POET (Nasdaq). Overview DD. Worth looking.

POET's business: developing and producing photonic chips (optoelectronic integrated circuits or optoelectronic semiconductors). These are chips needed in sensing markets such as Lidar, biosensing and defense but also in datacenters (transceivers), articifial intelligence (machine learning) and telecom 5G. Because photons (light) is way more efficient and way faster to guide signals than electrons used in conventional semiconductors, photonic chips are receiving increasing attention worldwide.

The world is changing. Smart cities, cars communicating, non-invasive biomarkers sensing in smartwatches and phones, 5G connectivity, data storage in clouds,.... The desire for POET chips is increasing.

The total global photonics market is projected to reach US$ 1.033.720 million by 2028, from US$ 661.770 million in 2021, at a CAGR of 6.5% during 2022-2028.

Other companies (Intel,...) are already developing photonic chips, but these chips are all made by hand-work. Components are individually placed and connected by hand, and they face a lot of technical issues, performance issues and manufacturability issues. These chips have problems with for example conducting light signals (absorption, loss, reflection...), have higher assembly costs and they consume a lot of energy.

So... POET's chips are adressing these problems. 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. POET pivoted from the previous Gallium Arsenide based technology to the development of their superior and current, Indium Phosphide based technology: the Optical Interposer. This technology is used to develop all types of chips for artificial intelligence and for datacenters. POET is also doing a feasibility study now on biosensing and they are in talks with worlds largest wearable and mobile phone manufacturers in China and Korea and POET has been adressed by many companies for Lidar and defense applications. Also in these markets, photonic chips are needed, and POET has the solution. After 5 years and $60M spent, the platform is ready for commercialization. Other companies on the OFC (conference) called it "a piece of art". POET has unlocked the bottleneck in packaging optoelectronic semiconductors. POET has a unique wafer-scale assembly technique (100's at a time). They make ONE "hybrid" chip with all the best components needed. All the best components available are passively aligned and "flip-chipped" into one, single chip. So everyone else is still doing hand work with limitations to specific components, and POET is developing ultra-fast, top-notch products. POET's chips have the lowest cost (-40% vs. competition), lower power consumption (-40% vs. competition), zero alignment (vs. 8 competition), no degradation in performance (great eye-margins, athermal waveguides, low coupling loss...), only 6 components into one single chip (vs. >30 competition) and the smallest size in the industry (75% smaller than competition). They can put 4 chips where competition can put 1, so multiplying performance by 4 in the same space. So in an inflationary world, POET’s chips are deflationary. POET's chips reduce costs for every party involved: capex, bill of materials, assembly/labor, testing, energy, and so on. POET got chips that adresses RF, thermal as well as the optical connectivity.

Production of initial chips begins end of this year. These initial products are 100G, 200G, 400G (this year) and 800G (next year) chips used in datacenters. These chips will be the first cash cow for the company because of the high demand for these speeds. POET will release chips with speeds 1.6T/s, 3.2T/s and 6.4T/s, while other big names such as Intel and others are still looking for these solutions. POET is the only hybrid, integrated, one-chip solution for higher speeds. Also the Lightbar (used for artificial intelligence) beta samples are underway (production next year).

POET easily can ramp up production because of the joint venture with SANAN Optoelectronics Co, China's biggest LED chip maker, and SANAN bought all the equipment. This team has already 40 employees. The joint venture may go public on the STAR board in the future. If demand exceeds, POET will start a new joint venture probably in Northern America.

Revenue: projected to be approximately 130 million USD revenue between now and 3 years (end 2025), based on just initial 10 customers and first initial products (!!!), while the customer base is increasing literally month after month and more and faster engines are being developed. Some of these 10 customers might already increase their position to 100M revenue per year if things go well (dixit POET). This in turn would catapult POET to the top of all those P/E lists that are automatically generated by bots, due to its low share price and high earnings. Not to forget that these revenues will gradually INCREASE to MORE than 1 billion per year by 2028.

Near-term gross margin 40% and long-term gross margin 50% and 25%+ EBITDA margins.

POET's senior management is senior ex-MACOM and senior ex-GlobalFoundries. The staff and board is increasing with world class talent from for example Columbia University, Arista and GlobalFoundries.

POET has co-founded SHINE (Singapore Hybrid-Integrated Next generation micro-Electronics center). It is a strong team formed by top-notch professors across the world from NUS, NTU, University of California Berkeley and Northeastern University, A*STAR Institute of Microelectronics (IME) and DSO National Laboratories (DSO). Other members of the Consortium currently include Advanced Micro Foundry (AMF), Applied Materials, Cadence Design System, Continental Automotive and SOITEC.

Mentioned as a major player in most market reports, such as Yole.

Critical acclaim on world leading conferences such as CIOE but also OFC and IEEE and is being compared to the big names.

POET has a small float of 37M and is now 2.5% owned by institutions (increasing).

Available cash: burn rate 1,2M/month, 9 month runway without debt.

POET CEO exercised out of the money warrants into the company this month -> bullish sign.

Risks: world war 3, supply chain issues, pandemic, competition (but they are out of reach because POET's chips based on the optical interposer technology is THE ONLY chip scale integrated solution for modulated lasers extending the applicability of these devices into the terabyte era, competition is way behind).

Scheduled: AGM october 2022; ECOC september 22, 2022: Suresh will join Intel and Imec to showcase the disruptive power of the Optical Interposer through an integrated 1.6T/sec chip.

Lots of info posted on the POET reddit board and on the website (new website is under construction).

POET as a non-rev (not for long) tech company is extremely oversold because fear of recession and war. Extreme buy signals here. We've reached resistance level. Risk-reward heavily skewed towards reward.

Zacks target 13.75 USD, now 3.38 USD.