Company’s technology is called the ‘Holy Grail’ in computer memory for use in small electronics
NVE
Corp., a Honeywell spinoff that has developed a way to use spinning
electrons to store data, has spent the summer setting its investors’
heads spinning as well.
The
Eden Prairie company, which had less than $10 million in revenue
last year, has seen its stock price soar from about $6 in May
to a high of nearly $45 this week. The stock dropped sharply in
midweek, but even so is up more than 300 percent over the past
year amid investor interest in its core technology: a new type
of computer memory that could replace many commonly used standards
in small electronic devices.
NVE (short for nonvolatile
electronics) has developed a type of computer memory called MRAM,
or magnetic random access memory, that’s as fast as conventional
computer RAM but as stable as a computer hard drive.
Cypress Semiconductor Corp.
of San Jose, Calif., a partner and investor in NVE, has said it
hopes to roll out the industry’s first MRAM devices by the end
of the year at its fabrication plant in Bloomington. It will beat
a similar project by IBM Corp. to market by more than a year.
“It’s taken a while, but
it seems to be getting fairly close to fruition,” said Daniel
Baker, NVE’s CEO.
The progress has likely
spurred the recent investor interest in NVE, said Chad Bennett,
senior equity analyst at Miller Johnson Steichen Kinnard in Minneapolis.
Bennett doesn’t cover NVE but has followed the company informally
for more than a year.
“The reality of MRAM actually
becoming a tangible product has really come around in the past
three months,” Bennett said. “If anybody is looking to get into
the space, they’ll be looking at NVE. ... If the technology develops
like people think it will, this company won’t stand alone very
long” before attracting suitors.
The stock climb is a burst
of endorsement for NVE, which since 1990 has mostly pursued government
research.
That business is profitable,
but the company has had to maneuver to keep its place in the market.
The thinly-traded firm orchestrated a reverse split last year
to keep its stock price above $5 per share.
Its MRAM development could
be the payoff of long years of work. The company’s technology
is based on a process it calls “spinitronics,” which alters the
spin of electrons at the atomic level to store data.
Conventional types of computer
memory use the charge of an electron (that is, the presence or
absence of a charge) to do the same thing, but such charge-based
memory doesn’t last long. Other types of memory are available,
but have their own problems. A cell phone uses at least three
different types of memory chips--one to handle complicated processing,
another to handle basic tasks and a third to store phone numbers
when the handset is turned off.
MRAM’s supporters say the
technology could replace all three types. “This technology really
is one of those things that come across once in lifetime,” Baker
said.
“MRAM has the potential
to be all things to all people: Stable, fast and cheap to produce,”
said Jason Sam, an analyst with Los Angeles-based Seidler Cos.
who doesn’t follow NVE but has tracked the company’s technology.
T.J. Rodgers, CEO of Cypress,
was more direct. “This is the Holy Grail of memory,” he said.
The key for NVE, which
will make its own products but hopes to see most of its business
through licensing deals with Cypress and Motorola, will be in
making sure the technology catches hold.
“At the end of the day,
it can take many years to establish a viable technology in this
industry,” Sam said.
Though its technology is
first to market, NVE must also make sure it can enforce its intellectual-property
portfolio against late-comers, and defend it against any challenges.
Rodgers, though, said that NVE’s patents were well-grounded; under Cypress’ deal with NVE, Cypress will help defend the company’s intellectual property. “They’ve got the patent in this field,” he said.