POAHY - Enovix Has The Silicon Battery Of The Future

2023-03-24 08:45:00 ET

Summary

• Silicon will double the capacity of current battery technology.
• Large-scale production is the goal.
• Gen2 equipment will increase production tenfold over Gen1.
• Enovix BrakeFlow™ significantly reduces the chance of thermal runaway.
• Chairman TJ Rodgers buys more stock boosting investor confidence.

In 1991, Sony ( SONY ) changed the world with its lithium-ion battery; without it, portable PC's and all sorts of other electronic gadgets we take for granted would have never proliferated. Fast-forward 30 years, and a company called Enovix ( ENVX ) appears to be in the same position. Go back to your high school chemistry days with the periodic table; if you look at carbon ((C)) and silicon (Si), you see that silicon's atomic mass is twice as big as carbon's; that translates to twice the power capability in batteries, so imagine if all the carbon-based (graphite) batteries today could be silicon; that is exactly what Enovix is delivering to the marketplace, and besides that, they'll provide superior fast-charge capability, longevity and practically eradicate thermal runaway . The Enovix company slogan is " tomorrow's technology today ", and I believe that phrase holds merit.

Enovix expects to have a factory in Malaysia capable of producing millions of silicon-lithium batteries; if successful, they will have accomplished what no other silicon-based battery company has been able to do, which is to materially scale production; the new CEO , Raj Talluri, and COO, Ajay Marathe , are experts in this arena with proven track records. The following article will spotlight some of Enovix's latest milestones and add some excerpts from Silicon Valley's legendary TJ Rodgers , the Chairman of the Board at Enovix.

Enovix may have the product that will give the battery industry the next step change . Even Elon Musk of Tesla ( TSLA ) touted silicon as the next big thing for batteries. If you're an Enovix investor like me, then this article should make you feel confident about your investment and its potential future.

Enovix is wisely entering the most profitable battery market first — consumer electronics, and then from there, they'll produce batteries for other applications, allowing the profit from the consumer electronics market to fund operations. In this way, Enovix won't need a $5 billion dollar Gigafactory to reach its goals. Unlike other battery companies who do have those gargantuan needs, Enovix does not and will start with a much more manageable but sizable market to ensure longterm success.

Enovix has a revolutionary battery architecture that makes the silicon battery possible which is easy to understand from the graphic above. It would be impossible for the conventional-wound battery architecture currently used in today's batteries to use 100% active silicon. Furthermore, because of Enovix's unique battery architecture, they've been able to integrate a decentralized resistive technology which significantly reduces the chance of thermal runaway. Think of a battery with a centralized resistor meant to prevent thermal runaway; then, consider a battery with an army of resistors doing the same; it's easy to understand that the battery with the army of resistors clearly has the advantage. Enovix's army of resistors is called BrakeFlow™, and if you watch this video , you can see TJ Rodgers proving the technology works.

Over a decade ago, solar PV was stigmatized as unreliable because when a lone central string inverter failed, the whole system failed. It was not until Enphase's army of microinverters arrived that installers began to realize the true reliability this multiplicity gave to solar PV systems by decentralizing power. Similarly, batteries with BrakeFlow™ technology decentralize resistive power; however, this technology is nascent, and most don't really understand it's true potential yet. Furthermore, large-scale production will not be underway until 2024. Enovix may well do for batteries what Enphase has done for solar but on a much bigger scale considering the multitude of applications.

In May, 2022, TJ Rodgers bought 400k shares at ~$9 per share ( 1 , 2 ), and then most recently accumulated 500k more shares on March 10th , 15th , 16th, 17th, 20th and 21st . I mentioned to TJ that his recent transactions inspire confidence in the investor community and asked what were some of the positives he is witnessing at Enovix to compel him to buy more stock; he responded by saying that " the company has recently beat key milestone dates and is on track to continue with this excellent execution ." He also added that " the plans for the second production factory, 'Fab-2', now set for Malaysia , have also hit key milestones ahead of commitments. ”

From the latest Investor Presentation ( above ), " Fab-2 " will be a huge milestone for the company, but it is its " Gen2 " equipment that should increase production throughput more than tenfold over " Gen1 ". Consider that Enovix announced they will more than double the battery units produced each quarter to end 2023 at ~180,000 total from " Fab-1 " in Fremont. At the last earnings call, COO Ajay Marathe was already in SE Asia working with vendors on planning the new factory. The company appears to be moving at a breakneck pace making strategic new hires of veteran personnel and plans to install the first " Gen2 " line later this year.

I asked TJ if he could touch on BrakeFlow™, and he stated that " investors must understand what Enovix possesses with its BrakeFlow ™ technology. Thermal runaway is a big, big problem in the battery industry, and Enovix's decentralized resistive power dissipator is a novel approach to solving it, that no other company has successfully engineered ." I agreed with TJ, and from my previous article on Enovix and Amprius ( AMPX ), the competition could not come close to their thermal runaway solution since it was chemistry-based; Enovix's BrakeFlow™ is a much more robust hardware-based solution. A prime example of how seriously expensive and big a problem thermal runaway can be is the $5.3B fine levied on Samsung for its Galaxy Note 7 disaster in 2016.

I asked TJ if it was just pure coincidence that both companies he invested in, Enphase Energy ( ENPH ) and Enovix, have decentralized power topologies that give them a major advantage — Enphase with its microinverters and Enovix with its resistors, or if he knew from the onset that these technologies would usher in a level of reliability and safety that would make both companies invaluable. TJ stated it was not.

In summary, Enovix’s 100% active silicon battery is the next step change in the industry, the fact that Enovix has five “ MegaCap ” customers in addition to the U.S. Army is the telltale; these customers are patiently waiting for the production muscle to ramp up — which it will with this new factory in Malaysia in 2024. Enovix's BrakeFlow™ technology practically preventing thermal runaway, along with their unique battery hardware architecture, sets them apart from the competition, and the Chairman buying more company stock is a very good sign for investors. I believe Enovix has a very bright future, possibly even brighter than Enphase Energy's. Of course, it is important for every investor to do their own due diligence. Good luck.

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