Canatu - Specialist in Carbon Nanotube Films

[Sijoittaja-alokas]

Atte has made a new company report on Canatu.

We raise Canatu’s recommendation to buy (previously add) and revise the target price to EUR 12.0 (previously EUR 13.0). Canatu’s share price has fallen by approximately 22% since our update (31.3.) following the company’s financial statements. We noted then that the unclear growth outlook for 2025 combined with a high valuation could offer even better buying opportunities, and now they are available. Significant growth expectations are still priced into the share’s valuation, but relative to Canatu’s long-term potential, the current enterprise value of just over EUR 200 million is, in our opinion, attractive. With our unchanged forecasts, we expect the company to achieve the targets set for 2027 (revenue >EUR 100 million, adj. EBIT >30%) slightly slower, during 2028. The valuation (EV/EBIT 6x-7x) would then fall to a very low level.

Canatu: Kärsivälliselle sijoittajalle tarjoillaan ostopaikkoja - Inderes

[Koala]

Interesting new findings regarding the potential of carbon nanotubes in electric motor applications, meaning they could be used for windings instead of metals. Below is a link to an article in phys.org media. The article highlights as one challenge that impurities can be problematic… Interestingly, progress is being made in that area too; for example, what was described in the editorial of the latest Tekniikka&talous magazine (“Revolutionary technology may have just been born in Turku”) might also apply to the CNT side. And it applies even more easily to the planned role of CNTs in memory chips. A couple of quotes from the editorial (paywall, Pääkirjoitus: Turussa saattoi juuri syntyä mullistava teknologia | Tekniikka&Talous):

“At the Department of Physics and Astronomy at the University of Turku, an invention based on ultra-high vacuum technology has been developed, which allows the surfaces of semiconductor components to be cleaned at an atomic level.”
“The recently founded Sisusemi startup’s invention allows microchip components to be made even smaller. It makes electronic devices better – faster, more precise, more durable, and more energy-efficient.”

Carbon nanotubes replace metal coils for ultra-lightweight electric motors

[StockTycoon]

MSN

Persuading outside clients to use Intel’s factories remains key to its future. As its 18A fabrication process faced delays, rival TSMC’s N2 technology has been on track for production.

Tan’s preliminary answer to this challenge: focus more resources on 14A, a next-generation chipmaking process where Intel expects to have advantages over Taiwan’s TSMC, the two sources said. The move is part of a play for big customers like Apple and Nvidia, which currently pay TSMC to manufacture their chips.

The 14A is Intel’s first high NA process. A couple of months ago, they communicated that 14A would be delayed, as they believed in the 18A process, but now the tone has apparently changed, which is positive from Canatu’s perspective.

[AntiReal]

Jussi made a good video report on the topic, Canatu – Is this the next billion-dollar company for the Helsinki Stock Exchange?

Canatu – Onko tässä seuraava miljardiyhtiö Helsingin pörssiin?

[Pandakarhu]

SAT completed, excellent work!

[Atte_Riikola]

Here is the full Canatu press release on the matter:

Tiedotteet - Canatu

It’s great that things are moving forward! However, the customer still has a few steps to complete before reaching mass production:

The next step for the customer is to ensure final approval for the finished carbon nanotube pellicle film and the entire production line before the start of pilot and initial mass production. This phase would initiate Canatu’s mass production of carbon nanotube pellicle membranes, which would bring the company one-time revenues from technology licensing, as well as continuous revenues as royalties from sold carbon nanotube pellicle films and reactor consumables.

[JJ_JJ]

Hei,
Great news for Canatu regarding this customer approval.

In addition to the analyst, there seem to be top-tier experts in this thread who understand the industry better, so I thought I’d ask for some views on this news: what is the forum’s consensus estimate on how solid Canatu’s success actually is after Friday’s announcement, and what kind of timeframes are we talking about for achieving a final breakthrough? Can anyone on the forum offer informed guesses on:

a) how many months (surely not years?) are we talking about when the announcement mentions:

“the next step for the customer is to secure final approval for the finished carbon nanotube pellicle membrane and the entire production line”.
At this stage, can the risk of complete failure still materialize, or is it more about the risk of fine-tuning some parameters for the customer before starting pilot and risk mass production, i.e., mainly the postponement of the pilot to a later future (schedule risk?)?

