Taiwan? Where is that And then just two quick ones to follow-up and I'll step off here.
How much of the backlog right now is represented by Advanced Products And has there been any impact to you or any of your customers due to M and A activity, that they may be engaged in at this point in time. And I'll leave it there. Thank you very much for your time.
Okay. Let me see if I can remember all those questions. So I think the first one had to do with, the supply chain or moving somewhat supply chain from China to Taiwan. To be clear, that comment with respect to changes in supply chain, that has to do with the contract manufacturers that we ship to. In other words, our customers as opposed to our suppliers, even though in some instances, there have been relocations outside of China already taking place.
With respect to M and A activity, I'm not aware of anything, Jamie, are you?
Yes. Jeff, what did you have in mind?
Well, I'm just I don't want to make you guys come out and make comments about customers. I just research kind of suggests that someone you may be or may not be working with is is in an acquisition now that may or may not go through. And I think it in my technology background in the cloud and in accelerators and things that you're working on, there could be some hiccups there if things don't go through as planned. And then the follow-up I had on that, if you can even answer that, is just what's the advanced products in terms of, is it substantially the largest portion of the bookings?
So let me take the one about, companies in the accelerator business. And potential mergers or acquisitions taking place in that space, particularly when it comes to accelerators from my visibility perspective, we are essentially playing with everybody that has got advanced products in that space. And to that extent, it doesn't really matter to us if some of these companies, particularly the stepped up companies end up getting acquired because they may change their name, affiliation, but we'll still be doing that business with the acquiring company that if it is in that space, we're already doing business, we are going to be doing business in the next year or 2. So, with respect to accelerators, we are in a very significant, I would say, potentially dominant position given the unique attributes of our technology and the technical needs in that space. Our cloud computing is a different story.
We have limited penetration to date in that space. But with our question, the event of 48 volt, which, was resisted by some in that space for a long time. And it's now happening with standards that are evolving towards 4k Vault, will confront potential customers that being reluctant to commit to us for a variety of reasons, concerns about single source, Vigor being a very small company, it will confront them with a dilemma, which is, do they want to have solutions that are truly enabling or be handicapped with respect to their products or accept that they can do business with us VAGO having had the history of being a very reliable supplier. I think they're going to go for the latter. But obviously that has got to play itself out.
Certainly, the convergence to 48 volt in cloud Computing, in the datacenter space, and most significantly in automotive bodes well for our seen that channel space.
Okay.
And just two quick ones for you James, sorry. What's been put in place since the inventory correction last that occurred at the end of the year into the new year to better understand the visibility you have to the end customer and what their current demand is. Then just coming back again on the bookings, is it just the vast majority coming from advanced products? Just trying to understand the mix of bookings a little bit. You so much for your time.
So unfortunately, when our customers cannot predict their level of business, I don't think we can realistically credit it for them, right? So, all that we can do first order is, the rely on the forecast that come from our customers. And this forecast, particularly to your point at the end of last year suddenly changed, and there was some positive feedback, some contraction brought about further contraction, as the mood very quickly changed, I think, starting in August, September of last year. Can we get better at this? I imagine we could, but realistically, I don't think It would be reasonable to expect us to do that much better in the regard.
I mean, in our space, these kinds of things happen, they happen periodically from time to time. The mood, if I go back to July or August, of last year was extremely brilliant. Everybody was worrying about being able to get their components, their power semiconductors and other components. And that mood changed very quickly, very dramatically, I don't know that we could have predicted that. So I'm afraid that we haven't made substantial progress with respect to the ability to forecast these kinds of turns in the market.
Thank you.
Is coming from the line of Quinn. Please go ahead. Your line is open now.
Hi, Patricia. Hi, Jamie. Wanted to follow-up just on this generation of GPU that you mentioned. I think the 1st generation you won with that customer seemed to be for a fairly limited application. I'm wondering if you feel that the 2nd generation GPU design that you've won could target a broader set of applications at that customer?
