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Good day, and welcome to the Netlist conference call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead.

Thank you, Dave, and good day, everyone. Welcome to Netlist's conference call to discuss the strategic alliance with Samsung.

On today's call will be Chuck Hong, Chief Executive Officer of Netlist; Gail Sasaki, Chief Financial Officer; and Richard Kim, Vice President of IP Strategy. As a reminder, you can access the press release and a replay of today's call on the Investors section of the Netlist website at netlist.com.

Before we start the call, I would note that today's presentation of Netlist's news and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of a number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements.

I will now turn the call over to Chuck.

Thanks, Mike, and hello, everyone. We're speaking with you from Seoul, Korea, where it's late Wednesday evening. Earlier today in the U.S., we announced a landmark 5-year strategic alliance with Samsung for advanced memory technology, agreements that represent a major milestone for Netlist and one of the most significant patent license arrangements in the memory industry. The agreements include a patent portfolio cross license, memory product supply, technology cooperation and Samsung becoming a shareholder of Netlist. This renewed partnership with Samsung, the preeminent leader in memory, represents a vital first step forward for Netlist. It validates the strength and importance of our intellectual property, including patented server DIMM and High Bandwidth Memory technologies that are foundational to AI computing. It also recognizes the value of -- the value that Netlist brings as an operating company through our products and long-standing innovation in advanced memory.

I'll now turn the call over to Gail and Rich for the details of the agreements signed by the companies. Gail?

Thanks, Chuck. Under the cross-licensing agreement, Netlist will receive an upfront license fee of $200 million after withholding of Korean taxes or $239 million gross. In addition, Netlist will receive 20 recurring quarterly license fees of up to $27.5 million, also net of tax or $32.9 million gross calculated in accordance with the revenue-based formula. Over the 5-year term, this represents aggregate net license fees of up to $750 million or gross license revenues of up to $897 million. Under the supply agreement, Samsung will supply Netlist with up to $300 million of memory products annually and up to $1.5 billion over the 5-year term.

This supply includes DRAM and NAND raw materials used to build Netlist's proprietary solutions as well as standard memory and storage products from Samsung for resale to our customer base. We believe this agreement provides critical sourcing assurance for our product business at a time of historically high demand and significantly constrained memory supply amid the build-out of AI infrastructure. In connection with the memory product supply agreement, Samsung will become a shareholder in Netlist through the purchase of 10 million shares of Netlist common stock, subject to standard lockup provisions. We believe Samsung's investment further aligns the interest of the 2 companies and strengthens the foundation for our relationship in the years ahead.

I will now turn the call over to Richard Kim, our Vice President of IP Strategy.

Thank you, Gail, and hello, everyone. As part of the overall deal, the parties have agreed to a settlement and release of pending legal proceedings between Netlist and Samsung. Netlist, however, will continue to defend its patents in connection with Federal Circuit appeals and IPR proceedings that involve or impact other parties in addition to Samsung. We have also entered into an ITC cooperation agreement, under which Samsung will provide certain information and declarations that Netlist may use in future ITC actions against third parties. We believe the unauthorized use of Netlist's patented technologies remains widespread across the memory industry, and these agreements will allow Netlist to now focus its full attention on other infringing parties. Netlist remains committed to protecting our intellectual property and preventing the unauthorized use of our IP will continue to be a strategic priority.

I will now turn it back over to Chuck.

Okay. Thank you, Rich. Over the past several years, we have worked with discipline and focus to reach these important agreements. On an annual basis, this transaction ranks among the largest patent license arrangements in the memory industry. That scale reflects the significant value of Netlist's IP portfolio at a time when advanced memory is becoming increasingly central to AI computing and data center infrastructure. Today's announcement is an important milestone. It establishes a recurring high-margin revenue stream and secures memory supply while advancing a broader strategy to leverage Netlist's product capabilities and IP leadership to position the company for sustainable long-term growth in AI computing. As part of these arrangements, the companies will jointly explore areas of technology collaboration on an ongoing basis.

Samsung is a global leader in memory and also brings unparalleled resources and capacity in ASIC design and semiconductor foundry. Netlist continues to invest heavily in R&D to develop unique memory architectures, including hybrid CXL and low-power MRDIMMs. I believe this alliance creates meaningful opportunities for the 2 companies to leverage their respective strength in advanced memory and next-generation computing.

Finally, I want to thank our team for their dedication and our shareholders for their continued support and patience. We understand the importance of your investment and the trust that you have placed in Netlist and its vision. Today's announcement is a meaningful step forward, and we remain focused on executing our strategy and building out sustainable long-term value. Thank you for your continued interest in Netlist. We look forward to updating you as we execute against these agreements and continue advancing our business plan.

Operator, we're now ready for questions.

[Operator Instructions] Our first question comes from Suji Desilva with ROTH Capital.

Chuck, Gail, Richard, congratulations on the deal and you and all the team on the validation of all the hard work and technology you guys have built.

Thank you, Suji.

Thanks, Suji.

So first of all, Chuck, maybe if you could talk about the timing of Samsung setting up this deal with you guys? Maybe why now? Obviously, the memory industry is strong and you had the ITC cases, but any color there would be helpful just to understand the context.

Yes. I think it is helpful that the memory for AI is a hot topic. Supply is short. Demand is at historical levels. I think that's part of it. But I think the biggest reason is the years of confirming the importance of our patents through the judicial system. We've gotten multiple rulings, verdicts confirming that, the dollar values through the district courts. And I think the industry recognizes. This is not the first time Samsung has licensed. Hynix is licensed. So the industry has recognized that our IP is integral to building these products on which many of the players now are reaping historical profits from.

So yes, I think it also speaks to the tenacity and the single-minded pursuit of protecting what we know to be our technology that's being implemented widely. Without the ability to pursue that through the courts, it takes a long time, takes a lot of resources. But without the commitment to doing that, I don't think we would have seen this agreement as we see it today. So a confluence of events, but most of it comes down to the fact that there is clear technology that we own that is being used by the biggest memory manufacturers in the world.

Great, Chuck. And obviously, Samsung is a clear validation of that as a memory leader.

Second question with the resale agreement, the 5-year agreement there. In the past, the resale agreements have taken time to ramp up to the annual amounts. Do you expect this time, there will be anything preventing that resale agreement from kind of kicking off right away? Certainly, the demand is there, but any color there would be helpful.