And a question for the second phase:

b) how long is the production process pilot when we talk about “pilot and risk mass production”? Are we talking about a couple of months, half a year, or perhaps a year from the customer’s perspective? And what significant risks can still be associated with whether the pilot/risk mass production succeeds or not? At this stage, can the risk of technological failure for actual mass production still materialize, or is it more about the risk of fine-tuning some parameters based on the pilot before starting actual mass production, i.e., mainly the postponement of final production to a later future?

In any case, if any informed guesses could be provided for this two-part question (a) and (b), it would help my own reflections as an investor on how long one should be prepared to sit with the uncertainty related to the technological breakthrough before this so-called technological risk mainly disappears.

[Pandakarhu]

I would divide the risks into two groups. One is reactors and their business, and the other is pellicles.

Canatu has chosen a business model where CVD chambers are sold to the customer. The customer operates the reactor themselves and obtains nearly finished pellicles for reticles from it. I am not familiar with Canatu’s reactor, as I haven’t seen one, but I am familiar with CVD or furnace processes, which are almost identical to what Canatu does. Generally, these are very straightforward but require continuous monitoring to ensure the process does not drift in one direction or another. Canatu has certainly refined its equipment and processes in Vantaa, but whenever a device is moved to a customer’s premises, a few complications may arise, especially when it’s the world’s first installation. The news of SAT (Site Acceptance Test) approval reduces the risk level regarding the reactor not functioning for the customer for some reason. However, I would see that the chosen business model involves slightly more risk than if Canatu were to make the pellicles themselves in Vantaa, inspect the quality themselves, and then send them to the customer. As I said, I don’t know Canatu’s reactor, so I can’t say what the yield (saanto) of a single reactor is and whether the yield differs when the device is operated by Canatu or the customer. The reactor requires continuous maintenance and process monitoring, which can increase the risk level regarding yield.

Canatu is quite a Mickey Mouse level (small-time) in the semiconductor industry, and I have seen how small players can be pushed around by a large customer regarding approvals, even if contracts are in place. Therefore, the news of a successful SAT is good news to me, although the stock market reaction was quite absurd, as it probably won’t bring in many euros to the cash register.

Regarding the risk level of pellicles, I would see it as low. Canatu has collaborated on pellicles with ASML and IMEC, who certainly know what they want. Perhaps not everyone has read my writings, so I will reiterate. The pellicle itself is not a new thing in masks and reticles; they have been used since the 90s. Now, completely new requirements are being placed on the pellicle, such as EUV wavelength transmission, resistance to high temperatures, and also resistance to high mechanical stress.

Regarding the timeline, Canatu’s pellicles will move into production as ASML’s high NA devices are deployed. ASML commented on the progress in its Q1 earnings report in April as follows:

https://keskustelut.inderes.fi/t/canatu-hiilinanoputkikalvojen-osaaja/53932/223?u=pandakarhu

[Sijoittaja-alokas]

Here are Ate’s comments regarding the recent news.

Canatu announced on Friday that it has received Site Acceptance Test (SAT) approval for its first CNT100 SEMI reactor and associated peripheral equipment, which were delivered to a semiconductor customer in September 2024. The equipment passed thorough tests conducted at the customer’s premises and met the extremely strict technical requirements and specifications defined in the acceptance criteria. According to the company, this confirms the CNT100 SEMI reactor’s readiness for the mass production of carbon nanotube pellicle membranes.

Canatun reaktoriliiketoiminta ottaa askelia kohti massatuotantoa ja jatkuvaa...

[_TeemuHinkula]

Can someone explain why this was only announced now, when the CEO already stated in the 2024 earnings release that the commissioning test has been approved? Could this final approval be related to those peripherals?

[Real]

The forum has very good expertise. Is there a key SEM image in some material that shows a forest of carbon nanotubes with strong orientation?

Couldn’t it be, for example, on the following page or somewhere else?

Versatility of Canatu carbon nanotubes

[Pandakarhu]

Canatu’s material can be found, although not very high quality.

[Atte_Riikola]

Canatu announced a new investment in Lasertec’s PELMIS EUV pellicle film inspection system.

https://www.inderes.fi/releases/canatu-investoi-lasertecin-pelmis-euv-pellicle-kalvontarkastusjarjestelmaan-vahvistaakseen-laadunvalvonta-ja-mittauskyvykkyyksiaan

Based on Lasertec’s website, this is what the box looks like:

https://www.lasertec.co.jp/en/news/2024/20241202_3888.html

“Our aspiration is to be the world’s leading CNT pellicle player. This investment is a key enabler for the long-term development of our CNT SEMI reactor and pellicle membrane business. It strengthens our competitiveness, elevates our quality control to a new level, and helps ensure that we meet the stringent quality requirements of our semiconductor customers,” says Juha Kokkonen, CEO of Canatu Oyj.

