Akoustis Technologies, Inc. (AKTS) Q2 2021 Earnings Call Transcript

Akoustis Technologies, Inc. (AKTS -5.66%)
Q2 2021 Earnings Call
Feb 01, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Akoustis Technologies business update conference call. As a reminder, this conference call is being recorded. [Operator instructions] A replay of the call will be available on the investor relations section of the Akoustis website. It is now my pleasure to introduce Tom Sepenzis, director of investor relations.

Thank you. You may begin.

Tom Sepenzis -- Director of Investor Relations

Thank you, operator, and good morning to everyone on the call. Welcome to Akoustis second-quarter fiscal 2021 business update conference call. We are joined today by our founder and CEO, Jeff Shealy; interim CFO, Ken Boller; and EVP of business development, Dave Aichele. Before we begin, please note that today's presentation includes forward-looking statements about our business outlook.

All statements other than statements of historical facts included during this conference call, including statements regarding our strategies, operations, costs, plans, and objectives, including the timing and prospect of product development and customer orders, our expectations regarding achieving design wins from current and future customers, the possibility of entering into collaborative or partnering relationships, potential impacts of the COVID-19 pandemic and guidance regarding expected revenue, product orders and milestones for the current and future fiscal quarters are forward-looking statements. Such forward-looking statements are predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties. The company and our management team assume no obligation to update any forward-looking statements made on today's call. Our SEC filings mention important factors that could cause actual results to differ materially.

Please refer to our latest Form 10-K and Form 10-Q filed with the SEC to get a better understanding of those risks and uncertainties. In addition, our presentation today will also refer to certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the investor section of akoustis.com. I would now like to turn over the call to Jeff Shealy, founder and CEO of Akoustis.

Jeff Shealy -- Founder and Chief Executive Officer

Thank you, Tom, and welcome, everyone to our 2021 second fiscal quarter business update call. We ended the calendar year with another strong quarter exceeding our original guidance by 30% with revenue of $1.3 million. Our highest quarterly revenue to date in our core chip business, driven by XBAW filters and filter-related revenue. Revenue increased over 100% quarter over quarter in December as we generated revenue from each of our major commercial markets including WiFi, 5G network infrastructure, 5G mobile devices, and defense.

We now have 15 commercial XBAW filters in our product catalog with many more planned. Our production ramp with our first WiFi 6 customer has been a great success and we delivered additional filters to our Tier 1 5G network infrastructure customer in the December quarter. We expect additional success throughout calendar 2021 as we layer in new products and customers across our focus markets, we also called for the redemption of $10 million of our convertible debt in the December quarter. And last week, we announced that we have delivered a notice of the redemption for the remaining $15 million to our existing noteholders.

This will retire all convertible debt remaining on the balance sheet and put Akoustis on a more sound financial footing. Our outlook remains confident as we continue to execute across multiple markets with the opportunity to deliver significant-top and bottom-line revenue and earnings growth for years to come. We currently expect to report strong revenue growth in the March quarter in the range of $2 to $2.5 million, or up 70% at the midpoint. We are fully booked to the midpoint of our revenue target for the March quarter.

The increase will be driven by our current WiFi 6 customer, shipments to our Tier 1 5G small cell network infrastructure customer, initial shipments of our new 5G mobile filters to two of our three announced 5G mobile customers, engineering revenue from multiple 5G RF front-end customers, network infrastructure providers, and our recently announced DARPA contract. I would now like to provide a quick update on the impact of COVID-19 on our business and markets. We continue to employ precautionary steps including selective remote work authorization and worksite isolation from outside visitors. The incredible flexibility afforded by our in-house manufacturing model in the current environment has allowed us to continue to develop and ship our products with minimal impact.

During the pandemic, Akoustis has continued to operate with all key personnel as an essential business in both New York and North Carolina and we continue to accelerate product development consistent with our strategic roadmap. We greatly appreciate our employees and value their flexibility and discipline in staying safe during this challenging time. It is difficult to predict how or if the ongoing pandemic will impact our customers' future production ramp timing or if we will be impacted by any supply chain disruptions going forward. Currently, we are experiencing a normalization of demand across our product markets including WiFi, especially given the emerging WiFi 6E standard and the demand for high-Q micro acoustic BAW filters that can address these new high frequencies.

I would now like to address our business performance by market segment beginning with 5G mobile. The December quarter was our most significant quarter to date in 5G mobile as we added not one but two new customers who plan to incorporate our XBAW filters in upcoming products targeting 5G handsets. The two new customers are in addition to the existing Tier 1 RF module maker that we had been working with for over a year. The mobile handset market is our largest potential BAW filter market opportunity by both unit volume and revenue and we continue to see a broad increase in interest and activity in our XBAW filters for the mobile market.

In fact, our XBAW filters have already been evaluated by several leading Tier 1 and Tier 2 mobile handset OEMs. As we have previously mentioned, entering the Tier 1 handset market in the near term would require a partner. However, we believe with our previously announced 500% capacity expansion of our New York fab, which we expect to complete by this June, that we will have the wherewithal to enter the handset market servicing our recently announced new RF customers and or several Tier 2 handset OEMs without a partner. Given the substantial interest in sales funnel activity for both our 5G mobile and WiFi 6E filters, we are planning to further expand our New York fab by doubling again our capacity by the end of calendar 2021 to support the ramp expectations of multiple 5G handset and WiFi 6E customers in calendar 2022 and beyond.

With respect to our first Tier 1 mobile customer, we have remained actively engaged in our currently developing new 5G XBAW filters for testing and approval which is expected in the first half of calendar 2021. We shipped initial samples of our XBAW filters to this customer in the second half of calendar 2020 and are currently executing against open purchase orders. Our second RF module customer which we announced in early November is moving quickly to develop a module for mobile applications using our XBAW filters. The customer's product is expected to be available for sale by the end of calendar 2021.

