Archer Materials (ASX:AXE) — one of a cohort of ASX-listed semiconductor stocks — flagged some good news yesterday afternoon after successfully obtaining a patent in the global semiconductor hub of South Korea.

The Republic of Korea patent (KR Patent — No. 10-2288974) relates to Archer’s CQ qubit (quantum-bit) computing chip technology, currently under development at the University of Sydney.

Following the announcement, Stockhead spoke with Archer CEO Dr Mohammad Choucair, to get some further context around the patent approval process and the company’s near-term outlook.

Archer Materials patent

Commenting on the patent news, Choucair said the approval marked the culmination of a multi-year application process.

“What’s important to understand is that we now have a patent portfolio for a quantum computing chip which is an entirely new technology,” he said.

“So it’s fairly big news because it’s taken over five years to get this thing through in South Korea.”

As a major electronics manufacturer, South Korea’s patent office currently enforces over one million existing patents.

And in Archer’s case, “it’s a very rigorous examination because you’re not just patenting an incremental change in the technology. It’s an entirely new technology so we’re seeking IP protection for,” Choucair said.

“It encompasses your core technology as well as legal and governance aspects. So it’s a very technical process with multiple phases.”

Global patent protection

In that context, patent approval in South Korea amounts to a “significant validation” of the CQ technology’s competitive advantages, Archer said yesterday.

Archer Materials shares rose by 13% to close at $1.62 and the stock has gained traction in FY22, having now doubled from its May/June trading range between 70-80c.

And while Archer’s technology is still in its development phase, Choucair said the broader shifts taking place in the sector make patent protection an “absolute fundamental commercialisation requirement”.

“There is a revolution going on in computing at the moment. And it’s not just quantum computing but a whole bunch of other areas like AI,” Choucair said.

In a nutshell, that revolution is based around bringing increased computing speeds to smaller mobile devices.

“The move to mobile devices is huge and quantum plays a part in that paradigm shift. So for us to have patent protection — especially in a country like South Korea where their primary export is electronic devices — is an exciting development,” he said.

As a measure of industry size, Korean electronic giants Samsung and Samsung and SK Hynix have committed to invest US$450bn in the country’s semiconductor chip industry through to 2030 — an amount which is “bigger than Australia’s entire mining industry”, Choucair said.

More broadly, the world is “still at an early stage of quantum computing so it’s important to have those foundational layer patents locked in and secured”, he said.

The South Korea patent accompanies Archer’s existing patent in Japan (received in January), with approval applications progressing in Europe and the US.

In the wake of its South Korea patent update, the company also flagged the approval of its China patent application for the CQ computing chip.

Archer said approval in China marks another key step in its long-term production strategy, given Asia’s position as a semiconductor manufacturing hub.

“Archer must have patent protection in the relevant countries if it wants to utilise these chip manufacturing plants in the future,” the company said.

Operationally, Choucair said the company is focused on the development of its computing chip, after flagging an early indication of its capacity for on-chip qubit control in microscopic-scale materials in July.

And it plans to leverage domestic infrastructure in Australia to move from a prototype to finished products.

“We have access to close to $1bn worth of deep-tech infrastructure to build our chip here in Australia,” Choucair told Stockhead.

“It allows us to build the technology and do testing analysis without having to raise $500m or go overseas.”

“For us, longer term it’s about getting our ducks in a row with regard to IP protection. Shorter term, the focus is on building a prototype of the chip and getting the control devices sorted.

“We’re miniaturising our devices towards single cubic control which is the next operational focus.”