Shares in AIM-listed integrated circuit maker EnSilica (LON:ENSI) extended their gains on news of a major contract win. So far this year the stock has risen close to 160%, with most of the gains coming in the last two months.
Tier 1 customer
Abingdon-based EnSilica announced it had won a new $75 million seven-year contract with a German auto components firm. The contract is to manufacture and supply an Arm-based sensing chip already in production, meaning no design or testing is required.
While the contract is worth $75 million in total, only $4m will flow into the company’s account in the financial year to May 2027. Also, the gross margin will be lower than if the contract included a design element.
CEO Ian Lankshear said the deal would not only generate material future revenue but would also deliver ‘significant strategic benefits’. The customer is a Tier 1 auto parts supplier so the contract shows the firm meets German’s strict regulatory standards.
We flagged EnSilica six weeks ago when the firm announced it had won two contracts from the satellite industry. That news sent the shares soaring as investors twigged EnSilica was another way to play the space theme.
Today’s news showcases the firm’s ability to expand its reach and its revenue in the highly competitive auto industry. And, as the CEO says, demonstrating its products meet the VDA-aligned standard could unlock more strategic wins.
The UK market may not have trillion-dollar tech companies, but for investors prepared to dig that bit deeper there are some great smaller businesses. EnSilica is undoubtedly one, as demonstrated by its $125 million of contract wins in the last six weeks.