So without getting too specific, I would say that we do agree that, the 1st generation GPU for a variety of reasons did not achieve the level of market penetration that the customer had anticipated. I think we have reason to believe both based on representations of the customer and other inputs that the second time around, dispositions are more well founded and likely to come through. But we'll take a wait and see at you with respect to that as well, because Again, as suggested in answer to the earlier question, our visibility is largely dependent on the customer visibility. So what we understand is that this time around steps have been taken to ensure much greater penetration and we'll see what happens.
Thank you, Patricia. My second question I had is wondering if you could give us any updates on the vertical power. Application and how you're progressing towards bringing that technology to high volume production?
So we we were actually, I was visiting in the Bay Area last week, in a couple of days, I visited A customers, I think in 6 out of 8, we were in their visiting the customer because of the customer realization that their future, GPU, their future AI ASIC, FPGA, was going to need a vertical power delivery in order to meet efficiently current demands ranging up to 1000 amps and potentially over time beyond. And in some cases, with some of these customers, If we look at the solution in its entirety as an array of radigals and an array of ASICs that are in proximate relationship to each other, I. E. Radicals of a wafer or devices ASIC that for latency reasons need to be in vehicles proximity to one another so that they in effect are bad each other. Verting apart delivery is the only way to get there.
So We are seeing it, getting traction. We are seeing it as a critical need in order to enable this next generation solutions Some of them are already approaching, I would say limited production, not large scale production, but It's been one step up company that made an announcement, I think, about a month ago with respect to very advanced solutions that already rely on vertical power delivery and for which we are developing a more advanced system with double the current capability. So we see it as a common denominator need, in that space were, in effect, functionality, computing capacity is clearly dependent on delivering in some cases, tens of thousands of amperes within a very small footprint, essentially a foot on the side.
And is
that do you think that's something that goes to higher volume production in the second half of twenty twenty? Or is that an application you think is a little bit further out in terms of timing?
So it depends on the company and the application. So I think there's with at least one of these set top companies for volume production in 2020. We're involved in other solutions that involves are, it's called GCMs that are due to go into production 2021. There's another application, which is an FPGA type of application that is 2022. So you got a range of timelines, but going back to what I learned from the visit in serial value last week is that there is a common denominator demand for these kinds of solutions and were uniquely equipped and uniquely capable in terms of our intellectual property to support these kinds of solutions.
Thanks, Theresa. And the last question for me, I think it's pretty clear what your advantage is in the high performance computing and data center markets where you can get your MCMs closer to the processor than traditional power supplies. And therefore, you have significantly lower distribution losses with your solution. I'm wondering can you just sort of discuss the advantages you have in the automotive market. Do you have similar advantages to what you're seeing in data center?
Or is it are these in the automotive market more 0 current switchingings or a voltage switching architectures that some of the other power management suppliers may also have in house. Just trying to get a better understanding of how do you what's your advantage on the automotive applications?
So without mentioning names, I'll make reference in the back of my mind the 2, one decent design win for which we recently got a 1st NRE order for development of a solution that involves conversion from an 800 volt bus, which relates to a battery stack. In hybrid vehicles initially, eventually into full EVs, where a solution is a 2 stage solution. It provides, 1st of all, bus conversion from, it undervolt. That's a nonlinear undervolt. You can go higher than that.
It can go lower than that, but normally 800 volts down to 40 volts So, it's once again the 48 volt, intermediate bus infrastructure that, I think sets us apart from, aspiring competitors. So there is a 1st stage involving a bus converter technology, which is way above anything else, in the competitive landscape. And then it's followed by 2nd stage which is our PRM regulators that take that bus converted voltage level that can track up and down depending on the state of charge of the battery pack and regulate it to, distribute within the vehicle at irregulated 48 volt. We go down from there. There is another part of the system where we take then the 48 volt down to 12 volt to provide the power for legacy 12 volt loads that are going to still be there in vehicles for quite some time because obviously that's a longstanding type of a solution that, will not be supplanted overnight.
They will continue to leave for, for quite some time. But going back to your core question, how do we fit there? Well, first of all, we fit by converting power from 800 volt to 48 volt, regulating it at 48 volt, and then supplying it selectively to legacy loads. They're going to continue to operate for a number of years at 12 volts until they go away. So this is in the first crash of the car in one application.