I am happy to report today that we successfully completed the first filter designed for this customer in the December quarter which was one of our stated milestones and this new design is currently running through our New York wafer fab. Finally, in mid-December, we announced a third Tier 1 RF solution customer. We are currently developing 5G mobile XBAW filters for this customer with the goal of entering commercial production in calendar 2022. Given early discussions with this customer, we believe our engagement may expand to include multiple filters for multiple bands in both 5G and WiFi modules.

As this customer sells into multiple handset OEMs, we expect that this customer could become a significant contributor to both filter volume and revenue in calendar 2022 and beyond. We currently expect to complete the first filter design and provide early engineering samples for this customer in the upcoming June quarter. As we have discussed previously. We have dedicated engineering resources to the development of advanced chip-scale packaging and wafer-level chip-scale packaging or WLCSP to address the next generation of 5G products.

One of our stated milestones for the December quarter was to deliver our first fully qualified CSP flip chip solution. I am pleased to announce today that the WLCSP process flow is now locked and we expect to complete technology qualification next month. Once qualified and released, we will be able to address the mobile market across our entire product line, given the significantly smaller footprint of our new packaged solutions which offer a 1-to-1 ratio to the size of the XBAW [dye]. To summarize our 5G mobile activity, we have multiple customer-funded filters in design.

We have announced three customer engagements: two Tier 1 RF component companies and one leading RF front-end module maker. And all three customer engagements are active with either the design or manufacturing teams within our company. And finally, we have just completed the development of our first chip-scale package and have additional designs slated for completion in the first half of calendar 2021. I will now discuss our achievements in WiFi.

We announced last week that we have successfully design locked our tandem 5.5 gigahertz and 6.5 gigahertz BAW micro filter solutions for WiFi 6E. The designs are breakthrough and very challenging given their wide-bandwidth requirement which is nearly 10 times wider than our first 5.2 gigahertz product for the WiFi 6 market. Further, it requires the development of high-performance piezoelectric materials and the associated modeling design kits to engineer these filter solutions. Clearly, this was one of the most important milestones we set for the December quarter as the enormous momentum in WiFi 6E continues to build both in the U.S.

and worldwide, as other countries are making room for extended WiFi above 5.9 gigahertz. WiFi 6E is emerging as one of our largest opportunities, driven by the rapid release and adoption of WiFi 6E CPE and evidence that handset OEMs are planning to incorporate the new 6E frequencies in 5G mobile devices. The new filters will now be able to target the router, cable set-top box, and other CPE markets as well as the future 5G-enabled mobile device market. Likely making the -- the WiFi 6E markets significantly larger than the current WiFi 6 market by both volume and revenue.

We have multiple active engagements in OEMs ODMs, SoC makers, and channel partners for WiFi sticks and now, WiFi 6E. We are now in the advanced stages of the sales cycle with several customers for WiFi 6E and expect additional design wins in the coming months. Specifically, last week, we announced a volume order from our first 5.5, 6.5 gigahertz tandem WiFi 6E solution from a new Tier 1 customer. The orders for multiple-user multiple-in-multiple-out or MU-MIMO consumer-focused router using multiple 5.5 and 6.5 gigahertz XBAW filters.

The customer expects to ramp this platform in the second half of calendar 2021. In the December quarter, we revised and improved our custom WiFi 6E filters for one of our two announced Tier 1 enterprise-class customers and delivered volume prototypes for their engineering builds. Both customers intend to use our standard 5.5 and 6.5 gigahertz XBAW filter products which we design locked last week. We remain on track with both customers and expect both to enter production once the respective product qualifications are complete.

Our WiFi 6 XBAW filter solutions entered the commercial router market in the December quarter as our high-profile Tier 1 consumer-focused customer began shipping finished products. The filters are being used in a tri-band MU-MIMO mesh router with multiple XBAW filters per device. Feedback from the customer continues to be extremely positive and discussions are already under way with increase unit expectations for next year. In addition, we have provided this customer samples of our standard WiFi 6E 5.5 and 6.5 gigahertz filters for potential use in future WiFi 6E platforms.

We have met all delivery expectations for our 5.2 and 5.6 gigahertz filters and I'm personally very proud of our design and operation teams that have successfully managed this first significant commercial production ramp during a pandemic. During the December quarter, we announced the addition of two new design wins with new WiFi 6 customers. The first design win announced during the quarter is for a gateway router product that will use multiple WiFi 6 XBAW filters for the MU-MIMO product. It is expected that this product will begin its production ramp late in the June 2021 quarter.

The second WiFi 6 design win announced in the December quarter is from another new customer which intends to use the 5.2, 5.6 gigahertz XBAW coexistence filters for a WiFi bridge product and is expected to enter production in the second half of calendar 2021. As WiFi is rapidly becoming one of our largest opportunities, I want to highlight that Akoustis is one of the first to market with both the 5.5 and 6.5 gigahertz BAW micro filter solutions for the rapidly developing WiFi 6E market which we believe will expand significantly in the calendar 2022 and beyond as 5G mobile device makers begin to incorporate the new WiFi 6E standard in smartphones, tablets, laptops, and other devices. To be clear, we believe that WiFi 6E will drive significant filter revenue and unit growth beginning in the current calendar year with significant growth in 2022 and beyond. To summarize our WiFi activity, we have four completed XBAW WiFi filters, two for WiFi 6 and two for WiFi 6E.

We have announced three design wins in WiFi 6, one of which is already in a commercially available tri-band mesh router. We have announced two WiFi 6E customers that are using our standard 5.5, 6.5 gigahertz solutions. We have signed a strategic purchase agreement in our building multiple custom 6E filters for a third enterprise-class customer. And finally, we have over 15 customer engagements in WiFi 6E, 10 of which have already place prototype purchase orders.

Next, I would like to discuss the opportunities in the 5G network infrastructure. Wide bandwidth, high-power handling, low insertion loss, and high out-of-band rejection are the core filter performance requirements for the 5G network infrastructure. Akoustis is ideally positioned to grow its market share in this segment, given our small form factor filter solutions in our growing portfolio of RF filters above 3 gigahertz where 5G is being deployed worldwide. We are currently designing and or shipping filters in three main segments of the 5G infrastructure market including small cell base stations, macro base stations, and Citizens Broadband Radio Service or CBRS equipment.

