Weebit Nano (ASX:WBT): A lot is happening at the moment!

 

Weebit Nano (ASX:WBT)

We caught up with Coby Hanoch, CEO of Weebit Nano (ASX:WBT), to talk about the company’s progress with bringing new customers on board, getting to first revenues in 2023 and the massive opportunity for ReRAM going foward.

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See the full transcription below.

Disclosure: Stocks Down Under/Pitt Street Research directors own WBT shares.

 

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Transcription

 

Marc: Hello, and welcome to “Stocks Down Under.” My name is Marc Kennis, I’m one of the co-founders, and today I’m joined by Coby Hanoch, the CEO of Weebit Nano. Good morning, Coby. It’s still morning in Tel Aviv, right?

Coby: Yes.

Marc: So, busy times for you, I understand. Obviously, a lot has happened with the share price, which we’ll talk about today as well. And I guess part of what’s happening is, you know, news flow and insurers have come into the stock, obviously. But I guess people are looking to, yeah, get more news out of the company in terms of what’s happening and what you’ve talked about in the past. So, let’s just kick it off with that. You’re in advanced conversations and discussions with a number of companies, prospects, etc. What’s the progress on these discussions? And I guess because, you know, in the industry, which is actually really conservative, stuff like that takes very long, right? So, what makes it so complicated? What can potentially push out these conversations?

Coby: And I think I explained to people already in the past the complexities and especially getting the first customers on board. So, I won’t really go into all of that. We are getting now a significant interest in our technology. We’re talking to different customers, specifically SkyWater customers, and making good progress. You know, sometimes you hit all kinds of things that you need to deal with, that have nothing to do with Weebit. Just as an example, it turned out that there’s a certain IP module that SkyWater is missing right now in their library. You know, when I was talking about foundries and saying on the shelf, they have all kinds of IPs. So, this specific IP module turned out to be a very important one for several of the customers that we talked to.

And we ended up working with the customers on trying to resolve that issue and finding a way around that and getting an IP for them. You know, this is something that has nothing to do with Weebit, but it caused, you know, quite significant delays with some of them that otherwise we could have already closed. So, you know, that’s an example of things that happen to us. You know, these customers, they have their schedules, they have their timelines on when they start new projects, when they need to make decisions, not everyone needs to make a decision immediately right now and things like that. But overall, the discussions… And by the way, some of these companies are actually names that even in Australia, people will recognize. So, you know, we’re really making good progress. It is, you know, a bit later than we thought, but nevertheless, we are very confident that we will be closing customer agreements before the end of this year and really start that push forward.

Marc: Right. Okay. So, it’s still plural as in, you know, multiple agreements potentially. That’s an important one, I think. It’s not just one, but several potentially. So, if you look across the spectrum, so you’re talking to customers of SkyWater’s, but of course, the foundries themselves are prospects, big ones for you. So, can you talk a little bit specifically about that group of customers or prospects I should say?

Coby: Yes, of course. You know, those are maybe the most important ones because once you get the bigger foundries on board, then all of their customers are potential customers. And there’s really, you know, significant work going on with many of these foundries. By the way, foundry/IDMs, you know, to remind you. Foundries are companies that have fabs that give services to others. IDMs are companies that have fabs of their own for their own products, and we are working with the big foundries and big IDMs, you know, in different stages of evaluations getting good results. I have to say, we’re very happy with the results that we’re getting in all of these evaluations and tests and so on and discussions. You know, we need to deal with issues that come up.

Sometimes even though we are using standard material, standard tools, standard everything, sometimes you have a situation where a foundry would say, “Yeah, it’s standard, but it’s at full capacity. So, we might need to buy a new machine, and it’s gonna take us so many months, and cost, and all of that.” And there’s all kinds of discussions around these things. So, I mean, you hit all of these things when you’re in the negotiations that you need to deal with. We’re moving forward. We’re making good progress with several of these guys. And again, I do expect before the end of the year, for sure, to announce at least one of them, that we’re moving forward with them.

Marc: Right. And so, you talked about names that people in Australia will know as part of the client base of SkyWater, but I’m assuming that’s true for foundries. Well, there’s a few really big ones, but IDMs, are those names that people will recognize or not?

Coby: Yeah, I mean, you know, if you look at the list of the top IDMs and I presented that list in previous meetings with shareholders, there are quite a few of them that I think even in Australia, people recognize and we are working with some of those. So, I think, you know, any one of the big foundries, even if people in Australia don’t know the name, they are one of the big foundries and they have, you know, a lot of customers and they manufacture capacity and so on. So, again, I think there is quite a big, you know, disconnect between all of the activity that’s going on in the company and what’s happening with the share price. But obviously, on my side, I’m just totally focused and we have so much work that we’re just totally focused on getting these deals done and pushing them forward. And I actually a few hours ago came back from another trip to meet one of these potentials and we’re all into it.

