Why is the BrainChip (ASX:BRN) share price springing 13% today?

The technology company is having a great day.

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Shares in Brainchip Holdings Ltd (ASX: BRN) are driving northwards and are currently trading 13% higher on the day at 69.5 cents apiece.

Whilst there’s been no market-sensitive information released by the company today, Brainchip shares have bounced from 61 cents in the past 2 days and are now up 13% this week. Read on for more.

What’s up with the Brainchip share price today?

Investors are piling into Brainchip today after trading flat over the last week. Shares are trading on a volume of 172% of their 4-week average, with a total of 20,845,092 Brainchip shares changing hands today.

The market took notice last Monday when Brainchip announced it had signed a partnership with Japanese firm MegaChips Corporation (TYO: 6875) to design and manufacture Brainchip’s Akida technology.

Adding the Akida technology to MegaChips’ products will deliver a plethora of benefits to both parties, Brainchip says.

Shares in the company were placed into a trading halt two days later before Brainchip added a few additional layers of information on the MegaChips deal.

In addition to the upfront license fee, Brainchip has the ability to generate additional revenue under the agreement. These funds can be obtained from royalties on the sale of products to MegaChips’ customers as a percentage of the net sales on select products.

Aside from this, additional revenue can be earned via license fees for application specific product developments, project fees for proof of concept development projects with MegaChip’s customers for specific custom networks; and fees for support services and licensing of software associated with the Akida intellectual property.

The remaining terms of the agreement are subject to strict confidentiality provisions as between Brainchip and MegaChips, according to the announcement.

Brainchip anticipates that it will recognise aggregate revenue of approximately US$2 million under the agreement over the current financial year and the financial year ending 31 December 2022.

It also expects to obtain further revenue from the license fee and additional revenue opportunities noted above in subsequent financial years.

Referencing the deal in its update, the company said:

Brainchip considers that this agreement is highly significant to its growth strategy as it not only provides a licensing fee for its Akida technology but also provides broader opportunities to generate revenue from MegaChip’s substantial global customer base which it would be unlikely to be able to access directly.

Brainchip share price snapshot

In the past 12 months, the Brainchip share price has gained more than 93% after rallying a further 62% this year to date.

It has soared over 51% over the past month as well and is up more than 12% for the week.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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