Weebit Nano Limited (WBT) Earnings Call Transcript

Welcome, everyone. Jacob Hanoch, I don't need an introduction in this room anymore. So I think you guys know me by now, I'd like to introduce Eran, our VP, Marketing and Business Development, who's joining me. As you might know, Thursday is Semiconductor Australia. So we will be in the conference in Sydney. So jumping right into it and with you guys, I can skip the 2 slides [indiscernible] Okay. I'm skipping the slides that you guys all know. [indiscernible] So excuse me for getting the logistics working. So I'm skipping all the intro since I think everyone now working -- [indiscernible]. So -- and I'll dive straight into the recent achievements, that's why you guys will have more time to ask questions and have an open discussion. So we just released our quarterly report. As you know, in Q1 of the fiscal year, basically released the cash and not the revenue was another $6.1 million in cash receipts this quarter. So I always say, and I'll repeat many times, cash is nice and it goes up and down. Cash is based on achieving milestones in the projects, et cetera. What really counts is the revenue that we recognize over time. So the blue line there is the revenue. There were -- these rumors or whatever spread by ABC about us going bankrupt and so on and so forth. I don't know how with $164 million in the bank and when the whole fiscal year of '26, the net burn was less than $20 million. How you can have those kinds of things going on, but that's how these things work. Anyway, we see very strong financial position. We have the cash, we have the revenue. Things are moving forward. And as you know, we announced the use of proceeds when we did the raise. A lot of money is going into continued intensive R&D, continuing to improve our ReRAM. We need to constantly [indiscernible] -- I sometimes say we're running a marathon at sprint speed. We just need to keep running as fast as we can, and this goes on for years, but improving the technology and doing all of the work on AI. I'll be talking about all of that as we move forward. The commercialization efforts, we have 3 main customers with [indiscernible] yes, it is. Go ahead. So it's very hard to control. So [indiscernible] do that. So anyway, with DB HiTek, we've been working for quite some time. We're qualified. They are now promoting us to their customers. We have initial customers that are designing their products with our ReRAM in them, that are planned or even being manufactured at DB HiTek, and we talked about the fact that some of these customers are already have silicon in their hand. They're running software, constantly making progress towards that level of mass production. So this is really with DB HiTek, we're in a very good position. On onsemi, we're making good progress, whoever remembers the time line that we presented in one of the previous AGMs. It's roughly order of magnitude of 2 years to transfer the technology and get it qualified. Well, we're getting close to that 2-year mark, and they are already working on the qualification. They have working silicon. Onsemi being an IDM and being a company that actually has its own product, a manufacturer that has its own products and you can imagine they don't engage with a new technology if their products don't want, right? So they've been working in parallel with their products, and there's really good progress there. And TI, which is more recent, we have obviously kicked off the technology transfer and making progress there. So each one of them is progressing according to the plan and we're very really expecting to see onsemi get qualified and TI. Now these customers, they did something that we already announced last quarter, but I think it is important to emphasize. We had 2 of the big customers. We unfortunately can't always name who exactly we're talking about, but a lot of these things you can understand on your own. They expanded after they already worked with us. They learned the technology. They saw it from the inside. They worked very closely with our team, and they saw the quality of our team. So I often say the milestone of having an existing customer expand agreements and add more business units and more products and more things. That's really such a strong endorsement. They saw us, they saw the technology. They've been working with it, working with the team. So when they actually extend the agreement and expand it to additional business units, that's for me, the best endorsement, and I think the industry has seen it as well. So really great, we have -- I won't go into the details of the slide, but I think that's an important milestone for us [indiscernible] and when we talk about product customers, because at the end of the day, all of these manufacturers, this is really the infrastructure that we need to set up. We need to get many manufacturers on board, but at the end of the day, the big revenues will be coming eventually from royalties from the product customers, having many of those that can manufacture and move forward. We have -- one of them is already announced and they revealed themselves, Overlord. Overlord is relatively a smaller startup, but the people who set it up like many startups in the U.S. are industry veterans, well known with a good track record, and they have some really strong customers behind them. So they're working on a chip, and they jumped in relatively early, working with DB HiTek. They already have samples actually. So not only do they have working silicon and they're managing to run their software on it, they even started giving initial samples to their customers. At the end of the day, you need to remember, this is a long supply chain. So DB HiTek manufactures the Overlord chips. Overlord sells those chips to systems companies who actually integrate them into a system and they sell them to consumers or industry or whoever, so there are several steps. We will eventually get royalties once product companies like Overlord sell their chips to their customers, and