Is this the end for 4DS Memory (ASX:4DS)?

4DS Memory (ASX:4DS) has crashed over 60% this morning after a company update, which we think could potentially be the beginning of the end for the company.  

 

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Developing a new type of memory 

4DS Memory is a semiconductor technology development company, specialising in non-volatile memory technology. Based on Silicon Valley, 4DS has been working on a new memory type called ReRAM that could keep up with the explosive demand for more storage in people’s everyday devices and in data centres. It was doing so in partnership with HGST, a subsidiary of Western Digital.  

 

Third wafer batch does not turn out well 

For the last few years, 4DS Memory had been on a slow, but steady journey and had made significant progress, including signing its first commercial customer. But it’s been all downhill in the last 9 months, starting with a development fork that was revealed in November. At least then, it was merely a delay. 

This morning, the company revealed its latest lot of memory cells had problems in being scaled to dimensions suitable for Storage Class Memory applications. Although the company said it was now trying to identify the root cause, it cannot go much further without resolving this issue. Shares crashed over 60%.

 

 

 

Is this the end for 4DS Memory? 

4DS Memory was honest that this was a big problem and would take some time to fix, potentially requiring process modifications and potentially being a ‘long-term delay’ to commercialisation. The company’s managing director departed, after just five months in the role and having been hired to lead commercialisation efforts. The remaining directors have deferred all fees for three months. 

 

An existential crisis 

The scaling issue that the company revealed this morning is potentially an existential issue. Think about it, if you can’t make the memory cells small enough to cram billions of them on a few square millimeters, there is no use case for it. 

Having said that, we think that it is not beyond the realm of technical possibilities that a solution may be found, we doubt that investors will have the patience for it. This is particularly true when you consider that there are other semiconductor companies, such as Weebit Nano (ASX: WBT), that are much further advanced than 4DS Memory. 

 

 

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