The Brainchip Holdings Ltd (ASX: BRN) share price jumped 29% on Thursday after releasing two price-sensitive announcements and coming out of a trading halt which commenced a day earlier.
The BRN share price had surged over 50% at one stage this morning but has since come back down to around 42 cents per share (up 29%).
While this is still a fair amount off its September highs of 97 cents, Brainchip shares have still performed extremely well since the start of the year and are still up over 900%.
NASA announcement
Brainchip’s first announcement revealed that the US National Aeronautics and Space Administration (NASA) has placed an order for Brainchip’s Akida early access evaluation kit which will be used by the NASA Shared Service Centre (NSSC) at the NASA/Ames Research Centre (ARC) in California.
NASA will use the evaluation kit to assess Brainchip’s technology for use in programs with a neuromorphic processor that meets spaceflight requirements.
According to the company, Brainchip’s Akida network chip has been “inspired by the spiking nature of the human brain and is implemented in an industry-standard digital process”.
Unlike other chips, Akida is a complete neural processor and does not require an external CPU, memory or Deep Learning Accelerator. In space applications, it’s paramount that there are as few components as possible that are also efficient in size and power consumption. According to the company, Akida supports these critical criteria.
First Licensing agreement
Brainchip also announced this morning that it had signed the first Akida intellectual property (IP) license agreement.
Under the agreement, Renesas Electronics America Inc, a subsidiary of Japan-based Renesas Electronics Corp, will use the Akida 1.0 neural network intellectual property for use in its system-on-chip (SoC) licensed products.
Renesas is a tier-one semiconductor manufacturer that specialises in microcontroller and automotive SoC products.
Brainchip will provide implementation support services at an agreed price to cover costs and will receive a single-use, royalty-bearing, worldwide IP design license for the rights to use the Akida IP in Renesas’ products.
Payment terms haven’t been disclosed in detail, but it has been advised that the payments for the ongoing royalties will be based on the number of units sold and that these royalties will remain in effect throughout the life of the licensed product.
Some of my thoughts
It’s great to see some material contracts being won by Brainchip. The technology looks promising and it’ll be extremely interesting to see how the company advances over the next few years.
As far as I can see, there hasn’t been any mention of the contract value for either the NASA early access program or the licensing deal with Renesas. As such, I think it’s really early days and the share price is still very much a guessing game at this point.
Investors have actually known for quite some time that some deals with NASA and other large companies were in the works, so it’s probably fair to assume that much of this information was already priced in.
My own investing style mainly revolves around finding companies for which you can get a rough sense of value. By this, I mean by seeing how the market values its shares (market capitalisation) and then comparing this to its expected cashflows.
Without any cash flow metrics for Brainchip, I find it hard to get a rough sense of value, which is why I won’t be buying shares for a while.
For some more share ideas, click here to read: 3 ASX shares for your 2021 watchlist.