we'll get royalties on that. So that's in terms of the business model, how it works. So -- and I really think and I think I said this in the past, the #1 milestone in the life of a semiconductor company is when the product goes into production. That's like -- at that point, you can't have any more excuses. Now we still sometimes have someone say, "Oh, yes, but you qualify, you did all these great things, but it's still on a smaller number of chips or blah, blah, blah or whatever." People like to make up all kinds of things. But when you're in mass production, I mean, that's it, right? You're there and all excuses are gone. So we're really looking forward to that. Obviously, we don't control. I think it's important for everyone to understand. We don't control when a customer goes to mass production. It's not our milestone. It is the customer that decides when they want to go to mass production, how they want to do it. It's their product and they're selling it. We get the royalties. So we're hoping to see them go into mass production. We know their plans and whatever and -- but at the end of the day, it's not something that I can commit to that Weebit will be -- Weebit technology will be in mass production at a certain date. We can just work with the customers, support them, push them forward as much as we can and we hope we expect or believe that they will manage to do that, and they will do it in 2027 [indiscernible] details. People always want me to commit to this more. It's really not something that I can commit. We have another customer that's a little bit behind on -- behind Overlord and they're already moving forward. They have working silicon. They're running software already, et cetera. So there are more and more products now ramping up and this list right now, we just have 3 customers here, but obviously, there are more products that are being designed and having our ReRAM embedded into them already and we do hope start seeing a pipeline of these guys and obviously getting them to production. [indiscernible] Okay. So Overlord, I already talked about them. Their application is battery intelligence platform. They -- it's a very smart, sophisticated power management application. It's going to go into all kinds of edge AI devices. It actually is a very interesting technology and their target for production is 2027. So as I said, we're really supporting them so that they can achieve that. Okay. Another highlight and back in the AGM last year, I announced 3 main targets for 2026. So it was revenue, it was customers going -- I forgot what the second one was and the third one was to have a first AI customer. So we were glad to say that we now have companies that want to use ReRAM for AI. And I'll talk about the AI application in a minute. But in general, people are now coming and actually engaging already with on this -- on the AI technology. I'll talk about it. This is still at the level of -- they're becoming customers, but they are mostly studying the potential of the technology. So it's important to say there are customers, but it's not mass production yet, and it's always important for me to set expectations properly, and I'll get into that in a minute. So those are the recent news, the things that have been happening and where are we headed. So we talked about this. This is a slide that I showed in the past. We are struggling with the situation in semiconductor, not making excuses or anything, just that's how life is. Every several years, there's huge demand. This time, it's really more than I've ever seen in the past for semiconductors. Most of the fabs that we talk to are telling us that they are between 1.5x and 2x the capacity that they can actually manufacture. So their customers -- half their customers are dissatisfied that they're their products. And when a company has so many mad customers all over it and then just yelling and screaming, we want our chips, why aren't we getting our chips? The last thing that they can do now is start focusing on new technology. So we really are seeing that all the time. We're talking to those guys. Good news is, and I said it many times, not a single one is telling us we don't want -- well, let's say, the general phrase, we don't want ReRAM, and they are engaged. We're making very good progress with some of them. You know that these negotiations take years and it's just moving a little bit slower than we expected, but we're definitely making progress with more manufacturers. And the plan is to obviously have more of them on board. So looking at the foundries and a little bit at where we are, we -- when we deal and this is in general, because many people are asking me what are the time lines and how do we look at it? We did -- I think it was AGM '23 that we showed a detailed time line of how this work. But just to remind everyone, when we're engaged with the foundry, we -- it takes us time to close the agreement when we signed the agreement, roughly a year to do the technology transfer to get the first chips taped out and start testing. We then have a long period of test and qualification and modifying the designs and things like that until we finally get to the fall. And then even when we get to the fall, it never ends. You're constantly improving, you want to improve the yield, you want to improve what's called bit error rate or [Audio Gap]. Hopefully, you'll see it here in a minute. They -- if you're talking about a customer of a fab -- of a foundry, I'm sorry, they normally want to see the foundry is progressing and the technology is in a good position. Many of them will just wait until after qualification. A few, which are more daring like Overlord are willing to take more chances and engage with us earlier. Then they need to go into the design. The design takes depending on the complexity of the chip, anywhere between 6 to 12, even 18 months, really the work on the design is quite intensive. Then you have the [Audio Gap]. Apologies for all the technical issues to the people online. We are online?