Additionally, we are watching closely the ongoing FCC C-band auction for 3.7 to 3.98 gigahertz spectrum which thus far has garnered more than $80 billion in gross bids. This will create yet another 5G network infrastructure opportunity for Akoustis and we expect to demonstrate XBAW filters addressing this new spectrum in the first half of calendar 2021. We continue to ship XBAW filters to our Tier 1 5G small cell network infrastructure customer in support of its initial ramp. We have shipped a total of 4 filters to this customer and have received three design wins.

The production ramp with this customer is presently slower than previously expected, given operator-driven network deployment and timing changes but we continue to expect to ramp production with multiple filters with this customer in the current year. We are currently on track to begin ramping our second small cell 5G network infrastructure customer with volume shipments in the first half of calendar 2021. The Citizens Broadband Radio Service or CBRS has emerged as a new market for Akoustis after the spectrum auctions that occurred this past summer. We continue to believe that the successful utilization of the CBRS bands within the five-gene network will require a significant amount of high-frequency filters and recent customer design activity appears to support our thesis.

We locked the design of our first 3.6 gigahertz CBRS XBAW filter in March of 2020 and announced our first order from a distributor in the September quarter to support promotion and customer engagements. In the December quarter, we received our first order from a leading wide-area network equipment provider for both CBRS infrastructure and customer premise equipment. We understand that this customer remains on track to begin the commercial ramp in the second half of calendar 2021. Furthermore, we're currently engaged with over 10 associate OEM and ODM makers for the development of CBRS networks using 5G and expect to have additional design wins in calendar 2021 and beyond.

One of our milestones for the December quarter was to complete the development of a macro base station filter for our first Tier 1 customer and design lock the product. We successfully delivered a new high-performance filter designed to this customer at the end of November and we'll update investors on the progress with this customer when possible. To summarize our 5G network infrastructure activity, we have five completed 5G network infrastructure filters, four for small so base stations, and one for CBRS. We have announced three design wins in a small cell with our Tier 1 customer.

We expect volume filter shipments to our second customer by June 2021. We have announced a CBRS order from a leading white area network customer for infrastructure and CPE. And finally, we have over 10 customer engagements, four of which have already placed purchase orders. I would now like to discuss our progress in our other markets segment.

During the December quarter, we were awarded a new multi-year R&D contract from the Defense Advanced Research Projects Agency or DARPA to further develop Akoustis' technology through the development of a Piezo MEMS process design kit or PDK for the company's proprietary and patented XBAW process. The direct-to-Phase 2 or DP2 contract is dedicated to developing a general-purpose PDK that will enable BAW and other similar MEMS structures to be designed and fabricated using the company's state-of-the-art patented XBAW process. The Piezo MEMS PDK under development will encompass all aspects of the process ranging from materials properties, process rules for stack dimensions, process control monitoring, design rule checking, and example device models. Upon successful completion of the DP2 program, DARPA has an option to fund a Phase 3 program.

This option supports multiple new customer engagements, leveraging the new PDK to create devices and circuits including RF filters using our company's XBAW process. We expect this will expand the opportunities for XBAW moving forward as other designers will be able to develop new products utilizing our novel piezoelectric materials and substrates outside the current devices which could lead to some new opportunities and adjacent markets. To summarize our other market segment activity, we have seven completed XBAW filters solutions completed for the civilian and defense market, we have one design win in phased-array radars and have -- and continue to ship production filters to our customer. We have already started and are currently progressing on our DP2 contract with DARPA.

And finally, we have a total of three customer engagements, two of which have already placed purchase orders or provided in our revenue. Now, I would like to turn the call over to Ken to go through select financial highlights.

Ken Boller -- Interim Chief Financial Officer

Thank you, Jeff. For the second quarter ended December 30, the company reported revenue of $1.3 million, which was an increase of 106% as compared to the previous quarter, and approximately 30% higher than our guidance. This revenue growth was driven by an 81% increase in our core shelter-related revenue on a sequential basis. On a GAAP basis, operating loss was $10.2 million for the December quarter, mainly driven by the labor of $6.3 million, depreciation of $1 million, and other operational costs totaling $2.9 million.

As a result, GAAP net loss per share was $0.30. On a non-GAAP basis, operating loss was $8.2 million and non-GAAP debt loss per share was $0.22. Reconciliation of these amounts to the corresponding GAAP measures was included in the press release issued this morning, available on the investor section of our website at akoustis.com. Capex spend for Q2 was $2.1 million, compared to $2.3 million in the prior quarter.

Mostly -- mostly related to the target 500% capacity expansion for the company's New York fab. Cash used in operating activities in Q2 was $8.3 million, compared to $7.9 million in the prior quarter. The current quarter included an increase in accounts receivable expected to be received in the following quarter and certain inventory build related expenses associated with our ongoing product ramp. The company exited the December quarter with $47.8 million of cash and cash equivalents versus $37.3 million at the end of Q1.

During the quarter, the company raised $20.2 million utilizing our APM program by issuing $2.3 million shares of common stock at an average stock price of $8.93. The company also took action to bolster its balance sheet by calling all $10 million of our October 2018 6.5% convertible senior notes for redemption. The notes were subsequently converted into shares of common stock. Separately this past week, we delivered a notice of redemption to the holders of our $15 million principal amount of May 2018 6.5% convertible senior secured notes.

While there is still some uncertainty regarding the timing of customer production ramp due to COVID-19, our visibility continues to improve given the rollout of 5G and new WiFi platforms. We currently expect to report strong revenue growth in the March quarter in the range of $2 to $2.5 million. We're up 70% at the midpoint. We are fully booked for the midpoint of our revenue target for the March quarter.

I would now turn the call back over to Jeff to discuss our future milestones.