Yes. I think with the supply being so constrained at this time, it practically will take 2, 3 months before we see the products flow. Yes. I think what we're planning to do is to not only resell, but -- the Samsung products, but to take the memory components, DRAM components, NAND components and incorporate the raw material into our specialized, our custom memory products and do more of that value-added products business. And that is the goal and to continue to increase the Netlist products component part of our revenues.

Yes. Exciting here, Chuck, you'll be using their memory for your in-house products, which leads to my third question. As you establish a technology cooperation agreement with Samsung, and you mentioned a few growth areas, hybrid CXL, LP LRDIMM. What most excites you about the potential for the collaboration there in terms of areas of opportunity? If you could kind of highlight a few. I know it will be an ongoing process, but any color there would be a good starting point.

Yes. Initially, when we did our agreement with Samsung about a decade ago, the company is focused on our hybrid technology. We had the -- at that time, we invented the NV architecture, nonvolatile NAND and DRAM being combined onto one subsystem. And the industry adopted some of that. Samsung and Netlist were pursuing a high-capacity hybrid product at that time. Now that was on the DRAM channel. Today, a lot of things are moving into the CXL. That will be the future where more memory products, both NAND and DRAM, it will move to the CXL bus, to the CXL protocol. So we have been -- Samsung has a CXL product offering. We have been working on our hybrid CXL for the past 6 to 7 years. And we think our approach will use lower-cost NAND to emulate the performance of higher-cost DRAM-based CXL. So we think it's -- in this market where DRAM costs are sky high, our approach will lower the cost of CXL memory significantly.

So I have high hopes on that technology. And we've also talked about our low-power MRDIMM. MRDIMM today, that's the next-generation high-capacity memory module in the memory channel. And we are working on using lower power -- low-power DRAMs, which go into mostly phones and laptops, deploying that into the memory channel. So we have been working on that R&D for low-power MRDIMM for the past 3 to 4 years. And we believe MRDIMM is going to be a power challenge. It's got high power consumption. And that's going to limit adoption. We think our low-power approach takes a lot of things to get resolved such as the low-power DRAM does not have ECC. So there's a reliability concern. We believe we have a solution for that by bringing an algorithm for error correction.

So those are, I think, 2 of the most promising areas of technology collaboration with Samsung.

Okay. Congratulations, again, to you and your team.

Thank you, Suji.

Thanks, Suji.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day and welcome to the Netlist second quarter 2026 earnings conference call and webcast. [Operator Instructions] Please note that this event is being recorded.

I'd now like to turn the conference over to Michael Smargiassi, Investor Relations. Please go ahead, sir.

Thank you, Cole, and good day, everyone. Welcome to Netlist's second quarter 2026 conference call. Leading today's call will be Chun Hong, Chief Executive Officer of Netlist, and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com.

Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements. This is due to a number of risks and uncertainties that are expressed in the call, annual and current SEC filings, and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements.

I will now turn the call over to Chuck.

Thank you, Mike, and hello everyone. We delivered another strong quarter with continued momentum in both product revenue and profitability. Revenue for the first half of 2026 exceeded $200 million, while product gross margins were over $45 million, fueled by robust demand, strong execution by our sales and operation teams, and a generally constrained supply for memory products, which analysts project will continue through next year.

While much of the revenue came from resale of difficult-to-source DRAM products, we saw growth in our own portfolio of products during the quarter, starting with Netlist's Lightning portfolio of overclocked, low-latency DDR5, RDIMM, and UDIMM solutions, which continue to gain market traction. Our next-generation CXL NVvault is currently sampling with SOC vendors, hyperscalers, and major OEMs for future hardware platforms. To support market adoption, we have partnered with the CXL Consortium and Storage Networking Industry Association to deliver industry education and technical thought leadership. We look forward to showcasing these collaborative efforts at CXL Mini DevCon 2026 in Santa Clara next week.

We are also committed to working with our industry partners to help validate and scale advanced CXL memory architectures for enterprise production. Our development work continues full bore for MRDIMM and high-performance server memory architecture designed to overcome the bandwidth limits of conventional DDR5 RDIMMs. Industry analysts forecast MRDIMM to be a $100 billion market by 2030, from small volumes today. Netlist holds over a dozen seminal patents that read on MRDIMM and have asserted them at the ITC against infringing MRDIMM products currently being imported by Samsung.

We continue to make significant progress in defending Netlist's patent portfolio against unauthorized use while continuing to invest in the expansion of the portfolio through the development of next-generation technologies and the issuance of additional patents in key areas. Our commitment to protect the value of our IP is reflected in the expanded legal actions we announced against Samsung in June. The new proceedings in the U.S. International Trade Commission, or the ITC, and the U.S. District Court for the Eastern District of Texas are based on the infringement of Netlist's recently issued 537 and 937 patents, which read on high bandwidth memory, or HBM, and DDR5 RDIMMs and MRDIMMs, respectively.

In July, the ITC voted to institute the second case against Samsung and its customers Google, Nvidia, Supermicro, and Broadcom. The investigation has been assigned to the administrative law judge, and we expect to receive the procedural schedule in August, which will include dates for the Markman hearing and evidentiary hearing. In the first ITC case against Samsung, where Netlist is asserting 6 patents that collectively read on DDR5 memory modules such as DDR5 RDIMM, UDIMM, SODIMM, and MRDIMM, and HBM. The Markman hearing was held in April, and discovery closed on July 8th. The evidentiary hearing is currently scheduled to start in late November.

As a reminder, a favorable ruling in either of these ITC cases would block the importation of billions of dollars of Samsung products that infringe on our patents and result in a cease and desist order prohibiting commercial activities by named customers including Google, Supermicro, Nvidia, and Broadcom. We believe we have a strong position in the first ITC case against Samsung, and the case is progressing well, while we have just added a second case with additional HBM and memory module patents.

It is important to note that 3 new commissioners were recently confirmed and appointed at the ITC, filling all 6 seats at the Commission. Previous to these appointments, there were only 3 commissioners, which resulted in limited bandwidth and delays in the ITC proceedings. From all accounts, the 3 new Republican appointees are strong advocates for IP committed to upholding the rights of the American IP owner against both U.S. and foreign entities that illegally import infringing products into the U.S. We believe they will take note of the biggest memory companies in the world that are making some of the highest profits recorded in the history of human commerce, and yet, continue to defy jury verdicts, hold out from licensing in order to get a free ride.

This efficient infringement by Big Tech is one of the areas that we believe will be addressed by the new ITC commissioners through rapid and strict enforcement of Section 337. In the appeal of the Eastern District of Texas 2023 jury verdict awarding Netlist $303 million for Samsung's willful infringement of 5 Netlist patents, the Federal Circuit heard oral arguments in March on Samsung's appeal of the verdict and Netlist's appeal of the IPR challenges to the asserted patents in the case. We look forward to the court's decision, which we believe will come in the near future.