We're talking about 20 kilowatts maybe go into even higher power levels. And our solution is extremely dense, extremely efficient and very cost effective. That's the value proposition. In another instance, I'll give another example. We're working with another customer that has got autonomous driving needs.
It's another modular free cash. And, in that case, the value proposition to your earlier point isn't conversion from high voltage pass is to 4kvolt. It seems that powering a very current hungry asic, you know, presumably I don't know exactly, but I presume 7 nanometer asic, consuming 7 100 amps. Powering it to vertical power delivery from a 48 volt source. Thank
you, Patricio.
Next question is coming from the line of John. Please go ahead. Your line is open.
Hi, Patricio. I'm wondering if you can give us some more detail on the design wins that you have in house. And along that line, you mentioned before a second large hyper center that we should start seeing bookings for in the fourth quarter and how these design wins give you confidence that you'll be growing your bookings 30% in the fourth quarter?
So we have high confidence that we're going to be able to grow the bookings in the fourth quarter by about 30%. That's a bottoms up forecast. I'm not going to give you obvious details of that, but it's coming out of a combination of new design wins and some reception of demand from all the programs. So it's a combination of factors that apply I'm not going to give you the specifics of what makes that forecast come together. But we were confident of it, and that's the way I'm going to leave it for the time being.
You talk about the, at one time, you had mentioned that we had another Hyper Center that might start ordering product in the 4th quarters. Is that still a possibility And along those lines, are there more hyper centers hyper data centers in the wings It seems like it's taking a little bit longer than I expected for people to switch over to 48 volts. And I'm just wondering if you're seeing acceleration of that. And if you can give us any kind of, details on that?
I think it's the conversion to 48 volt has become evident for everybody to see. I don't think let's put it this way, even our competitors I think, acknowledge at this point that, that is happening. And And that it is here, it is here in the center space in accelerators, in supercomputing, And as we're discussing a moment ago, it's also coming here with automotive. And ultimately, I think automotive is really the elephant in the room, so to speak, meaning that the scale of usage of in automotive systems and the content, the electrification of automobiles in a variety of ways. Drives common than we have standards, not just within that industry, but also in diverse industries because again, of common denominator economies.
So, I don't think there's any debate any longer. That can reasonably be had with respect to 48 volt becoming a relatively universal standard. And to say it in different words, top vault is going away, because of limitations at this point, clearly recognize in all of these end markets. So it's not going to go away overnight. As I was suggesting earlier, there's going to be legacy lows for quite some time, but that's not going to be a growth market.
The growth market is going to be 48 volt and 48 volt our technology is without peers.
So I see that. I guess what I'm trying to get at though is it seems like from the outside that you've had 1 large data center that really has been taking a large chunk of your production And I would expect we're going to see some more shortly. And you had mentioned a couple of quarters ago where maybe it was last quarter that there was another one in the wing. So I'm just wondering When might we start seeing other larger hyper centers really coming on board? The extent that you've got the current large hypercenter guy taking product?
I think it is coming. I'm not going to make very specific references. I'll repeat things I've said in the past. And with respect to these kinds of things, our knowledge, I may have been at times ahead of when the future happens, but I think being pretty reliable about the nature of the structure of the future that is going to come about. So I'll persevere in saying that the convergence to 48 is happening.
I think development instance, in the GPU space, GPU is going to 48 volts, is accelerating upon intended, that trend. The automotive developments are going to accelerate it further. And we are on the verge of having a much broader adoption It is happening with design wins. This isn't a marquee target customer, today that isn't talking to us or asking us for proposals, for solutions for their next generation requirements. So we are there and our solutions are far superior than anything else out there in many cases, our solutions are really the only way to enable what the customers needs to do.
So I acknowledge the fact that we've been dependent for quite some time, unfortunately, a bit too long. On some limited, very limited number of key customers. But again, as I look at the business we had in the valley last week, I see all those customers becoming major BICO customers in years to come. In some cases, going to be next year. Other cases, it's still a couple of years out.
