Money Talks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to see what’s hot, their top picks and what they’re looking out for. Today, we hear from Marc Kennis, co-founder of Sydney-based Pitt Street Research.


What’s hot right now?

Kennis’ focus is on technology and one of the areas that he sees as hot right now is the semiconductor space, particularly “neuromorphic computing”.

He says that while artificial intelligence has been around for a number of years, there is now a shift from just software programs written by people to help systems learn, to semiconductor chips that are designed using the biological brain.

“The point here is it is neurons and synapses that actually allow machines and systems to learn autonomously,” he explained.

“So neuromorphic computing is probably one of the hottest areas right now within technology.”

Neuromorphic computing enables what is called “edge computing”, which means all the data processing is done at the point of the device rather than in the “cloud”.

The cloud refers to processing and storage that is done over the internet via programs such as Google Drive or iCloud as opposed to being stored locally on your phone or computer hard drive for example.

“It could be your smartwatch, it could be your phone, it could be sensors, it could be a robot in a factory,” Kennis said.

“All of those devices need processing power to help them make decisions and up until now a lot of that processing has been done in the cloud.

“So every time one of those devices, like your Apple watch, collects data for instance on your heart rate, it needs to have a connection to the cloud to process all that data.

“What edge computing allows is for all these devices to do that processing at the edge or at the actual device. So there’s a lot less need to communicate with the cloud.”


Top picks

There are about nine ASX-listed companies in the semiconductor space.

Here are four that Kennis likes:

4DS Memory (ASX:4DS) and Weebit Nano (ASX:WBT) are in the same space but addressing different segments of the market, according to Kennis.

Both companies are developing their own storage technology, known as “resistive RAM”, which essentially allows electronics companies to replace existing flash memory in a mobile phone, for example, with faster and cheaper flash memory.

“This sort of stuff will do wonders for the battery life of your phone for instance,” Kennis said.

“Both companies are sort of at the same stage of commercialisation. So I’d say give it another year, maybe two years, and they should be able to get some nice licensing deals.”

4DS Memory has a market cap of around $76m at a share price of 7c, while Weebit Nano is currently valued at about $34m at a share price of 53c.

BrainChip (ASX:BRN), which has a market cap of $47.2m at a share price of 4.1c, has developed a computer chip, called “Akida”, that mimics the biological brain.

The chip can be used for edge applications such as advanced driver assistance systems (ADAS), autonomous vehicles, drones, vision-guided robotics, surveillance and machine vision systems.

“It allows computer systems to learn autonomously rather than have some programmer define the rules,” Kennis said.

BrainChip has now started to commercialise its Akida chip.

Pointerra (ASX:3DP), meanwhile, has developed cloud-based technology that manages the huge amounts of data contained in 3D files such as maps — ideal for utilities or mining companies.

But Kennis also sees a future for the company in the autonomous vehicle space.

“All the data collected by Tesla for instance through LIDAR first of all needs to be processed but also shared with other cars in the area and it needs to be sent up to the cloud, and managing that 3D data is a humongous task,” he said.

Pointerra has a market cap of $23m at a share price of 4.2c.

Kennis owns shares in 4DS Memory, Weebit Nano, BrainChip and Pointerra.

Investors who may be interested in checking out the ASX-listed companies in the semiconductor space can take the opportunity to meet some of them at the Pitt Street Research Semiconductor Conference in Sydney on May 16.

Marc Kennis has two decades of institutional equities research experience in the technology and telco sectors, servicing clients in the UK, Europe, North America and Australia. In 2016 Marc founded TMT Analytics, providing independent equities research on companies in the Tech, Media and Telco sectors.


The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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