In the appeal of the breach of contract case against Samsung, appellate briefing has concluded. We remain on track for a hearing before the U.S. Court of Appeals for the Ninth Circuit, likely in the coming months. This is a case that Samsung has lost on 3 separate occasions based on the facts presented. This includes a summary judgment ruling and 2 subsequent federal district court jury verdicts in separate trials. In each of these instances, it was found that Samsung materially breached the joint development and license agreement, and therefore, the license to Netlist's patent portfolio was rightfully terminated.

In Micron's appeal of the Eastern District of Texas 2024 jury verdict awarding Netlist $445 million for Micron's willful infringement of the Netlist 912 and the 417 patents, the Federal Circuit has scheduled oral arguments or a hearing for September 9th, which is in the next 5 to 6 weeks. Netlist's appeal of the IPRs against these patents are also scheduled to be heard on the same day. The 912 has been upheld in the PTO multiple times and by the appellate court itself, yet this recent PTAB panel and the appellate court ruling was allowed to be reexamined again by a new PTAB panel.

This patent's 15-year history of being subjected to serial IPRs has become a poster child in the IP community and at Capitol Hill for patent re-exam abuse and hold out by the biggest companies in the world. We believe we have a strong case for overturning this egregious PTAB finding at the appellate court come September. We look forward to the ruling by the court that corrects this inconsistent finding of invalidity of the 912 patent and upholds the $445 million jury verdict. Netlist remains committed to protecting patent owners' rights by engaging with government officials and encouraging Congress to act on proposed patent reform legislation, including RESTORE, PREVAIL, and PERA.

Last week, I had the privilege of speaking at the Center for the Protection of Intellectual Property annual conference, where I participated on the IP and the U.S. Global Competitiveness Panel. As some of you are aware, the U.S. Department of Justice has filed 2 statements of interest that have been supportive of Netlist's matters involving Samsung. At the ITC, this was the first time in history where the DOJ and the PTO combined supported the position of a complainant. The DOJ has continued to reference these statements of interest in public forums as examples of the current administration's broader efforts to promote robust intellectual property protection.

We believe these statements and public remarks underscored continual federal support for U.S. innovation and effective enforcement of patent rights. In summary, we had a strong first half of 2026. We generated record product revenue, secured additional confirmation of the validity of our patents, received newly issued patents, which read on high bandwidth memory and DDR5 products, and advanced enforcement actions covering new generation of DDR5 and HBM technologies that are foundational to AI computing. Now I'll turn the call over to Gail for the financial review.

Thanks, Chuck. We delivered our second consecutive quarter of strong top-line and bottom-line performance. Second quarter revenue was $109.8 million, an increase of 163% as compared to the second quarter of 2025. For the first 6 months of the year, revenue was $214.7 million, a 3x increase from the same period in 2025. Second quarter gross profit was $22.9 million, an increase of 1,544% as compared to the second quarter of 2025. For the first 6 months of the year, gross profit was $45.3 million, an increase of 1,582% compared to the same period in 2025.

Operating expenses reflect continued investment in R&D, IP initiatives, and SG&A to support revenue growth. Operating income was $1.3 million, an improvement of $8 million compared to the second quarter of 2025. While we do not formally guide, given booking and shipping for the third quarter of 2026 to date, subject to the visibility we have today, we currently expect third quarter product revenue to be similar to the second quarter of 2026. We ended the second quarter with cash and cash equivalents and restricted cash of $40.7 million with minimal debt.

In the second quarter, we received $10.5 million in proceeds from the cash exercise of issued and outstanding warrants. With a $10 million working capital line of credit and approximately $74 million still available on the equity line of credit, we continue to maintain significant financial flexibility and liquidity. And as always, we manage the operational cash cycle very carefully. Days sales outstanding continues to be less than 3 days, and our inventory turns an average of 10 days between quarters, which drives an optimal cash cycle of an average of 15 days. Operator, we are now ready for questions.

Thank you. And ladies and gentlemen, we will now begin the question-and-answer session. Our first question today will come from Suji Desilva with Roth Capital. Please go ahead.

Chuck, maybe I can come back to the Hynix agreement. I know, you know, it's post the 5-year anniversary of the prior license. I'm wondering if you could give us some color on the status today of the Hynix license itself and maybe any renewal discussions and perhaps maybe broader renewal discussions. Any color would be helpful.

Yes, we conduct discussions with our licensees, as well as potential licensees, on a regular basis, and I think we're making good progress across the board with all of these discussions, but I can't get into the specific details because they are privileged.

Okay, Chuck, appreciate the color. And then I'm just curious from the litigation perspective, is there any connection between the court cases for Samsung and the ITC hearings for Samsung, or do they try to consider those separate in their efforts?

They are connected. We probably have a dozen outstanding cases against Samsung in the Eastern District of Texas, at the ITC, and in the District of Delaware. And the relationship between all of these cases are the patents. There are some different patents, but mostly overlapping patents in each of these venues. So the Delaware case, which really Samsung has, where they are the plaintiff in a declaratory judgment action, most of those, I believe all of those are stayed. Nothing going on. We have cases at the Eastern District of Texas with overlapping patents at the ITC. Once the ITC institutes their proceedings, the cases with the same patents in the Eastern District of Texas become stayed. So that is the relationship between all of these cases against Samsung.

Okay, very helpful, Chuck, thanks. And then going to the products, Chuck, I'm trying to understand what percent of your revenue now is coming from the Netlist products and of the opportunities you listed, Lightning, NVvault, things like that, which one is perhaps the nearest revenue opportunity, and what would be the timing for an inflection in the ones that are nearer?

Well, as I indicated, we are, I mean, we're in production mode with shipping. We're making good traction. We're probably in the double digits millions with our product line, the Lightning, and some of the other Netlist-branded products. So making good progress on all of that. And then as I indicated, our development work on the MRDIMM, low-power MRDIMM, CXL NVvault, those continue. And we're working with potential customers, major OEMs, as well as hyperscalers on those technologies.

Okay, helpful. And then Chuck, 1 last question. Your resale revenue is strong, your guidance as per Gail was strong. Is there any risk to your ability to source these products given the supply constraints, or do you just have a sense of how you're able to continue to source products in what is obviously a very tight market?

