This is my complete transcription/analysis of the points ortakeaways from Ken Scarince's presentation.
I listened to the presentation live and so some of thetranscription is assisted by my memory of what was said where some parts ofStan's amazing recording are not clear. If it is not in inverted comma's it ismy summary for context sake or my comment or interpretation and should not beconsidered something said by Ken Scarince. When putting down what Ken Scarincehas said I have not included um’s and r’s and corrected some minor conversationalspeech and inserted what I considered to be the end of sentences.
Accordingly, I would suggest that you might be best served by using this in conjunction with listening to the recording Stan made as I am not pretending this to be a verbatim transcription of his every word:
1. Market Outlook
60 billion addressable market. Brainchip does notexpect to capture it all.
"we believe we have avery big lead and can keep this lead for years to come.."
"Intel are our significant competitor butseveral years from commercialisation"
"We think today we have a good lead but wehave to stay focused on it.."
"When you have Intel focused on somethingit brings a lot of credibility to where AKIDA is at.."
"If you look at the chart we are the onlychip that ticks all the boxes so a considerable lead for now.."
2. Revenue
"Our first and top choiceis licencing the IP. We get revenue off every chip sold in perpetuity.."
Chip sales are not Brainchip's preferred model asthe margins are far less than IP sales
"We do have interestedparties in chips.."
"We will be producing chips and boards forretail customers but that won't be happening just now, probably next yearsometime.."
"Not for revenue but to build familiarityand establish it as first chip of choice for edge Ai.."
3. Time Line
Is in tact.
"Testing will befinalised in the next 2 to 3 weeks. If all goes well with that we expect tostart taking orders for the chip..."
"We already are selling our IP..."
"We have already done a licence for theIP. That we did very early, it happened last November with a Japanese chipmaker. They have licenced our IP and they are working on their chip right nowand it is expected out some time next year..."
Later in the presentation KenScarince clarifies this and makes clear he is referring to RENESAS Tier 1company and third largest semiconductor supplier to the automotive industry.
4. Early Access Partnerships
There are 15 EAP's - this is taken from the slide presentationthat Ken Scarince was speaking to at this point.
"A lot of interest fromautomotive not just FORD, there are others, big companies looking at us, we area very good fit for autonomous driving because of the .." dead end that current deep learning is froma power requirement and bandwidth connectivity perspective "Ai has to be done in the vehicle you cannotrely on the cloud... it needs a revolution in technology and we believe that iswhat AKIDA can provide.."
5. IP Licensing & Research Partners
"RENESAS is the IP licence we sold lastNovember...Very reputable Tier 1 company... proud to be partnered withthem...We are looking forward to when they bring their chip to market..."
"Biotomeis a research project. We have done a couple of interesting research projectsand Biotome is one detecting antibodies in blood samples. We did anotherdetecting Covid 19 in breath samples with a 95% accuracy..."
"We are excited about the differentindustries that are opening up and we think there are ENDLESS OPPORTUNITIES especially in automotive and medicaldevices."
"When you consider a lot of things thatwere considered IMPOSSIBLE AND IMPRACTICAL before that is going to change and AKIDA is going to USHER IN AWHOLE LOT OF NEW DEVICES CONSIDERED IMPOSSIBLE BEFORE.."
6. Management Team
This part of the presentation showed a slide of the four members of the management team Peter van der Made, Anil Mankar, Rob Telson and Ken Scarince.This was straight forward and can be found on the Brainchip website under ‘ABOUT’ except for the following when Ken Scarince spoke to Rob Telson:
“We are very interested in adopting the ARM revenue modelwhich is heavily focused on licencing intellectual property..”
7. Summary
“What we are trying to do is pull processing out of thePC and directly onto the device…”
“That is a grand plan but we think it is very plausible..”
8. QUESTIONS AND ANSWERS
This part of the presentation is hampered by the way the questions were being put so I have had to put my own interpretation on the question to make clear what I think was being put to Ken Scarince but I have tried as far as possible to accurately present his answers.
Q.1. – What commercial engagements does Brainchip have toreport?
A. “Renesas is the only commercial engagement that I amable to report upfront.I’m not allowedto talk about aspects of that engagement.What I can say were progressing, there have been some delays Covid andthings like that, we are still very encouraged …we think it will probably allcome together early next year.”
Q.2. – Do you have an update regarding NASA?
A. “I can say that NASA is very excited about what theyhave seen. They have expressed an interest in doing more. Yes, I mean theyare REALLY HAPPY um (laughs). That’s about all I can say about thatas well.We hope that is going to go onto another project and if it does we will announce that as well.”
Q.3. – Chips do you have capacity projections for chip buildsin 2022 & 2023
A.”Good question.”
“We are not going to build chips for inventory so we willonly byuild chips if we get chip orders, other than for the Boards program Ispoke about earlier and to satisfy EAP customers.So I am not sure about capacities.We have great partners. We were able to producechips during the chip shortage and we attribute that to being partnered up withSocionext and TSMC.As to how much wecan do not sure how to answer that. What I can say is we do not plan to buildany chips unless they are ordered by a customer so we won’t hold any inventory…”
“Our IP is more economic for a company if they are reallyintent on high volume production”
MY COMMENT – RENESAS HAS LICENCED THE IP – THIS STATEMENTTELLS ME THEY DID SO BECAUSE THEY ARE ‘REALLY INTENT ON HIGH VOLUME PRODUCTION.’– FF.
