QuickLogic (QUIK) Stifel 2024 Cross Sector Insight Conference summary

Industry trends and market outlook

• Programmable logic is experiencing a renaissance, with new use cases and high growth predicted in semiconductors, especially FPGAs, expected to more than double from $12 billion in 2024 by 2029.

• The market is shifting toward embedded FPGA (eFPGA) IP, with increasing demand for custom silicon and vertical integration by large tech companies.

• Chiplet technology is emerging, enabling multi-chip packaging for workload and cost optimization, with future plans to expand in this area.

• COVID-19 accelerated the need for supply chain control and programmability, driving more sectors to consider custom chip design.

• The defense sector remains a major spender on FPGA technology, with fragmentation leading to domain-specific solutions.

Business model, technology, and automation

• The Australis tool automates IP design and porting, reducing process migration from 18 months to 3-4 months, enabling significant operating leverage and faster market entry.

• Nearly all recent growth is driven by embedded FPGA products based on Australis, with about 75% of growth in aerospace and defense.

• Open-source components in Australis increase customer trust through inspectability and community development.

• The business model includes device sales, funded development, and IP licensing with royalties, similar to Arm.

• SensiML, an AI/ML software subsidiary, enables efficient edge inferencing on microcontrollers, with recent private-label and open-source initiatives to expand reach.

Financial performance and growth

• Revenue growth has been strong, primarily from embedded FPGA IP and related services, with relatively flat OpEx leading to profitability last year and forecasted for this year.

• 30% revenue growth is projected for fiscal 2024, with a $180 million sales funnel and $32 million in recent contracts.

• Margins have reached as high as 78% in recent quarters, with a sustainable target in the high 60s.

• The company expects a step-function increase in TAM in 2.5 years when the strategic Rad-Hard FPGA device is commercialized, unlocking a multi-hundred-million-dollar market.