Weebit Nano Ltd (ASX: WBT) shares are having a poor start to life in 2025.
In morning trade, the ASX tech stock is down more than 6% to $3.37.
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Why is this ASX tech stock sinking?
Investors have been selling the semiconductor company's shares following the release of some big news.
As a reminder, Weebit Nano is a developer and licensor of advanced memory technologies for the global semiconductor industry.
The company's key offering is its Resistive RAM (ReRAM), which aims to address the growing need for significantly higher performance and lower power memory solutions in a range of new electronic products. This includes Internet of Things (IoT) devices, smartphones, robotics, autonomous vehicles, 5G communications and artificial intelligence.
What's the big news?
This morning, the ASX tech stock announced that it has licensed its ReRAM technology to tier-one semiconductor supplier, ON Semiconductor Corp (NASDAQ: ON) (onsemi).
While this would ordinarily be seen as a huge positive, it seems that Weebit Nano is suffering from the classic "buy the rumour, sell the facts" trading strategy. After all, prior to today, its shares were up almost 25% in the space of a month.
According to the release, under the terms of the agreement, Weebit ReRAM intellectual property (IP) will be integrated into onsemi's Treo platform to provide embedded non-volatile memory (NVM).
It notes that Weebit ReRAM integration into a Bipolar CMOS, DMOS (BCD) process provides a low-power, cost-effective NVM that has proven excellent retention at high temperatures.
As part of the engagement, the ASX tech stock is required to meet several technical milestones based on an agreed work plan. Weebit Nano will receive manufacturing license fees, non-recurring engineering fees (NRE), and royalties based on production volumes.
What's the deal worth?
Weebit Nano concedes that it cannot put a dollar figure on the value of the deal due to a range of variables. It also warned that termination is possible for onsemi if certain technical milestones are not achieved.
Nevertheless, the ASX tech stock views this commercial agreement as strategically important given onsemi's position in the US semiconductor industry. It also highlights "the commercial validation it provides for Weebit's ReRAM technology when a company of this stature commits to Weebit's technology, with the associated investment in preparing its own systems for production."
And if all goes to plan, the "royalties are expected to be material over time depending on the number of products that onsemi decides to produce using Weebit's technology."
Commenting on the deal, Weebit Nano's CEO, Coby Hanoch, said:
We are delighted to announce Weebit's latest commercial agreement with onsemi, one of the world's top semiconductor integrated device manufacturers.
This agreement is further industry recognition that ReRAM is the non-volatile memory solution best positioned to replace traditional flash storage, with Weebit being a leading independent provider of ReRAM.