Yes.

Okay. Well, let's move on slide and focus, so I mentioned, and I think some of you guys might have seen this slide already, when we did the raise, we said we're going to be focused on improving the technology. And this is really a race of constantly moving forward. You can't ever stop improving the technology. Okay. Can you go to the next slide and put it in -- so we are -- I gave a general guideline to the team. I said, "Hey, guys, whatever technical parameter you're thinking of, we need to be at least one order of magnitude better than any other ReRAM in the market. Very simple, let's just focus on that. Obviously, it's easy said, not so easy to do, but the team is very focused on it and we are working hard to give examples, if it's endurance that most of the industry is still at 10,000 going to, trying to go to 100,000 cycles. We qualified at 100,000. We're now looking at doing a million cycles. Access time having Okay. This one just have it Hopefully, we'll manage to finish this presentation. Yes. So okay, you can be like this. So access time most of the industry, the lead time is greater than 20 nanoseconds. We're already pushing down below 10 nanoseconds. And again, it doesn't really matter what these are, just so you understand, Weebit is very focused on having the best ReRAM in the industry and on constantly being ahead of it. [indiscernible] Let's go already to this one. We're losing time, so let's just skip to this one. So of course, we always start by talking about embedded memory and where we are and then I end up saying -- and by the way, there's also that little thing called AI, and Weebit is now very focused also on the AI side. I mentioned in previous presentations how there's this move from near memory compute to in-memory compute to neuromorphic. In-memory compute is something that is happening now. It's really getting a ReRAM into -- embedded into the chip, so that it sits next to the processor, very close to the processor, but still next to the processor and having the processor read the coefficients from a ReRAM, that's something that today's technology, it's available and people can use it and people are looking at adding it and moving forward in that direction. So that's something that basically, there's no special R&D to do and it's available. The big thing is going to in-memory compute. Now I would like go to the next slide and people always like to challenge me in presentations to see how I've managed to deal with all of these surprises. So nobody can beat on these things. But anyway -- so -- let's talk about AI. Let's focus on it. AI has 2 main activities. AI, there's the training and then there's the inference. Training in AI is basically done once per system. You learn whatever you needed to learn and you develop those coefficients. Inference is done all the time, again and again and again, you take those coefficients and now you use them in real life. So as you can imagine, in the early phase of AI, most of the work was learning, now most of the work is inference and as we go forward, inference will become the much bigger activity in AI. You can see that this year, it's actually for the first time, inference is already bigger than training. And by the way, that's in data centers and, of course, in the edge devices. So it's really growing very fast all of the inference activity. And for Weebit, that's great news because inference, the thing that you're doing all the time is you're reading data. You're not updating it. That's the training has to generate the data, and there's a lot of read and write and everything. When you're doing inference, you're basically taking the coefficients that were developed by the training and you're reading them most of the time and that's where ReRAM shines in the reading part. We can read and we talked about access time now and how fast you can read, et cetera. So that's really a very good application for us. We've been working on it for some time. You've heard it before, and we're making very good progress in. Before I go into the details, last time I showed you an initial version of a video. Let's put the video on because I think it really explain things that now it has more information in it. Go to the next slide [indiscernible] As AI models become larger and complex [Audio Gap] Artificial intelligence is becoming part of everyday life devices, vehicles, factories and robots. Behind every AI application are enormous numbers of computations involving large amounts of data. In traditional computing, data must constantly travel between memory where information is stored and processors where computations occur. As AI models become larger and more complex, moving data consumes more power and becomes a growing constraint on AI performance. As AI workloads continue to grow, so do the power, cooling and infrastructure needed to support. What if instead of moving the data to the processor, we move the processing to where the data already lives, in-memory computing performs calculations directly within the memory itself, dramatically reducing the need to move data. Emerging memory technologies such as ReRam and [indiscernible] information and perform the computation. AI inference relies heavily on a type of operation called vector-matrix multiplication at each stage of a neural network, incoming data is multiplied by a matrix of weights. The weights represent [indiscernible] here's the conventional memory can store [indiscernible] matrix, [Audio Gap] [indiscernible] powerful AI systems where power, performance and real-time decision-making are critical from vehicles, aerospace defense, intelligent edge devices [indiscernible] cloud infrastructure to intelligent edge devices, memory computing has the potential to become a foundational technology for a new era of efficient AI computing. [indiscernible] a new memory technology for the AI...