But I see this is somewhat inevitable development. So, as that happens, I think we're going to get the statistical base of business that we've been starting to get. And as I mentioned in the past, not having it, can lead to lumpy performance. That's unfortunate, but it is part of the innovator role that we've been playing and are continuing to play. So, I'm very passionate with respect to this, very determined.
I see it coming. And you'll be able to gauge the accuracy of my predictions in the next year or 2.
That sounds good. What I think I'm hearing is that we're you're very confident of the 30% increase in bookings this fourth quarter and there's a very long runway down the road where we can see continued growth in bookings and revenue with all the different design wins and having a statistical base, we shouldn't be as lumpy as we had before. Is that a pretty good summary?
I think I may have used some more different words, but I think, honestly, that's a pretty good summary. So we see good things happening starting in the fourth quarter and extending into next year with programs going into production. And more and more design wins that are going through the gestation phase.
Excellent. Thank you very much. Tresio. And, congrats on the cash flow. That was really nice to see.
The next one is coming from the line of Richard.
Taking my questions. So maybe a couple of quick ones to start off with here just to clarify on the bookings that you're talking about for the fourth quarter. Is this driven largely by a single a single customer, I think, in the GPU space or is there a little bit more balance between some of the other dynamics you referred to as well?
No, these balance, in fact, the biggest single booking that we anticipated for our quarter is not coming from that space at all. But I think on the GPU front, the real ramp in bookings should start in Q1. There may be some in Q4. Obviously a growing lease of design wins that is coming our way. There may be opportunities also in the front end part of the business coming our way next year.
There was a recent example that just came up within the last week. So it's diverse to your point. It's not coming from one existing major customer is coming from a few different directions.
Okay, perfect. Quick question just on the commentary regarding revenues for this quarter. You said it was difficult to predict. I assume this is the difficulty is coming largely from the brick business. Is that fair?
Well, I'm not sure that it is just that. I think it's also from Advanced Products and our ability to turn, within the quarter depending on where the orders are placed within the quarter. Given capacity as the quarter progresses. So, we're not comfortable making a forecast with respect providing guidance with respect to revenue this quarter. To the bookings level.
Okay, fair enough.
You
had some good commentary regarding the automotive space here, both in the kind of traditional powering, digital powertrain as well as with autonomous driving. If you look at a few years, Patricio, what do you think your content opportunity per vehicle could be?
Well, it very much depends on which particular type of vehicle we're talking about.
What if it's a full EV with autonomous driving capability?
Yes. By the way, it's fully V is not necessarily the best scenario. I think hybrids, let's say, hybrid with the 20 kilowatt worth of power conversion through a couple of stages, with then some select downstream conversion to 12 volts, there's a lot of dollars in that. So it doesn't have to be fully to represent a good case scenario. So what I can say is that if if this complete power distribution infrastructure from a bad APAC to 48 volt distribution, including some, conversion to legacy loads at 12 volts.
At the level of 20 kilowatts. I'm not going to say what the number is because at the beginning of way, the value position in terms of cost per watt, which I'm not going to do, but it's safe to say that it's a substantial, content. It's very substantial content.
Okay. Well, we look forward to seeing that over time. My last question or maybe kind of a quick set of questions here on competition. Just so can you kind of characterize above what level of amperes do you think you have no effective competition? And also have you seen customers who who have chosen a solution that is in your words not fully enabling?
And are you still engaged with those guys if they are?
So we've had instances of customers, I can think of 1 in Japan as an example that try to deploy a competitive solution and couldn't make it work. And I forgot the exact current level of debt, application I think it may be in the 4 100 amp category. To give you a little bit more technical call with respect to this, So the competitive landscape is very consistent. It relies on regulators, these are so called back regulators that are capable in one stage of delivering well, they're advertised to be capable of as much as 60 compares in reality they because of thermal limitations, they're used at something less than that. So if you take one of these devices, and in the real world, you can get 30 or 40 amperes out of it.
