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Date : 08/12/2020

Weebit Nano (ASX: WBT)

ASX :

WBT

Market Cap : $134.15 Million

Buy

52 Week Range : $0.20 - $2.47

Share Price : $1.76

WBT is an early stage company with a huge market potential. We recommend members to "Buy".

Company Analysis

Weebit Nano (ASX: WBT) was trading at $0.28 a share up until late August. Since then, it has had quite a ride with a 52-week high of $2.47 a share. During 2020, WBT has returned 345% to shareholders at its current share price of $1.76.

Our members have been no stranger to the stock. We have covered Weebit Nano ASX news 3 times, with our first buy recommendation coming in at a share price of $0.73. There is a lot of volatility associated with a stock such as WBT due to speculative pricing. Every update announcement released by the firm tends to be price sensitive and thus, it is important for investors to hold a position in the stock with a long-term strategy in mind.

weebit nano asx news and trend fy 2021
Source: Tradingview.com

 

Weebit Nano Q1 FY2021

The firm reached another milestone in its product roadmap. The stabilisation process has been completed. This means that WBT’s technology has been verified and its production process is now repeatable and ready to be transferred to the production fab. Over 99% functionality has been reached in Weebit’s memory during the stabilisation process.

With advancements in product going as planned, WBT has been busy optimizing the business side of things. Eran Briman has been hired as the VP of Marketing and Business Development for the company. He comes with significant experience and know-how in the semiconductor industry, and also exposure to the American market. WBT is looking to get its partnership agreement right and also define its business model as the firm moves closer to generating revenues.

Weebit Nano’s priority has been to embed the memory module on its chip. Along with its partner Leti, WBT has reported that advancements have been made here in this space during the period. A successful completion of this would mean that WBT’s chips will be more likely to be adopted as embedded memory brings added advantages.

Every quarter has been leading to WBT filing for a patent to protect its technology. This quarter has been no different with the firm filing for 3 patents. During the quarter, WBT received $2.75 million from its Share Purchase Plan. The total costs incurred for the firm has been $1.6 million.

Outlook

R&D is the most important area of WBT’s business at this stage. With the firm aiming to become a leader in the next gen memory market, expertise in the R&D department will be what can drive adoption. In mid-November, WBT announced the appointment of Ilan Sever as the VP of R&D. Ilan brings a lot of experience in the very large-scale integration design department to WBT. This appointment along with the VP of Marketing has been perceived well by the markets.

In addition to the appointment, WBT have extended the partnership agreement with Leti, their research partner. Along with production, the partners will be looking to make advancements of the ReRAM technology in the embedded memory module, and development for the selector and standalone memory market. These are steps in the right direction as the firm gets closer to commercialisation.

With plans in place for R&D and commercialisation, a cash runway has been addressed as well. A $12 million equity raise was completed late last month via a placement offering. In addition to this, a $3 million share purchase plan has also been offered to existing shareholders. The SPP presents an opportunity to eligible shareholders to apply and purchase shares without brokerage or transaction fee. The closing date for the SPP is 5pm, 15th of December 2020. Weebit Nano has confirmed that the funds will be utilised for the next development phase for the standalone memory market and increase their activities to begin commercialisation in the embedded memory market. Neuromorphic technology research is also an area where some of these funds will go towards.

WBT ticks 3 very important boxes when considering investing in such an early-stage company:

  • Constant R&D investment and advancement
  • A knowledgeable & experienced board
  • Cash Runway to take it through to the next stage

The Commercialisation Opportunity

The industry is driven by two very different technological solutions on either end of the spectrum – DRAM and Flash.
DRAM is a high speed and highly volatile memory. In a nutshell, high volatility means the chips lose the data as soon as power is cut off. The chips are associated with high power consumption and high costs per every gigabyte of memory. The data is limited to 2D density.
Flash however is quite the opposite. Its costs have been decreasing every passing year. It comes with speed much lower than DRAM, but it has 3D density capabilities (meaning, more data can be stored), and very low volatility & power consumption.

WBT has signed a Letter of Intent with XTX Technology, a Chinese developer of flash memory chips, to research the possibility of deploying WBT’s SiOx ReRAM technology in XTX products and cooperate on sales and marketing efforts in China.

By 2025, research estimates reveal that an average person will interact with 4 devices every day. These devices are only getting smarter and in order to get smarter, they should be capable of storing more data, delivering it at higher speeds, reduce volatility of the data, and of course consume less power.

This rapid growth in data storage and processing is driven by a wide range of applications in a lot of industries. Phones, computers, and electronic devices are not just the sectors that demand faster and innovative memory anymore. With the emergence of technology, almost every sector is on the verge of disruption with big data and machine learning capabilities becoming more mainstream. Artificial Intelligence and Internet of Things applications are more widespread than ever before. The one common requirement for all these sectors is the availability of faster, denser, less volatile memory that also comes with lower power consumption.

The market size for DRAM at the end of 2019 was US$ 45 billion. While that of Flash memory is about US$ 60 billion. The demand in the industry is at levels that we have never seen before as storage requirements are growing at 2x year-on-year.

flash memory market size graph

ReRAM is said to be that technology that will reinvent the industry by combining the pros of both Flash and DRAM. WBT’s ReRAM chip consists of a Silicon Oxide layer sandwiched between two metal layers. While we will not go into technical details of the structure of the chip, this is a simple structure that is easy to manufacture and is cost effective.

The potential for commercialisation for WBT is thus huge. There are 4 markets that the company is targeting for commercialisation:

  • Embedded Applications
  • Persistent Memory
  • Neuromorphic Computing
  • Storage
Recommendation

Weebit Nano is a very early-stage company with huge market potential. This is exactly why there is a high degree of share price volatility in the short-term. As of 8-Dec-2020, we recommend members to “Buy” with a long-term strategy. For members who are eligible for the Share Purchase Plan opportunity, we recommend you “participate” in it at the offer price of $1.70 per share.

 

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