Thank you for the fantastic insight on this, really well written!
I am considering deploying capital here after seeing the POC order today. Wanna hear your thoughts on their margins trajectory. These guys only assemble so would make sense that their margins would not be lucrative, do you see that impacting the valuation? Also, does the fact that they could get competition soon make you rethink this (either from hyperscalers themselves or any company), or is the TAM too big to be bothered about this? Thank you again for the article
They remain an AI hardware and next robotic hardware companies so even as simple assemblers, margins should still be positive with volume of such demanded hardware I believe.
For stock appreciation, I don’t think it matters. If their ahrdware goes within AI datacenters, the stock needs a repricing. No AI hardware name can trade at 4x sales while potentially growing 50%+ within the AI inference narrative. So first growth, second margin for price appreciation in this case to my opinion.
They already have competition. Nvidia or AMD use FPGAs by themselves. I think today’s PoC confirmation answers this question. As for are they better at optimizing the hardware, are they just victim of too much demand or are they better position while being constructor agnostic… Hard for me to know.
Thank you for the great insights as always! A quick question, as you've mentioned they are more or less an assembler of semi components, what's stopping somelse from mimicking what they are doing? They have no IP as such right?
Short: nothing. They do not have IPs besides a few patents but not enough to protect their business. What they have is great relations and engineering capacities. They are working with clients since years and protect their own designs with contracts and such.
But nothing prevents competition from reverse engineering and copying. It's all about relations and competencies.
As for investing, they do not have much competition, publicly traded - besides the giants which aren't pure plays. So the advantage is that their stock is kinda the only one on this vertical, with low cap.
great write up - have you started a position in SILC?
Yes, sub $20 when I shared this write up
do you think these current prices are too high for an entry?
Hard to answer. I do believe there is much more upside, but I also believe we can have a 30% dawdown tomorrow. So...
Thank you for the fantastic insight on this, really well written!
I am considering deploying capital here after seeing the POC order today. Wanna hear your thoughts on their margins trajectory. These guys only assemble so would make sense that their margins would not be lucrative, do you see that impacting the valuation? Also, does the fact that they could get competition soon make you rethink this (either from hyperscalers themselves or any company), or is the TAM too big to be bothered about this? Thank you again for the article
Appreciate the nice words!
They remain an AI hardware and next robotic hardware companies so even as simple assemblers, margins should still be positive with volume of such demanded hardware I believe.
For stock appreciation, I don’t think it matters. If their ahrdware goes within AI datacenters, the stock needs a repricing. No AI hardware name can trade at 4x sales while potentially growing 50%+ within the AI inference narrative. So first growth, second margin for price appreciation in this case to my opinion.
They already have competition. Nvidia or AMD use FPGAs by themselves. I think today’s PoC confirmation answers this question. As for are they better at optimizing the hardware, are they just victim of too much demand or are they better position while being constructor agnostic… Hard for me to know.
But demand is here.
Thank you for the great insights as always! A quick question, as you've mentioned they are more or less an assembler of semi components, what's stopping somelse from mimicking what they are doing? They have no IP as such right?
Thanks!
Short: nothing. They do not have IPs besides a few patents but not enough to protect their business. What they have is great relations and engineering capacities. They are working with clients since years and protect their own designs with contracts and such.
But nothing prevents competition from reverse engineering and copying. It's all about relations and competencies.
As for investing, they do not have much competition, publicly traded - besides the giants which aren't pure plays. So the advantage is that their stock is kinda the only one on this vertical, with low cap.
Thank you!
Great spot! Interesting.
Sure is! Hopefully will yield great returns in such tough conditions.