Since we launched our Journey to Scale earlier this year, we’ve made tremendous progress. Most recently, we kicked off Factory Acceptance Testing (FAT) in August of our Gen2 High Volume Manufacturing (HVM) equipment and it’s well underway. In this article, I’ll breakdown our manufacturing “Zones,” “Lines” and processes that will enable us to produce our first samples from the new Gen2 equipment.
Defining the Zones
Our unique patented manufacturing process uses dozens of machines working in concert. Here’s a breakdown of our four manufacturing “Zones” within each line:
Zone 1: Electrode Patterning: rolls of electrodes are run through our machines and precisely laser patterned based on customer specifications. We began FAT of Zone 1 in August and anticipate its completion in October.
Zone 2: Cell Assembly: laser cut electrodes from Zone 1 are stacked, the constraint is applied, as well as the interconnect. We begin FAT of Zone 2 in September and anticipate its completion by the end of this year.
Zone 3: Cell Packaging: pouching, electrolyte fill and prelithiation processes are completed in Zone 3. FAT will kick off in October and be completed by early next year.
Zone 4: Formation: buffering/first charge and then the final charge takes place in Zone 4. This Zone follows the same FAT timeline as Zone 3.
It’s important to note that Zones 1 and 4 will feed and service multiple lines. I’ll explain further below.
Defining our Manufacturing Lines
We are building two types of “Agility” lines and one High Volume Manufacturing line currently. The Agility Line in Fab1 (also called the Agility R&D Line), located at our headquarters in Fremont, will handle New Technology Programs (NTPs), New Materials Development and R&D for EV batteries. This line will also include a Lab Scale Coater and flexible workstations. All of this will be housed in an end-to-end dry room. Initially, we planned to also support Custom Cell Development on this Agility Line in Fab1, however, we realized that’s too much for one line. We also determined that we don’t need to run this line 24X7 here in Fremont to meet our objectives.
To that end, the Agility R&D Line in Fab1 will include:
· New Gen2 machines for Zone 2 and 3 — such as, the New Automated Busbar Insertion, as an example and, the same process kernels as the Agility Line in Penang.
· Zones 1 and 4 will remain the same as currently installed in Fab1.
The Agility R&D Line in Fremont will not be as automated as the Agility Line in Penang. This reduces our costs significantly, and high throughput is not needed to meet our goals.
The Agility Line in Fab2 in Penang that will be used to quickly build and qualify custom batteries on the other hand, needs to be collocated with the HVM line and needs to be run 24X7. This line will have higher throughput. It’s important to note that the Agility Line in Penang and the HVM Line will share Zones 1 & 4.
To further illustrate the functions of each line, here’s a high-level look at the customer journey:
Manufacturing Excellence
As we ramp to HVM, incorporating our proven DIMES framework is critical to our success. DIMES, which stands for Dfx, Integral Yield, Material, Equipment Efficiency and Supply Chain, is a framework the team and I designed and have been using for many years in order to achieve our goals.
This framework is a robust program to reach operational excellence. Each component is just as important as the next and if followed meticulously, enables increased efficiencies, cost reduction and improved yield.
· Dfx: Stands for Design for cost, manufacturing, high yields and quality. We continuously look to cut waste and optimize manufacturability leading to the highest quality at the lowest cost.
· Integral Yield: At every step, starting from raw material, we measure yield loss. It’s the “cost of non-quality (CONQ).” This includes advanced metrology and robust controls. This enables us to quickly identify a problem, do a root cause analysis, systematically attack the root cause(s) with a “poka-yoke” fix — a process that makes it impossible for an error to occur again, and the dependency on the operator is minimal to none. Predictability is key for HVM.
· Material cost down: This is the process of reducing our material usage and cost through “LEAN manufacturing,” principles where we minimize waste and maximize productivity; “Value Engineering,” where we review products during the design phase to either eliminate or combine steps and therefore reduce costs; and “Value Stream Mapping” that documents every step in the process with our suppliers so we can apply the same “LEAN” principles to their manufacturing processes using certified professional procurement principles.
· Equipment Efficiency: This process involves getting more out of our installed equipment, improving that equipment and determining labor efficiencies including optimizing Man to Machine Ratios (MMRs) and resolving bottlenecks.
· Supply Chain: Supply Chain is the “finger on the pulse” of operations. Attaining supply chain excellence is prioritized at the best run companies. It includes everything from reducing the cycle times to no more than 2.5X the theoretical cycle time, to managing total inventory quantities and locations so that customers are given a “Promise date” for their shipments, which are met and exceeded at 95th percentile accuracy levels. This, done repeatedly, makes the supplier dependable and reliable which, in the world of consumer electronics, is as important as the quality and reliability of the products themselves.
Those in manufacturing know these terms well. Our DIMES framework is comprehensive and incorporates the gold standards in manufacturing excellence. At Enovix, this framework is used to ensure that all of these processes are prioritized, and one is not more important than the other.
As we commence FAT for each of our Zones, we rely on the DIMES framework to ensure a disciplined and meticulous approach to every step. For those of you who want to dive even deeper into the details, we launched our Journey to Scale podcast today. Check it out here and continue to follow our progress on our Journey to Scale.
This blog contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, about us and our industry that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “believe”, “will”, “may”, “estimate”, “continue”, “anticipate”, “intend”, “should”, “plan”, “expect”, “predict”, “could”, “potentially”, “target”, “project”, “believe”, “continue” or the negative of these terms or similar expressions. Forward-looking statements in this press release include, but are not limited to, statements regarding our ability to manufacture overseas and scale up. Actual results could differ materially from these forward-looking statements as a result of certain risks and uncertainties. For additional information on these risks and uncertainties and other potential factors that could affect our business and financial results or cause actual results to differ from the results predicted, please refer to our filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed annual periodic reports on Form 10-K and quarterly report on Form 10-Q and other documents that we have filed, or that we will file, with the SEC. Any forward-looking statements made by us in this press release speak only as of the date on which they are made and subsequent events may cause these expectations to change. We disclaim any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise, except as required by law.