So again, I really apologize for all the technical issues. It's -- I hope -- well, first of all, this video is online and on YouTube, and you can listen to -- watch it again, listen to it, but it really explains what happens and actually, for the people who actually came here physically, so you're going to enjoy seeing a real model of what it looks like. So I'll pass this around. But basically, you have here just the memory, the vectors that go in, the voltages, you can actually even see it really nice. You can actually see different levels of resistance in each cell and then it comes out and it's summarized. So you have basically the model of what happens in-memory compute and you guys, I guess I can pass this around and you guys want to take a look. And let's go to the next slide. So really, what we see here is the fact that we can do this in-memory compute with ReRAM. We have now initial customers, as I said, they already are looking at this closely, analyzing, seeing how they can actually use this technology. We still have a lot of work to do. Again, I emphasize there still is quite a bit of R&D to make this into a real commercial product or technology. There still is work, but we're making good progress. We have good results, as you could see already before. This is a big focus [indiscernible] on things. So really, maybe I'll stop at this slide, and I'll open up [indiscernible] but we had 3 targets for '26, the revenue and as you know, that we achieved significantly over the initial expectation, first product customers to tape out so long ago, but it just happened this year, and they're moving forward and already, as I said, the first one having some samples for customers and now first AI customer engagements and bringing them on board. So with that, I think we'll stop with the technical issues and open it to questions. We'll start with people here in the room and then if you have people online also [Audio Gap]

So that is by far the #1 priority of Weebit and it needs to be very clear to everyone. We're not taking our eye off the ball. We need to have that work, we want to take over that market, become a major player and generating a lot of revenues. AI still requires R&D work and it's further down the road, and we can't afford to wait for that for revenue. So we are focused on the embedded. Having said that, AI has a huge potential. It might even be much bigger than the embedded market for us. So there is a focus on it. We have a separate dedicated team that is focused on AI activity. But the #1 priority by far continues to be generating semiconductor industry. [indiscernible]

Sort of bottleneck in the semiconductor industry, which is slowing down the adoption. What do you think is going to break that, that's going to encourage that?

