Aiming to become the global leader in chip-scale photonic solutions by deploying Optical Interposer technology to enable the seamless integration of electronics and photonics for a broad range of vertical market applications
Message: Audio Transcript from Sidoti Microcap Investor Conference
-
00:36Great Thank you good morning Good afternoon, good evening, and thanks for joining this and giving me the opportunity to present all the technologies to you, I know.
-
00:46We probably have both new people and an existing shareholders, who are already familiar with the company i'm going to try to move through this presentation fairly quickly.
-
00:57As soon as this is over, or as soon as my day is over, after some one on ones will get this deck cleaned up and posted on our website so you don't have to take notes, you can refer to it to it later.
-
01:13technologies is really focused on on data hungry applications, the most prominent being and the one that were initially focused on is optical transceivers for data centers.
-
01:26it's a large market it's, one that is in in which there's intense competition and in which there's a lot of change all the time.
-
01:36optical transceivers are those devices that turn electronic signals into light signals, so that they can be so the data can be transported via optic fibers.
-
01:47From data centers to your home or to your office and our focus is on making these transceivers more manufacturer will, making them for a lower cost higher efficiency, while we're power, which is what the data centers are looking for that's our first technology that we've applied.
-
02:09Our invention to, but I do want to talk a bit about the.
-
02:15about how those transceivers are being made and historically they've been made one, at a time in a very capital and Labor intensive process.
-
02:25Which is which does not scale.
-
02:29So we focused on trying to bring semiconductor manufacturing to this space and have done so successfully.
-
02:40In a very unique invention and and what we regarded as being a disruptive invention, called the poet optical inner poser I won't spend too much time on this technology, but I would like to say that the result of.
-
02:54Being able to build these devices.
-
02:58With semiconductor technology on an eight inch way for and with the kind of architecture that we have that's illustrated in a slide really has brought a lot of benefits to.
-
03:12To these devices they're they're smaller they're faster.
-
03:18They are they consume less energy, and the fact that they are so small, means that we can fit many more into the space that others are are fitting only one which is which turns out to be a huge advantage in some of the markets that we're looking at.
-
03:38just looking at the way that these devices are currently built.
-
03:43On the left you'll see a convention up sorry on the Left you'll see a conventional Board, which has separate pieces that are.
-
03:54aligned actively, which is the expensive part of building these devices it's done one, at a time.
-
04:00Using expensive scientific equipment let's Compare that to poets optical engine which is built on the poet optical inner poser which is.
-
04:10about a quarter of the size or even a fifth of the size and is a single chip so to our customers who are module makers in in the world, we present them with a bill of materials have exactly one.
-
04:27i'm.
-
04:28Looking at the node that we are really focused on and the market is is largely focused on today, introducing 400 g.
-
04:39modules into the market will look at these three approaches that companies are taking what we saw at the optical fiber conference that we did back in March.
-
04:51Is a standard that's called Dr for which means that there are eight fibers being used.
-
04:58The kind of module or or optical engine that we produce actually only uses two, but you can tell from this illustration that in some of the solutions that are are being proposed.
-
05:12You still have a lot of active alignment going on got a lot of separate pieces, even in the silicon photonics solution that's in the middle of this slide you see that there are.
-
05:25In the individual chips that have to be aligned.
-
05:30and placed into the module there are many more chips there's a lot going on in there it's it's a very expensive approach, whereas on the far right what you're seeing is the way that we integrate to electronic and photonic devices which is into a single chip.
-
05:45And you can just tell by this the simplicity of the architecture of what we're doing how that would likely lead to to a lower cost, and it does.
-
05:58i've showed this slide many times.
-
06:01Costs are you know 20 to 40% lower we use much less capital investment than those companies who are producing these devices do.
-
06:13using conventional approaches.
-
06:17We actually have demonstrated that.
-
06:20Our lasers can operate at 30% lower power and get the same output out of that device, because it is a single chip, and of course we get the benefits of.
-
06:30way for scale suddenly and test which show up in in the lower cost, but the the architecture and the platform nature of our technology is is really something that allows us to approach many different solutions and many different applications.
-
06:49i'll review some of those markets, I already talked about the data Center market for optical transceivers there's another one that's that has really.
-
06:59become apparent over the last year, I would say, and even more so, over the last six months and that's the artificial intelligence accelerator market.
-
07:09We have a customer in that space because we're called celestial a I, which is a vc backed machine learning accelerator company what's going on here in the entire space.
-
07:21Is that these artificial intelligence chips or inference engines take up a lot of power and one of the ways to reduce the power in fact practically one of the only ways they can figure out how to reduce the power is to either do some of the computations using light or to.
-
07:44facilitate the transfer of data from one of the trips to another chip using light and.