Jeff Shealy -- Founder and Chief Executive Officer

Thank you, Ken. Our backlog and sales funnel continue to grow as we enter commercial production across multiple markets and layering new customers across each of our market segments. In the March quarter, we expect to generate revenue from each of our business segments including 5G mobile, WiFi, 5G network infrastructure, and other markets including defense. We continue to strive toward executing on our targeted milestones and we'll continue to keep you informed of our progress.

Our March 2021 milestones include qualification of our first wafer-level packaging solution; shipment of a 5G mobile filter design to our second RF front-end module customer; release of the XBAW filter design for our third mobile customer; we expect to announce our first design win in WiFi 6E; and finally, we plan to receive at least one design win for the CBRS market. Looking slightly further out, our calendar 2021 milestones include the -- the design lock and commencement of production with our second RF mobile module maker; the delivery of compliant XBAW filters to both our Tier 1 RF mobile customers; next, we expect to ramp production with multiple WiFi 6 and WiFi 6E customers including three announced Tier 1 WiFi 6E customers; we plan to complete product qualification of CSP and WLCSP XBAW package filters for 5G mobile, 5G infrastructure, and WiFi; and finally, we expect to ramp production with multiple 5G and CBRS infrastructure customers. In conclusion, we continue to work diligently to achieve each of our stated objectives and we will continue to update you on our execution against these objectives going forward. Our growing XBAW filter product catalog puts us in a great position to grow revenue by more than 70% sequentially in the March quarter as reflected in our guidance and we look forward to expanding our filter catalog as we progress through 2021.

To support our current engagements in emerging sales opportunities, we have been working diligently to expand our capacity by 500% to be able to produce hundreds of millions of XBAW filters per year. Given the expected ramps in both 5G mobile and WiFi 6E in calendar 2022, we now plan to double this output once again by the end of calendar 2021. We continue to add key hires across our sales, design, and manufacturing teams. Beyond our current expansion plans, the company is positioned to scale as our New York fab can ultimately produce up to 5 billion XBAW filters per year when fully equipped.

I would like to thank those who have joined us on the call today. We continue to build our company around our core belief, in strong management and technical staff, strong intellectual property which currently includes 38 issued and license patents and 74 patents pending, margin growing markets with limited historical competition in the high-band and ultrahigh-band spectrum, and our qualified wafer manufacturing operation which has now proven to deliver volume quantities of XBAW filters and is expanding to address high-growth opportunities in our target end markets. Finally, I remain especially grateful to our employees for their hard work, passion, and dedication throughout 2020, particularly, during this ongoing pandemic as our team has kept the momentum going on our R&D which has led to multiple design wins across the WiFi, 5G network infrastructure, and defense markets. We've also experienced exceptional momentum in the 5G mobile market, driven by our leadership in filters that can operate above 3 gigahertz in our new and expanding wafer-level packaging capabilities.

I also wish to thank our shareholders who continue to support the company. And with that, I would like to open the call for questions from the investment community. Operator, please go ahead with the first question.

Questions & Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator instructions] One moment please while we poll for your questions. Our first question comes from the line of Suji Desilva with Roth Capital.

Please proceed with your question.

Suji Desilva -- ROTH Capital Partners -- Analyst

Good morning, Jeff, Ken, Dave, Tom. I'm very happy to see the progress you guys are making in revenue, it's well deserved. A couple of questions. The -- the WiFi segment, I believe, three revenue customers and I think you said 15 in the pipeline perhaps 10 prototype orders.

Just help me if I got those numbers right. And more importantly, you know, what portion of those do you think can ramp revenues for you guys by the end of '21? Just give us some ballpark idea and the factors there in that ramp, 6 versus 6E other factors. Thanks.

Jeff Shealy -- Founder and Chief Executive Officer

Hey, good morning, Suji. This is Jeff. I appreciate your comment and I'm -- I'm going to turn it to -- to Dave just read through the color on the WiFi. And maybe I'll have a few comments with him.

Dave Aichele -- Executive Vice President of Business Development

Morning, Suji. So, the activity you estimate is correct, you know, we've got three engagements on the WiFi 6E and we've got -- we have three engagements with WiFi 6. We're ramping in production right now, one of the WiFi 6, and we have two more that should be ramping, you know, in the -- by June 2021. A majority of the activity that we highlighted on the additional customers in the WiFi 6E is going to happen in the second half of the year.

So, if I was to give a ratio, it's you know, probably, a larger percentage would be to the WiFi 6E once it starts really ramping in production the second half. So, yeah, we should have a combination of both, you know throughout 2021 with the majority picking up in the second half with WiFi 6E.

Suji Desilva -- ROTH Capital Partners -- Analyst

OK, great. Helpful color. Go ahead, Jeff. I'm sorry.

Jeff Shealy -- Founder and Chief Executive Officer

Yeah. I -- I just wanted to add to that. You know, we've had a very successful ramp in WiFi 6 that same customer have also as -- as a follow on the program in WiFi 6 as well as the new program in 6E. So, there -- we've been providing parts to support all of those programs.

So, just a little bit of more color. You see, customers that are continuing WiFi 6 evolution, you see, customers that are in WiFi 6 that are building hardware that containing both 6 and 6E configurations. And then also customers that are exclusively working on 6E. So, there's kind of a field that is pretty diverse but -- and I think, with the customers that we're talking about we also see as many as three platforms per customer in terms of different -- different platforms that they're launching over, you know, the next 12 to 18 months.

So, it's a -- it's a -- it's very robust from a sales activity and you know, we're very pleased with the portfolio that we have that we can service both WiFi 6 and WiFi 6E at this point.

Suji Desilva -- ROTH Capital Partners -- Analyst

Yeah, great. It sounds like a very exciting opportunity. And another question on the smartphone market. It sounds like you have a smartphone OEM and a module provider.

I just want to understand which one was potentially larger and how long will it take for the module customer to get their own OEM customers to qualify the product? What's the cycle there?

Jeff Shealy -- Founder and Chief Executive Officer

OK. I'm going to start here and I'm going to ask Dave to chime in. So, first I want to clarify what I said in the script. I think I had the -- the numbers flipped.

