Tech Player BrainChip’s share price zooms ~53%: What drove the surge?

BrainChip Holdings Ltd (ASX:BRN) share price improved massively following the announcement related to the Akida Early Access Program Agreement with VORAGO Technologies on 02 September 2020.

The announcement propelled the shares by 53.226% to close the trading session at A$0.475. The Company hit a 52-week high during the day reaching A$0.490. The Company has a market capitalisation of A$478.87 million and has around 1.54 billion outstanding shares.

Let us know a bit about BrainChip and throw some light on the collaboration which lead to the massive surge in the share price.

About BrainChip Holdings:

ASX listed BrainChip Holdings is a global technology company that has developed a revolutionary enhanced neural networking processor that brings AI to the Edge in a novel manner. The solution offered by the Company has high performance, small, ultra-low power and allows a broad range of edge capabilities comprising local training, learning and inference.

Brainchip – VORAGO Technologies Collaboration

The collaboration between BrainChip Holdings and VORAGO Technologies, announced on the ASX on 2 September 2020, intends to support a Phase I NASA program for a neuromorphic processor that fulfils the spaceflight needs. The BrainChip Early Access Program is for only a select group of customers that need early access to Akida device, as well as evaluation boards and dedicated assistance. The Early Access Program Agreement comprises of payments that are intended to offset the Company’s expenditure to support the partner needs.

VORAGO Technologies is a privately held technology company with 15 years of experience in providing a radiation-hardened and extreme-temperature solution for the hi-reliability marketplace. The US-based Company is also amongst one of 5000’s Fastest-Growing Private Companies in America.

The Akida neuromorphic processor is distinctively suited for aerospace and spaceflight application. The device is a complete neural processor that does not need any external CPU, monitor or Deep Learning Accelerator. In the spaceflight and aerospace application, the reduced component count, size, and power consumptions are a top concern, and the level of integration and ultra-low power performance of Akida meets these suitable criteria. Further, Akida also provides incremental learning. With Incremental learning, new classifiers can be included in the network without preserving the entire network.

The advantage in spaceflight and aerospace application is essential as real-time local incremental learning enables continuous operations when new discoveries or situation happen.

In the last month, the shares have delivered an impressive return of over 63%. The influence in the share price was driven by the recent announcements of the Company related to its partnership with Magik Eye Inc and its FY2020 result. Let us take a look at these announcements as well.

Partnership Between BrainChip Inc and Magik Eye Inc.

On 17 August 2020, the Company entered into a partnership with Magik Eye Inc to market a breakthrough solution for object detection & classification, and gesture recognition. The solution would be based on Magik Eye’s Invertible Light™ 3D depth sensing technology along with the Akida^TM neuromorphic processor. The partnership between both companies would open a path for BrainChip in Japan. Magik Eye’s Invertible Light offers the tiniest, quickest & most power-effective 3D depth sensing via a standard CMOS image sensor along with a normal dot projector plus a proprietary and patented technique to make 3D point cloud data. This solution, coupled with Akida neuromorphic processor, would provide a complete 3D vision solution to customers. The solution is intended for fast 3D object detection in applications which includes robotics, automotive & evolving consumer products, like AR/VR and others.

Advanced neuromorphic processing blended with a low power 3D sensor is the ideal solution for many products in end-point gadgets. 3D imaging is drawing great attention in the market today. The BrainChip architecture, which offers a power-effective, scalable solution allows improved functionality with limited impact on system cost and the power budget, is suitable for this class of applications. When this is coupled with Invertible Light Technology of Magik Eye, it will provide real-time object detection in every type of applications, where there is a need for low power and high throughput.

FY2020 Result:

On 26 August 2020, the Company announced its 1H FY2020 results for the period ended 30 June 2020:

• Revenues from continuing operations dropped significantly by 80% to US$13,397.
• BRN’s operating loss for FY2020 was US$6,199,380, down 38% as compared to the previous corresponding period (pcp).
• The loss for the period attributable to members tumbled 53% to US$6,858,171.
• Total expenses for the half-year ended 30 June 2020 was US$6,212,777, up 36%. There was 81% growth in the R&D expenses on pcp.
• Sales & Marketing expenses increased by 50% to US$749,534.
• General & Administrative declined by 20% as compared to FY2019.

Conclusion:

Despite BrainChip’s feeble performance in 1H FY2020, the recent deals signed by the Company have improved its outlook with market participants anticipating a positive impact in the long run. The two back to back deals in a month has supported the BRN’s shares to soar on the ASX.