Aehr Test Systems Q4 2025: Contradictions Surface in AI Market Growth, Margins, and Customer Dynamics

AI processor market enthusiasm and growth projections, gross margin impact of product mix, impact of TSMC's gallium nitride decision, silicon carbide customer growth and ramp timing are the key contradictions discussed in Aehr Test Systems' latest 2025Q4 earnings call.



AI Market Expansion:
- Aehr Test Systems diversified its revenue from 0% in artificial intelligence processors last year to over 35% this fiscal year.
- The company completed the development and delivery of the first-ever wafer level burn-in solution for AI processors, marking a significant technological and commercial milestone.

Silicon Carbide Market Shift:
- Silicon carbide wafer level burn-in accounted for over 90% of Aehr's revenue in fiscal '24, reducing to less than 40% in fiscal '25.
- This shift was due to a growing customer base and expansion into new markets, including AI processors and gallium nitride power semiconductors.

Product Diversity and Market Expansion:
- Aehr Test Systems expanded into production wafer level burn-in of AI processors, gallium nitride semiconductors, and silicon photonics integrated circuits.
- The expansion into new markets was driven by customer demand and the need for production burn-in and screening solutions.

Financial Challenges and Tariff Uncertainty:
- Aehr reported a $864,000 onetime restructuring charge related to the Incal facility closure and a 15% decrease in Q4 revenue compared to the previous year.
- The impacts were attributed to the integration of Incal's operations, fluctuating manufacturing capacity, and tariff-related uncertainties affecting supply chain deliveries.