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EnSilica Shares Decline Following Project Delay Announcement
Shares in British chipmaker EnSilica (ENSIL) experienced a significant drop on Monday after the company issued a cautionary statement regarding project postponements affecting its financial outlook for the current year. The semiconductor firm alerted investors that delays in client projects are anticipated to exert pressure on its near-term financial performance.
Project Delays Impact Revenue Forecast
The revised projections stem from postponements in two key customer projects. Notably, a substantial contract with Siae Microelettronica, an Italian telecommunications company, now expected to yield considerable returns, has been rescheduled for delivery across the financial years 2026 and 2027, shifting from the previously anticipated 2025 timeline.
Edge AI Chip Tape-Out Pushed to FY2026
Further impacting EnSilica’s financial forecasts is the deferral of the ‘high-value tape-out’ for an Edge AI chip. This crucial stage in chip production is now projected to commence in the first half of fiscal year 2026. As a result, the company anticipates a reduction in revenues and earnings for the fiscal year 2025 by approximately £4 million and £3 million, respectively.
Revised Turnover and Earnings Guidance
As a consequence of these project timeline adjustments, EnSilica now projects a turnover figure between £19 million and £20 million for the fiscal year concluding in May. Furthermore, the company forecasts earnings to range from £0.1 million to £0.5 million for the same period.
Future Financial Year Projections Remain Positive
Looking ahead to the subsequent 12-month period, the Oxfordshire-based enterprise anticipates a significant revenue increase, projecting figures between £33 million and £35 million. Encouragingly, approximately 80 percent of this anticipated revenue is already secured through existing customer contracts, providing a degree of financial certainty.
Stock Price Reaction
Investor reaction to the revised financial outlook was pronounced. Shares in EnSilica experienced a sharp downturn, plummeting by 24.4 percent to 29.5 pence in early afternoon trading. This decline positioned EnSilica as one of the ten most significant decliners within the AIM All-Share Index.
Outlook: EnSilica shares declined on Monday after the chipmaker flagged that customer delays on two projects would affect results this year
CEO Statement on Project Delays
Ian Lankshear, Chief Executive Officer of EnSilica, acknowledged the ‘disappointing’ nature of the delays. However, he reassured investors that these postponements are not expected to compromise the company’s medium-term performance trajectory.
Lankshear further stated, ‘We have adjusted our future guidance to reflect a more conservative estimate regarding the timing of our growth progression. I want to emphasize that we maintain strong confidence in EnSilica’s position to deliver substantial returns for our shareholders.’
New Contracts and Revenue Streams
Despite the project delays, EnSilica, which specializes in the design of mixed-signal application-specific integrated circuits (ASICs), has secured six new design and supply agreements within the first ten months of the current fiscal year.
These newly acquired contracts are projected to generate non-recurring engineering (NRE) revenues surpassing $40 million over the upcoming two financial years.
Understanding NRE Revenues
NRE revenues are defined as the charges levied on clients for chip design services. These fees encompass significant expenditures such as tape-out fees and other substantial third-party costs associated with the design and prototyping phases.
Confident Path to Positive Cash Flow
Bolstered by a robust order book and increasing income from chip supply operations, EnSilica expresses confidence in possessing ‘sufficient capital’ to achieve positive cash generation by the conclusion of fiscal year 2026.
Projected Revenue Growth
Until that target is reached, the group anticipates consistent month-on-month revenue expansion. This growth is expected to be underpinned by increased customer activity, aligning with the momentum generated from recently secured contract wins.
EnSilica’s Background and Market Presence
EnSilica was co-established in 2001 by Ian Lankshear, whose prior professional experience includes roles at Hitachi and Nokia. The company was founded with the initial objective of providing consultancy services to the semiconductor industry.
Today, EnSilica’s ASICs are utilized by businesses spanning a diverse array of sectors, including aviation, automotive manufacturing, healthcare, and telecommunications.