If you need to support an ethic that consumes on a steady state basis for 100 further amps, you need a dozen of them. And then If the Essek has got transit requirements, pick loans that go to X, the so called TDC or steady state current consumption. Then with a competitive solution, what you need to do is double up on the number of regulators, whereas with our solution, we have a freebie, if you will, which is that on instant tax basis, our timescale of milliseconds, which is long enough to support this turbo modes of ASICs, the Castle can draw double the current without having to add more hardware and pay for it. So when we get to the level of 400 amps with peak loads that could be going up to 800 amps or 1000 amps. Our solution that involves with vertical power delivery is single current multiplier.
As you can imagine, is far preferable to a competitive alternative, they may require 2024 phases that don't quite fit, generate a lot of noise a lot of these advanced assets running on very low voltages are noise sensitive So you got the following dilemma with a competitive solution to limit power distribution losses the regulators and large multi bushel dam needs to be deployed close to the asset. Well, 1st of all, there's not enough room to do that. But If you can somehow bottom up against the ASIC, then you have to worry about something else, which is they generate a lot of noise. And because of that, the ASIC may not be able to operate nearly as well as it can with our solution, which is fully soft switch with our packaging, this metal shielding, there is no noise. So fundamentally, it's a very predictable, very high performance solution that doesn't present both the fit and the noise challenges of the competitive alternative.
And I would say the threshold there is probably a band of not a bright line, a demarcation line, I would say at the level of the couple 100 amps, it is still possible to compete. It gets relatively hard as you progress from 200 to 400 amps, it becomes mission impossible for the competition above that level. And that's where a lot of ethics are going in many application environments.
Patricia, that was a great detail there. Thank you for that. That is all my questions.
Thank you. If there is another question, we'll take it. Otherwise, I think we're 1 hour into it.
Yes, we do have 2 more questions actually. And we have Doug next. Please go ahead. Your line is open.
Yes, hi. It won't take a lot of time. I know we're running late. Just two quick questions. I read a report recently that one of your patents that was issued in 2005 on a a converter.
I don't know if it's pronounced sign or seen a Amplitude converter that expires next year. If that's correct, then it expires is that significant in any way? And then the second part of the question, which follows up to the other guy, when you go and talk to a new customer, potential new customer, what pushback are you getting? You know, because clearly we feel I feel as an investor, you feel as you communicate to us as investors, that your product is completely superior? Is it price?
Is it are they fearful of production capacity? Do they have doubts about the 48 volt conversion why would somebody try a completely inferior product? Like you said, have it fail only to come back to you again? Those are my two questions.
Okay. Let me take the first one. So one of our pilots, maybe a few of our pilots, because there is about 100 patents relevant to protecting our IP with advanced products. Will be aspiring in the next couple of years, but you can be sure of the fact that we haven't been sitting still, right? So, since 2005, we have continued to make innovations in that particular area there may be, at least, Alpha Dazs and other tenants.
The way our products are Sanfrio converters operate today and the way they used to operate back in 2005, it's there's a world of difference there have been very significant innovations. And you can be sure having been, very diligent with these fact, to our intellectual property, that we've gone very far in terms of protecting our innovations. So fundamentally, the way I look at it, the analogy that I like is planting a minefield. Any competitor that wishes to follow our technology in, aducid or the circuit, has got to confront the crossing of a minefield. Well, maybe one of the mines in the minefield being old, our guests to be inoperative, but there's plenty of other mines that can blow limbs off.
And that's what's going to happen if anybody tries. And that's my
I just wanted to add.
Yes. And that's why we're watching this very carefully. We're not seeing, frankly, we're seeing something on the fringes and we're keeping a close eye on that. But it's not mainstream, Vicor Technology. And but when it comes to the card technology, I think the industry understands that we're very good, very honest.
We invested literally 100,000,000 of dollars in developing this technology and we're ready to assert the IP. So, I don't think anybody's got the guts to try. With respect to what happens, with customers, as we nowadays, it's mostly as they come to us looking to implement an advanced solution. I think what goes through their mind, as we discussed in the past, is the appeal of enabling a more advanced system. System that, a power system that allows the end product to have superior attributes, bath by the fear, and I would say misplace fear, that it's a single source solution.