Yes, I think it helps, Suji, that we've been in this industry for 25 years. We've got a very strong network throughout the world for sourcing products. So we've done very well compared to others. We've had the supply agreement with Hynix. We continue to get support from Hynix on the supply, both for DDR4, which is in very short supply, and also on DDR5. So we're relatively better off than most in our ability to procure tight DRAM, short DRAM products.

Okay, helpful. Thanks, Chuck. Thanks, Gail.

Thanks, Suji.

And this will conclude our question-and-answer session, also concluding today's conference. We'd like to thank you for attending today's presentation, and at this time you may now disconnect your lines.

Good day and welcome to the Netlist First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please also note that this event is being recorded today. I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead.

Thank you, Joe, and good day, everyone. Welcome to Netlist's First Quarter 2026 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com.

Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release.

Netlist assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck.

Thanks, Mike, and hello, everyone. We delivered a strong first quarter performance, achieving record quarterly revenue and a significant improvement in profitability. These results were driven by robust demand for our memory products and disciplined execution across the business. As we discussed on prior call, the memory market remains structurally undersupplied. AI-driven demand continues to accelerate while DRAM capacity remains constrained.

This imbalance is rippling across the economy, from smartphones to data center servers. In Netlist markets, demand remains healthy across key end applications, even as supply stays tight across OEM and distribution channels. The outlook for memory remains favorable. Industry-wide supply constraints are expected to persist until new fabrication capacity comes online later next year, which could delay meaningful relief until 2029.

Analysts continue to expect pricing to rise through the rest of the year, though at a slower pace than the sharper increases seen in recent quarters. On the product side, our Lightning portfolio of overclock low-latency DDR5 RDIMM and UDIMM solutions continue to ramp. We are progressing through qualifications with OEMs, particularly in high-frequency trading and high-performance computing space.

We also continue to support industrial and networking customers with our DDR4-based custom solutions. And these accounted for a major portion of our revenues this quarter. On the next-generation products, we are advancing CXL NVDIMM and low-power MRDIMM solutions. Our CXL NVvault is a CXL Type 3 persistent memory designed to extend memory class storage beyond the CPU socket while preserving low latency and data durability.

It provides a product that combine DRAM-like access with persistence through power events, addressing the growing performance and capacity needs of AI workloads. We continue to sample NVvaults with major OEMs on next-generation platforms. Regarding our low-power MRDIMM solution. We continue to be active in the development of this technology, which contains proprietary ECC protocols developed by Netlist. And we are looking to become the first supplier to bring the benefits of low-power DRAM into the server space, which is very sensitive, the data centers, in particular, are sensitive to power concerns.

On the IP front, we continue to advance the defense of Netlist patents and multiple favorable jury verdicts in our appellate process. As you know, Netlist is seeking exclusion and cease and desist orders against Samsung, Google and Super Micro at the ITC. A favorable ruling would block the importation of Samsung products that infringe our patents and cease and desist of commercial activities by Google and Super Micro, which involve Samsung memory products. The Markman hearing was held on April 21, and our legal team performed very well. We look forward to the Markman order and to the start of trial this fall.

Netlist has asserted the 366, 731, 608, 523, 035 and 087 patents at the ITC. These patents cover one or more products, including DDR5 memory modules such as RDIMM, UDIMM, SODIMM and MRDIMM as well as high bandwidth memory, HBM. In 2025, the U.S. Court of Appeals for the Federal Circuit affirmed the validity of our 608 and 523 patents upholding the PTAB's IPR decision. Last month, the USPTO also denied both Samsung's IPR and PGR challenges to our 366 patent, which covers DDR5 module power management technology.

These outcomes further validate the strength of our IP and puts us in a favorable position in the ITC case. As a footnote, the 366 patent is also asserted in our 2025 Eastern District of Texas action against Samsung, Micron and Avnet. On March 6, the U.S. Court of Appeal for the Fifth Circuit heard oral arguments on Samsung's appeal of the Eastern District of Texas 2023 jury verdict, which awarded Netlist $303 million for willful damages of 5 patents. The court also heard Netlist's appeal involving IPR challenges to the 339, 918, 054, 060 and 160 patents asserted in that case. The court will issue decisions in due course.

In our breach of contract case against Samsung briefing is expected to conclude this summer, and we remain on track for hearing before the U.S. Court of Appeals for the Ninth Circuit later this year. In addition, we currently expect Fifth Circuit oral arguments related to the IPRs of 912, 417, 215 patents in the coming months.

In April, the U.S. Department of Justice filed a public interest comment in the Samsung v Netlist case in the U.S. District Court for the District of Delaware. The statement addressed standard essential patents, antitrust and market power issues and supported Netlist's positions. This marks the second DOJ's statement of interest in the past 6 months that have been supportive of Netlist in matters involving Samsung. These comments underscore the administration's support for U.S. innovation and the enforcement of U.S. patent rights.

In summary, we delivered a strong first quarter and remain positioned -- well positioned in the current market environment as we scale our product business and advance our IP strategy. We continue to secure validation of our patents and the strength of these patents. And we continue to pursue vigorous enforcement actions covering next-generation DDR5 and HBM technologies that are foundational to AI computing.

Now I'll turn the call over to Gail for the financial review.

Okay. Thanks, Chuck. We delivered a strong top and bottom line performance in the first quarter. Revenue was $104.9 million, an increase of 262% as compared to the first quarter of 2025. Results reflect the strength of the current industry environment, a combination of tight memory supply, accelerating demand and rising DRAM prices, which supported both revenue and gross profit margin improvement. Operating expense declined as a percentage of revenue and reflected continued investment in R&D and SG&A to support revenue growth.

Operating income was $8.6 million, an improvement of $18 million compared to the first quarter of 2025. Subsequent to the end of the first quarter, we received $10.5 million in proceeds from the cash exercise of issued and outstanding warrants. As of May 8, 2026 and based on information available today, Netlist estimates that its cash, cash equivalents and restricted cash on that day to be $37.5 million. With a $10 million working capital line of credit and approximately $74 million available on the equity line of credit, we continue to maintain significant financial flexibility and liquidity. And as always, we manage the operational cash cycle very carefully. Days sales outstanding improved by 3.5 days year-over-year. And overall, our cash cycle remains well below 30 days. currently at 16 days during the first quarter of 2026.

Operator, we are now ready for questions.

[Operator Instructions] At this time, we will take our first question from Suji Desilva with ROTH Capital.

Ration the strong quarter here. Can you help us understand in the revenue, the composition resale products revenue versus Netlist products to understand that dynamic?

Sure. It's been about the same as last quarter, Suji, I think it's like 80% resale and a little under 20% of Netlist's products.