-
07:50Our our optical inner poser platform is you know, uniquely differentiated in this market, this is a market that exceeds optical transceivers by a factor of maybe 10.
-
08:05And so we're working with cholesterol Ai and we have had discussions with other companies that are in this market.
-
08:14We believe we have a unique approach, which is a gives some of these companies, a path to the kind of cost and form factors and scale that they need in order to make this work so we're working very hard to.
-
08:33To ensure that those participants, some of which are startup, some of which are our large well known companies know about what our capabilities are and and we, we believe that this is an important market for us going forward.
-
08:50we're investigating and doing a feasibility study and wearables for health monitoring this is on the sensing side of the business what we've talked about before is really data communications with depends on high speeds.
-
09:04sensing depends on really the ability to send out lots of different frequencies of light and view what comes back to you what's reflected back.
-
09:15And we have that capability as well, so we're exploring what our opportunities may be in health monitoring.
-
09:23We also have a number of them that we haven't yet been able to investigate thoroughly, but we know, based on our capabilities are potential markets for us and that's you know edge computing and and lidar.
-
09:38we've been working hard on on our business plan and.
-
09:46we've been able to identify what we believe is are the markets that are current products and and those are immediately adjacent we believe.
-
09:59We can can address directly and so you can see from this that these markets are.
-
10:05And this is by specific device type are quite large and and are growing rapidly, particularly in the 24 to 25.
-
10:14time period So these are the serviceable addressable markets we're not talking about the big tams the tams are are much bigger than this, but these are the ones that we can address directly and and plan to do so.
-
10:31Overall i've shown this slide a number of times over the last year, we really fundamentally believe that we can build a billion dollar revenue company out of.
-
10:42These segments, and we even think that we can get a long way there in the segments that we're now active and not to mention the ones that were we're not.
-
10:57We we showed this revised roadmap back, I think, in September, and I wanted to give people an update on where we are in terms of our commercial engagements.
-
11:11So you can see from this chart that we are, we have completed some some of our beta units, we certainly completed a number of alpha units and with some customers we've been sending alpha units and beta units to for some time.
-
11:27You know.
-
11:29it's been only since January that we have, after four for four years of development, been able to deliver samples to customers these beta samples are important because they need spec.
-
11:43And they are the ones that customers will use for reliability testing, which takes you know about couple of months three to six months, in some cases, so we expect these beta units.
-
11:55To be ready for production later this year but, in most cases, we think that that the the ramp for for our revenues or for the revenues of our joint venture are likely to occur mainly in in 2023.
-
12:14So you can those of you who have been following this can refer back to this exhibit to see exactly where we are.
-
12:21On importantly.
-
12:24In intelligence that we picked up at ofc in March really confirmed that the things that we are doing, are really on track for what the data Center customers, we want to see and that's that's what this this slide is about.
-
12:46Many everyone's interested in in our commercialization plan and just exactly where we are in terms of customer engagements.
-
12:56A couple of these are shown as being contracted we have with been systems company been working for over a year with them on two projects.
-
13:08And that's 100 G CW DM for lr for space where we are architect doing very unique solution.
-
13:19Where we're putting four of our optical engines into a.
-
13:24module that's a small module that.
-
13:28Is is a device that no one else can can do because of our size so that's a really exciting project for us and you know we're showing what what we're kind of the level of of revenue that they have told us to expect out of these projects.
-
13:49We also have customers that are committed, and by that we mean these customers are primarily module companies in China.
-
13:59who were working with on an almost daily basis to to help them design our engines into their modules and so, while we haven't signed a contract with them they're in that.
-
14:13In that kind of relationship we're producing as a standard product, so the kind of work that we're doing with those customers is to ensure that they can wire bond our our optical engines within their module.
-
14:27So it's it's pretty light kind of have an interaction, but it is, it demonstrates to us that they're committed to using our module so what's going to happen is.
-
14:37we'll send them and continue to send them samples and they'll do the reliability testing and the next step for them is to.
-
14:44to submit a purchase order to either the joint venture or to us and then we're actively engaged in a number of other projects for for customers for both 204 hundred g engines and, importantly, these light bars for.
-
15:01which we think is a potentially very large market for us so we're actively engaged with customers and we expect that to continue and we expect to be able to to ramp here in in the coming months.
-
15:18Our funnel has expanded since ofc and we're working hard to to address these.
-
15:25You know I wouldn't.
-
15:29spend too much time trying to figure out who's who, in this, but suffice to say that we've got a lot of interest and we're sending out samples to as many companies as we possibly can, as soon as we possibly can, and the beta units are largely expected to start in.
-
15:48sampling here this month.
-
15:52um most of you are familiar with our team, but we have really a first rate executive team.