So, it's two RF are in customers in mobile and one RF component customer. So, your question was regarding the -- the RF component customer that they've talked about and what that sales cycle looks like.

Dave Aichele -- Executive Vice President of Business Development

Yeah. So we've, you know, the activity that we've got going in the mobile is primarily focused on supporting, you know, those three customers that Jeff just mentioned. We do have some activities talking with the mobile phone OEMs as well. And those are focusing more on the Asia market where there is an opportunity for discrete BAW filters with respect to, you know, the -- the, you know, one of the three customers, you know, we could see something in the second half of this year depends on, obviously, the development of their module and getting it into the market and getting it into certain models.

There are proven suppliers to the market. So, that's, you know, something that we're taking advantage of and also having access to, you know, the BAW technology which we're the only noncaptive premium BAW provider out in the market now that we've got a WLCSP platform. You know, this will accelerate, you know, the development within customers. With regards to the other ones, you know, we still have to deliver compliant products to them or compliant designs to them.

And the intent would be to see something in, you know, the 2022 period calendar year. And so again, depend on, obviously, their success in designing it into a mobile phone OEM but these guys are well-known in the industry and service multiple customers in that market segment.

Suji Desilva -- ROTH Capital Partners -- Analyst

OK, great. Thanks for all the color. Congratulations again, guys.

Jeff Shealy -- Founder and Chief Executive Officer

Thanks, Suji.

Dave Aichele -- Executive Vice President of Business Development

Thanks, Suji.

Operator

Thank you. Our next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed with your question.

Harsh Kumar -- Piper Sandler -- Analyst

Yeah. Hey, guys. First of all, congratulations. This just tremendous.

I mean, literally watching this company, you know, become -- become very meaningful. So, congratulations. I had two questions mostly strategic. Jeff, if I could ask you, you know, there's lots of stuff going on, right? You got different end markets, lots of actions.

So, could you maybe rate the quarter for us how -- on the order of attractiveness, how you see some of the end markets in which one you would prefer if you had your way, which one would you prefer over the others if there's anything like that? And then I've got another one.

Jeff Shealy -- Founder and Chief Executive Officer

OK. Good morning, Harsh and I appreciate your comments, and thank you for this. In terms of attractiveness, we've stated previously that the mobile market by -- in terms of unit volume and -- and the overall size is the most attractive to us. That we're in -- that certainly remains so.

And you know, we've talked about so many activities that we've had -- WLCSP to enable us to get into that market that's -- that's, you know, been a key development this year. But most mobile markets -- also the WiFi market would come very quickly after that. We've -- in terms of the mobile market that's for us a little bit betting on the income in terms of the growing number of engagements. We've got three now and that will -- but the WiFi market is one that we've currently ramped.

It's one we've -- we've taken, you know, our -- our XBAW technology and ramp it in a high-volume production over a period of a month, which as we said in the script, we've executed and we believe bri -- brilliantly in that market by delivering volume quantity in that market. You know, one of the things that we really love -- our -- our markets that are being disrupted. I think, WiFi, I see, is a big disruptor and you know if you look at the products that are required for WiFi 6E they require as much as 10 times the bandwidth of what we -- what we had to deliver in a WiFi 6 market for 5.2 gigahertz. And so, we see a very dynamic market there, one that's going to have a lot of minute volumes that would also going to adapt, we believe, into the mobile.

So, it's got kind of a dual significant size in that regard. And then the 5G infrastructure, we've talked about the traction in the small cell. And we did see some slowdown in that market in 2020 but we think that's going to pick up pretty dramatically in 2021. So those are -- those are all the big three.

And then, the other derivatives market certainly the best market at some attractive as it to us because it's very high performance-oriented and also they weren't really cutting-edge type filters and in -- for Phase 3 applications they need high power and that's are areas that we excel at. So that's kind of a secondary one but still a lot of factors. Ultimately, what we need to do more is to show as factors back to New York. That's what we're focused on.

We're focused on expanding our capacity to get there. And but that's -- that's our recipe for success here and in -- in our business.

Harsh Kumar -- Piper Sandler -- Analyst

Hey, Jeff. Thank you for the color. So, piggybacking off that question. Mobile, you know, all of a sudden has gone up in your eyes quite dramatically.

I think, last year you guys were saying that you would not enter it without a partner because the capital requirement -- you've -- you've seemed to overcome the -- the capital requirements piece, you're doing very nicely in the capacity piece. I guess the question is, is it just from the infrastructure scene that you've felt like having a partner would limit your opportunities? Is that what happened? Or was there some other logic to -- to just going in about on your own?

Jeff Shealy -- Founder and Chief Executive Officer

So, I think for the -- for the mainstream the Ter 1 market, it's still a partnership. What we're seeing with two to three customers is that their business is at a -- is at a magnitude that we actually can bite off and chew. So, setting aside the opportunity is -- is meaningful to us as we're scaling up. So I think, you know, as the December quarter what it -- what it brought to us was two new customers in that category that allow us to play.

We -- we still have Tier 1 front-end engagement that has taken some steps to accelerate and we'll see where that engagement goes. But I think, you know, for that extremely high volume it's going to be through -- it's still going to be through a partnership. And you know, we've -- we've got adequate relationships. We think that is ongoing now, that can ultimately drive there.

But if the two -- the two opportunities in mobile that we announced in the December quarter were the ones that we can we can manage without a -- a -- a very large partnership that required dramatically increasing the scale of other capacities of the factory in New York.

Harsh Kumar -- Piper Sandler -- Analyst

Understood. Thanks, Jeff. Congratulations, again.

Jeff Shealy -- Founder and Chief Executive Officer

Thanks. Thanks, Harsh.

Operator

Thank you. Our next question comes from the line of Anthony Stoss with Craig-Hallum. Please proceed with your questions.

Anthony Stoss -- Craig-Hallum -- Analyst

Good morning, guys. My congrats as well to the entire Akoustis employee base. It's nice to see the hard work really starting to pay dividends. Two for Jeff and a follow up for Dave.

