"Every electronic device in the world is our target"

Coby Hanoch / Photo: PR

Weebit CEO Coby Hanoch talks about his company's new memory technology, and rocketing share price.

At the beginning of 2020, just before the global coronavirus pandemic broke out, the share price of Weebit Nano (ASX: WBT), an Israeli technology company traded on the Australian Securities Exchange, was at A$0.42. Today, the price is A$2, which represents a return of 400%, and gives the company a market cap of A$210 million (NIS 531 million).

What is Weebit Nano, what made its share price shoot up, and what does the future hold for it? "Weebit produces non-volatile memory technology, that is, memory that retains information even when there is no power supply. Our technology is far more advanced than what exists on the market today, which is flash," explains company CEO Coby Hanoch.

"The company raced ahead faster than we are accustomed to seeing in the semiconductor market," Hanoch continues, "because we manage to produce the memory using standard materials (silicon oxide), unlike other companies that are trying to develop new technologies that use non-standard materials, and have to introduce a set of new machines into the production site, which is a crazy upheaval and a huge investment."

Last week, the company released a quarterly update that only accelerated the rise in its share price. It included a report on meeting another development milestone. The assessment is that the technology will reach the market and commercial agreements will be signed in 2021.

"That apparently is what is making the share price jump - that time to market is no longer measured in years, but in months. The technology is already stable and ready for the transition," Hanoch says.

An A$9.1 million financing round last July was, he says, "very successful, and put us in the spotlight."

When the company's value rises, does the kind of investors you have also change?

"Yes, certainly, there is a change in the make-up of our investors. We are precisely at the stage where investment institutions are looking at us, and then coming in, but with small sums. Up to now, our focus has been on Australia, but now we are seeking Israeli investors."

"A $60 billion market, and we address all of it"

Weebit, which has still not recorded any revenue from its activity, was founded in 2015, employs 40 people in Israel and France, and has so far raised $20 million. On the board of the company, which listed on the Australian Securities Exchange in 2016 (through a merger with a stock market shell company) are some well-known figures in the industry: the chairman is David (Dadi) Perlmutter, formerly a senior executive at Intel, and among the other directors are former Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM) CEO Yoav Nissan-Cohen, and Atiq Raza, formerly a senior executive at AMD.

Hanoch, the CEO, has forty years experience in semiconductors. He was one of the founders of Verisity, which was sold to Cadence in 2005 for $315 million. Eran Briman, formerly chief architect at Ceva, recently joined Weebit as VP marketing and business development.

"We have an amazing team," Hanoch says. "The company made very rapid progress in developing the technology, and we now have a prototype that was checked by Chinese company XTX and showed very positive results. This gave a following wind to the company. XTX is a company that sells memories that currently work on flash, and it wants to switch to a more advanced technology.

"In general, there is very high interest in Weebit in China. China is investing immense resources in promoting its semiconductor industry. Trump imposes more and more restrictions on them, and they are looking for solutions and constructing many production plants, and so they need technologies, and we have good relations with them."

In the light of the state of relations between the US and China, is there a risk that you will have to choose between activity in the one or the other?

"We have our finger on the pulse. At the moment, we are talking to both US and Chinese companies, and we can do business in both places, but we'll see how things develop."

What's the size of your addressable market?

"This market is huge. In semiconductors, memory is the biggest and hottest sector. This year, the semiconductor market will remain fairly flat because of the coronavirus pandemic, but the memory market continues to grow at double-digit rates. Today, the non-volatile memory market is worth about $60 billion, and it's expected to grow to $100 billion by 2025."

How much of this market is relevant to you?

"We address all of this market. It divides into two sub-markets. We're starting with computer embedded systems, memory as part of System on a Chip, but we'll expand to chips that are all memory.

"It's important to realize that every electronic component contains memory: telephones, washing machines, autonomous vehicles, security cameras, they all need non-volatile memories. The demand is growing exponentially, and every year more non-volatile memory is consumed than was consumed from the beginning of history up to the previous year. Everyone is backing up to the cloud, and they don’t think about it, but astronomical quantities of memory are needed."

Does your technology suit every product?

"Yes. Every electronic device in the world is a target for us."

What's the business model?

"At the moment, the model is selling IP. We license the technology to companies, and they manufacture, and when the product reaches the market we'll receive royalties according to sales. Initially, that will be the only model, but in the future we may perhaps produce memory chips ourselves."

In the System on a Chip market, the expected royalties are around 3% of the price of the chip, so they could amount tens of cents on each device sold containing Weebit's technology. This is revenue that goes straight to the profit line, because there are no associated expenses. In a smartphone, for example, apart from the main processor there are other chips, each of which needs non-volatile memory. "It adds up to a substantial part of the price," Hanoch says.

How is your technology an improvement on existing technology?

"It's much faster, and also output power consumption is much lower, and production costs are lower."

Even after the rise in your market cap, you're no giant company. What are the chances that someone will try to acquire you?

"We talk to the big companies all the time - with a board like ours we can't hide. I can’t comment beyond that, but there are talks all the time, it's part of what the industry is like."

How far has the coronavirus pandemic affected Weebit

"In general, technology companies are managing to cope with the coronavirus period better than others. Even beforehand, we were capable of working from home. The immediate effect is not great. We took a blow at the start of the virus because the plant at which we are developing in France shut down for three months, but now it's open and working at full pace. The effect is when I want to send an engineer to sit with the customer, and I can't - now everything is on Zoom, and that's less effective. It's hard to estimate how harmful it is, but it's certainly less easy."

And has demand taken a hit?

"No, no. The market is so hot, and to some extent growing because of all the Netflixes and Zooms. Demand is rising, not just not falling."

Published by Globes, Israel business news - en.globes.co.il - on October 27, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Coby Hanoch / Photo: PR
Coby Hanoch / Photo: PR
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