Here's Why Shares in Aehr Test Systems Fell This Week

Core Insights - Aehr Test Systems' shares fell by 8.6% in response to the release of updated AI models by Chinese start-up DeepSeek [1] - The company recently signed its first AI customer, indicating a strategic shift towards the AI processor market to mitigate weaknesses in its core silicon carbide chip market [2] Market Context - DeepSeek's low-cost AI solutions pose a threat to U.S. AI companies and the infrastructure providers, including those supplying AI processors that require Aehr's wafer-level burn-in test equipment [3] - Aehr's primary market, which traditionally accounts for about 90% of its revenue, is the silicon carbide wafer-level test and burn-in equipment market, heavily driven by electric vehicle (EV) demand [4] Challenges and Opportunities - The near-term growth in the silicon carbide market is hindered by disappointing EV sales attributed to high interest rates, with management indicating that growth outside of China will remain challenging until 2026 [5] - Despite the setback from DeepSeek's AI developments, there is potential for increased adoption of AI applications, which could positively impact AI processor companies and benefit Aehr's market position [5]