Instead of debating the merits of the Skywater deal on HC I decided to send an email to Coby with 3 questions on it.
I have permission to post on HC.
Hi Coby,
I justwanted to clarify the recently commercial deal announcement with a fewquestions.
Firstly,you mentioned the deal comes with a licensing agreement and eventuallyRoyalties. You also mentioned that the “qualification” process is expected totake 12 months and that during this 12 month, Skywater is giving up theopportunity to be making wafers they can sell. I understand that qualificationis a very normal part of the industry, but can you explain the likelihood ofthe qualification process failing and the commercial deal being terminated.
Secondly,given the completion of the qualification process is 12 months away, does thatmean that process needs to be complete prior to the licensing agreement beingpaid?
Finally,you have said many times that you will be working in parallel with otherpotential Fabs and Customers. How can you expect to have a customer to come onboard without the completion of the qualification process?
Many thanks
Youactually asked about several issues so let me try to clarify each one:
Regardingthe fees: SkyWater are licensing our technology and will pay us a license feefor it. The payments will be made as we meet pre-agreed milestones. In additionWeebit and SkyWater will jointly engage in marketing and sales activities withcustomers. The agreement defines the ways customers can access Weebit’stechnology and the fact that they will be paying Weebit a license fee,royalties, and a potential NRE fee per project they use our technology in.
As for thequalification process: It is something every new technology has to go throughand requires running many wafers through the fab, in multiple cycles, verifyingthat a very high percentage of the dies (what is packaged into chips) meet thespecifications and that the technology is ready for mass production. Obviously,when SkyWater is running our wafers they are not running other wafers. I thinkthis is an important point people might be missing – instead of running ourwafers SkyWater could be running other, revenue-generating, wafers. The factthat they will work with us shows their belief in the potential of ourtechnology to generate future revenues for them. I believe the fact that theydid this despite the huge shortage of semiconductor capacity and demand forchips in the industry, is a great manifestation of their expectations from ourtechnology.
Regardingthe payment terms: Unfortunately they are confidential and I can’t comment onthem. What I can say, answering your last question, is that we are alreadyengaged with potential customers who are interested in our technology and whohave already reached out to SkyWater. You are correct that product companiesare normally conservative, and wait till after qualification to engage, but itis possible to get the first ones to engage earlier when they are convincedthis can be a competitive edge for them and under the right commercial terms.
(20min delay)