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Atomera is an IP licensing company that will generate royalties by semiconductor companies adopting its technology into any of the worlds roughly 500 semiconductor nodes in today’s 370 fabs. Atomera has created a patented, quantum engineered material called Mears Silicon Technology™ (MST®) which enhances transistors to deliver significantly better performance in today’s electronics that results in higher performance, lower power, and lower costs for ICs. Once the first companies adopt the technology it is expected that the rest of the industry will follow to stay competitive.
Q2 Summary from 8/3: The JDA customer continues on track and all 10 of the companies in Phase 3 continue moving towards production. No development delays as importance and benefits of adopting MST is giving it priority in the fabs even during the high capacity usage they are currently seeing. Ongoing discussions continue with customers for either JDAs or licenses to enter Phase 4 and a deal could happen at any time. Recent whitepaper showed importance for next generation semiconductors and although the paper is targeted at manufacturers of 3D transistors like nanosheets and gate-all-around structures, the benefits described also apply to work going on in memories, CMOS image sensors, and in other advanced products.
The example shown below in this updated chart shows an example of a fabless company and how they will pay royalties. These piece part royalties will be in the range of 1-3% of the Average Selling Price (ASP) of the part and will be similar to what other Integrated Device Manufacturer (IDM) customers like STMicro, Samsung, Intel, SK Hynix, Qualcomm and Broadcom will pay. The example shows not only the advantage of a die shrink in terms of capacity increases but also demonstrates the business case in terms of royalties to Atomera and additional profits for the adopting fabs.
As seen in the slide example by adopting MST they can shrink the die by 25% and this increases the chips per wafer from 2235 to 3001. This change increases the chips per wafer by 766 but the actual production capacity increase is 34%. Imagine the impact on the chip industry if everyone could adopt the MST technology and get a 34% increase per wafer in chips? Also by increasing die/wafer there will a huge decrease in the amount of water, power and materials used. ESG is on every companies agenda and this is the only way to improve the 370 legacy fabs that will still be producing chips for the next decade. Also if you don’t adopt the technology your fab is going to be at a huge competitive disadvantage. Fabs making money is the second most important item besides meeting delivery commitments and by adopting MST they can either make more money or lower their prices and take market share.
Besides the 34% increase in capacity there is also an example of what adoption means for Atomera in terms of royalties and also added profitability for each adopting fab. Using a standard 2% royalty, that is in the center of the typical 1-3% range, it can be seen that Atomera will make around .09 cents per $4.24 part sold. A large volume fab will typically produce 80k wafers per month although the very large fabs can produce 120k-200k wafers per months. A simple calculation shows that Atomera will earn $255m/year on every node it is adopted on and the fab will generate an additional $3b in profits. These numbers demonstrate such a compelling business case that its not a matter of if the technology will be adopted but how quickly can it be implemented. After some discussion with some industry experts my revised estimate to implement into each node is under a million per node and 9-12 months to go from Phase 4 to production. Originally I thought implementation would be much higher but I am now convinced it is much lower and probably already installed in a number of the phase 3 customers fabs.
While previously I had estimated the potential node royalties for wafer fabs adopting MST technology at roughly $64m/node in royalties now we can see that the example provided for piece part royalties is much higher. With my expectations that a range of 8-12 nodes will be in Phase 4/5 by the end of 2021 I am updating my price targets to include 2023. I still don’t expect significant royalties until 2022 but suspect the stock price will continue to rise as progress like the announcements of JDA #1 going to Phase 5, JDA #2 being announced or even the EPI tool being certified and put into production to drive the share price during 2021.
- Atomera (ATOM): Royalty potential is highest the industry will ever see (Wafer Fab $64m/node)
2021 Price Target. Range $100-$150 based on 8-12 nodes in process of coming online.
2022 Price Target. Range $250-$500 based on first royalties on 4 nodes starting production. Roughly $250m-$500m in royalties or $5b+ market cap,
2023 Price Target. Range $500-$1000 based on 4 IDMs in full production at $255m/node and 4 Fabs in full production at $64m/node for a total $1.25b in royalties in 2023. Market cap projections at $12b+.
All the above numbers are just rough guesses and only include what I believe covers the current 4 licenses that are known today. There are multiple other companies in Phase 3 that should also be expected to move forward in future months. As they advance these numbers will be updated.
Any due diligence from this site is for entertainment only and not a solicitation to buy or sell Atomera stock. Any estimates are just examples of what is possible and should not be considered financial advise. I have not been compensated in any way and will never be compensated for my reports.