Marc: Right. So, if we can summarize those first two couple of questions into summarizing question, are you still expecting revenues to come in, maiden revenues in this calendar year?

Coby: Yeah, we clearly are. You know, as I said in the past, I wanna make sure that the expectations are set properly. They won’t be huge amounts, but, you know, some very initial payments that are related to some of these very initial deals, we are expecting to see before the end of the year.

Marc: Right. You alluded to it already, you know, in terms of what’s happening with the share price, and I found in my history or my experience as an analyst, you know, if the product is right and the management team and the board are doing the right thing, the share price will take care of itself, just be patient. So, I’m always a bit reluctant to ask the following question, but given that, you know, you were included in the ASX 200, which is phenomenal. It hasn’t done the share price much good though, actually similar to what happened when you got included in the ASX 300. But from your point of view where you’re sitting, and you know what’s going on inside the company and the conversations you’re having, can you share a bit of your insight into what’s happening with the share price? Just your thoughts on that.

Coby: So, anyway, I honestly, and people think that I’m not serious about it, but what’s happening with the share price right now is, I can spend my whole day just following the share price and who’s shorting and what’s happening and I won’t make any progress. So, I really am not looking at the share price all the time and not following it. And of course, you know, shareholders are contacting me and I’m responding about it. You know, what I’m told is that in Australia, when you’re included into a new index, obviously the index funds have to buy the shares. You know, from my understanding, they then offer them to shorters. And so, Weebit is not completely unique. Again, this is what I’m told and that’s what happened to us when we got into the ASX 300, and now, you know, it’s happening again.

And I can understand that, you know, we didn’t announce any significant news yet. So, you know, the shorters are, you know, doing what they’re doing. I’m sure that, you know, again, what I can control is getting deals done, you know, at least partially, it also depends on the other side, but we are pushing that forward. You know, as I said, there’s good progress with customers, with foundries, with different partners, and we are resolving issues that come up. We are pushing forward. And for me, that’s what counts. And I believe that at the end, you know, when we will get to the point where we have these things done and we announce them, that hopefully the market will recognize it.

Marc: All right. Yeah, makes sense. So, I think in general, yeah, like you said, you can control what you can control. Management should focus on that specifically. So, all right, enough about the share price, Coby. Just let me, just to conclude that by saying, as you know, we own shares in the company as well, my fellow director in Stock Down Under/Pitt Street Research, and we’ll continue to hold. We’re very bullish on this story, especially, and let’s zoom out a little bit, but because of the potential for ReRAM, right? So, it’s a vast opportunity. But can you talk a little bit about sort of, you know, high level about who else is out there in the ReRAM space, who is the competition? What’s the emerging competition, established competition? And I know you’ve talked about the potential before, but maybe zoom in a little bit on the market size in the longer term, and if there’s enough market there to sustain a number of providers of ReRAM technology.

Coby: So, we’ve been presenting analyst numbers about the size of the non-volatile memory market, which is, it’s huge. It’s expected to be over $120 billion U.S. in the near future. So, it’s a very big market. You know, there are several sections in it, and overall, it’s big. I think that today the clear message from the market is people want advanced new memories. Flash has so many limitations that, you know, people are looking for a replacement. MRAM is expensive and has all of its issues. And I think you can see in the latest Yole report that they show how the number of wafers with new non-volatile memory, pretty soon will be, you know, 60% ReRAM and, you know, much smaller numbers for MRAM and other things.

And I think that’s really what I’m feeling from the market. Obviously, I’m not objective, but that’s what I’m sensing very strongly from the foundries, from the customers. People are seeing this, the automotive space, etc. You hear about it all the time. The key point I think that is really important to understand is, you know, ReRAM is a very, very difficult technology to develop. It takes many, many years of hard work. When you look at the market today, I believe that Weebit is the only company in the world today that has what it takes to really break through and become the leader in ReRAM. And why am I saying that? In ReRAM there are four critical disciplines. There’s what’s called device, process, analog design, and digital design. These are the four disciplines that are required to really make ReRAM work.

The device and process are actually what is needed to make the memory array work. The analog and digital design are what makes the memory module and what controls it and all of the smarts of how you actually get the most out of that memory array. And today, when I look around, you know, there are not many ReRAM out there. You have the ones that are really in production mode or, you know, anywhere near production mode. It’s basically what TSMC has, and TSMC, you know, definitely I give it full respect and everything. And on the device and process, these guys are very, very strong. But TSMC doesn’t really focus on giving services on the design side. You know, we’ve heard from customers who go to TSMC and TSMC basically says, “Hey, here’s the module that we developed. You know, you take it or leave it.”

