AXE Chart, page-114

Yes it's good to talk about how to value AXE at this stage.

If we take AXE as a potential IP vendor - a fabless semiconductor/materials company that is designing a chip in house. It charges an up front initial license fee to anyone who wants to use its chip technology. This fee depends on complexity of IP, cost to develop, targeted use and expected volumes. Every unit that is actually manufactured and sold will attract royalties.

Question is, how developed is the IP at this stage. It is definitely complex and pioneering work. Will a potential chip vendor be evaluating this right now. Well TSMC has been given access and will be evaluating. AXE has done at least 3 to 4 years work on the 12CQ in its current form. That kind of lead time cannot be bought other than to license the 12CQ from AXE and find ways to include it in systems on chips designs. Since AXE continues to talk of scaling and every day use, and since AXE has mentioned smartphones, we'll assume a decent volume of sales. So royalties would be the continuing revenue stream. Even at a very conservative $5 a pop, this sounds great in theory.

Cost of CMOS production masks has figures of around USD 0.6 million to develop at 55/65nm CMOS. Development/validation/verification costs I will conservatively X10 and say USD 6 million. I don't think AXE has spent much of its AUD 24 million YET but soon its biggest costs will be personnel and followed by testing, verification, software development.
AXE has the capability to develop different hardware IPs for different clients, its lithography know how and talent is one of its major assets. It can handle paying for the best in class talent and I believe has a team and collaboration with EPFL that has got us this far and is continually looking to solve for more efficient integration into silicon. How to value this particular asset, I hope both consumer electronics and defence are doing some sums.

At what point does a major like TSMC decide that it wants this IP. I believe it's when AXE can reliably demonstrate it can integrate its qubit material into any chip configuration. Just this hardware know how alone is an advantage IMO, leave alone the the coherence times and potential range of applications. There is enough software development to manipulate the qubit states and read out. AXE, could even get the 12CQ design so similar to TSMC CMOS, that AXE can sell the architectural license and turn its attentions to more classified designs that provide a separate revenue stream. The only thing I would wait for, if I were a chip maker, is for when the qubit material proves robust at the typically higher operating temps of most electronics.

And of course, the outlier is defence applications. They can probably see right now that the potential here has been demonstrated. So is AXE worthy of being valued at over a billion dollars now. Not beyond logic, when we see how other speculative stocks with no revenue go to billions based on hope alone.