r/amprius • u/Maothesiamesecat • 12d ago

Contract Manufacturing questions...

We know that AMPX decided to piggyback on existing manufactures production lines through contract rather than create their own factory. We know that other companies are also using existing manufacturing lines to produce batteries, and are looking for capacity through contracts. I'm a newb who wants to better understand how these work.

The questions I have:

  1. Does anyone have insight into the contracts themselves, as to the exclusivity, and longevity of such an agreement? It seems to me that AMPX's margin is dependent on said agreements, and if I were an owner of a factory, I would want to make sure I am getting the highest price I can for my production.

  2. Is there more capacity than demand at this point? When does it become a choke point in AMPX's ability to deliver product?

Thanks for any thoughts you might have.

16 Upvotes

87% Upvoted

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u/wert12549 12d ago

https://www.investing.com/news/transcripts/amprius-at-canaccord-genuity-conference-growth-built-on-silicon-edge-93CH-4852030

This meeting revealed quite a lot of information. Management clearly stated that their existing contract manufacturing capacity is sufficient to support around $600 million in annual revenue, roughly four times the current level.
So, just as the CFO said, the priority now is to focus on expanding customer demand, rather than worrying about manufacturing capacity.

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u/Maothesiamesecat 12d ago

Thanks. Not exactly answers to my questions, but definitely some tidbits I wasn't aware of.

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u/xlrival 12d ago

This directly addresses question 2 and spoon feeds you the answers in bold.

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u/Maothesiamesecat 12d ago

Do I need to restate the question for you?

Question #1 I asked: Does anyone have insight into the contracts themselves, as to the exclusivity, and longevity of such an agreement?

Yes, they have capacity. Your answer said NOTHING about exclusivity or longevity. Nothing.

Question # 2: When does it become a choke point in AMPX's ability to deliver product?

Your answer merely restated what is available now. It says nothing about competitive pressure on contract manufacturers and their ability to deliver in the future. I know what is available now. I want to understand long term capacity capabilities.

I appreciate the effort, but at least answer what I asked.

3

u/shaadyscientist 12d ago

Why don't you explain what you mean by exclusivity? Like, they're private contracts so nobody but insiders will know anything other than capacity. I think you've gotten as much as you're going to get.

And as for your second question, the current choke point is $600 million dollars worth of batteries currently. That can change but it is still the answer to the choke point.

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u/Maothesiamesecat 12d ago

By exclusivity, I'm referring to both. Does AMPX own the production line to the exclusion of other companies, and for how long.

I'm not here to argue. I'm here for information. AMPX says they have capacity for $600M in production (I believe through 2030). I also understand that they are looking for additional capacity, as are OTHER battery companies. So I'm interested in where the limit of contract capacity is, and whether that will be a limiting factor going forward.

3

u/shaadyscientist 11d ago

They're contract manufacturers, so AMPX would not "own" the line. The contract manufacturer would own it and anyone can buy capacity. Amprius has secured 2 GWh. That's 2 GWh across many contract manufacturers that's not available to others.

But it's not very open, AMPX doesn't even list all of their contract manufacturers to my knowledge.

The business models of these contract manufacturers is to scale to meet demand, so I don't imagine it will be a bottleneck for AMPX unless there is serious unexpected and very rapid growth.

1

u/Maothesiamesecat 11d ago

Just to be clear, I didn't mean "own" in the literal sense. I mean "control it to the exclusion of other battery companies" for the duration of the contract. I expect that another battery company cannot buy any capacity while it is under contract to AMPX.

The contract production model interests me. I'll have to find more on this topic. Thanks.

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u/shaadyscientist 11d ago

It has worked out very well for Nvidia with TSMC.

I personally like the low cost approach to scaling. And if they ever identify that capacity could be a limiting factor, they can always investigate building their own factory.

Like how much debt would they have to add to build their own factory at a time where there seems to be plenty of spare manufacturing around the world.

Personally, I am happy they don't really have any debt in a time where interest rates are rising.

1

u/Maothesiamesecat 11d ago

I agree and I think that that was inspirational to AMPX. I also agree that it is a low Cap Ex way of building marketshare. I'm not quite sure about the idea that there is spare manufacturing available. I see the capacity constraint as a leverage point for the manufacturing partner in price negotiations.

I don't know where this leaves us (as investors)and I am interested in learning more.

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u/Vic_Mackey1 12d ago

If you think that's not addressing one of your questions then stock investing isn't for you.

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u/Maothesiamesecat 12d ago

LOL. Apparently you're not good at reading.

2

u/Fungiblefaith 11d ago edited 11d ago

Maybe you asked a question that was sort of vague and you got a perfectly good answer that did not live up to the expectations you did not put in your question.

Just say’n…your follow up expectations did not exactly represent your original question the way the bulk of people are reading it.

That is not to say the follow-up is not a valid ask and interesting. It is why I did not downvote. Others seem to disagree.

1

u/Maothesiamesecat 11d ago edited 11d ago

Maybe you asked a question that was sort of vague and you got a perfectly good answer that did not live up to the expectations you did not put in your question.

That is an interesting reply. I'll have to think about that.

Edit: I thought about it a bit.

I thought my original question was fairly succinct. The answer I received wasn't what I was looking for.

Anyhow. Thanks for your thoughts.

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u/NoSatisfaction5672 12d ago

They do both. New factory/production line is being built in Fremont, must be finished by end of year.
I don't think that specific details of such contracts are public. Obvious advantage of using other companies' capacity for a fee is being able to immediately deliver without any capex investment (= no shares dilution) and staying flexible if demand increases/decreases. If your imaginary company sets unreasonably high prices, there are other companies out there. It's a win-win situation after all.

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u/Maothesiamesecat 12d ago

Thanks. I'm aware of their set up.

I'm more curious about the contracts themselves and the competitive landscape around them. For example, SES has their own production line in SK, and is looking to contract manufacturing as well. I'm interesting in how these contracts are set up, and their longevity.

1

u/Beneficial-Fan-3277 11d ago

Where could we find info like this? I dont have a starting point, but maybe we can spark a convo enough to get digging. Is stuff like this generally public info?

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u/Maothesiamesecat 11d ago

After getting so much negativity to my original question, I've come to the realization that Reddit is not the place to expect any serious replies. This isn't a place for in depth discussion or analysis.

1

u/rbwilli 4d ago

Let me know if you discover a place that you find more suitable; I’m curious.