Posted on June 8, 2021 by Ashleigh Day
The post-Covid business resurgence isn’t just for retail and travel, many companies have been executing all along and are poised to shine in 2021 and beyond. The pandemic has provided a huge tailwind for incumbent semiconductor companies, which has benefitted their share prices, as the demand for chips has soared, fueled by work from home and increased online activity.
However, not all semiconductor companies were in position to benefit from these circumstances. This because chip manufacturers were not in a position to update everyone’s processes and technology with technology from new vendors. Sales to companies that were not core to meeting pressing demands were put on hold, with projects delayed due to travel restriction for onsite installation, supply chain issues and labor constraints.
There is an opportunity for investors in companies that suffered sales cycle delays as a result of the pandemic, but strengthened their product offerings and pipeline. The pandemic has created pent up demand and the reopening should accelerate their sales as a result.
Three companies introducing new semiconductor technology, AEHR Test Systems, Atomera, and Quicklogic continued gathering positive data for customers, enhancing their products, and better positioned their companies for the future. As fabs reopen to vendors and travel restrictions ease, these companies are poised to accelerate their growth. Here is a quick summary of these 3 companies:
AEHR Test Systems (AEHR)
Travel restrictions and lockdowns prevented outside vendors from entering fab facilities to install new test equipment. AEHR’s pipeline was accelerating pre-pandemic, but everything was put on hold until late 2020. Since then, AEHR is said to have been approached by Apple to solve their problem of ensuring reliability of their next generation health sensors for new products. In the spring, AEHR successfully provided its unique wafer level test solution, an industry first and that I have written about here:
I spoke to the CEO with fellow Breakout Investor Brad Steveson after their last earnings call…not only was he hard to get ahold of and said he was very busy these days, but he seemed very confident in their future and their electric vehicle equipment and silicon photonics for data center and 5g business getting back on track. A few weeks later, they announced another order from their Silicon Carbide customer and expect to land another in the near future.
Breakout investors were able to pick up shares confident the business remained intact and that these orders would materialize and create shareholder value.
The company has many customers evaluating their technology and it was able to continue generating data during the pandemic. In January, the company announced its first JDA and subsequently has transferred its technology. Once in production, hopefully next year, this agreement should lead to meaningful royalties at very high margins of 90%+. The stock had sold off in May 2021 due to conservative language on the conference call. In a private call with investors, the CEO said that while the language was intended to manage investors expectations of an imminent second JDA, the company was moving forward as it expected with no delays.
Link to the recent conference call post:
Investors were able to take advantage of the weakness post CC knowing the company remains on track.
Quiklogic, maker of programmable low power edge computing chips and SensiML suffered from supply chain issues at one of its soon to be customers, Roku, who was going to use QUIK’s chips for “always on” voice enabled remote controls. As a result, Roku shipped a version without the always on functionality. Despite this setback, QUIK in the past year has been qualified on Globalfoundries platform, obtained qualification for Amazon Alexa for its smart hearable reference design, and introduced several new products.
One the last call, the CEO reiterated 2021 would be Quiklogic’s breakout year, with profitability by Q4, and tens of millions of dollars in RFP’s and RFQ’s, just 6 weeks into the quarter.
To read more about our writeup on the most recent quarter, here’s a link: