Last week, the NASDAQ reached its highest level since August 2022 thanks to immense growth in Artificial Intelligence (AI) and associated NASDAQ-listed companies. The combined market value of tech companies listed on the NASDAQ Composite index stood at US $22 trillion, up from US$18 trillion at the end of 2022 with the AI-driven rally contributing to a 23% increase in the index’s performance this year. One of its biggest gainers, chipmaker NVIDIA, became only the fifth company on the NASDAQ to surpass a US$1tn valuation, joining Alphabet, Amazon, Apple and Microsoft. The quirky thing? NVIDIA isn’t an AI company. 

NVIDIA is the world’s most valuable semiconductor (aka computer chips) manufacturer, with their chips expected to play a massive role in the exponential growth of AI and machine learning. Their high-end chips support data centers of generative AI tech like ChatGPT. Last week, the company issued a sales forecast of US$11 billion in the fiscal second quarter, surpassing Wall Street targets and increasing its value by US$184 billion in a single day. Its stock price experienced a remarkable surge of 160% in 2023 which propelled its market value from US$361 billion at the beginning of the year to surpass the US$1 trillion milestone. 

Nvidia’s share price surge sparked a rally in AI-related stocks and boosted other chipmakers. That helped the Philadelphia SE Semiconductor Index close at its highest in over a year last week.

NVIDIA capitalised on its competitive advantage by directing investments towards the development of innovative GPU variants specifically tailored for AI applications, making it more user-friendly and accessible for leveraging AI technology. Shares continued to gain after NVIDIA announced several new AI-related products that touch on everything from robotics to gaming to advertising and networking. 

Investors’ recent obsession over AI has created a lucrative market opportunity for NVIDIA and fellow chip manufacturers keen to push the boundaries of current computing capabilities. High-performance chip processors can handle massive data processing, complex algorithms, and deep learning models which will be the cornerstone of all sophisticated AI systems.

In a speech at Computex 2023, NVIDIA founder Jensen Huang unveiled NVIDIA’s plans to “make programming open to all” by releasing an AI supercomputer platform that will help tech companies create their own versions of ChatGPT. He celebrated the end of the “digital divide”, where the programming barrier is incredibly low. Most importantly, Huang emphasised that this supercomputer platform built off powerful chip and processor hardware will touch every single industry. 

“Every single computing era you could do different things that weren’t possible before, and artificial intelligence certainly qualifies. The rate of progress, because it’s so easy to use, is the reason why it’s growing so fast”, he noted.

Despite concerns about job losses and the impact of automation on employment rates, these concerns have somewhat been outweighed by the significant growth potential of the industry. Investors have displayed considerable interest and enthusiasm, extending their focus to industries that contribute to AI and automation such as semiconductor device developers and chip processor manufacturers. 

The AI stock boom sweeping the US has arguably made ripples in Australia with several active semiconductor companies listed on the ASX. 

Archer Materials (ASX: AXE)
Market cap: A$158 million

Archer is a technology company with a focus on developing semiconductor devices advancing the areas of quantum computing. It is the only ASX-listed company, and one of only a few globally, developing a qubit processor chip. 

Archer’s patent protected qubit processor technology is in development to enable more practical quantum computing. Quantum computing machines are currently limited in ownership and use because they use qubit processors that must be operated at low temperatures or are difficult to integrate with modern electronics. 

Archer has been accepted as a customer of the world’s largest semiconductor foundry Taiwan Semiconductor Manufacturing Company (TSMC) after extensive screening and due diligence, which gives Archer significant opportunities to access TSMC semiconductor fabrication process technologies, secure future manufacturing capabilities, and support in technology development. 

Archer has recently became the first Australian company to partner with the World Economic Forum’s Centre for Fourth Industrial Revolution, with its quantum computing technology being acknowledged as a technological advancement that gives us a peek into the future—not just of industries but its potential for impact on our everyday lives. This partnership is slated to reinforce Archer’s foothold in the industry through global initiatives that help deploy technologies set to transform economies and societies.

For the quarter ending 31 March 2023, Archer acquired a cash inflow of A$145k from operating activities and held A$24.4 million cash at bank with no debt. 

Investors can receive updates on Archer’s developments by subscribing to their mailing list here. 

4DS Memory (ASX: 4DS)
Market Cap: A$48 million

Silicon Valley-based semiconductor company 4DS Memory (ASX: 4DS) focuses on the development of non-volatile memory technology, the Interface Switching ReRAM, for next generation gigabyte storage in mobile and cloud. Established in 2007, 4DS owns a patented IP portfolio, comprising 34 USA patents granted which have been developed in-house to create high-density Storage Class Memory. 

4DS has several joint development agreements, such as an ongoing agreement with global storage leader Western Digital subsidiary HGST to accelerate 4DS’ technology which has recently been renewed for the ninth consecutive year, as well as nanoelectronics and digital technologies collaboration with research and innovation hub Imec to develop a production-compatible process for the 300mm production tools that memory makers use to fabricate high-density high-volume memories, and combine this production process with Imec’s proven memory platform to build a 4DS megabit memory. 

4DS’ technology is developed based upon the market need that every  device or system that processes data needs storage and system memory for computation. Examples of such devices or systems are remote controls for audio/video, smart thermostats, video door bells, security cameras, automotive electronics, smart phones, tablets, laptops, personal computers, air traffic systems, robotics, data center systems.

In the three months period ending in March 2023, 4DS had net cash outflows of A$1.9m from operating activities primarily contributed to research and development expenditures. The Company ended the quarter with A$6.5m cash left at the bank with no other financing facilities, which is sufficient to fund operations for the next 3.37 quarters.

Revasum Inc. (ASX: RVS)
Market Cap: A$21 million

Revasum supports the operations of semiconductor manufacturing businesses, specialising in the design and manufacturing of capital equipment used in the semiconductor device manufacturing process. Its product portfolio includes grinding, polishing and CMP equipment used to manufacture substrates and devices that are integral for production chain in manufacturing and processing wafers sized 200mm and below. These wafers are used to make microchips, sensors, LEDs, RF devices and power devices, commonly used in connected IoT devices, mobile phones, wearables, automotive, 5G and industrial applications.

Silicon carbide (SiC) semiconductors continue to grow at a brisk pace. SiC device sales are anticipated to continue strong growth of 40% in the current year driven by demand for electric vehicles and charging stations. Industrial power for data centers and renewable energy generation and storage facilities are also reported beginning to deploy silicon carbide devices to improve efficiency in power distribution and storage. An area of focus and point of differentiation in addressing the demand, Revasum is currently developing the new flagship 6EZ Silicon Carbide Polisher, a specialised cassette-to- cassette handling machine to ease the process of polishing SiC.

For the three months ending in 2 April 2023, Revasum incurred a US$724k cash outflow. Largest expenditure was accounted towards product manufacturing and operating costs, resulting in a total of US$486k cash at bank with a cash runway of 0.67 quarter. The Company claimed that it is currently processing backlog orders valued at US$6.73 million, which are anticipated to be converted as realised revenue upon completion, thus resulting in improvement in net operating cash flows in subsequent quarters. The Company has a US$ 6.25m loan facility available at the end of the quarter.