And Vigor is the only game in town with respect to the single source solution. Now, our track record of supplying a large number of customers and a few key customers abundantly demonstrates that we're a very liable supplier, we're a very honest supplier. Customers can rely on us for price, for capacity, for delivery, for quality. And but not everybody who doesn't know us releasing that. And so the handicap or the the hump dev to get over has to do with the appeal on the other side of the fence of adding a multi source commodity solution.
So that's the dilemma that customers face. And if it were the commodity management team, that choice would logically be give me a solution that I can buy from a multiplicity of vendors and I can knock the vendor's ads against each other to get lower price and I can get multiplicity of sourcing with dimish risk, but the engineering team and the project managers are attracted to our solution because it's enabling. So he gives them the capability to do something that with the commodity multi source alternative they can't do. And what I'm seeing, what I saw in visits last week in the valley is that, enabling a severe solution Wednesday for obvious reasons because that's more important to the customer, the ability of their end product to compete effectively against their competitors, that's more important than concerns that can be addressed with respect to single sourcing with Vygo. So customers come to visit their facility they consistently come away impressed with, the state of the art, well fast manufacturing capabilities we have, the control systems that we have in place, our capabilities reassure them with respect to the fact that, the single source national solutions isn't something they should lose sleepover.
But some customers or potential customers do. I think this is the national pension between, in effect, our product and the commodity competitive alternatives that can't keep up with the level capabilities we have.
So just real quick, if I understand you correctly, it's sort of you educating them to overcome their fear.
It's I think that's very important. I can't say that, we can succeed. I'm aware of very large customers that have an edict or at least have ever needed historically that they're not going to commit their solutions to a single source. Other customers that in the past had similar restraint across the fence. In some instances, their system integrators crosses the fence for them and adopts our solutions.
So, it is a consideration without it. Obviously, the progress would be greater. But I mean, the tide is turning in our favor. And as we grow larger, I think some of the concerns with respect to size are also going to get this event. So I think we need to pass it with respect to this.
What we need to do is keep raising the bar and continue to advance our level performance leaving the competition further in the task. And that's what we're doing.
Okay. Thank you.
And the last question is coming from the line of Alan. Please go ahead. Your line is open.
Yes. Good afternoon. Just one question. How are you doing on the new RFM power tablet. Is that completed on the new 4 support G technology?
It's moving forward remarkably. I so indirectly referenced it in a comment without being specific about the RFM. But just within last week, there's a customer that has talked to us about very significant volumes for DSM next year. So we'll, we'll wait and see. We're also working on completing the next generation of these kinds products based on our 4G control system that's nicely coming along.
So we're going to be able to raise the bar as I suggest in in just the last answer to the earlier question, raising the bar with respect to the lower performance of the tablet. So while competitors maybe striving to achieve the lower performance of a tablet, which is literally in other markets, smaller than anything else in the competitive landscape, we're far along with respect to an organizational solution that will raise the bar by another significant factor, but in terms of density, efficiency and most importantly cost.
Okay. So was the 4G completed yet or is that still coming?
We are shipping. We actually recently completed qualification of some 4G products. The 4G TFC, which is what's relevant to to the RFM or any AC to DC converter. That's not quite completed yet. But it's approaching completion.
So we have both types on the bench, and we expect it to get to the finish line in another few months.
Okay. But the 4G version of the power tablet, is that completed yet?
So we have prototypes on the bench on a much smaller footprint. The elephant, the power tablet, as you might have seen from our website, it's an assembly in a metal shell. Future PFM or RFMs in other words AC2C converters are going to come right out of our molded pounds. So we're going to slice them and dice them other pounds and that is going to make them a lot more cost effective than the RFM itself is. So that's progressing along.
We have prototypes on the bench, but the problem is not quite ready for prime time. It's still a few months away.
Okay. Thank you very much.
You're welcome. And with that, we thank and looking forward to talking to you in a few months.
Thank you, everyone. That concludes your call for today. You may I'll disconnect. Thank you so much for joining and have a great day. Goodbye.