Not sure if $14-15 would be the cost of these chips as this assumes that only a total volume of 40K chips are on order from EM for the stated price. How many is 'tens of thousands'? It could be only 40K, or it could be many more. I would think those would be the first batch of pre-production chips from the 6" wafers. Those from the 8" wafers will come up to 6 weeks later. $14 per chip would go against what has been said about the lower cost profile of the new design of GEN-II chip made on the bigger 8" wafers (~double the number of chip dies, 30% lower cost).
Note comments in Jan 23 onwards:
4C Jan 2023 "... During EarthMountain’s visit in September 2022 we mutually concluded that the not only were the defined objectives for MEMS GEN-I achieved, but that sufficient knowledge, experience and investment were made to ensure success producing and packaging MEMS GEN-II to spec. Consequently, as reflected in our Appendix 4C, the company has paid a prepayment of A$586K and issued a purchase order for 10’s of thousands of fully packaged MEMS GEN-II pre-production chips that will be fully tested for compliance to spec prior to shipment. ..."
How many is 'tens of thousands'? Is it 40K or 140K? We do not know, tens of thousands is simply too ambiguous to draw conclusions on, but I would be very surprised if the ongoing costs of the finished chips from 8" wafers will have got up to $14 each in AP's hands.
AGM May 2023 "... We will address some of those tales in more detail during the Q&A session, but in an effort to move things along let me quickly address some of the strategies and actions we are employing to minimize challenges involved in transitioning from 6” to 8” wafers.
First and foremost, we continue production at the 6” facility, at least until such time that AP approves EarthMountain’s wafer production at its 8” facilities. ..."
Those at the AGM Q&A may wish to comment further.
HY Jun 2023 "... For the sake of clarity and compliance with ASX disclosure requirements, the Company’s upcoming critical milestone is focused on the demonstration of the commercialised version of the technology. Earth Mountain’s is forecasting that it will be able to begin delivery of MEMS GEN II sometime in September 2023, being the order of the pre-production chips Upon arrival, the chips will undergo characterization to ensure compliance with our specification. This is required not only for usage in demonstration systems, but to also enable Earth Mountain to calibrate mass production processes. Upon confirming compliance (within reason) the chips will be incorporated into existing GEN-I demonstration systems. ..."
Calibration of mass production processes refers surely to ongoing manufacturing on predominantly 8" wafers into the future. These will be the real 'mass production' versions.
"... In the opinion of the directors, the ability of the consolidated entity to continue as a going concern and pay its debts as and when they fall due and payable is dependent upon:
The receipt of the 40,000 pre-production chips to specification from Earth Mountain in September 2023 to enable testing and subsequent demonstration of the product;
The successful completion of the current testing phase of the technology, enabling the consolidated entity to successfully demonstrate the technology’s capabilities and negotiate commercial contracts with interested parties;
. . . . . .
The ability of the Company to secure additional capital by November 2023 to fund working capital requirements and fund the production ramp up, including payment of the USD$9,600,000 purchase order for Earth Mountain, with payment to be made on a progressive basis commencing in December 2023;
. . . . . . ..."
This 40K sounds to me like the pre-production set ex the 6" wafers. These will be tested and once approved will then installed on demo boards for prospective customers to evaluate, and then provided as sample chips to those same customers. AP does not have a huge number of demo boards (12 units?), so at the most that would require up to a thousand chips, more if you include the 4 chip boards. But I would expect the chip sampling program to customers could also use quite a few of these 40K pre-production chips.
I would guess that the chips will ultimately cost AP somewhere between $4-10 each at commercial production levels. That is still great considering its audio performance is better than anything else for its size. The cost of a speaker system on a product is not just the cost of the speaker itself; it is all the ancillary bits around it, which AP does not need. The economics of the deployment of the chip is as yet not quantified, but I expect that AP will be very cost effective even after a good margin is added. That is my hope of course.
For now we can all go back to drumming our fingers for a few more weeks! Dang!
(20min delay)