-
16:01discounting myself, of course.
-
16:03So restaurant good testing has been the chief technology Officer of globalfoundries before we came to poet, and before then at freescale and motorola he's the semiconductor guy.
-
16:15Deep long deep experience in this vivek is is comes to us from years of being in the optics space and I have been in the capital equipment space and so.
-
16:30I know you know how how the cycles work and and and i'm happy to tell about below below the executive team our leadership team is also extremely solid and our most recent.
-
16:46hire is Raj you counterparty who's our VP of product line management, who we're really excited about having with us we're excited about everybody, but he's he's, the most recent.
-
16:57We have only about 50 employees and poet plus there are 30 to 35 in the joint venture we're headquartered in Canada, we have operations in allentown Singapore and john then.
-
17:11Excuse me in Shenzhen our joint ventures and drama and and our founding partner for the last four years is so Tara in Malaysia.
-
17:23Almost 18 months ago, or yeah I was 18 months ago we signed an agreement with with salon I see, which is a suburb of San on optimal electronics what's important here is that it's not enough to just deliver the technology and to say hey This is great whiz bang technology.
-
17:43It is, but the next question the customers asking is, can you supply it in the volumes that we're going to need it, otherwise what's the point so.
-
17:53We saw that coming we didn't have the capital to do our own.
-
17:59FAB so we tied up with si si, no one will ever question their ability to manufacturer their.
-
18:08their parents is the producer of 25 million wafers a year they they are the largest in fact us compound semiconductor manufacturer in the world, so this jv we contributed a small slice of our IP to it.
-
18:25That IP was valued at 22 and a half million, you can see the explanation for that in our in our filings.
-
18:32and
-
18:34You know, we don't contribute cash for op X or X.
-
18:38son on is bearing that burden, so it gives us a place they've been an operation now for.
-
18:46For a year and so they're ready as soon as we release for production we have orders they're ready to to manufacturer our our optical engines.
-
18:59I know you're interested in in our capital structure and i'm grateful to the shareholders who have you know stuck with us over this really rocky market for for technology companies.
-
19:16We just reported last night.
-
19:20And we showed our existing cash level at 17.7 million, we certainly have enough cash to the last us 1214 months and importantly in this kind of environment not having any debt is really, really important.
-
19:40You know, none of us are happy with the show price, where it is.
-
19:45And we're doing.
-
19:48whatever we can to ensure that.
-
19:52You know the market understands where we are they understand.
-
19:57How.
-
19:59You know what we're offering.
-
20:01And you know we expect this to turn around, as it always does, and technology in the technology sector that's where wealth is is really fundamentally created.
-
20:13And so I think will will cycle through this and, and you know will be as strong player once once this market turns around and in talking to our our banker friends, they believe this, this is going to turn around sometime soon, and I hope the right.
-
20:35That actually ends my my prepared remarks, I wanted to be sure that I left enough time in this for some questions so mitra i'm you know i'm happy to take them on.
-
20:50Yes, hi again if you have any questions, please type them into Q amp a tab.
-
20:57or first question is, you know what are the milestones you need to achieve to start generating revenue.
-
21:07Well we've we I think we showed a collection of customers, where we expect to be start to generate revenue, towards the end of this year.
-
21:18That revenue will be in initial orders for samples that customers are going to use to qualify and do reliability testing on once they're completed with that and we're pretty confident about that.
-
21:34You know, ending positively because we've done our own reliability testing so that's you know 5000 hours 10,000 hours and testing that you have to do over the period of weeks and months.
-
21:46So, particularly those customers who were who are committed to us where we feel very, very strongly that they'll place orders for us, or with us and with a with a jv.
-
22:02I think, as we look out in in later years.
-
22:07There are a couple of inflection points that are coming up and then for us the ability to deliver a 400 G transmit module which we're working on is is really, really key.
-
22:20And that's dependent on modulator and as we've announced to to the market, we have a relationship with a company that is building a module module later for our use specifically designed for the inner poser we're also working on non modulator kinds of of.
-
22:40of optical engines ones that wouldn't require a modulator which would be a really good thing because modulators tend to to use up a lot of energy.
-
22:53And they're an expensive component of of an optical engine so we're looking at different paths, but we're really focused on getting that 400 G transmit together.
-
23:04In the marketplace.
-
23:06there's going to be in the 24 to 25 time period there's going to be a transition by the data Center operators to 800 G, and you know from poets point of view, once we have 400 g.
-
23:25We also have 800 g.
-
23:27And we have 1.6 terabytes because of the size of our devices were able to architect these devices into into a single module where other simply can't and so that's an important.
-
23:44point for us, but an important milestone which work on on on very hard this this.
