Shares in chip designer EnSilica (ENSI) jumped, after it said that strong second half trading meant that EBITDA for FY 2023 would beat management’s previous expectations of £1.18m by 30%.
Revenue is expected to be in line with current expectations of £19.8m, an increase of 29.5% over 2022 thanks to impressive new contract momentum and the completion of ongoing projects. But the company said that leveraging its established IP chip library to support ongoing design projects meant that it would be delivered at a higher margin.
Notable contract successes in the period include the commercial production of a mixed signal automotive ASIC, a significant 7-year industrial ASIC supply project worth over US$30 million, and two new contracts with existing European customers valued at US$3.6 million.
Additionally, EnSilica won a €5 million contract for developing a satellite user terminal broadband chip, extended a $1.3 million ASIC contract, and secured a $2.4 million contract with an existing Europe-based customer.
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EnSilica’s engineering expertise makes it an indispensable design partner to companies looking to develop communication chips for a wide range of industrial applications, which is translating into steady growth underpinned by long-term recurring revenues and a growing catalogue of reusable intellectual property.
In its half year results, the company pointed to a high-quality sales pipeline worth around £250m, focused on automotive, industrial, healthcare, and satellite communications sectors which are less sensitive to economic gyrations than consumer-facing ones.
That’s important given recent disruption across semiconductor supply chains, and in light of geopolitical concerns that is prompting renewed investment in chip making capabilities in the West to ensure security of supply. As a trusted partner to a growing number of companies, that’s creating a significant opportunity for EnSilicato capitalize on the growth potential within the semiconductor industry.