Chip making minnow EnSilica agrees $20m deal with ‘major electronics manufacturer’

EnSilica shares rose more than 10 per cent on Wednesday after the AIM-listed chipmaker revealed a major US supply deal.

The company, which specializes in application-specific integrated circuits (ASICs) used in semiconductors, told shareholders it had agreed to an order for a custom ASIC “from a major US-based electronics manufacturer.” worth $20 million in revenue for calendar year 2025 and 2026.

Bosses said the company is “actively pursuing” similar deals in the “significant growth market” of the US, which it hopes will boost production margins across its ASIC business and help “strengthen” its position “within of the semiconductor supply chain.

EnSilica shares They rose 14.6 per cent to 70.5 pence by mid-afternoon on Wednesday, taking 2024 gains to almost 80 per cent.

Shares received another boost this week as EnSilica reported first-half revenue growth of 11.2 per cent to £9.5m, while tax credits helped boost the group to a £500,000 profit. after taxes.

EnSilica was initially founded as a consultancy in 2011 by CEO Ian Lankshear, who previously held semiconductor-related positions at Hitachi and Nokia.

It now also designs custom chips, used in four key sectors: automotive, general industry, satellite communications and healthcare.

The three EnSilica chips approved for production

First-half revenue was split evenly between the two units: its consulting business recorded sales of £4.7m, while its growing design and supply unit generated £4.9m.

The group’s revenue has risen from £8.6m in 2021 to £20.5m last year, the highest thanks to growth in its design and supply business, and analysts at Allenby Capital They believe the company will record sales of more than £32 million by 2025.

Debts have also risen as the group invests in the expensive chip design and production business, reaching £1.4m last year from a net cash position of just under £800,000 in 2022. Allenby believes this This figure will rise to almost £4.4 million at the end of this financial year.

Allenby analysts said: “The design and supply model requires an upfront investment from EnSilica, but has the potential to generate predictable, high-margin revenue streams over the long term as EnSilica chips move into production.”

EnSilica’s latest deal is a “takeaway” order in which the ASIC moves from design to foundry production.

It has announced several similar deals over the past two years, but the stock has struggled to maintain long-term momentum, reflecting uncertainty over the strength of UK chipmaking investment as well as overall struggles. of the smallest publicly traded companies in the country.

Having traded around 40 per cent below its all-time high of around 188p in January last year. He listed in May 2022 at 50 pence a share.

Boss Ian Lankshear said on Wednesday: “We are delighted to announce this Supply Win from the US, which reinforces our position as a quality-focused supply partner for customers and further strengthens our foundry partnerships in the US. “U.S.”

“The United States now represents a significant growth opportunity for the Group and we believe that the award of this contract has the potential to generate further business, thereby reinforcing our near-term revenue growth and cash generation.”

The seven EnSilica chips in production