Is $LAES Set to Lead the Post-Quantum Cryptography Revolution？
U.S. stocks wrapped up Christmas week last Friday with retracements of double-digit uptrends, and, alongside the dollar to a smaller degree, succumbed to profit taking in illiquid markets heading into the last weekend of 2024.
The best-performing concepts is Semiconductors.
Considering the different perceptions of the stock, this time TigerPicks chose $SEALSQ Corp(LAES)$ to have a fundamental highlight to help users understand it better.
SEALSQ is a forward-looking semiconductor company that is focused on building future-proof, secure semiconductor chips. SEALSQ used to be a subsidiary of $Wisekey International Holding AG(WKEY)$ before being spun out of WISeKey in May 2023. WISeKey remains a parent company to SEALSQ and a major shareholder in the company.
SEALSQ is mainly focused on semiconductor security for current-generation IoT devices and applications, post-quantum cryptography solutions, and managed public key infrastructure ("PKI") for IoT. The applicability of these solutions is in connected vehicles, smart grids, healthcare devices, critical infrastructure, and industrial automation, among others.
Post-quantum Cryptography
Post-quantum cryptography ("PQC") is a major highlight for the company. PQC-level security is essential for the Fourth Industrial Revolution ("4IR") which is already underway, with the increasing convergence of digital and physical systems we are witnessing. And with the rapid advances in quantum computing — major recent breakthroughs being the development of $Alphabet(GOOG)$ $Alphabet(GOOGL)$ 's 105-qubits Willow quantum chip, and $IBM(IBM)$ 's roadmap to unveil a 10x more powerful 1000-qubits system called Flamingo — it is now pertinent that secure cryptographic systems be designed to withstand quantum computing threats. This is where SEALSQ shines and holds great prospects.
SEALSQ has developed a comprehensive portfolio of products and services that address present and future digital security needs that are applicable in several market verticals. Some of SEALSQ's digital security solutions cover device-to-device authentication, where data integrity and privacy are ensured in decentralized environments. This is done by using cryptographic private keys and certificates, device-to-cloud authentication where secure communication is maintained between IoT devices and cloud services, and secure satellite IoT connectivity. This ensures encrypted, reliable, and tamper-proof data transmission in remote and critical applications using certificate-based authentication known as PKI.
SEALSQ boasts 24 years of experience in chip development and has achieved 1.5 billion chips installation worldwide. Though SEALSQ has a large portfolio of microcontroller and cybersecurity products already serving a wide range of industries, the addition of new post-quantum products has been the main growth driver for the company.
Challenges and Opportunities
In the digital age, securing digital data remains a priority for individuals and enterprises now and in the future. With breakthroughs in quantum computing, new threats arise to the security and integrity of data. SEALSQ's digital data security solutions are being built to be quantum-ready, and herein lies a unique market opportunity for the company.
SEALSQ has followed through with its milestone of launching two ground-breaking quantum-ready chips that are built on the RISC-V architecture. RISC-V is a more power-efficient and portable chip design architecture that is gaining prominence in embedded systems and other applications and becoming a strong competitor to ARM and X86 chip architectures. X86 chips have been mostly used in PCs and servers and dominated that segment over the years, while ARM chips gained popularity in mobile devices. Tech giants have begun realizing the potential of the RISC-V architecture, with Google announcing that its future Android OS will support RISC-V chips. The adoption of RISC-V chips shows that SEALSQ is building on technology that is set for widespread adoption in the years ahead.
The official launch of QS7001 and QVault products sometime next year will be pivotal for the company's market standing and financial growth.
Stock Rally Continue
SEALSQ is set to leverage the high-net-worth partnerships of its parent company WISeKey, like WISeKey's ongoing project in Saudi Arabia to implement secure IoT and Decentralized Physical Infrastructure network ("DePIN") solutions as part of the country's Vision 2030. We have witnessed one instance of such leverage when SEALSQ's post-quantum chips were recently integrated on WISeKey's WISeSat satellites.
The next WISeSat launch to space, together with $Tesla Motors(TSLA)$ SpaceX, is scheduled for January 14, 2025, from the Vandenberg Space Force Base in California. This integration has brought enough attention to LAES to make the stock rally. Both WKEY and LAES have seen increased price momentum in the past one month.
This synergy of momentum between these two companies and stocks is bound to continue, and LAES has no likely price ceiling in sight yet, in my view. At just a $148 million market and $19.63 million in total debt, coupled with notable milestones like having post-quantum chips ready to be deployed in space, the financial growth potential for LAES in the near term is promising. LAES currently trades at a 3.53x P/S ratio, which is one of the lowest P/S among semiconductor companies with actual products.
Ambitious companies require ambitious funding, and SEALSQ may need to raise more funds through equity issuance in the future. While the company may avoid borrowings to keep the balance sheet attractive, there is potential for more stock dilution in the future.
Resource:
https://seekingalpha.com/article/4746251-sealsq-a-quantum-ready-company
What are your thoughts on $SEALSQ Corp(LAES)$ ?
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