Got it. That's helpful. And then, Chuck, in the data center, you talked about putting low-power DRAM into servers. I'm curious that trend. Has that already been underway? Is that kicking off now? And what kind of shape would you expect the mix to grow maybe it's more of a focus on power efficiency and things like that. Any color there would be helpful.

Yes. So, there has been some movement towards bringing low-power DRAM, which we use in, for example, in laptops and mobile phones, to replace some of the high-power server-grade DRAMs that are going into data centers. The problem with the low-power DRAMs is it does not have error correction. The memory that we use in phones, it doesn't have error correction. So it takes a lot of work to make those DRAMs more robust using ECC technology, which we have, to be allowed to use those low-power DRAMs and get to a level of robustness, reliability in server applications.

If you can do that, the low-power DRAMs are obviously much lower power, significant low power. And there is also -- it's much cheaper. So we've been working at this for a number of years now. we've got a unique solution that we're working with some of the hyperscalers.

That's great. That's great. Helpful to understand what it takes to get there. And then lastly, just on litigation. Maybe you could kind of recap for us, Chuck, what are the next milestones we should be watching for across the various cases.

As I stated in the prepared remarks, there's a lot of appellate activity coming up this year. We've already had the appellate hearing, and we'll get a decision, hopefully, sometime later this year. We'll have appellate, probably 4 or 5 appellate cases from now until the end of the year. And those will likely be final decisions. Appellate rulings, of the District Court verdicts that we had and PTAB decisions that we had on the patents. So -- and those will likely be final because it's unlikely that the Supreme Court would take up in any of these cases.

So we're looking forward to the decisions on those. Probably more imminent is -- are the ITC cases again Samsung, Google and Super Micro, which is progressing smoothly for us. We believe we came out on top in the Markman hearing and things are going well in that case and that will go to trial sometime later this year -- in the fall, scheduled for the fall right now. So, yes, things are going smoothly. And we're looking at other parties that are utilizing our patents without a license. We'll be looking to enforce our patent rights against a number of other parties that are unlicensed and are implementing our technology in the AI memory space.

And this concludes our question-and-answer session, along with today's conference call. Thank you for attending today's presentation, and you may now disconnect your lines.

Good day, and welcome to the Netlist Fourth Quarter 2025 Earnings Conference Call and webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead, sir.

Thank you, Nick, and good day, everyone. Welcome to Netlist's Fourth Quarter 2025 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer.

As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com. Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations.

The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck.

Thank you, Mike, and hello, everyone. In 2025, we strengthened Netlist's long-term strategic position as we made substantial progress across product and IP initiatives. We saw significant improvement in full year financial results, both the top and bottom line, and we ended 2025 with revenue more than doubling in the fourth quarter.

Financial performance was driven by strong demand for memory in the second half of 2025 and the strong execution of our sales and marketing teams in delivering the value of our products to customers across key markets. Rapid growth in AI has created a supply-demand imbalance leading to a global memory chip shortage and sharp price increases across all product categories.

These industry dynamics are expected to persist through this year and into 2027 when new fab capacity is expected to come online and increase supply of memory chips. In the current environment, Netlist is well positioned to grow its product business. Sales volume for Lightning, Netlist's overclocked and low latency DDR5 line of products, is ramping up nicely in the system integrator market segment. Adding to this, we've completed qualifications at a global server OEM, and they, in turn, are currently in testing with many of their end customers.

We anticipate continued growth of our existing customers as well as new customers in high-frequency trading and high-performance computing applications. On the legacy products front, industrial and networking customers continue to require DDR4-based Netlist custom solutions. We will support these customers through 2026 and into 2027 through last-time buy agreements that were concluded in 2025.

As AI workloads continue to drive demand for higher performance and higher capacity memory, we are investing in strategic R&D for next-generation technologies. Those include CXL NVDIMM and low-power MRDIMM. We are sampling our CXL NVDIMM proof-of-concept products to Intel and AMD for testing and validation on next-generation platforms. NVDIMM was invented by Netlist over a decade ago, and we are now moving this storage backup solution onto the CXL channel.

As DDR5 DIMM speeds continue to increase, MRDIMM and LPMRDIMM are projected to become the primary memory module used in high-capacity, high-performance server applications. Netlist is developing a unique solution in this space. which takes LPDDR5 DRAMs currently used in mobile devices and deploying them in high-end servers via our unique LPMRDIMM design.

On the IP front, we continue our defense of multiple favorable jury verdicts. We secured important appellate affirmances of the validity of our patents and expanded enforcement actions covering next-generation DDR5 and HBM technologies that are foundational to AI computing.

In December, the ITC or the U.S. International Trade Commission instituted an investigation into Samsung, Google and Super Micro based on the complaint Netlist filed in September. The investigation centers on the importation of Samsung memory products that infringe on 6 Netlist patents: The '366, the '731, the '608, '523, '035 and '087. Each of these patents reads on one or more of the following products: DDR5 memory modules such as DDR5 RDIMM, UDIMM, SODIMM and MRDIMM and high-bandwidth memory, HBM.

In 2025, the validity of Netlist's '608 and '523 patents were affirmed by the U.S. Court of Appeals for the Federal Circuit, upholding the PTAB's IPR decisions. As a result, Samsung is not able to challenge the validity of these patents going forward. The ITC has assigned the investigation to an administrative law judge and the procedural schedule has been set.

The Markman hearing is scheduled for April and the trial is set to start on November. A ruling in Netlist's favor would direct U.S. Customs and Border Protection to stop Samsung memory products that infringe these patents from entering the U.S. The discovery phase of the ITC investigation will take place over the coming months. In the federal courts, Netlist filed 4 separate actions in 2025 in the U.S. District Court for the Eastern District of Texas against Samsung and Micron and their distributor, Avnet.

In these actions, Netlist is asserting newly issued patents covering DDR5 memory modules and HBM for AI computing. They include the '087, '731 and '366 patents, which read on memory products that represent tens of billions in annual revenue for these defendants. In the breach of contract case against Samsung in March 2025, the Federal Court for the Central District of California found that Samsung materially breached the joint development and license agreement Netlist and Samsung signed in 2015. This was actually the third separate time Samsung has lost this case.

Samsung filed its appeal -- appellate brief in December, and Netlist will file its brief in the coming weeks. We estimate that the briefing process will be completed this summer with a possible hearing before the U.S. Court of Appeals for the Ninth Circuit before year-end. In other appellate activity, Micron's appeal of the $445 million jury award to Netlist is in the briefing process with oral arguments expected in mid-2027. In the $303 million damages award against Samsung, the appeal has been companioned with the IPR appeals of Netlist's '319, '918, '054, '106 and '064 patents, which were asserted in this case.

