EnSilica announced that it has entered into an exclusive and binding Letter of Intent for the development and supply of a high-end ASIC for use in telecommunications infrastructure (the "Agreement"), with work commencing next month. The Agreement has been awarded by an established telecommunications equipment supplier and provides for the commencement of the ASIC specification and then design phase of the project, ahead of a final contract being entered into for the full design and supply of the ASIC. The initial work funded by non-recurring engineering ("NRE") fees under the Agreement is set to commence in January 2024 and will be fully funded by the customer, with initial ASIC production and supply anticipated to begin at the end of the calendar year 2026, subject to final contract.

The final contract is currently expected to be worth in excess of an estimated USD 35 million over a ten-year period (including initial work undertaken pursuant to the Agreement), based on quoted NRE fees and the customer's minimum projected production volumes. The Agreement outlines the key commercial terms of a final contract, including the budgetary NRE fees and volume production pricing for the ASIC. Both parties have a break option under the Agreement if the final terms of the contract are not agreed, however, the principal terms are defined in the Agreement and EnSilica will be paid to commence work next month.