BrainChip’s $35M Placement at 10% Discount Targets 450,000 Unit Sales by 2028

Capital Raise Overview

BrainChip Holdings Ltd (ASX – BRN), a leader in ultra-low power edge AI solutions, has announced a $37 million equity raise comprising a fully underwritten $35 million placement and a $2 million non-underwritten share purchase plan (SPP). The placement price is set at A$0.175 per share, representing a discount of approximately 10% to recent trading prices, reflecting a strategic move to secure capital for accelerated growth.

The equity raise is designed to fund the ongoing commercialization of BrainChip’s Akida 2.0 technology, a neuromorphic edge AI platform, as well as the development and productization of the new TENNs product line. These initiatives aim to build on BrainChip’s existing leadership in delivering real-time, low-power AI processing at the edge, targeting sectors such as defense, healthcare, wearables, and consumer electronics.

Market Position and Growth Prospects

BrainChip operates in the rapidly expanding edge AI market, projected to grow at a compound annual growth rate (CAGR) of 34% through 2030, reaching an estimated $102 billion. The company’s Akida technology, including the AKD1500 chip currently in volume production, boasts impressive performance metrics such as 400 MHz processing speed and power consumption as low as 125 mW. With design wins secured in defense and healthcare sectors, BrainChip forecasts sales volumes of 450,000 units by 2028.

The company’s flexible monetization model spans IP licensing, silicon sales, software tools, and full-stack solutions, supported by a robust ecosystem of industry and university partnerships. BrainChip is also investing in next-generation technologies, including generative AI for edge large language models (LLMs), positioning itself at the forefront of emerging AI applications.

Use of Proceeds and Financial Position

Proceeds from the capital raise will primarily support the commercialization of Akida 2.0 and the TENNs product development, alongside ongoing research and development efforts. Additional funds will cover product manufacturing, operating costs, and working capital needs. The company’s pro-forma balance sheet post-raise shows a strengthened cash position of approximately A$36.5 million, providing a solid runway for execution.

Unified Capital Partners acts as sole underwriter and bookrunner for the placement, with Morgans Corporate Limited joining as joint lead manager. The SPP offers eligible Australian and New Zealand shareholders the opportunity to participate at the same offer price, capped at A$30,000 per investor.

Risks and Considerations

BrainChip’s announcement candidly outlines key risks, including potential delays in product development and market adoption, funding uncertainties, intellectual property protection challenges, and the risk of shareholder dilution from future capital raises. The company also highlights general market risks such as economic conditions and liquidity constraints. Investors are advised to consider these factors alongside the company’s growth prospects.

Overall, BrainChip’s capital raise reflects a confident step towards scaling its edge AI technology offerings amid a dynamic and competitive market landscape. The company’s focus on low-power, on-device AI solutions aligns well with growing demand across multiple high-value sectors.