The comments in the release could indicate that Canatu is now taking steps towards the manufacturing of fully finished EUV pellicle films. The company has already highlighted this earlier as a long-term opportunity alongside its reactor business.

[Real]

Does anyone on a highly knowledgeable forum know what kind of Imec/Mitsui pellicle factory, possibly completed in December 2025, it will be, what method they use, is there a directional method during carbon nanotube growth, which presumably provides a fundamentally different way to control compared to a post-method?

Can ASML choose between them and Canatu, or only one?

Lasertec’s PELMIS EUV pellicle film inspection system

[StockTycoon]

There was no update on the progress of the construction project in Mitsui’s latest earnings release. It may be that the approvals will only happen in 2026.

ASML does not make any choice regarding pellicles; instead, the decision is up to each device operator.

[Koala]

Spotted the following story on LinkedIn; clear results have been achieved in health sensors. The link in the picture leads here:
https://canatu.com/company/carbon-age-news/dry-printed-carbon-nanotube-film-based-electrochemical-immunosensor-for-total-testosterone-detection/

[Sijoittaja-alokas]

Here are Ate’s preliminary comments as Canatu releases its H1 results on Friday.

We expect the company’s revenue to have decreased from the comparison period, when the company’s first carbon nanotube reactor deliveries were underway. No new reactor orders have been seen from the company in the early part of the year, but new orders may still be heard about later in the year. Since its listing, Canatu has clearly increased its growth investments to realize its attractive long-term growth potential. This, combined with weakening revenue in our forecast, naturally means a deepening of operating losses for H1. Canatu may provide guidance for this year in the report, and the company’s outlook comments are also of particular interest.

Canatu H1’25 -ennakko: Odotamme heikkoja lukuja ilman uusia...

[_TeemuHinkula]

Even though you are a nice man, @Atte_Riikola, would you dare to challenge the CEO about the realism of the 2027 revenue target? If no new reactor orders have come in and deployments seem to take a year, then by what means is the said 100 million intended to be achieved?

In addition, I am under the impression that CNT (carbon nanotube) technology is not necessarily needed for the production of, for example, NVIDIA’s next-generation Rubin chip, but rather the one after that. Rubin, I understand, is coming to market in H2 2026, so the next one will probably come in late 2027 or early 2028.

Have I understood correctly, and how essential is this development for Canatu’s revenue target? Someone else on this forum might be able to answer this, but if not, you can probably formulate a smart question about it.

So, summasummarum, what is the can-kicking risk in the case of Canatu?

[Atte_Riikola]

@_TeemuHinkula

could you challenge the CEO about the realism of the 2027 revenue target?

This was already on the question list for Juha’s interview

@_TeemuHinkula

So, in summary, what is the can-kicking risk in the Canatu case?

In light of the forecasts, no one has believed that 100 MEUR target by 2027 from the very beginning; in my own assumptions, it has always been achieved in 2028. But even that requires the market to evolve in the right direction in the coming years. But I will certainly try to gauge again where we stand in relation to the targets. After all, last time in connection with the financial statement, the company already stated that market development has been somewhat slower than was still envisioned at the time of the listing. This can already be interpreted as a small can-kick, and the stock has also been under pressure since then in relation to the times immediately after the listing.

[Pandakarhu]

Ate probably has it on their question list, but let’s just confirm if you could ask for more information about the announced news that Canatu is acquiring a Lasertec device that can inspect pellicles. So, what is Canatu’s strategy regarding this? Is it the case that some customers don’t want to buy an expensive reactor but instead want Canatu to manufacture the pellicles for them?

Here are additional questions, add them to the list if you wish

The SAT for the first reactor was completed; what is Canatu’s view on the next steps towards mass production? Is this expected to contribute to 2027 revenue?

What is the manufacturing time for one reactor at Canatu’s Vantaa factory? How many reactors can be under construction simultaneously?

Does Canatu have an educated guess on how many masks are needed to produce one modern finished chip? My main point with this is that it directly indicates the need for pellicles for one finished product.