POET Technologies - 1st institutional investor ($2.2M) - photonics industry probably next market bubble

Paragon Capital Management has acquired a 357,200 share stake in POET ($2.2M).

POET was recently listed on the Nasdaq exchange to become "investable" for institutions. In the coming weeks and months, as POET goes into production and the funds do their own due diligence, we should see many more buy-ins. POET has a float of 37M and is now 1% owned by institutions. Shares will get very expensive if more tutes buy POET.

POET's business is "photonics", "optoelectronic integrated circuits" or "optoelectronic semiconductors", an innovative type of semiconductors.

History - today: we use mostly electronic semiconductors in phones, cars, laptops, .... These make use of electrons. Electrons represent signals 1/0 within the circuit.

Problem today: no conventional semiconductor made today can meet the speed, energy and form factor requirements for important future markets such as computing (Ai), sensing (Lidar, biomedical) or communications (5G). Electronic semiconductors are too slow and consume too much energy.

Future: we'll use optoelectronic semiconductors. Experts have been looking to use light signals (photons) instead of electrons. Light requires less energy, is much faster and has no heating problems. The modulator in the optoelectronic chip can split the light coming from a laser into different colors. Each color is passed through waveguides and detected as a 0 or a 1. This is much more efficient than firing and conducting electrons.

So... the world is dreaming of communicating cars, fast 5G networks, artificial intelligence, robotics, space and biosensors, .... but there is no such world without photonics. It's just not possible. You will inevitably have a high return on this investment because frankly there is no other way.

Why aren't we using these optoelectronic semiconductors everywhere today? It is because until recently (1) it was difficult to develop these superior optoelectronic semiconductors in large volumes and at low cost....... Everything must be done in active alignment, which requires a lot of labor which makes it more expensive than conventional chips. And (2) there were problems with, for example, conducting light signals (absorption, loss, reflection...).

Now POET comes into play.

(1) POET's chips unlock the bottleneck in packaging photonics. POET has a unique wafer-scale assembly technique (100's at a time). Kind of 3D printing and assembling on a wafer. POET does what is called the "semiconductorization" of optoelectronics, i.e., making optoelectronic semiconductors, which are superior to conventional chips, in large volumes.

(2) POET has a kind of improved optoelectronic semiconductors. POET's patented Interposer TM platform is a work of art and will eventually become the de facto standard in the industry. The platform consists of different types of optoelectronic semiconductors, so it is a series of products with different structures depending on the vertical, but all based on the same technology (same layers and principles), and manufactured in large volumes. All of them are patented. The platform has insane features. The structure of the platform can be customized depending on the customer's needs. It has speed agnostic, athermal waveguides to guide the ligt. It has insane performance results (eye margins) and it is compatible with different types of materials, e.g. modulators (different types, can easily become a Lightwave Logic modulator in the future) or lasers (DML, EML), depending on the customer. POET can easily and very quickly integrate new materials. They just "flip-chip" everything on the chip. For example, POET is the 1st company doing this and creating a DML flip chipped optical engine. Everyone is still doing hand work, and POET is developing ultra-fast, top-notch products at the lowest cost (-40% cost and -40% power consumption compared to other solutions). Competition is suffering coupling loss and technical issues, while POET has zero alignment. Moreso, POET's chips have a very small form factor (4X smaller), and smaller is better. For example, in the sensing vertical: a spectrophotometer is paired with POET's chip in a wearable or phone camera -> huge amounts of data can be processed and glucose, lactate, hydration,... can all be measured non-invasively from your wrist. Thanks to the small form factor it can be placed e.g. in a cell phone.

The global photonics market will grow to >$1.2T by 2030, almost a 7% annual CAGR. This is insane. The world is changing. In 1995, people didn't know about the dot com bubble. In analogy, photonics is highly disruptive and I think this industry will eventually become well known. The need for photonics and POET's products is increasing.

POET is getting more attention from private investors and much more on the technical side. Major companies are 100% aware of POET's technology and are now validating it. Customer and partnership list growing: growing environment.They will soon announce a partnership for biosensing with one of the largest wearable / smartphone makers in the world (dixit POET) and POET just announced they will supply Celestial Ai (with members of META and Koch in it).

POET's senior management is senior ex-MACOM and senior ex-GlobalFoundries. The most recent iteration of this company came around 2015, when Dr. Suresh Venkatesan joined the company as CEO. He was formerly the CTO of GlobalFoundries and his track record is public here. POET pivoted to the development of their current tech platform: the Optical Interposer. After 5 years and $60M spent, the platform is ready for commercialization.

POET is aiming to generate at least $1B yearly revenue within 5 years.

Production of first products starts in late 2022.

Available cash 25M.

Burn rate 1M/month.

Risks: all the other risks mentioned in their 10-Qs, world war 3.

I think at this stage, the risk-reward profile is heavily skewed towards reward.