Oral arguments on these appeals will be heard on March 6, 2026, this Friday in Washington, D.C. Regarding other IPRs in late February, the Federal Court of Appeals affirmed the October '23 final written decision by the PTAB upholding the validity of Netlist's '314 patent in an IPR brought by Micron. Micron has 90 days from the CAFC's judgment to file a petition to the U.S. Supreme Court. This is the third time within the past 12 months that the Fed Circuit appellate court has affirmed the validity of Netlist patents against -- asserted against Micron and/or Samsung.

These affirmances of the validity of these patented technologies attest to the Netlist's role as a technology leader in memory subsystems. The '314 and the '508 patent, which was also affirmed by the CAFC are asserted in Netlist's case against Micron in the U.S. District Court for the Western District of Texas, which is currently stayed. Finally, we expect oral arguments before the CAFC for the '912 and the '417 patents later this year.

Netlist continues to advocate for the rights of patent owners from meeting government officials to urging Congress to take action on proposed patent reform legislation. In the fall, we provided our comments in support of the Patent and Trademark Office's Notice of Proposed Rulemaking, NPRM. The proposed rules seek to level the playing field between small technology innovators and big tech in the patent dispute process, especially when it comes to IPRs.

We will be participating in the upcoming IPWatchdog Conference in Arlington, Virginia at the end of March. The conference will bring together leaders in the intellectual property community and will feature speakers from the USPTO leadership as well as district court judges. I look forward to being part of the panelists discussions.

In summary, 2025 was a year of progress for Netlist. We entered 2026 well positioned to build on our success and capitalize on the transition to next-generation memory through our products and IP assets.

I will now turn the call over to Gail for the financial review.

Thanks, Chuck. For the 12 months ended December 27, 2025, revenue was $188.6 million, an increase of 28% from 2024. We ended the year with strong fourth quarter performance as revenue improved 121% as compared to the fourth quarter of 2024. Top line results reflect the current industry environment, which Chuck noted earlier, with solid demand from both OEM and resale customers as well as significant price increases, which supported gross profit margin improvement for both the full year and quarter.

While we do not formally guide, given booking and shipping for the first quarter of 2026 to date and subject to the visibility we have today, we currently expect total first quarter revenue to show further improvement from the fourth quarter of 2025. Operating expense for the full year 2025 declined 36%, driven by reductions in IP legal fees and SG&A cost controls.

We ended 2025 with cash and cash equivalents and restricted cash of $42.1 million compared to $20.8 million at the end of the third quarter with minimal debt. In the fourth quarter, we strengthened our cash position, raising $10 million through a registered direct offering. With a $10 million working capital line of credit and approximately $74 million available on our equity line of credit, we continue to maintain significant financial flexibility and liquidity going forward.

As always, we manage the operational cash cycle very carefully as inventory turn improved by 32 days over 2024 and days sales outstanding improved by about a week year-over-year. I would note that we will once again be attending the ROTH Annual Conference in March and look forward to meeting with investors.

Operator, we are now ready for questions.

[Operator Instructions] The first question will come from Jared Osteen with ROTH Capital Partners.

This is Jared Osteen on for Suji Desilva. In relation to the current market supply and demand environment, Chuck, can you share your perspective on the current memory supply and demand environment? I know you shared a little bit in the formal remarks. And how much of this is being driven by the transition to DDR5 versus AI capacity driven? And then with the new fabs that have been announced, do you think these are sufficient to meet demand or is more needed?

Jared, there's a global shortage of memory chips, really the raw material for all computing hardware really from laptops to mobile phones to servers and AI servers. While we focus mostly on high-end servers, servers for AI, we're feeling the effects of the access to raw material, the shortage of DRAM -- mostly DRAM raw material and some NAND. But on the other hand, the ASPs, the prices of all products that are related to memory have increased significantly. So that is offsetting the lower volumes in supply.

And I don't know that any of this is impacted or due to transition to DDR5. A lot of it is driven by AI. I think OpenAI committed to some 40% of the output of HBM over the next few years. But they're not buying that yet. And then you've got commitments to companies like NVIDIA and AMD for HBMs. So that's taking up a lot of the DRAM components that are going into mobile phones and PCs that are now allocated for HBMs.

And fundamentally, until there is new capacity, this capacity that's in place has been -- it was a CapEx that was invested some 3, 4 years ago. So there's really not too many ways to increase the overall capacity. It's kind of a zero-sum game. If you allocate more to one segment of the market, you get less on the other side. And until there is new capacity that comes online towards second half of '27, I think all sectors of computing will continue to face this memory shortage.

And then to go a little bit deeper into demand and pricing, how do you see the demand environment playing out for the remainder of the year? Do you expect it to be front-loaded as customers grab all the product supply that they can today? And do you think that the significant price increases for memory that we've seen in the past couple of quarters will hold?

There's 2 different points -- price points that we look at in our industry. One is the OEM pricing that are to manufacturers from the DRAM manufacturers being sold to computer manufacturers. And then there is the spot pricing, kind of the broker market. So the -- in the last 6 months, the OEM pricing for DRAMs have gone up probably 3 to 4x, the spot market has gone up probably 7 to 8x. So it's kind of unprecedented type of increase.

We think most of that price increase will hold through this year, which means revenues for people that are able to secure supply of DRAMs for most people that are in this industry should go up despite the fact that unit supply and unit sales will likely go down for most people. So I think if you're able to secure supply, I think you're in a good position. And over time, if supply becomes an issue, I think it's going to become more difficult.

Switching topics a little bit. Now that you have 2 CAFC-affirmed patents, the '314 and the '608, what are the next steps to get the stayed Micron case in the Western District of Texas moving? And is there anything else that might keep it stayed?

Yes. I think this case now is open to being unstayed now that the patents have been affirmed by the appellate court. So our outside lawyers will take steps to reopen this case and get it moving again. So it's a legal motion practice that they'll undertake to get the cases -- get this case back open and on track.

And then in terms of litigation expense cadence expectations for 2026, it seems like there's a little bit more activity in the pipeline this year with the hearing at the end of this week, some additional IPR deals and ITC in November. How are litigation expenses expected to track in the remainder of calendar year '26 relative to 2025 levels? Any color would be helpful.

