Variable Interest Entity |
12 Months Ended |
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Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Variable Interest Entity | Variable Interest Entity YBS Agreement
On July 26, 2023, the Company entered into a manufacturing agreement (the “Agreement”) with YBS International Berhad (“YBS”), a Malaysia-based investment holding company with segments including electronic manufacturing and assembly, high-precision engineering, precision machining and stamping, among others. Pricing under the Agreement is set on a cost-plus basis and the Company is subject to a minimum commitment pursuant to the Agreement. The Company has the sole and exclusive rights to YBS’s output of products with the Company’s proprietary technology. At any time during the first seven years of the Agreement’s term, the Company reserves the right to purchase the Gen2 Autoline 1 by repaying the equipment cost, net of depreciation, as defined in the Agreement. The term of the Agreement is for ten years and automatically extends for an additional five years.
The Company and YBS agreed to share an initial investment of $100.0 million for the Gen2 Autoline 1 equipment and facilitation costs, as set out in the Agreement. Pursuant to the terms of the Agreement, the Company shall contribute 30% of the initial investment, which is designated for Fab2 construction use, and YBS has the obligation to finance the remaining 70%, which is designated for purchase of Gen2 Autoline 1 equipment. The Company funds its contributions through payments directly made to the leasehold improvement vendors, who are constructing the Fab2. YBS assigned Orifast Solution Sdn Bhd (“OSSB”), its subsidiary, to manufacture lithium-ion batteries for Enovix under the terms and conditions of the Agreement. OSSB obtained $70.0 million of term loan (the “Term Loan”) in financing for manufacturing operations under the Agreement from OCBC Bank (Malaysia) Berhad (“OCBC”). The Term Loan is
expected to be repaid within five years. Per the Agreement, the Company bears the early repayment penalty fee imposed by OCBC, if any.
On September 13, 2023, the Company entered into a cash deposit agreement with OCBC to collateralize the Term Loan. The Company will deposit sufficient collateral for the Term Loan. As of December 31, 2023, there is no outstanding balance of the Term Loan and no deposit was made to OCBC for the collateralization. As of December 31, 2023, the Company had $70.0 million deposit in an interest-bearing account with OCBC for interest earning purpose.
Consolidated Variable Interest Entity The Company consolidates a VIE when it has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE, which could potentially be significant to the VIE, and, as a result, is considered the primary beneficiary of the VIE. As of December 31, 2023, the Company concluded that OSSB is considered a VIE and the Company is the primary beneficiary of OSSB based on certain assumptions and judgments made by the Company. As of December 31, 2023, the Company has a variable interest in OSSB with no equity investment in OSSB. In accordance with GAAP, the Company consolidates 100% of OSSB financials. As of December 31, 2023, the total assets and liabilities of OSSB are immaterial. For the fiscal year 2023, OSSB had immaterial operating activities.
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