A few things. First of all, everybody understands there's undercapacity and the demand is much higher. And for that reason, all of these foundries and fabs are now building more capacity and this capacity is going to come in the next 12 months to 24 months. A lot of it in Taiwan, in China, in Korea, in the U.S., of course, there's a lot of new capacity being built. Once this capacity is available, they'll have to fill in all these fabs. And the foundries that we are talking to and highly engaged with are those that are doing these expansions. And they need to show their customers that their next-generation capacity has more technology included. So that's where our embedded NVM really shines. So that's going to be the next deal. By the way, I think it was 2 years ago at the Semiconductor Australia Conference, I presented a slide, and I think I also showed it in this forum that back then, there were $800 billion invested in building new fabs that year. So you can understand people already realize that this demand is coming and they started building the fab. So there are many fabs in the process of being built, like I said, and you can read in the news about all the activity in Arizona and in Texas now and all of these big fabs that are being built. So eventually, this capacity is coming. I mean, it's coming online. And as it comes online, that situation will go down. By the way, I'll tell you, since I've been in this industry more than a couple of years, and these cycles happen all the time. I mean we see that. It's not anything new, every roughly 4 years or so, you get to the point where the demand is crazy and then more fabs come on board. Now I mean, if you can try to imagine, demand is going up like this, the capacity is scarce. You have a certain capacity. At a certain point, the demand is above that capacity and then the capacity jumps, because new fabs come on board. You're now in a good position, you can supply the demand, but then the capacity stays the same and the demand keeps going and you end up being under capacity. So I mean this happens all the time, and that's how this industry has been working since -- I've been in this industry for 46 years, and it's always been this way. This time is much crazier. I have to say I've never seen anything like it, but it's happening. By the way, part of the reaction of customers, when you're sending in an order and you get only half of what you ordered, guess what you do next time. You just send double the order, right? So to a certain extent, part of the over demand is because people are taking this into account and you have that feedback effect and people are ordering more. And then when they get more, if they start getting more than they actually needed because they ordered more, they start stockpiling. And then at a certain point, they stop ordering, because they already have some chips in their storage house, right? So it kind of goes crazy a little bit and then it starts stabilizing again. But all of those effects happen, and we are seeing more capacity coming on. Yes. This is a reputational question. The recent issue we've had with the media is very strong anti-Israel seen through a lot of the Australian media. Are you going to take some proactive steps with your public relations to counter that? In other words, to counter the attack before it comes, because this won't be the last time, in my opinion.

So I don't know if the ABC note that they made, because we're Israeli or not. They know, believe.

I -- as a public company, we need to be very cautious about any claims we make and some people said that it was connected to the rise in shorting that a lot of people -- shorting suddenly jumped and then all of a sudden, you have -- I don't know, we have no proof. I can also say being Israeli, all of this crazy fake nonsense that goes on in the news drives me crazy. I just can't believe intelligent people actually believe all of this stupidity that's just all over the place. As a public company, we need to focus on our work. We're not going to be the ones start fighting political fights or things like that. And I really have to do that separation. I remember even there was a point where I started making some comments on LinkedIn, and I got all these requests from shareholders, please don't mix your posts are on Weebit and we follow them and please don't add political posts. So -- and they were right, by the way. So we have to make that separation. On the personal side, I can talk about it, and it's just totally insane, but at the level, I can't really do much.

Suppose what I was suggesting is not necessarily political, but to be on front foot with your relations to put yourself up there, not to do with the politics, but to do with the positive aspects of why the company is operating. That's what's important at the end of the day.

And I agree, and that's what we're trying to do. Actually, the fact that I'm coming out to Australia 4 times a year to do these rounds to talk to people and present as it is, right? That's -- I think that's the best answer, and you're absolutely right, and we keep doing it and Eran is here and the Automic guys are here in you as well. [indiscernible]

You talk about shorting -- for sure you guys looked at the register, who's been shorting for the last one month?

Well, unfortunately, shorting is the type of thing when people hold the shares, they need to reveal themselves. Shorters don't reveal themselves. I don't understand why it's that way. I mean I can tell you, I have a lot of questions about all of the regulation around shorting. But the biggest issue that I have is people can short you and you never know who they are. They can hide and they don't have to reveal themselves and we just don't know who they are.

Does it show on the register?

No. No. That's the frustrating part. You know who holds the shares. You don't know who loaned them to short them. Yes, very frustrating.

Yes. Just one point about the recent media speculation. I thought I saw a correction note a week or a few days after that actually said that although the analysts claim that we risk of bankruptcy is actually from a low base and also the other point that they made was that basically still within [indiscernible]

So in general, I'll say the question was about the ABC, again, the ABC thing. And I don't want to take it out of proportion because it was just something that didn't make any sense. We actually, of course, took the action and asked them, how did you reach the conclusion that Weebit is getting closer to bankruptcy. They did post a clarification and they did make some excuse. Let's say it this way, to me, nothing that they said makes sense. Again, the simple numbers that I showed, when you have $164 million in the bank and in the whole last fiscal year, the net spend was less than $20 million, you're not near bankruptcy, okay? I don't care what anyone says, you're not near bankruptcy. And the revenues are going up, et cetera, et cetera. We just had $6 million this quarter coming into the bank. So let's put ABC aside maybe and not give...