Jeff, on the doubling of production by the end of 2021, do you foresee any issues in lead times and getting that capital equipment installed and -- and ready to produce? And then also, I'd love to hear an update kind of where you see the competitive landscape at this point especially on the WiFi side. And then I'm going to follow up after that.

Jeff Shealy -- Founder and Chief Executive Officer

OK. I appreciate your comments and good morning, Tony. In terms of procurement challenges for -- for expansion, one of the things that we've been, you know, one of the things -- strategically we've done has really looked out as what lead times have done. I can tell you one on some of the longer lead times we've seen -- we've seen, you know, maybe one to two months type of adjustments in lead times.

When we've mitigated that is we looked at -- we look at that select category very long lead times tickets and we are -- we already -- and we pull the trigger on bringing those in. So, that's -- that's one way we've managed the -- the lead time challenge there. The other challenges in terms of capacity expansion have been bringing outside installers into our path in order to install the equipment but we definitely have solutions saying, off-hours, the weekends to, you know, to enable us to remain compliant from a regulatory standpoint bringing those -- those outside in and also keeping our employees safe. So, we've take them -- we work them off schedule and off-hours in order to achieve that.

Overall, we think we're in a very good position in terms of lead time for this expansion. And you know, the other -- the other aspect is not always just leave tons of equipment. We have to recruit and bring in the labor for the added shift. And so, we make significant progress on a second shift in the -- in the second half of 2020 and we're going to continue, you know, we've -- we don't see -- foresee any major problems there filling up those shifts with additional capacity.

In terms of the competitive landscape, what I would share is that you know, we're not the only on seeing the attractiveness of the WiFi market and in the dynamic. Clearly, that was in our top two and it really does helps back in the mobile. So, what I would think from a competitive landscape standpoint is that the industry never stands still. This is always the case.

What we have to do is not stand still either and I hope from what we've reported to investors today, you know, investors can just judge for themselves but we're -- we're not standing still either. But in terms of specific competition, we don't comment on any specific competitors. What I would say is that the burden has gone up to produce state-of-the-art filters and -- and do those in a -a a timeframe that allows our customers to compete. And so, that requires rapid response and rapid prototyping and really gearing to a very short time span in order to allow our -- our customers compete.

So, you said you had a question for Dave or any follow-up?

Anthony Stoss -- Craig-Hallum -- Analyst

Yeah, no thanks for that detail, Jeff. And then, for Dave maybe you might want to comment on just overall where you're seeing changes on the content side. How many BAW filters for -- per device in the WiFi 6E side and how important you think wafer-level packaging might be even just for that WiFi marketplace?

Dave Aichele -- Executive Vice President of Business Development

Good morning, Tony. Good question. You know, with WiFi 6, you know, it -- we rely to the market there and, you know, the DR and LTCC-type filters had created a, you know, a pretty strong position but we had success and we continue to have success in that market segment. On the WiFi 6E, it definitely is playing in our favor, you know, with the high-Q acoustic BAW technology.

The spectrum is more challenging there for the other technology to be able to hit that coexist requirement, you know, of 110 megahertz split between the two bands. So, that's something that, you know, the content-wise, we are seeing that there's a good mix of two by two MIMO and four by four MIMO that's playing there, both on the enterprise and the retail. And then, that the, you know, that the interest level as you can see in our -- our announcements is that, you know, we've got over 15 engagements there and 10 of them have already placed orders and we just locked the design and, you know, we're gonna be providing preproduction parts in this coming quarters so there's a significant pull. And the main reason is that we enable that channel 15 and the 6 gigahertz spectrum, you know, that nobody else does from a, you know, they can from a DR ad LTCC.

So, that -- in addition, the poll that we're seeing in the mobile side, you know, as WiFi 6E and not just on the smartphone but also in, you know, potential tablets and laptops is a big play for the other BAW technology and that's where we'll need to WLCSP. So, we could utilize the WLCSP and our -- our modules that go into CPE. You know but that may give us some advantages in performance but size is not as critical as it is in the -- the mobile be it, you know, smartphone or tablet and laptop. And you'll see more announcements, you know, of product being released with WiFi 6E and just like in 5G, some of them won't have as -- as rigid or as I guess higher performance on the filtering for their initial model but they'll need to -- to integrate it with higher performance filters if they want to meet the requirements, you know, for those standards.

Anthony Stoss -- Craig-Hallum -- Analyst

Thanks. Best of luck, guys.

Jeff Shealy -- Founder and Chief Executive Officer

Thanks, Tony.

Operator

Thank you. Our next question comes from the line of Rick Schafer with Oppenheimer. Please proceed with your questions.

Rick Schafer -- Oppenheimer & Co. -- Analyst

Hey. Good morning, guys. And I'll add my congratulations as well. You know Jeff, I guess I got a -- just kind of a two-part for you first.

I mean, you've talked in the past I think about having a sort of at least a 12 month lead in -- in WiFi 6. I mean, do you feel like you've got similar or possibly longer lead in 6E. And it's sort of second part of that question. You sort of, you know, assuming WiFi is set to lead growth this year which it sounds like it is.

What would you consider sort of a dark horse for you guys for this year for upside? I mean, would it be, you know, the handset business ramp up a little quicker. Could it be CBRS after the, you know, cable guy that he just spent $4 billion on spectrum? So, I'm just curious -- kind of your -- your take there?

Jeff Shealy -- Founder and Chief Executive Officer

OK. Good morning, Rick, and thank you for the comments at the beginning. In terms of product lead in the market, I'd say there -- there in WiFi 6, we do see competitive parts better in that marketplace. That, again, is -- is a type of situation where we also have -- have redesigned some of our parts to improve their competitiveness.

And that's -- that's really how the game is played, once you commit to a particular market as you make -- if you make constant improvements to the product or forward and we -- we certainly have done so with our WiFi 6 products. In terms of WiFi 6E, one of the things that's pretty interesting to me from a standpoint is, as I mentioned earlier, the -- the bandwidth requirements are 10 times that of -- of the narrowest WiFi 6 product that you have to produce. That's not just a circuit design, that's a complete redesign of -- of materials you're looking at in the 6 gigahertz band, nearly 1,200 megahertz a bandwidth. That is despite 5G seems trivial.