-
23:52I can't overemphasize how important this is once we have 100 G, we have 800 G, we have 1.6 terabytes in a pluggable logical.
-
24:01it's going to take some time to architect those and get them into the market, but that's where a lot of the network equipment market more makers would prefer to go.
-
24:14In into pluggable is rather than co packaged optics because, from the designs that are presented been presented to the market so far co packaged optics is not saving any energy.
-
24:25And there's no point in doing it, and unless you can save energy and our our devices do so so there's your answer to the important milestones anything else.
-
24:39Thanks right right now you're burning cash what level of revenue, do you need to achieve the reverse that.
-
24:48yeah so you know when we look at our model we're based basically modeling two companies are modeling super photonics and we're Martin Martin are modeling.
-
25:01poet itself, and you know we've we've not really said it's it's.
-
25:09Somewhere in the you know 25 million range 25 to $40 million range for some poet.
-
25:19We have you know until we get to 2425 we're not going to have much CAP X requirement, whereas spx does have a significant gap X requirement so um you know it's it's it's in that range.
-
25:42And I would say that that's you know, a couple years off.
-
25:47Not more than.
-
25:49Okay, no that's great Thank you.
-
25:52or your operations are the jv in China right now being impacted by the latest round of covert lockdowns.
-
26:00For as far as we know, no thankfully now um.
-
26:07that's as far as a lockdowns are concerned, know we have had some some slowness on the supply chain but we're working also to kind of consolidate some of the.
-
26:18processes that where we use a lot of different suppliers for doing some of these specialized processes trying to consolidate those either into Malaysia, Singapore or into the into the jv so that we can insulate ourselves to some extent from the supply chain issues.
-
26:36It makes When will you be able to disclose names of companies you're dealing with.
-
26:43You know.
-
26:46When they.
-
26:47allow us to do something.
-
26:50Okay.
-
26:53Right now, a lot of companies are facing different challenges in this environment, what do you see is your biggest challenge, and what are you most excited about.
-
27:05um.
-
27:06Well, I think we've said in the past that right now, are our biggest challenge is getting the 400 G transmit completed, and we believe that we have a way to get that done this year.
-
27:24And we are it's it's an important development for us.
-
27:29And you know, one of our suppliers has been has had some challenges getting to us, you know the modulator that that we need we expected that in January.
-
27:42We don't have it yet, but we expect to have it, this month, and then we will you know do what we need to do to tweak that to make to ensure that it works well enough for for our for at least for our sampling of of units that's a key challenge.
-
28:00And, and I think that's The other challenge from for me as a CFO is making sure that we become known to institutional investors in the United States, and I hope we have some on in this audience today.
-
28:20Because we're relatively unknown and and one of the ways we do, that is, to start with analysts and so we've been systematically you know.
-
28:32demonstrating what we have to the the best known analysts in the country who are who cover you know optics companies photonics companies and and that's what's been on our our my plate for the for the past few months.
-
28:50Thanks.
-
28:52How many design wins have been achieved.
-
28:56Remember design wins are those in which we are doing a custom product for a customer.
-
29:06yeah you know it's not since we're producing standard products and selling them to module makers in China.
-
29:16Those don't need design minutes and then they're never going to be representatives design weeds there's simply you're going to take this product.
-
29:25or not, and when you do you'll submit appeal design wins are are more about very unique products, I mentioned one of those the four by 100 G, which is a very, very unique product.
-
29:42that's a designer I mean let's call that a designer.
-
29:47The light bar that we're doing for celestial Ai is a design.
-
29:52And one of the things in dealing with the larger companies here in North America and in Europe is that.
-
30:00You know they're not going to change their whole method of doing things overnight what they're more likely to do, which is what we've seen is to.
-
30:09engage with us on a specific project that's something that's new that they haven't done before, so that they can get accustomed to working with us custom to working with you know, uniquely designed.
-
30:24component that they might have in their in their plug herbals or in other parts of their network equipment so.
-
30:33You know we're doing that and we expect to do more, but please understand that we have limited capacity to do that.
-
30:41We expect those two to be you know very impactful in the market.
-
30:49Our customer for the for buys it has already announced the product and their customers who are also large companies have seen it in an operation in at ofc in March and, and that makes a huge difference for how people perceive us as this as a company.
-
31:11They can actually see it working and when those beta samples and other things are delivered to our to our customers customers, they will have an opportunity to to look inside and see exactly how unique, we are in in this in this field.
-
31:35Okay, thanks i'm afraid out, we are out of time i'd like to thank CFO Thomas micah to share for sharing with us deploy technology story today and wishing everyone a great rest of the day, thanks alright.
-
31:47Thank you very much for for listening thanks.
New Message
Please
login
to post a reply