Question about the director selling a few weeks ago or a couple of months. I think there was a lot of directors which is sold out. $7, $8.

Well, I think, first of all, we need to remember directors, just like anyone in this room or on the video, they are people who have lives, who have all kinds of events happen and sometimes they need money. In Australia, especially, you don't have what's called 10b5-1, which is a very basic thing that I would expect boards to have stock market they have. So directors, they can't actually sell in the future like you can on NASDAQ or any other market. And when you sell, everyone kind of thinks, "Oh my God, what's happening," but they have the tax events, they want to buy a house for their kids or whatever. So they held and for many years, no director sold. For many years, they held the share price went up at a certain point, it was a good opportunity. Some people sold. I don't look at it as a major issue. By the way, people -- I don't know how many people noticed about a month ago, Dadi and I bought, right? I mean the share price suddenly dropped. We looked at it. We looked at each other. We said, wow, this is a great opportunity for us. So Dadi -- and by the way, for us to buy again, because we can't ever sell. I mean the thing is when we buy, selling becomes such a huge thing that it's such a huge challenge. But still, we looked at it and we said, wow, this is a great opportunity. So people didn't notice that side of things. But again, I can't recommend anyone else what to do, but I took the decision that I thought would break.

Question, from now to end of March next year, are you expecting more product companies or any other major announcement that you guys like in the process of end of negotiation, like anything like from now to end of March?

So I can't -- again, I try to be very cautious. Maybe some people say I might be too conservative. I don't like to issue forward-looking statements when I don't actually -- these deals go up and down and whatever. Do I want to sign agreements? Do we have some agreements in the pipe that can materialize theoretically? Yes. Will they materialize? I can't give a commitment that they will materialize. So we are engaged now definitely with more than 1, 2 or whatever. We're engaged with a lot of -- quite a few manufacturers. We're engaged with quite a few product companies pushing forward. We announced it when we closed the deals, because these things -- I mean, even the TI deal, the negotiation lasted for so many years. It had its ups and downs. I was sure that it was going to close 2 years before it actually closed. I was confident I would have signed a paper on it. It was ready for closure, and then it took another. So it's very hard. I know many people are asking me, can you give us some sort of pipeline? Can you give us some sort of prediction? -- the number of customers, potential fab companies in the world is not that large. And each one of them, the negotiation is so difficult and goes up and down and whatever. Trying to give this type of guidance, it's very risky and it's very difficult. So I know it's frustrating. We are -- I can tell you, right now, we are engaged in quite a few of these negotiations or evaluations or whatever you want to call them. Do some of them have the potential more than one to close in whatever number of months? Yes. But will that potential materialize? I have no idea.

Yes. Can you comment on the [indiscernible] Just slipping to 2026. Is that still positive? Or is that kind of [indiscernible]

Yes. So that one actually, we really -- that's a great example of an agreement that I was sure we were going to close rather quickly. And then the whole situation in the market changed. And that's one of the companies that we're engaged with.

Still in advanced negotiations as it previously was?

It's -- that one, actually, it's like the TI one when it suddenly I was sure I was signing it and it went back. That's kind of -- we have these ups and downs in all of the negotiations. It's not something special with them. Right now, with that specific company, it kind of went into -- it's progressing less fast than I expected. Others suddenly accelerated, but I didn't expect...

That's still progressing nonetheless.

It's -- we're engaged with them, let's say it that way.

The 2 AI customers, is that purely speculative -- sorry, is it purely exploratory? Or is it also -- is the revenue as well?

At this point, they came on board wanted to study the technology more and see the potential for the future. So they haven't committed to actually do products based on this technology, because we still have a lot of R&D. So that's why it's important for me.

I think we need to maybe also give these guys a chance to [indiscernible] bunch [indiscernible] some of the favorites too.