Sondrel strikes deal for next phase of video chip contract

Chip specialist Sondrel announced on Monday that it has successfully concluded negotiations for a material design and supply contract, as first announced on 27 February.

The AIM-traded firm said the contract, valued at $23m, pertained to the development of a next-generation video processing chip tailored for high-performance, professional video streaming solutions.

It said that, following the earlier establishment of a master agreement with the client and the start of design work, the finalisation of the contract marked the last procedural step towards formalising an agreement between Sondrel and its client.

The initial phase of the contract encompasses design and qualification activities, with a committed value of over $9m.

Sondrel said the client would cover the entirety of the phase's expenses.

Expected to start in 2026, chip production and supply were contingent on successful tape-out and prototype qualification.

On meeting those milestones, the contract foresaw production revenues totaling $14m over the projected 10- to 15-year lifespan of the product, based on current forecasts provided by the customer.

“This is a substantial design and supply contract for Sondrel and a demonstration of the group's ability to provide the most complex engineering expertise required for these next generation technologies,” said chief executive officer Graham Curren.

“We're delighted to partner with one of the leading manufacturers in the high growth video streaming market, where the constant innovation and focus on efficiency is driving demand for the ultra-complex chips that we specialise in.”

At 1448 GMT, shares in Sondrel Holdings were up 4.95% at 11.02p.

Reporting by Josh White for Sharecast.com.