Enovix seeks revolution in batteries, preps public stock launch

FREMONT — Enovix is betting that it can disrupt the lithium battery market by creating and mass-producing the devices at its Silicon Valley headquarters and operations hub in Fremont.

The tech company, whose head offices are tucked away in an unassuming building on the border of Fremont and Milpitas, is preparing to stage an initial public offering and raise money through a SPAC, or special purpose acquisition company.

Fremont-based Enovix also has begun to scout for an existing facility that could be re-tooled as a second manufacturing center in addition to the company’s existing production facilities in the East Bay.

This new center would likely be located outside California. But the new site would be an expansion of manufacturing and wouldn’t replace the existing factory line in Fremont.

What’s more, Enovix is hiring more workers in Fremont, according to the company.

All of these endeavors are being fueled by a core Enovix goal: Revolutionize the advanced battery sector.

“We are trying to completely disrupt the lithium battery industry,” said Harrold Rust, Enovix’s chief executive officer and co-founder. “The idea is to reinvent a product that hasn’t changed in 30 years.”

Enovix claims that it has crafted a battery that is more compact and can hold a considerably greater charge than conventional batteries. The materials in the battery are stacked and not wound, which reduces the size. The key material is silicon rather than conventional graphite.

“We are trying to put the silicon back in Silicon Valley,” Rust said.

First released by Sony in 1991, lithium-ion batteries have applications that include electric vehicles, laptop computers, phones, smartwatches, and tablets.

“We want our batteries to be a made-in-America product,” Rust said. “We are trying to do this in Silicon Valley.”

Enovix conducts all of its research and manufacturing in the headquarters building at 3501 W. Warren Ave. in Fremont. The building totals 68,700 square feet.

Mass production is slated to occur sometime during the first quarter of 2022, according to Rust. Revenue from the production line is expected to begin appearing in the second quarter, he added.

“The factory in Fremont will have $220 million in revenue per year over time as we add more factory lines,” Rust said. The company projects $800 million in revenue in 2025 after it adds another factory or two.

Enovix has wowed at least one analyst. Gus Richard, an analyst with investment firm Northland Capital Markets, has issued an outperform rating for Enovix, according to a research note dated June 1 of this year.

Richard believes Enovix’s battery products differ so greatly from conventional batteries that Enovix is poised to generate hefty revenue and fend off serious competition for the foreseeable future.

“Enovix has ample opportunities for rapid revenue growth,” Richard wrote.

In late May, Richard visited the Enovix research and production line in Fremont.

“What we saw was impressive,” Richard wrote in his analysis. “Enovix has re-engineered the manufacturing of a lithium-ion battery.”

Enovix appears confident enough in its business that it has launched a significant surge in hiring. At present, Enovix employs roughly 150. At the end of 2020, Enovix employed about 100. Rust predicts that the company will have more than 200 by the end of 2021.

“All the big consumer electronics players already are customers,” Rust said. “We have blue-chip companies lining up to buy our products. People are being blown away by our batteries. Our customers include two gigantic California companies.”

Plenty of risks could swamp the company’s efforts, Northland analyst Richard warned.

Among the risks, according to the analyst:

— Enovix must successfully ramp up production beyond its sole factory in Fremont and expand to factories two and three, as currently planned.

— Other types of battery technologies could blunt the advantages that Enovix currently wields in its battery version.

— The consumer electronics market can be volatile and experience fast-shifting tastes, which makes demand in this sector notoriously tricky to predict.

— Enovix could encounter direct rivals that might seek to produce similar batteries.

“There are several other companies working on silicon anode lithium-ion batteries,” Richard wrote in the research note. “Other products may come to market, impacting Enovix.”