Atomera (ATOM ): Is it the next Qualcomm ( QCOM ), Arm Ltd, Universal Display ( OLED ) or target for SoftBank?

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Investors often ask what is my stock going to be when it grows up? In the case of Atomera, as discussed on the recent conference call, it is leaving the first phase of a companies life, the development stage and headed towards revenue and growth. In my mind Atomera is starting the second inning of a nine inning game and its hard to say exactly what it will become but it will be very unique like Universal Display (OLED ) turned out to be. Some of the possibilities are Atomera may end up being a major IP licensing company like Qualcomm who started out in the CDMA space, Arm which became a major designer of CPUs or be acquired by a company like SoftBank that will use it as a cash cow generating royalties for years to come.

My personal belief is the best comparison would be Universal Display (OLED) which was also mentioned by Atomera’s CEO Scott Bibaud. Looking at Universal Display it is easy to see similarities. Universal Display took around 10 years developing materials and acquiring patents on the materials that are the foundation for OLED displays. Now virtually every OLED display made licenses their technology and the company has an $11b market cap. Their patent portfolio has built a fence around the technology and they have disrupted the display market by capturing roughly 25% of the total available market size of $80b. Atomera also is looking at becoming a disruptive player in the $450b/year semiconductor space. They have built an extensive patent portfolio that others will need to license to take advantage of their technology. Current market cap is roughly $780m and after signing their first JDA are on the cusp of industry wide adoption into the space. While adoption takes time once it has now started the pace will pick up. As was found with Universal Displays there were no other options and companies either licensed or stayed out of the OLED market. The same may very well happen here as the advantages of MST technology which allows higher yields, lower power and smaller die(increased productivity) will be a competitive advantage to those adopting.

The question that continues to come up is why won’t these worlds largest semiconductor companies they are working with allow Atomera to mention their partnerships. Here is a simple example. Lets say you are Apple. The small company you have been working with for years has come up with a way for you to lower your new IPhone costs by 50%. Great for Apple in that they either make twice as much money or undercut their competitors prices and gain huge market share. So what are the upside for Apple allowing this tiny company to tell everyone that by Apple using their technology they are making Apple a ton of money? NONE. In fact if Apple lets them do that they give away their future strategy and everyone in the industry swamps this company wanting to work with them. Worst case one of these other companies decides to buy the other company and cut off Apples access to the technology. Given that example its not hard to see why secrecy is a top priority. The fact is adoption of MST allows almost a full node of performance benefit without having to go down a node. What could this mean? The DRAM that one company is building on a 7nm node can be built on a 10nm node. The cost of the part is now 25-50% lower. The ability to undercut your competition is huge in the semiconductor market and its not hard to imagine why you might not want other people to know what your doing.

Atomera is going to generate royalties by licensing their 269 patents into the $450b semiconductor space. In 2020 they had 26 additional patents issued and one so far in 2021. Their first JDA was just signed with a major wafer fab and my estimates for generating royalties are based on just 1 JDA covering up to 4 nodes. Worldwide there are 370 fabs and roughly 500 potential nodes.  Expect additional JDAs and to find out who these major fabs are which is likely to spark a major run.

The companies share structure is tiny with only 22.4m shares outstanding. They also have roughly $37.9m in cash, no long term debt and no need to raise money. The amount of shorted shares has been between 2.2-3m and the actual float is tiny. With the right news the potential for a short squeeze is high. 

2021 going to a Breakout Year
Wafer costs significantly increase as nodes get smaller

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.