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Ann: Continued Suspension from Quotation, page-314

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BobF

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19/06/24

08:31

Post #: 74381323
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Originally posted by uncle joe: ↑

It's easy to understand how some people think that EM are going to dump AKP and go it alone. China has a history of stealing the IP of western companies. However, this hypothesis discounts AKP's knowledge and experience of the last 15+ years to zero. It assumes that if EM is able to design the chips for manufacture, organise that manufacture and then package the chips, that they don't need AKP at all. This is incorrect.

If you have ever worked in a company that has wanted to branch into something outside of their expertise, then you will readily understand this. You can slowly build up expertise by hiring key people with the required experience and client contacts. This is a slow and costly process and not always successful. I have seen this process many times.

You can also achieve the goal by buying out another company with the required expertise and hey presto you can now branch out in this direction. It's a costly exercise, but it has more chance of success. It does bring its challenges with it to intergrate the two companies. Sometimes it results in a reverse takeover where the original company tries to bite off more than it can chew. This has happened to a 70,000 employee company I was a part of. Another company I was in successfully bolted on a multitude of other companies to become a world leader.

Another option is to partner with a company to win work that brings the strengths of both companies together. This way, you can still achieve the end goal of being able to attract work that you were previously not able to win and with significantly less risk and cost. This happens all the time. A global example of this is the AUKUS agreement. Australia partnering with the UK and US to deliver nuclear powered submarines. Why do we need the UK and US? Why don't we just get our own nuclear industry? Well we could. Just look at the above options and we could do it, but it would take an enormous amount of time. It would cost a lot of money and there would be risk attached, but we could do it. There would also be political consequences perhaps.

So it is with AKP and EM. There is a partnership in place where each partner benefits from the other's expertise and knowledge. If EM were to want option #1 of hiring their own people with the required expertise, where would they get these people? We are talking about DSR on a MEMS chip here. Not analogue. So there are people in AKP. Where else? don't discount their expertise here.

EM might want to bolt on a company to achieve their goals. But there is only 1 such company - AKP. They have tried to buy shares in AKP and at the time asked if there were other ways to increase their share holding. So this is still an option if the Chinese bureaucracy would comply.

So I don't believe that there is a real issue here. I see how both parties benefit and how both would not want to try the alternatives. The company seems to indicate as much as well.

Expand

Originally posted by WallStChihuahua: ↑

I'd like to add.

An additional technical consideration is that the chips on their own are not usable. They require software in the ASIC, this is developed by AKP - EM does not have the source code for this software. They could pirate the compiled copy, but so what? I think even with that they can't sell it as a integrate-able product. The global electronics manufacturers need to integrate the chips into their devices. These chips are not a swap out substitute for speakers. They need to be implemented into a digital design, and this requires specific information from those who developed the chips (not just those who manufactured the chips). AKP has this information, and clearly only as part of a purchase agreement, is the full information support provided. I suspect there would also be integrated within the software on the ASIC and any other implementation software needed, some sort of activation keys, which only AKP can supply to an electronics manufacturer so as to enable the chips in the end device. I don't know for sure, just speculation, but some sort of solution would be in place. Without all this from AKP these the chips are useless.

Just because a company can produce the chips does not mean it can in any easy way steal the technology and produce it's own to sell on to device manufacturers. It is simplistic for some to propose that they can just steal IP and DIY it so easily. Sure it is possible given enough time, but not easy. And frankly, a pretty stupid move.

The other side as well is that the established electronics manufacturers are not going to risk the legal ramifications of buying off market chips. Yes some Chinese brands might buy from EM if EM went rogue and reverse engineered the software. But then it doesn't mean AKP (financial issues overcome) could not partner with an alternative to EM. There probably would be volunteers once all is proven, so as to manufacture for non-Chinese markets, which will not buy "counterfeit" chips.
So let's not simplify the situation. AKP would be reasonably safe from these scenarios.

AKP is full of risk but I don't consider EM's loyalty a risk to worry about. The main issue for AKP is fabrication success ASAP so as to either not run out of funds (eventually) or not fall behind too much to allow a competitor to catch up.

Expand

Agreed. And very well put. Of course it would be possible for EM to have been a disguised pirate raider all along. But AP itself seems to be convinced that is not the case. Just read the answers Danny Lewin gave to those very questions at the last AGM. AKP is clearly very comfortable working with EM. Also note Danny's declarations about the software and algorithms that drive the MEMS to produce DSR. And who owns them. And whom AKP can contract to manufacture the chips, and market them. And where.

It is a case of either we can trust AKP's most senior officers to be telling us the truth or we cannot. Excessive doubt is something we choose to do in defiance of logic and public announcements to the contrary. The problem with all the accusations and innuendos posted here as that there is not enough substance to them, just conspiratorial paranoia. Sowing doubt is easy. Affirming confidence is much harder. People believe according to their own nature, not according to the weight of evidence.

I believe that we will all be pleasantly surprised when finished chips appear. Or at least some of us will.

AKP Price at posting: $6.20 Sentiment: Hold Disclosure: Held
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