This release is great news but is somewhat at variance with what we thought we knew following the AGM 6 weeks ago.
This release states that it is wafers that will be delivered early in August, albeit finished wafers now made via this new process. This serendipitously discovered process, discussed by Danny Lewin at the AGM, provides some patentable developments that make the production process significantly better or more reliable in some way. This is new breakthrough science, and will presumably provide significant advantages to AP over any future competitors. The release also says the new process took "longer than expected" to finalise, but it has now been reduced to reliable a process step. This is all excellent news.
However, realistically, this puts us right back where we thought we were on the day of the AGM, when we were told that finished wafers were being delivered to Israel even while Danny was in Oz.
To reconcile these statements one has to presume that the initial wafers that were received at that time came from an initial production run that had a low yield rate. This process improvement has now been perfected and has now been built in to the production process. That is great news for production costs.
One must also accept that AP said they had been provided with a batch of completed wafers at the time of the AGM, and that AP was "certain" that the finished wafers provided at that time would pass all the testing, and would "imminently" get turned into demonstrable chips. The fact that we have not been told what happened to these wafers and the finished integrated chips is of concern. Even if the production yield had been low, if the wafers were or were not functional, we should have been told that by now. Were they OK? Did they perform as expected? Did step 499 interfere in any way with earlier steps? We still do not really know.
Wafers have to be cut into chips (by the packager) joined with the ASICs, then packaged into finished devices. We have been told this step is now routine, so not a drama. I think we can expect this will take a further 4-6 weeks to complete, which will take us out 4-6 weeks beyond the early/mid August as stated.
In other words the fulfilment of the progress we were expecting imminently has been reset by around 6 weeks. So we probably have another 10-12 more weeks to go from now before finished chips are ready for demo.
Every step is a step in the right direction, even if it gives "imminent" a new definition.
AKP Price at posting:
$22.20 Sentiment: Buy Disclosure: Held
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