Q.4. – What is the available capacity for producing chips
A. “Socionext and TSMC are our partners. I don’t know howthings are for them going forward. I do know they have made capacity availablefor us when needed and it might be because we are so small. We are not doingruns in the millions of chips.Also Idon’t think we are hitting their chips using high demand technology as we’reusing 28nm technology, I don’t think that is one where auto makers aresuffering shortages from right now.Ican’t tell you what capacity would be like if we needed them to build a millionchips for somebody else. I just don’t know.”
Q.5. What is the most important think to open the marketup to AKIDA technology and the risks?
A.”I am not the marketing guy that is better directed toRob Telson.”
“I think what is opening up in the market right now is howcompanies and consumers are understanding that Ai can move to edge devices. I thinkthat trend needs to continue. They need to start building and designing thingsthat uses this capability.”
“A year ago people would say to the sales guys this isgreat technology but we don’t know what to do with it.That was hard.We were offering a solution that did not havea problem yet.”
“A lot of technology when it first comes out people don’tknow why they need it and a year later they can’t imagine living without it sowe are counting on that migration to continue.”
“Then if there were some other development in traditionalAi or connectivity that makes some of our advantages to go away we really needthe market trends to continue the way they are going.”
Q.6. The share price is it undervalued?
A. ”It is undervalued right now.”
“There has been a lot of shorting.”
“I don’t know where it will settle outbut in a couple of years it will be worth afew billion dollars.That’s my opinion.Right now its tough to price this thing till revenue. I think when this chipgoes to market the share price will follow quickly.Those who have been following this technologyif they are short, I think they are going to learn a hard lesson.”
“But its tough right now because we can’t talk aboutcustomers and we can’t talk about deals we are working on, but when we can itwill be appreciated.”
“Some of the acquisition values of the companies bought latelyby some of the giant chip makers, if you compare them to what we are doing Ithink that will give you an idea of the value we should have.”
Q.7. What is Brainchip’s sales distribution strategy?
A.”Again this is best dealt with by Rob Telson but it isa multi pronged attack. He is partnering up with distribution companies indifferent countries because we are too small to cover the globe. He is findingreally high quality distributors in countries to handle that for us. So likelywill be announced sometime in a month or so about the partnerships we havebeen doing.”
“Domestically we are comfortable and can cover that againour aim is to push IP so we don’t have to have a global distributionnetwork.We will also partner up ifsomebody does want to buy chips and likely partner up with one of the companieswe have worked with in the past and have them build the chips so we don’t haveto get into the manufacturing business.”
Q. What do you consider the biggest risk?
A.”The biggest risk. Economic shock to the supplychain.Issues this could create if ourIP customers can’t build chips that would be a problem.The auto industry is suffering from that atthe moment.”
“There is always competition to keep an eye on. Intel. Acompany popping up with something as food or better to keep and eye out forthat. That is one of the reasons we are continuing to spend money ondevelopment.”
“Absolutely cannot rest. We know that. We are pre-revenue for the most part, but weneed to keep that investment going to keep our technology ahead of everybody.My biggest fear is somebody catching up.”
(AT THIS POINT THE QUESTION IS A BIT CONFUSED BY THE CONVENOR SO I HAVE HAD TO BE A BIT CREATIVE – FF)
Q.8. Can you comment on the chip price and how the IP ispriced & how long is the company presently funded?
A.”The IP licence fee I cannot give specifics on rates,we already have one IP licence negotiated.”
“Run rate cash on hand Q3 is about $US20 million whichis about 18 months.The development ofanother chips next year is likely to take $US5 to $US7 million if it proceedsthen.”
“We just extended the LDA Capital agreement and are verycomfortable.”
“Right now, we have 18 months of cash RIGHT NOW.”
Q.9. Was the extension of the LDA Capital Agreement arequirement of an EAP or customer and what is the budget for commercialisationand R&D?
A.”It was not a requirement of a customer,There was no pressure from anyone which is goodnews. Everybody takes a good look at you as a start-up. But that question has been removed by the LDACapital facility.”
“Can’t go into exact amounts budgeted forcommercialisation and R&D.We have enoughcash to do the commercialisation strategy. So really what we are doing with theLDA Capital facility is…..inaudible……commercialisationI don’t expect that to be millions and millions of dollars maybe a million.”
“If we do the chip development next year that will befrom 5to 7 million depending on what wedo.”
“ So my biggest concern is that we need to commit to thenext generation of AKIDA and we need to do that now because again Intel isright behind us and we need to maintain first mover advantage so these arerough numbers that what we are thinking about for next year.”
“The average price of AKIDA chips for budget purposes areany where between $10 to $15 US dollars and that could vary if it’s a reallybig order. It is an expensive chip that is why we sell the IP.”
My opinion only DYOR
FF
AKIDA BALLISTA
(20min delay)