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QuickLogic (QUIK) Secures $5.26M Contract From the DoD
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QuickLogic (QUIK - Free Report) has won a contract from the Department of Defence (DoD) worth $5.26 million. Under this contract, QUIK will continue its development of a strategic radiation-hardened (Rad-Hard) high-reliability field programmable gate array (FPGA) that will be used in DoD’s space systems in the future.
QuickLogic is steadily expanding its footprint in the aerospace and defense markets with its radiation-hardened embedded FPGA and standard FPGA portfolio. These products are in high demand in the defense and aerospace markets, where operations are conducted in high radiation and extended temperature ranges.
QuickLogic is benefiting from large DoD contracts and other embedded FPGA contracts from the U.S. defense industrial base. At the end of 2022, DoD awarded a $6.9 million base contract for strategic Rad-Hard FPGA Technology. QUIK participated in the DARPA Toolbox in 2021 to get orders for its programable logic products from the military, aerospace and defense.
The market for military, space-based and standard FPGA products is expanding rapidly. Since this product has its use in artificial intelligence, high-performance computing and the Internet of Things alongside defense and space usage, the market size is expected to grow at the rate of 16.4% from 2023 to 2029, per a MarketsAndMarkets report.
The potential of this market has attracted the attention of many large companies that are not only expanding into the FPGA market but also in the niche strategic Rad-Hard FPGA technology space.
Image Source: Zacks Investment Research
Rising Competition in the Rad-Hard FPGA Market
The Rad-Hard FPGA market is dominated by major players who invest substantial resources into optimizing their FPGA products for reduced size, weight and power. Additionally, this market is less sensitive to price, facilitating the entry of large semiconductor companies.
Large corporations, including Advanced Micro Devices (AMD - Free Report) , Intel (INTC - Free Report) and Microchip Technology (MCHP - Free Report) operate in this space. AMD’s subsidiary, Xilinx Inc., competes directly with QuickLogic’s discrete FPGA products for defense and aerospace.
Advanced Micro Device’s Xilinx produces space-grade Virtex-5QV FPGA, while Microchip develops radiation-tolerant RTG4, RTAX-S/SL and RTAX-DSP series FPGAs. Intel’s Agilex series is a defense-grade FPGA. Intel also has the advantage of owning foundries, which makes it less dependent on third parties, unlike QUIK, which operates fabless.
Conclusion
Although QUIK is receiving big budget contracts from the DoD, the rising competition in the Rad-Hard FPGA market is a major concern for the company. Larger corporations with bigger budgets and larger facilities would have a more competitive advantage over QuickLogic.
To remain competitive, QuickLogic is investing heavily in enhancing its sales and marketing (S&M) capabilities. In the first quarter of 2024, its selling, general and administrative expenses increased 26% year over year. Though the company foresees these investments to garner benefits over the long run, we note that there is uncertainty about the payback period. Also, higher S&M expenses might weigh on QuickLogic’s bottom-line results.
Image: Bigstock
QuickLogic (QUIK) Secures $5.26M Contract From the DoD
QuickLogic (QUIK - Free Report) has won a contract from the Department of Defence (DoD) worth $5.26 million. Under this contract, QUIK will continue its development of a strategic radiation-hardened (Rad-Hard) high-reliability field programmable gate array (FPGA) that will be used in DoD’s space systems in the future.
QuickLogic is steadily expanding its footprint in the aerospace and defense markets with its radiation-hardened embedded FPGA and standard FPGA portfolio. These products are in high demand in the defense and aerospace markets, where operations are conducted in high radiation and extended temperature ranges.
QuickLogic is benefiting from large DoD contracts and other embedded FPGA contracts from the U.S. defense industrial base. At the end of 2022, DoD awarded a $6.9 million base contract for strategic Rad-Hard FPGA Technology. QUIK participated in the DARPA Toolbox in 2021 to get orders for its programable logic products from the military, aerospace and defense.
The market for military, space-based and standard FPGA products is expanding rapidly. Since this product has its use in artificial intelligence, high-performance computing and the Internet of Things alongside defense and space usage, the market size is expected to grow at the rate of 16.4% from 2023 to 2029, per a MarketsAndMarkets report.
The potential of this market has attracted the attention of many large companies that are not only expanding into the FPGA market but also in the niche strategic Rad-Hard FPGA technology space.
Image Source: Zacks Investment Research
Rising Competition in the Rad-Hard FPGA Market
The Rad-Hard FPGA market is dominated by major players who invest substantial resources into optimizing their FPGA products for reduced size, weight and power. Additionally, this market is less sensitive to price, facilitating the entry of large semiconductor companies.
Large corporations, including Advanced Micro Devices (AMD - Free Report) , Intel (INTC - Free Report) and Microchip Technology (MCHP - Free Report) operate in this space. AMD’s subsidiary, Xilinx Inc., competes directly with QuickLogic’s discrete FPGA products for defense and aerospace.
Advanced Micro Device’s Xilinx produces space-grade Virtex-5QV FPGA, while Microchip develops radiation-tolerant RTG4, RTAX-S/SL and RTAX-DSP series FPGAs. Intel’s Agilex series is a defense-grade FPGA. Intel also has the advantage of owning foundries, which makes it less dependent on third parties, unlike QUIK, which operates fabless.
Conclusion
Although QUIK is receiving big budget contracts from the DoD, the rising competition in the Rad-Hard FPGA market is a major concern for the company. Larger corporations with bigger budgets and larger facilities would have a more competitive advantage over QuickLogic.
To remain competitive, QuickLogic is investing heavily in enhancing its sales and marketing (S&M) capabilities. In the first quarter of 2024, its selling, general and administrative expenses increased 26% year over year. Though the company foresees these investments to garner benefits over the long run, we note that there is uncertainty about the payback period. Also, higher S&M expenses might weigh on QuickLogic’s bottom-line results.
The shares of QUIK have declined 22.3% in the year-to-date period compared to the Zacks Electronics - Semiconductors industry’s growth of 35%. Estimates for this Zacks Rank #3 (Hold) company’s earnings for the current quarter have been reduced from 6 cents to a penny in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.