So there are very few competitors that -- that I believe could even pull that design off. Nonetheless, as I said previously from a competitive standpoint the industry never stands still and -- and nor do we. So, hard to gauge you on that. I think, with the magnitude of interest in 6E, I wouldn't be completely shocked if a -- a competition is not those that have the opportunity to produce those parts or are building in deciding 6E products but we'll see what comes out.

We always take the approach of, you know, don't -- don't sit and stare at what the competition's doing. Make them sit and stare at you. So, in terms of let's go execute on our end and we think the rest will take care of itself if -- if we're able to package the technology and -- and deliver the performance requirements in a short period of time. To your second question, in terms of any dark forces or outside, you mentioned -- clearly -- clearly one that is -- is really has materialized during the last quarter, it's been the mobile.

We mentioned two additional customers coming on board, pretty aggressive schedules. However, they're -- they're working -- they really work in our favor because they're working at frequencies we think we're already pretty good at in terms of these -- these overhyped and 5G frequencies where we already have models in place. We already have products in very near its frequencies they're looking at playing. So, those are -- those are really tight opportunities in that they're both and that they've got, you know, they got very tight schedules and in short triggers so when they want to move.

You mentioned the CBRS. I think, that's clearly another one. If you look at, you know, that one -- that was really the best -- last summer with that spectrum and the, you know, 3.6 gigahertz range. I think another one that's kind of a dark horse to be looked at is the C-bar -- excuse me, the C-band auction, I mentioned that in the comments, that spectrum, and the 3.7, the 3.9 gigahertz that's for 5G.

There's a massive amount of -- that's -- the amount of market in that auction thus far is pretty staggering, it's over $8 billion. So, that's clear -- it's clearly going to have some impact we believe on the 5G spectrum. So we're already -- as we said in the prepared notes already designing filters for that that we think are going to be available this first half of this year. So, you know, one of the other dark horses that we're on the subject is, I think, there's a nice opportunity of platforms that are using both WiFi 6 and WiFi 6E and being able to, you know, it's -- it's not exact -- not all custom -- not all of our customers are doing parts which oversee 6E.

They're going kind of bridge-type device that -- that use both WiFi 6 and 6E. So, I think we'll see more like how our WiFi 6 products at the market evolve to 6Es. So that -- those all are all positive things. Dave, you may want to add to that -- on the dark horse?

Dave Aichele -- Executive Vice President of Business Development

I think, the only other thing maybe I touched on a little bit ago too is -- is in the mobile sector, you know, with laptops and -- and tablets. That's an area that we haven't talked too much about and there are, you know, interests that we're seeing in the market, particularly, around WiFi 6E. So I think, you can see some activity picking up the second half of this year around that sector as well.

Rick Schafer -- Oppenheimer & Co. -- Analyst

Thank you, guys, thanks. Thanks, Jeff. Just a quick one on the capacity announcement. I mean, I think, please let me hear from -- if I may correct but I think you recently targeted sort of 200 to 300 hundred million filter capacity by this summer.

So, I guess is that correct? And so, we should be thinking sort of 400 to 500 million filters by end of the year in terms of -- of capacity. And then -- and then, what does that mean for -- for your capex plans this year?

Jeff Shealy -- Founder and Chief Executive Officer

Yeah. I -- I think the -- the, you know, we're -- we're targeting very clearly by the end of the year. So, your -- your assumption is -- is correct. You know, we don't -- we're -- we're careful not quoting an exact number but certainly in that 4 -- 400 million-plus call it 400 to 600 million type capacity, it would be in that range.

There are still some bottlenecks and incremental bottlenecks that we can address eke out more -- more capacity. Clearly, a focus on our end on -- on staffing out all four shifts in order to maximize their capacity. So, there are some things that -- that we could do incrementally that -- a lot of large -- the large equipment that we have in the past can do significantly higher but we get these bottlenecks that we have to -- we have to address, some of that can be done through automation, other is through smaller capital equipment. And then obviously, the -- the labor built up piece of that.

So, it also depends on the mix and -- and how many -- have you know the mobile market is going to have it's -- if its -- it clearly has the smallest chips that you get more for wafer. So, there's a lot of different ways to calculate the number but overall, I think your -- your comments are correct.

Rick Schafer -- Oppenheimer & Co. -- Analyst

Thanks.

Jeff Shealy -- Founder and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Cody Acree Loop Capital. Please proceed with your question.

Cody Acree -- Loop Capital Markets -- Analyst

Thank you and congratulations guys and the entire team. Maybe if I could just touch on opex with the ramp through '21 passed of the end customers. What is it to be opex budget look like for the year? Maybe your thoughts on cash burn as well for the year.

Jeff Shealy -- Founder and Chief Executive Officer

Hey, hey, Cody, good morning. Jeff, I'm going to hand it off with Ken. Let him comment.

Ken Boller -- Interim Chief Financial Officer

Good morning, Cody. As Jeff mentioned, we are ramping up our capacity expansion over the next -- throughout calendar year '21 to yet double again. So, we will be bringing on additional shifts, and the way we handle that is we typically -- we bring in new employees, it's usually a quarter ahead of when the capacity need is -- is required. So, we will be bringing in additional costs to fund that capacity expansion.

But we'll be prudent and we will do so when we have line of sight to revenue. They'll be looking, like I said, about a quarter ahead of time when we expect to incur those costs. And then, obviously, as we utilize more capacity in our -- in our plant the operating cash flow burn itself will come down. And we mentioned before, we get to the $12 to $15 million in revenue.

We would expect to be operating cash flow breakeven at that point depending on mix.

Cody Acree -- Loop Capital Markets -- Analyst

Any, any specifics that you're thinking about as -- as far as your capex ramp through the year?

