The Brainchip Holdings Ltd (ASX: BRN) share price is flying high on Tuesday.

At the time of writing, the semiconductor company's shares are up 20% to 26.5 cents.

This is despite a selloff in the tech sector this morning.

Why is the Brainchip share price rocketing?

Investors have been buying the company's shares this morning after it announced a contract win.

According to the release, Brainchip has been awarded a contract for US$1.8 million from Air Force Research Laboratory (AFRL) on neuromorphic radar signalling processing.

The company notes that this award was granted under the Small Business Innovation Research Programs (SBIR) program, which is a US federal government program that funds research and development by small businesses to support government missions.

What is the contract?

Brainchip advised that the SBIR contract award is titled "Mapping Complex Sensor Signal Processing Algorithms onto Neuromorphic Chips."

Management notes that the contract is an expansion of efforts after a multinational aerospace and defense customer successfully demonstrated radar processing algorithms capable of running on Brainchip's commercial off-the-shelf neuromorphic hardware as part of an internal research and development initiative.

However, it highlights that this current program will develop algorithms based on Brainchip's proprietary state space model algorithm framework, which is known as TENNs (Temporal Event Neural Network). It will then be optimised to run on Akida 2.0 hardware.

Management also points out that the TENNs algorithm combined with Akida 2.0 has successfully demonstrated the capability to run models very efficiently. This has resulted in significantly higher performance at ultra-low power relative to traditional accelerators running traditional models.

Furthermore, Brainchip's neuromorphic technology improves the cognitive communication capabilities on size, weight, power and cost (SWaP-C) constrained platforms such as military, spacecraft, and robotics for commercial and government markets.

Terms

Brainchip advised that the AFRL agreement includes a US$1.8 million contract amount that will be paid over the 12-month term of the agreement.

It will then partner with the aforementioned aerospace and defense company to provide R&D services developing and optimising algorithms for a fixed fee totalling US$800k over the same period.

Commenting on the US$1.8 million contract award, the CEO of the $450 million company, Sean Hehir, said:

Radar signaling processing will be implemented on multiple mobile platforms, so minimizing system SWaP-C is critical. This partnership to improve radar signaling applications for AFRL showcases how neuromorphic computing can achieve significant benefits of low-power, high-performance compute in the most mission-critical use cases.

This award is a very strong endorsement from leading organizations such as Air Force Research Laboratory for our industry leading TENNs offering.