EnSilica shares sink as chipmaker warns on survival without more funding

Posted by Admin November 5, 2024 Tech

Shares in EnSilica sunk as much as 12% after markets opened on Tuesday as the British chipmaker warned on its survival without further funding.

The Oxford-based business has said that it would not be able to continue trading for another twelve months unless it continued to receive funds from existing customers as well as seek external funding from shareholders or lenders.

“Additional external financing may be required should the company experience further delays in contracted customer receipts,” EnSilica said.

“[The] situation gives rise to a material uncertainty…that may cast significant doubt on the entity’s ability to continue as a going concern and in such circumstances it may therefore be unable to realise its assets and discharge its liabilities in the normal course of business.”

But EnSilica’s board said it was confident it would be able to continue trading for another twelve months after signing a number of new contracts with customers and refinancing debt agreements totalling £6m on more favourable terms. EnSilica had already raised more than £5m from shareholders in May of this year.

The company today reported revenues of £25.3m for the year to end May, a rise of more than a fifth on the previous year, while posting losses of £0.2m compared to a £1.7m profit in 2023.

The firm, which develops ASIC chips as well as cryptography, radar and communications systems, said it expected to benefit from a growth in demand for domestic supplies of chips amid fears of global supply disruption. That growth was spurred in part by a new contract for an Edge AI processing chip, valued at $7m, with potential supply revenue exceeding $50m over the first five years of production

“Geopolitical tensions, particularly between the US and China, have continued to complicate the global semiconductor supply chain. The US continues with export controls on semiconductor technology to China, prompting many countries to secure their own supply chains and reduce dependency on foreign sources. Additionally, tensions between China and Taiwan, a major semiconductor hub, add to the uncertainty,” EnSilica said.

“In response, there has been a push towards the localisation of semiconductor supply chains. Companies are investing in local manufacturing and exploring alternative supply routes to mitigate risks. This trend is expected to continue as nations seek to bolster their semiconductor industries.

“As demand for advanced semiconductor solutions increases, the need for skilled professionals in design, manufacturing, and R&D becomes more critical, making talent shortages a key concern. EnSilica is investing in talent development and retention strategies to actively bring in new talent in our operational locations.”