QuickLogic Corp Canaccord Genuity's 46th Annual Growth Conference

Yep. All right. Thank you. Good afternoon, everybody. Excited to be here, excited to talk about QuickLogic. Firstly, QuickLogic is within the semiconductor industry, a sub-segment called programmable logic, and that sub-segment is going through a renaissance right now. We're seeing lots of use cases across all different market sectors, especially with our peer companies. Where we're focused right now is on aerospace and defense, so I'm going to go a little bit more into detail on that. Aerospace and defense happens to be spending more dollars on programmable logic than any other microelectronic category. Within that, they have ASICs and FPGAs that they purchase. Our technology, be it devices or IP, fits squarely within that hashed area of FPGA and ASIC. High growth market. We're looking forward to talking about it today with you and also addressing some of the nice interesting questions from Austin.

Before we get to the questions, we have two types of products. We have tangible devices called discrete FPGAs. This is sort of our founding technology, and we continue to sell these today. We're going through a big development contract right now with the U.S. government to modernize some of these devices for very specific use cases that I know we'll cover in the fireside chat. On the right-hand side, we have embedded FPGA IP. This is intellectual property that we license to some of our customers for them to include in their own custom ASICs. Again, it covers both FPGA and ASIC devices and IP. In short, the benefit of our technology is that our customers can take their own IP, program it into their devices, and we don't ever have to know about it.

They get faster time to market, and they get better development cost in using our technology than if they did any custom silicon themselves. With that, I will now kick it over to you to ask questions.

Yeah, definitely. If we look at the FPGA market in general, typical companies, you might see Xilinx, which is part of AMD, Altera, which was part of Intel, now it's back out independent again, Lattice and Microchip. Within those, the larger Xilinx, Altera, tend to focus on high-end compute data centers. When we look at aerospace and defense and more industrial control applications, we see Microchip quite a bit more. One of the things that we're doing right now that's really exciting, I think, on that, let me advance the slide here. With respect to aerospace and defense is a purpose-built FPGA for strategic rad-hard applications. This is something that's never been done before in our industry, and I've been in this industry for 30 years.

This is very unique in the type of application space it's targeting, and again, it's new and different than any of the other peer companies that we've had for programmable logic.

Yeah, that's a good question. If you think about the way system companies do design, if you look at a consumer company, they may design an architecture like Apple would do, knowing that they're going to sell hundreds of millions of units of one thing in one year, and they're going to refresh that the next year and do the same thing over and over again. So they know exactly what they're going to be doing in that technology. Forward programmability probably has less value for them in that sense. There are other ends of the spectrum, though, where you have systems that are highly specialized and have to live in airplanes or in hangars or below the sea level or in silos, and they have to last for decades. You can imagine that over the lifetime of those units, they will have to be updated with algorithms.

Technology evolves, software evolves. Those are the types of applications that really benefit from programmable logic, be it a discrete device or an IP in an ASIC. Again, you could be wanting to reconfigure something decades in the future. If you have a fixed silicon component in that architecture, you will have to redo that entire chip, and now we're talking about tens if not hundreds of millions of dollars of NRE fees and the time it takes to do a custom ASIC design and validate and manufacture. However, if you have programmable logic on that same device, you can update algorithms in hours. So it's a dramatically different economic question, dramatically different risk profile when you can use programmable logic to make those changes versus tear it apart and rip it up and do the silicon from scratch.

Yeah. In most cases, that's correct. If you go back in our history, we've had a lot of devices we continue to sell today to different defense contractors for weapon systems. I agree with what you're saying. Once you're designed in, the cost of requaling a system to make a component change is very large, and most of these contractors want to avoid that kind of allocation of resource to go save pennies or maybe to replace something that's been end of lifed. So they really take great care in looking at suppliers before they do their design to know A, that the technology meets their needs now and in the future, and B, that the company is going to meet their needs in the future as well from a supply chain perspective.

They typically do design in one thing and then make sure that that works, again, work for the decades that they may want to have that thing in deployment. Again, it's unlike the consumer business where you can pick people based on lowest price, and are they going to be around next year before the design refresh happens? It's very different dynamics in the aerospace and defense industry.