2021 BRN Discussion, page-15173

The answer to your question can only be supplied by Brainchip however relying upon a submission by Intel to an Australian Parliamentary Select Commission looking at patent protection a few clues can be gleaned. I posted a link to it early this year but baby sitting at the moment but the gravamen was as follows:

1. In the semiconductor industry the rule is do not disclose what you charge for your IP;

2. The same IP is likely to be charged differently to each customer;

3. When Courts have been called upon to consider the fairness of an IP licence agreement or damages in a patent breach case they have generally tied the calculation of a fair price to what the company selling the IP retails a chip containing the IP for so in Brainchip’s case the AKD1000 is about $25.00. The Court cases cited by Intel determined the fair royalty to be around 3% of this price so this would be 75 cents for each use of the IP or $750,000 for every 1 million units sold.

Someone put up a figure of 200 million fridges sold each year so if half, 100 million had AKIDA IP that would be $75 million in royalties.

Now this 3% is a base number which a Court will determine but it can be argued that a unique IP could justify a higher royalty up to 5% or more.

Last year someone posted an analyst’s report that spoke of a royalty as high as 15% might be demanded in some cases.

The former CEO addressed this question in one of his webinars and said he was not going to answer the question other than to say the greater the volume of the order a reduced pricing structure might apply.

Do not forget that on top of the ongoing royalty there will be the upfront licensing fee and payments for engineering costs associated with assisting each customer to maximise value.

A further complicating feature for shareholders will be that Brainchip is able to chop up its IP into various sized blocks and will have multiple chip sizes AKD500, 1000 & 1500 as well as USB sticks and modules with the Rasberry Pi module being priced between $49 and $69 see Anil Mankar 2021 Ai Field Day.

So we do not know really but it is clear there is a lot of money to be made if Brainchip has half a dozen or more significant customers buying the IP.

My opinion only DYOR
FF

AKIDA BALLISTA