And the customer says, “No, but we need to make modifications. We need it to be ultra-low power. We need to have it very fast, or the endurance, or this.” And, you know, that’s something that you need to have a very strong design team who can actually support that. And, you know, we go to these customers and we say, “Hey, you know, we have this really big team that has all this experience and you just tell us what you want and we’ll do it and we’ll tailor it.” And we have customers who come to us with very extreme requests, and it’s very interesting. And, you know, we go and we’re working with them on how to give them the most optimal module so that they can really be efficient.

You know, when you look at UMC that has the ReRAM that they took from Panasonic, it’s not clear to me who’s supporting and continuing all of the device and process work there. And I’m not saying that they don’t have anyone, I’m saying, I’m not finding out who actually has that ability. I think we have a big advantage on that side. You know, so when you look at the different ReRAM companies, Weebit today is the only independent company that is, you know, in commercialization mode and ready to go. And we have a very, very strong device and process team under our CTO, Ishai, who himself has so much experience in ReRAM. He was one of the founders of Adesto and he’s been doing ReRAM work for, I guess it’s getting close to 20 years now.

He’s a real-world expert on ReRAM and in his team, we have more than 10 Ph.D.s that did their Ph.D. on non-volatile memory, you know, on ReRAM and so on. So, it’s really a very, very strong team. And under Ilan, our VP R&D, who’s been developing memory modules for so long, and he has so much experience, he’s known, you know, in the industry. And again, we have there a really, really strong team that can give that support. You know, overall customers, when they look at Weebit, they say, “Wow, you know, this is very nice. You know, the team is growing. It’s a good-sized team. It has this ability in all four disciplines, and it gives people a lot of confidence.” And I think that’s really a key message to pass.

We are in a very unique situation. We’re the only ones who can work with everyone. You know, we’re not tied to a specific foundry, and we have what it takes to give good support on all fronts. And that’s really, I think, the key message. So, I see a very strong future for Weebit. By the way, we’re continuing to develop game-changer technologies in the form of selectors and so on. We don’t talk about it a lot, but, you know, we are working on it. There’s still a lot of R&D work there, but once we get that happening, we will have significant technical advantages over other versions of ReRAM. So, I’m still very, very bullish about the future of Weebit.

Marc: You sound very bullish as well, Coby. You sound very positive, which is good, full of confidence. And I think it’s interesting what you mentioned, maybe you can briefly touch on the selected development because maybe you can summarize that for people that don’t know that, but that would open up a big market in discrete memory, right? So, for the large-scale storage solutions.

Coby: Yeah, we’re looking. So, first of all, you know, for those who don’t know, one of the big advantages of ReRAM is that it is what’s called bit addressable. You can actually access directly to every bit. So, in order to do that, every bit has what’s called a selector. And in the industry, the simplest selector, the most obvious one is a transistor. So, what everyone uses today basically is a 1T1R-type technology, basically one transistor for every resistor, or there is a variant that’s called 2T2R, but I won’t go into that. So, this is a great solution except for the fact that the transistor is somewhat big and has some limitations. So, you know, it’s great for the embedded memory space. It’s already a limitation when you try to go to the standalone memory market.

So, we are working on more advanced selectors for the discreet side, but actually, we’re looking even at how we can improve the selector technology, also in the embedded space even. So, there’s really a lot of work going on. We have a large R&D team that is working on this. We have the management focus, this is what Weebit does. You know, we are very focused on this, unlike the other companies that are dealing with ReRAM out there in production mold. And I think that’s a key thing, and we’re also well-funded for this. So, we really can continue that development.

Marc: All right, good stuff, Coby. Thank you very much for your time. I know you’re a very busy man. I caught you just off the plane, right? So, it’s good too that you’re busy, and yeah, look, again, sort of looking at what’s happening in terms of, you know, developments on your end, you know, new customers, new deals that are coming. You sound very busy, so yeah, hopefully, we can see that come through soon. And in the meantime, yeah, stop looking at the share price, it will take care of itself. And so, from where we’re sitting being very long-term shareholders, this is a long-term story, as in there’s a lot of potential, right, in different subsegments of the semiconductor market. And you’re addressing them one by one. So, we’re still very bullish. So, Coby, thank you very much for your time. And we’ll touch base when you have, you know, news flow coming out, we’ll definitely touch base again.

Coby: Yeah. And hopefully, it won’t take too long. We’re working on it. Thank you.