I'll take that. So we believe it will be about the same as 2025. As you can see, I mean, even if the Western District of Texas case is unstayed, it won't happen in 2026. So there won't be any court cases in 2026. Obviously, the ITC will be spread out throughout the year, even though the trial is not until the end of the year. But we don't expect expenses to be much higher than 2025.

Great. And then my final question in terms of products. How do you see Lightning revenue building in 2026? And what's your visibility into the duration of the process from proof of concept to material order process?

Well, we've gone through this process. We're kind of at the tail end of the qualification and validation at the major OEM, our top customer, and they have their end customers. So we're finalizing those validations. We've been -- it's been ongoing for 6 to 9 months. In terms of the system integrator market, we're already shipping in some good volume, and that is ramping up.

And the demand in that side of the market is very strong, not just because of the shortage, but people moving to overclock higher-speed DRAMs, both for high-frequency trading and a lot of these applications that require very fast execution, trade executions. So yes, we're seeing good traction, and we look forward to seeing continuing growth of this product line through the course of this year.

This concludes our question-and-answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Netlist Third Quarter 2025 Earnings Conference Call and Webcast, [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead.

Thank you, Dave, and good day, everyone. Welcome to the Netlist Third Quarter 2025 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer.

As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com.

Before we start the call, I would note that today's presentation of Netlist results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements.

I will now turn the call over to Chuck.

Thank you, Mike, and hello, everyone. Since our last call, we continue to make further progress on product and IP initiatives. We filed a new legal action, again, Samsung at the ITC and further strengthened our cash position. The memory market has entered a period of shortage. And we believe that this will continue for the foreseeable future, all the way through 2027, when additional capacity is brought online.

AI-related demand is consuming the majority of DRAM and NAND capacity, leaving very little availability for the rest of the market. Pricing has increased significantly for most product categories in the last several months, and it is forecasted to continue on this upward trend.

Netlist is well positioned to capitalize on these market trends through innovative IP and custom memory solutions such as the Lightning DDR5 DIMM for overclocked and low-latency memory module for servers. Lightning in particular -- Lightning provides faster memory performance, which is particularly important in markets such as quantitative trading, where the reduction of even a microsecond and executing a trade can bring about a significant improvement in the performance of the customers' systems.

At the moment, a global OEM as well as half dozen system integrators continue with their qualification of our Lightning products. We expect some of these qualifications to be completed by the end of the year and provide meaningful contribution to revenues next year.

On the R&D side, we continue to work on the CXL-based solutions such as the CXL NVDIMM as well as low-power MRDIMM. Netlist invented the NVDIMM over a decade ago, and we continue to innovate in this segment with data backup solutions that will leverage the versatility of the CXL channel. The LP-MRDIMM will be a critical technology in the years ahead as the current generation of MRDIMM has shown to consume excessive power. And power, we know is a critical variable in AI computing.

MRDIMM is likely to replace the RDIMM in the next generation of servers, but only if the power consumption of these memory modules can be lower. Thus, the LP-MRDIMM is being pursued by the broader industry -- broader memory industry, but Netlist is the only company that is designing a solution with significant power savings as well as lower latency without sacrificing error correction or chip kill.

On the IP front, in the past 2 years, Netlist has obtained 2 jury verdicts awarding combined total damages of $421 million for willful infringement of its patents by Samsung. Samsung has also lost 3 district court cases against Netlist and their bid to somehow revive a terminated license. Despite this, Samsung continues its unauthorized use of Netlist's intellectual property.

At the end of September, Netlist expanded, it's -- at the end of September, Netlist expanded the defense of its IP by initiating legal proceedings before the U.S. International Trade Commission, or the ITC. Netlist is seeking exclusion and cease and desist order against Samsung, Google and Supermicro, which would direct U.S. customs and border protection to stop Samsung memory products that infringe on Netlist IP from entering the U.S. The ITC does not order monetary damages.

The IP at issue in the ITC action include Netlist Patents 366, 731, 608, 523, 035 and 087. Each patent read on one or more of the following products: DDR5 memory modules, such as DDR5, RDIMM, UDIMM, SODIMM and MRDIMM and HBM or high-bandwidth memory. The ITC is an independent agency of the executive branch that investigates and makes the termination against unfair acts of import trade that violate U.S. IP rights. The process of bringing legal action before the ITC differs from core proceedings and is much quicker in duration, typically around a year to receive an initial determination.

The ITC will review Netlist's complaint to decide if it should institute an investigation. This review process occurs within 30 days of filing and our filing was September 30. If the ITC decides to institute an investigation, it assigns an administrative law judge to the case. Within 45 days of institution, the judge sets a target date for an evidentiary hearing or a trial and the issuing of a final decision.

The evidentiary hearing or trial is administered by the administrative law judge or the ALJ. There is no jury. This hearing typically takes place a year after institution and is followed by an initial determination issued by the ALJ. The ITC's commissioners may review the initial determination at the party's request or of their own volition. If review, the commission may affirm, modify, reverse or remain all or part of the initial determination and will issue a final determination.

In order to find the violation of Section 337 of the Tariff Act, the ITC investigation must determine that there is infringement of a valid U.S. patent that relates to an imported product and that the patent is being used in an existing domestic industry. A party may appeal final determination to the U.S. Court of Appeals for the Federal Circuit.

However, regardless of any appellate process, once the ITC makes its determination and this determination is ratified by the U.S. trade representative within 60 days, the import ban of the infringing product goes into effect immediately. The ITC ceased operation during the federal government shutdown, which will impact the timing of the ITC process just outlined. Netlist filed its complaint on September 30 and the federal government shutdown started the next day. Netlist has previously litigated 2 prior cases at the IT seat.

Let's now move on to the federal court actions, which include 3 separate jury verdicts that awarded Netlist combined damages of $866 million for the willful infringement of its patents by Samsung and Micron. In addition, we now have 4 separate actions filed this year in the U.S. District Court for the Eastern District of Texas against Samsung and Micron and their distributor, Avnet. In these cases, Netlist is asserting new patents covering next-generation HBM and DDR5 memory technologies.

In the Eastern District of Texas, one case against Samsung, Netlist secured an order finalizing $303 million of damages award in July 2024. Samsung filed an appeal, and we estimate that the appeal hearing will take place sometime mid next year.

In the Eastern District of Texas case 2 against Samsung, where Netlist was awarded $118 million in damages, post-trial briefing has been completed. We expect the court to rule on these post-trial motions in the coming months.

In the $445 million damages award against Micron, this case has concluded in the district court, Micron filed an appeal with the Federal Circuit, and we are currently in the briefing process.

