INVENTORIES

9 Months Ended

Sep. 30, 2023

At September 30, 2023 and December 31, 2022, inventories, net consisted of the following:


	September 30, 2023		December 31, 2022
Raw materials	$	202,048	$	167,135
Work-in-process	83,386		79,126
Finished goods	221,997		146,911
Total inventory	$	507,431	$	393,172

Inventories are stated at the lower of cost or net realizable value on a moving weighted average basis. At September 30, 2023 and December 31, 2022, the value of finished goods inventory of which were first-tools at customer physical locations for which customers were contractually obligated to take ownership upon acceptance totaled $140,788 and $123,169, respectively. At September 30, 2023 and December 31, 2022, the value of finished goods inventory of which were first-tools in warehouse but not delivered to customers for which customers were contractually obligated to take ownership upon acceptance totaled $38,763 and $0, respectively.

The $39.2 million increase in raw materials and work-in-process inventory at September 30, 2023 compared to December 31, 2022 was due to additional purchase of supplies to support a higher level of expected shipments for the next several quarters, and to reduce the risk of supply chain delays to meet anticipated customer demand for the Company’s products. The $75.1 million increase in finished goods inventory at September 30, 2023 compared to December 31, 2022 reflects an increase in completed tools not yet shipped to the customer, and a higher value of first-tools that have been shipped but have not been accepted by the customers.

The Company’s products each require a certain degree of customization, and the substantial majority of the work-in-process inventory and finished goods inventory is built to meet a specific customer order for a repeat shipment or a first tool shipment. At the end of each period, the Company assesses the status of each item in work-in-process and finished goods inventory. The Company recognizes a loss or impairment if in management’s judgement the inventory cannot be sold or used for production, if it has been damaged or should be considered as obsolete, or if the net realizable value is lower than the cost.

At the end of each period, the Company also assesses the status of its raw materials. The Company recognizes a loss or impairment for any raw materials aged more than three years. The three-year aging is based on the Company’s assessment of technology change, its requirement to maintain stock for warranty coverage, and other factors.

During the three months ended September 30, 2023 and 2022, provision for inventory of $1,807 and $1,157 were recognized in cost of revenue, respectively. During the nine months ended September 30, 2023 and 2022, provision for inventory of $5,031 and $1,739 were recognized in cost of revenue, respectively. Write-downs were due to an internal assessment that certain inventory could not be sold or used for production due to damage or obsolescence.