Ken Boller -- Interim Chief Financial Officer

Yeah, I think, well, we stated before, as far as the initial 500% capacity expansion, leave about $4 to $6 million left on that spend, an additional about $9 to $10 million to get double again to get to -- to what we talked about earlier 400 million filter-ish range. A lot of those items that we discussed earlier were, you know, we purchased the equipment and they really had the capacity to use that backup -- to do that level filters. So, we're talking about now of some of the less lead time items and bottleneck areas that get double again our capacity throughout the calendar year 2021.

Cody Acree -- Loop Capital Markets -- Analyst

Do you expect to be in cash breakeven in the same level that has been discussed before?

Ken Boller -- Interim Chief Financial Officer

Yes. As I've stated earlier, I think, our models still indicate that we'll be operating cash flow breakeven in the $12 to $15 million of revenue. And some of that depends on whether it's a lower and the higher end depending on the mix of what we're selling during that quarter.

Cody Acree -- Loop Capital Markets -- Analyst

And then lastly, Jeff, can you just talk about maybe for Dave as well just the overall implications of the CBN auctions, are they all placed to -- to your sweet spot of filter, your -- your capacity or your -- your capability today. But as you go forward, do you expect that C-band opens up significantly more spectrum for you? Or is it going to become a larger market driver, maybe then, what handsets would have otherwise, and then what do you think that does to 5G in millimeter-wave?

Jeff Shealy -- Founder and Chief Executive Officer

OK. So, about to unpack there but let me -- let me jump into it. I just was scribbling notes here just to make sure I try to address it. So, your first piece was there on the C-band auction -- I'll comment and I'll get Dave to jump in here as well.

In terms, of the C-band auction -- that if you look at how we've been planning, you know, planning our capabilities and -- and our technology around those necessary capabilities. C-band auctions -- those that aren't too familiar with it, it's -- it sits right in the -- n -- n77. It's right -- it's right at the high end of n77. So that's been a band that -- that's been of interest to us.

The interesting about -- the interesting thing about n77 is it's extremely wide bandwidth so we've been developing materials that are necessary to be able to address a very wide bandwidth within the overall IP spectrum including n77. So in terms of our capabilities, it's right in the bull's eye of where we've been developing. I'll remind you that the first product the company made was it and delivered into the market was the phased-array radar filter at 3.8 gigahertz which is right at that band. So we -- we've -- we've been developing models designed kits capability and expertise at these higher frequencies all throughout the life cycle of the company.

In terms of it being a larger market, I think, in terms of the deployment in the market, I think there are great indications by virtue of the magnitude of what's going on at auction that it's going to be deployed. There's a whole -- there's a whole load of filters that are going to be required for that -- for that particular band both in the infrastructure as well as in the mobile area. So it -- it really falls within the sweet spot when you couple in our wafer-level packaging capability we're bringing on. In terms of what that does for 5G in millimeter wave, I think, there is a -- from -- certainly, from my perspective that the sub-6, sub-7 gigahertz technologies are -- are by far easier to implement for -- in the mobile environment than a millimeter-wave.

There's just a lot of challenges with -- with no net weight in a mobile environment that are -- that are just challenging to overcome. So, I think, from a more reliable standpoint, the sub-6, sub-7 gigahertz frequencies are really -- certainly going to be deployed. There's certainly a role promoting the wave but it's -- it's for a fixed type of backbone -- for the fixed backbone of 5G. It is a clear business case for that but in a -- so that's more of a point-to-point type use whereas the local environment is -- is very much a dynamic, the one that creates challenges for millimeter-wave.

So, back to your fact that the C-band, I think, it's going to play a significant role in 5G and we -- we believe we've got the technology and capabilities to address that market. Dave, you want to comment on that?

Dave Aichele -- Executive Vice President of Business Development

Yes, Cody. I just add a couple more points. I think, Jeff highlighted that we've been focused on that 3.8 gigahertz and developing the technology several years back. Additionally, we've been shipping 300 megahertz solutions in the, you know, that n77 band yet to the Asian markets.

And so, this new spectrum is, you know, 280 megahertz. So you know, we just shipped this up new designs and we've been talking to the providers in the market and we've also been talking to the -- the key OEM service in the North American market as well. So, this is a huge play and we've got a pretty good line of sight on the technical requirements. Obviously, the shakeout, you know, as far as who bought whatand, you know, who's going to win the contract still got to happen but we believe, as Jeff highlighted, it's going to be a pretty significant market opportunity for us on the infrastructure side.

You know, the mobile will follow then thereafter. It will, I believe, get into the millimeter market based on, you know, the spectrum that becomes available. It's easier from a technology standpoint to deploy, carries the similar band. Not as good as bandwidth but has better bandwidth then obviously the legacy frequency spectrum.

So we think, this will be a -- we're bullish on, you know, what will happen over the next several years with this sector.

Cody Acree -- Loop Capital Markets -- Analyst

Great. Thank you, guys. Congrats.

Jeff Shealy -- Founder and Chief Executive Officer

Thanks, Cody.

Dave Aichele -- Executive Vice President of Business Development

Thanks, Cody.

Operator

We have reached the end of the question-and-answer session. I would like to turn to back over to management for any closing comments.

Jeff Shealy -- Founder and Chief Executive Officer

Hi. Thank you all for your time today. We, of course, speaking with you during our next update call to discuss the current quarter execution against our milestones and future expectations. I want to wish everyone a -- a safe and healthy week and we look forward to following up soon.

Thank you very much.

Operator

[Operator signoff]

Duration: 68 minutes

Call participants:

Tom Sepenzis -- Director of Investor Relations

Jeff Shealy -- Founder and Chief Executive Officer

Ken Boller -- Interim Chief Financial Officer

Suji Desilva -- ROTH Capital Partners -- Analyst

Dave Aichele -- Executive Vice President of Business Development

Harsh Kumar -- Piper Sandler -- Analyst

Anthony Stoss -- Craig-Hallum -- Analyst

Rick Schafer -- Oppenheimer & Co. -- Analyst

Cody Acree -- Loop Capital Markets -- Analyst

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