Onshore FPGA Advances Will Expand Defense And Aerospace Demand

Key Takeaways

• Differentiated US-based, rad-hard FPGA and advanced IP tools enable entry into high-value defense, aerospace, and edge AI markets, limiting competition and driving revenue growth.
  
• Shifting to an IP-driven, storefront model with strategic partnerships enhances predictability and quality of earnings through recurring, high-margin revenue streams.
  
• Heavy reliance on a narrow customer base, limited scale, execution risk on new initiatives, and intense competition threaten QuickLogic's profitability, growth prospects, and long-term competitiveness.

Catalysts

Operates as a fabless semiconductor company.

• QuickLogic's accelerated investment in a US-fabricated, high-density, radiation-hardened (rad-hard) FPGA test chip positions the company to capitalize on the growing demand for domestically produced, mission-critical programmable logic in defense and aerospace, enabling entry into large, multi-hundred-million-dollar addressable markets (top-line revenue growth, higher average selling prices, and improved earnings visibility).
  
• The anticipated release of Australis 2.0, QuickLogic's upgraded proprietary IP generation tool, will allow for rapid deployment of customer-specific, high-density eFPGA cores on advanced process nodes (12nm, Intel 18A), supporting customer design requirements for speed, efficiency, and reliability. This accelerates customer adoption and expands the company's potential customer base (revenue growth, improved gross margin via higher-margin IP licensing).
  
• Product differentiation through onshore manufacturing and unique capabilities (rad-hard, advanced node integration) limits competition from offshore or legacy FPGA vendors, providing QuickLogic with potential sole-source or low-competition positions on strategic government and defense programs (higher gross margins and sustainable earnings).
  
• The ongoing proliferation of edge AI/ML applications and IoT end-points requiring customization and low power consumption aligns with QuickLogic's reconfigurable, IP-based solutions, expanding long-term demand across industrial, automotive, and wearables (sustained revenue growth, future operating leverage).
  
• Expansion of the IP-driven, "storefront" business model with a blend of discrete product sales and high-margin IP licensing, combined with new strategic partner engagements, is expected to result in more predictable, recurring revenues and superior long-term earnings quality as government funding and customer contract momentum build through 2026 and beyond (margin expansion, improved earnings stability).

QuickLogic Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming QuickLogic's revenue will grow by 26.3% annually over the next 3 years.
• Analysts are not forecasting that QuickLogic will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate QuickLogic's profit margin will increase from -40.5% to the average US Semiconductor industry of 14.1% in 3 years.
• If QuickLogic's profit margin were to converge on the industry average, you could expect earnings to reach $5.2 million (and earnings per share of $0.26) by about September 2028, up from $-7.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 41.6x on those 2028 earnings, up from -12.0x today. This future PE is greater than the current PE for the US Semiconductor industry at 33.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.8%, as per the Simply Wall St company report.

QuickLogic Future Earnings Per Share Growth

Risks

• QuickLogic's recurring quarterly net losses, modest revenue decline in 2025 (relative to 2024), and low gross margins (Q2 non-GAAP gross margin dropped to 31%, Q3 forecasted at just 5%) highlight ongoing challenges in achieving sustainable profitability, which could constrain long-term investment in product development and limit future earnings growth.
  
• Heavy reliance on a small customer base (three customers and one distributor each accounting for over 10% of revenue in Q2 2025) and revenue concentration in government/defense contracts expose the company to significant earnings volatility if key contracts are lost, delayed, or do not materialize as anticipated.
  
• Intense competition from major FPGA and ASIC players (e.g., Intel Altera, AMD Xilinx) and the potential for new entrants in the high-density, onshore, rad-hard FPGA market may drive pricing pressure and erode QuickLogic's market share, negatively impacting both revenue growth and gross margins over time.
  
• QuickLogic's limited R&D and operational scale compared to industry giants may impede its ability to sustain technological leadership as the semiconductor industry accelerates toward advanced nodes, heterogeneous integration, and large-scale deployments, risking product obsolescence and declining revenue competitiveness.
  
• High dependence on successful execution of unproven strategic initiatives (such as the internally funded rad-hard FPGA test chip and the Australis 2.0 toolchain) creates significant execution risk-failure to win large defense design wins, delayed product-market fit, or technological misalignment with rapidly evolving customer requirements could materially undermine future revenue, margin expansion, and shareholder value.

Valuation

• The analysts have a consensus price target of $7.975 for QuickLogic based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $5.95.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $37.0 million, earnings will come to $5.2 million, and it would be trading on a PE ratio of 41.6x, assuming you use a discount rate of 10.8%.
• Given the current share price of $5.41, the analyst price target of $7.98 is 32.2% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.