How the company works
What it sells, how it makes money, and the anatomy of the extremes: what has to break for the result to land far from the forecast, either way. In Aehr Test Systems's own words, from its annual report for FY2026.
Aehr Test Systems sells equipment that tests semiconductor devices under electrical and thermal stress to find failures before the chips reach their end products. It serves wafer-level and packaged-chip testing, including power semiconductors, silicon photonics and processors used in AI computing.
How it makes money
Customers buy test and burn-in systems, the contactors and carriers that connect their devices to those systems, and services and spare parts. Revenue was $50.0M in FY2026. Full-wafer contact products supplied $31.5M, or 63%, and package-level products supplied $18.5M, or 37%. Orders depend on customers qualifying a device and then adding production capacity; a system sale can be followed by contactor purchases and support as the customer's production grows.
What it sells
| FY2026 product lines | Revenue | Share |
|---|---|---|
| Full-wafer contactFOX systems test and burn in wafers, singulated die and modules; WaferPak contactors, DiePak carriers and alignment and loading equipment connect the devices to the test system. | $31.5M | 63% |
| Package-levelSonoma, Tahoe and Echo systems address different power and thermal requirements for testing packaged devices, with associated services. | $18.5M | 37% |
Product-line revenue includes systems and services, as the annual report groups them.
Unit economics
Aehr assembles equipment using purchased components and subcontracted assemblies, with final assembly and testing in Fremont and additional Sonoma integration and testing through a subcontractor. It must fund engineering and customer support before large production orders arrive. FY2026 gross margin was 35.3%; research and development was $12.6M, and the operating loss was $14.1M. The company attributed the margin decline to higher assembly and warranty costs, freight and tariffs. Its largest customers can move the whole business: the largest five represented 70% of revenue.
Competitive position
Its proposition is to screen many devices in parallel and catch failures before an expensive finished product or multi-chip package is assembled. Wafer-level screening and the package-level Sonoma offering give it routes into different stages of a customer's process. Competition turns on technical capability, throughput, reliability, automation, cost of ownership and support. The annual report describes intense competition from companies with greater resources and price pressure in less advanced systems; technical differentiation must keep earning the order.
Biggest cost inputs
Purchased environmental chambers, power supplies, metal fabrications, printed circuit assemblies, integrated circuits, sockets, wafer contactors and interconnect substrates; engineering payroll and outside development; manufacturing assembly, freight, tariffs and warranty work; and sales, service and administrative staff. Customer demand and product mix affect manufacturing efficiency, while development spending continues between equipment orders.
Anatomy of a large upside
- AI reliability screening becomes a production purchase. Qualification work in AI accelerators, high-performance processors and silicon photonics turns into repeat system orders and associated contactors. Both wafer-level and package-level products participate as customers move from engineering to high-volume production.
- The order book becomes shipments and factory utilization improves. The $80.6M backlog at the fiscal year end ships on schedule, customer production programs add capacity, and the additional Sonoma manufacturing route supports delivery. Revenue rises against an engineering and support base already being funded.
Anatomy of a large downside
- A few customers postpone the capacity build. The largest five customers represented 70% of revenue. A qualification delay, a canceled order or a changed delivery schedule can leave capacity and engineering costs in place while shipments move out; the filing cautions that backlog does not establish future revenue.
- New markets fail to offset weak power-semiconductor demand. AI and photonics programs stay in qualification while electric-vehicle-related demand remains soft. Competitors improve performance or price, and assembly, warranty, freight and tariff costs prevent a recovery in gross margin even when orders arrive.
Written from Aehr Test Systems' annual report for the fiscal year ended May 29, 2026. The upside and downside describe conditional business outcomes drawn from that report; the quarter's forecast and its cases are on the forecast pages.