In the breach of contract case against Samsung, again, which Samsung has lost 3 separate times, Samsung has filed a notice of appeal before the U.S. Court of Appeals for the Ninth Circuit. We expect this process to approximately 16 to 18 months. Regarding IPRs, oral arguments before the U.S. Court of Appeals for the Federal Circuit has been set for several patents, the 314, 506 and the 608 patent in early December 2025.

We expect the Federal Circuit to issue its decision on these appeals, and these are important appeals in later in December this year or early this year. In closing, Netlist remains active in advocating for the rights of patent owners. Over the past several weeks, I've had the opportunity to meet with government officials in Washington, D.C. and was encouraged by these discussions. We welcome the constructive reforms brought on by new leadership at the patent office that could bring a more balanced approach to the IPR process.

We also urge Congress to take action on several patent reform bills that are currently under review. We believe these bills, if enacted, will bring much more clarity to the issues of patent eligibility, patent enforcement and provide American innovators a predictable framework on which to create new groundbreaking technologies and provide assurances that their innovations will be protected from unauthorized use.

Now I'll turn the call over to Gail for the financial review.

Okay. Thanks, Chuck. For the quarter ended September 27, 2025, revenue was $42.2 million reflecting solid demand from both our OEM and resale customers and in line with our expectations. While we do not formally guide given booking and shipping for the fourth quarter of 2025 to date and subject to the visibility we have today, we currently expect fourth quarter revenue to be slightly higher than the third quarter of 2025.

Operating expense for the third quarter 2025 declined 17% compared to the prior year's quarter and declined 38% on a 9-month basis.

Net loss improved by -- net loss for the third quarter 2025 declined 25% compared to the prior year's quarter and declined by 45% for the 9-month period.

We ended the third quarter with cash and cash equivalents and restricted cash of $20.8 million compared to the $29 million at the end of second quarter with minimal debt.

After the end of the third quarter, we raised $10 million through a registered direct offering. With a $10 million working capital line of credit from our bank and approximately $74 million available on the equity line of credit, we continue to maintain significant financial flexibility and liquidity. And as always, we manage the operational cash cycle very carefully.

Inventory churn improved by 17 days over last year and the overall cash cycle improved by 2 days over last year's Q3 and by 16 days over last quarter.

Operator, we are now ready for questions.

[Operator Instructions] Our first question comes from Suji Desilva with ROTH MKM.

So the products that you're talking about, Chuck, and seeing opportunity in AI infrastructure into calendar '26, can you talk about which products, which AI infrastructure server platforms they may target? And what could be the magnitude of contribution potentially in '26, maybe ranges there?

We've made -- Suji, we've made good progress with the Lightning line of products. These are the fastest server memory. Most of them go into high-frequency trading, quantitative trading the Chicago area, New York area and the commodity markets and in the stock exchanges. So they are being qualified at one of the top 2 server OEMs in the world, along with probably half a dozen other major system integrators.

We believe -- we're making good progress. We have clearly a product that has industry-leading low latency and speed. And we expect those to -- we're seeing revenues already. We've seen some revenues probably in the 4%, 5% of our overall revenues in the last few quarters came from this line of product. We believe once these are qualified as some of the bigger players, bigger server manufacturers, we will certainly get into next year to double-digit percentage of the overall revenues with these lighting line of products.

Okay. All right. And then I'm just curious of the ITC process and the government shutdown. Are really -- are all the processes that you talked about pause at this point? Are some proceeding in the traditional branch? Or any color there would be helpful.

So the ITC was part of the government shutdown, and we filed September 30 against Samsung and to stop them as well as Google and Supermicro, which are major customers of Samsung. And what we're -- just to give you kind of context of what we're trying to accomplish, it is a significant dollar value of memory products coming into the U.S.

As we've indicated, we've gone through 5 federal court trials over the last 3 years with Samsung, against Samsung. We won them all, and yet they continue to -- they continue to engage and infringement and selling of infringement. We are committed to shutting them down in the U.S. That's what we're committed to seeing this process through all the way to the end.

These guys are beyond the pale in terms of the -- just unapologetic and just -- they just go about ignoring IP rights of U.S. patent holders. So -- we believe that since District Court, they award dollars, but they do not provide since eBay, there is no injunctive relief at the -- from District Court rulings. So ITC is injunctive relief. There is no dollar damages. So the only way to stop people who are completely ignoring U.S. laws and patent laws is to stop their business. And that's what we aim to do.

The government shutdown will impact us -- will not impact us at all. As soon as it reopens, our filing will be put on to the Federal Register. And then the 30-day clock will start to a decision on institution. Once the case is instituted, it goes forward, investigating patent infringement as well as patent validity.

And the third prong, which is industry, whether these patents are being practiced in the U.S. in terms of U.S. domestic industry and products that are built and shipped into the U.S. -- in the U.S. Those will be investigated and there'll be a decision. We've been to the ITC twice before. We understand the process. We understand the impact that it can create to bring some of the infringing parties to their consensus. So that is what we're committed to seeing that process all the way through to the end.

Okay. I appreciate that color. And then Gail, maybe you could talk about the litigation expense trend you're expecting from here. I know the ITC expenses are second half '25 and they fall off or they remain? Any color there would be helpful.

Sure. Well, we are on track to have reduced our legal fee expense by 50% over last year. ITC expenses will occur in 2026 towards kind of increasing over time towards the end of the year when the trial will actually occur. So we continue to believe that there will be a reduced amount of legal expenses compared to 2024, but probably about the same in 2026 as has been for 2025.

Suji still on?

Yes. I'm here.

Yes. I just -- I kind of ended on perhaps a negative note regarding Samsung. I just want to highlight that there are good actors and bad actors. We have Hynix, which is a licensee. They respect U.S. IP laws. They've licensed from us. They are the #1 supplier of HBM products to NVIDIA in the AI space. And they have also committed -- announced a plan to invest $4 billion in building of the HBM in the U.S and Lafayette, Indiana in a joint venture with Purdue.

Now that contrasts completely with a bad actor, who is way behind in the HBM technology. They are a very small player as a supplier into the U.S. for HBM. They have not taken a license in the last 5 years. And they have announced no plans to build HBMs in the U.S. So that, I think, is the contract that we're looking at. It's not everybody is flouting the laws and getting a free ride. There are good actors that abide by the IP laws of the U.S., and there are others. And it provides a huge contrast and we're trying to correct that, create parity amongst the different implementers. They all have to respect the rights of IP holders in the U.S.

Appreciate you pointing out the model that works through the U.S. there.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.