QuickLogic (NASDAQ:QUIK) is targeting aerospace, defense and other long-life infrastructure applications as it expands its programmable logic offerings, President and CEO Brian Faith said during a Canaccord Genuity discussion.
Faith described programmable logic as a semiconductor segment experiencing renewed demand across market sectors. QuickLogic’s current focus is aerospace and defense, where he said programmable logic represents a significant area of microelectronics spending. The company sells discrete field-programmable gate arrays, or FPGAs, and licenses embedded FPGA intellectual property for customers to integrate into custom application-specific integrated circuits, or ASICs.
Defense-focused rad-hard FPGA program
Faith highlighted QuickLogic’s development of a purpose-built FPGA for strategic radiation-hardened, or rad-hard, applications. He said the U.S. Department of Defense awarded the company a contract in August 2022 to develop the technology for strategic rad-hard uses, which he characterized as mission-critical weapon and defense systems.
The company also elected to self-fund a version of the technology to provide samples to companies in the defense industrial base sooner, he said. QuickLogic has development kits in the field and has publicly disclosed sales of those kits, Faith said.
Faith said the company hopes to receive evaluation feedback by year-end and begin securing designs into programs of record next year. Those programs could then move into low-rate initial production and eventually full-rate production. If successful, he said major systems could represent hundreds of millions of dollars in potential revenue for QuickLogic.
He said the company’s value proposition for defense customers includes being U.S.-domiciled, using U.S. persons on designs and manufacturing products onshore. Faith also stressed the importance of documenting the chain of custody from chip design through manufacturing, shipment and programming.
Faith said defense systems can remain in service for decades, making the ability to update algorithms particularly important. In contrast with replacing a fixed silicon component—which can involve substantial non-recurring engineering costs and lengthy design, validation and manufacturing cycles—programmable logic can allow algorithms to be updated in hours, he said.
Trusted supply chains and infrastructure
Discussing concerns around foreign-sourced electronics, Faith said recent reports involving Chinese firmware in components used in U.K. unmanned surface vessels underscored the value of trusted supply chains. He said customers increasingly want visibility into the provenance of IP, the design teams involved, manufacturing processes and whether delivered chips match their intended designs.
Faith said this focus extends beyond weapon systems to critical infrastructure, including utilities and energy systems. He said government initiatives to bring critical manufacturing capabilities onshore could increase demand for chips designed and supported in the U.S.
QuickLogic has longstanding relationships with defense prime contractors, Faith said, adding that the company has done business with the five largest U.S. defense primes and eight of the top 10, including certain European allied contractors. He also cited a supplier-of-the-year award from BAE Systems tied to a successful IP deployment and customer support.
Space, cryptography and design flexibility
Faith said QuickLogic sees an opportunity to extend its strategic rad-hard work into radiation-tolerant applications for space-based systems, including low-Earth-orbit satellite constellations. The company could address those markets through discrete devices or embedded FPGA IP for customers developing their own ASICs, he said.
He also discussed potential use of embedded FPGAs in systems requiring post-quantum cryptography. As cryptographic standards and algorithms evolve, programmable logic could allow customers to update encryption capabilities in infrastructure systems without replacing circuit boards or hardware components, Faith said. He said QuickLogic has been talking with companies specializing in post-quantum cryptography about making such implementations easier.
Margins, cash position and engineering capacity
Faith said QuickLogic generates revenue from services, devices and IP licensing. He said IP licensing typically carries gross margins in the 80% range, devices are in the 60% range, and services have lower margins. The company is currently more weighted toward services due to the Defense Department development contract, he said.
As that project nears completion, QuickLogic expects device revenue and IP licensing to represent a larger share of revenue, Faith said. He said the company’s goal is to reach gross margins in the high 60% range or higher in a normalized state, compared with a recent range of high 40% to low 60%.
CFO and Senior Vice President of Finance Elias Nader said QuickLogic ended the second quarter with $13.5 million in cash and had a $10 million line of credit used only to “window dress” the balance sheet. He said the company had no debt and that most current research-and-development spending is customer-funded. Nader said the company has 49 employees and that its largest expenditures are R&D and engineering staff.
Faith also said QuickLogic’s Australis 2.0 development flow has increased engineering capacity. Built partly on open-source automation technology originally funded by DARPA, Australis allows the company to operate four design teams in parallel rather than dedicating its entire engineering staff to one design for more than a year, he said.
About QuickLogic (NASDAQ:QUIK)
QuickLogic Corporation (NASDAQ: QUIK) is a fabless semiconductor company that specializes in ultra-low power, multi-core sensor processing System-on-Chip (SoC) solutions and embedded field programmable gate array (eFPGA) intellectual property. The company’s products are designed to enable always-on, voice-activated, and vision-driven applications at the edge, delivering a balance of performance, flexibility, and power efficiency. QuickLogic’s technology is often deployed in consumer, mobile, and industrial IoT devices, where minimizing energy consumption is critical.
Among QuickLogic’s key offerings is the EOS™ family of sensor processing SoCs, which integrate ARM Cortex-M cores alongside proprietary sensor fusion and neural network engines, coupled with customizable FPGA fabric.
