Question: POET has been going since around 2015, so that’s 7 years without a profit.  OK, covid and all that may have stretched that a bit.  

The above question was in response to a bit of INTELs history and how long it to INTEL to become profitable.

Answer: 

POET’s Optical Interposer was introduced in 2018

2018-01-29 10:53 ET - News Release

POET TECHNOLOGIES INTRODUCES OPTICAL INTERPOSER PLATFORM FOR CO-PACKAGING OF ELECTRONIC AND OPTICAL COMPONENTS

Poet Technologies Inc. has introduced a novel optical interposer platform, which facilitates the co-packaging of electronics and optics in a single multichip module (MCM). Based on its previously announced dielectric waveguide technology, Poet's optical interposer provides the ability to run electrical and optical interconnections side by side on the same interposer chip at a micrometre scale. The optical interposer represents an integral part of Poet's hybrid integrated optical engines and leverages the manufacturing processes and unique capabilities of its dielectric waveguides.

POET’s Optical Interposer wafer fabrication agreement 

2018-04-09 09:49 ET - News Release

POET TECHNOLOGIES AND SILTERRA ANNOUNCE PARTNERSHIP TO DEVELOP AND MANUFACTURE POET'S OPTICAL INTERPOSER PLATFORM

Poet Technologies Inc. has entered a master collaboration agreement with SilTerra, a Malaysia-based semiconductor wafer foundry, for the co-development of certain fabrication processes and the manufacturing of Poet's Optical Interposer platform. The partnership is expected to accelerate the path to commercial production of the Optical Interposer, which will enable optical engines for single-mode transceiver modules and other high-bandwidth devices.

Together, the companies will develop critical waveguide processes previously developed by Poet for its Optical Interposer, and implement the process flows on newly purchased equipment at SilTerra's world-class eight-inch silicon foundry in Kulim, Malaysia. In support of this activity, SilTerra has agreed to assist financially with the purchase of specialized semiconductor fabrication and testing equipment, as well as to share certain costs associated with facilities enhancements and installation of equipment for manufacturing the Optical Interposer. Additionally, the collaboration includes a wafer-purchase agreement for the manufacturing of prototype, initial-production and volume-production wafers.

Poet's chief executive officer, Dr. Suresh Venkatesan, commented: "Following several months of preliminary collaborative work together, this agreement with SilTerra represents a significant milestone toward our goal of commercializing Poet's Optical Interposer platform. The combined resources and investments of the two companies enables us to establish a unique manufacturing process as well as a reliable supply of wafers for our Optical Interposer. SilTerra offers Poet a truly unique combination of advanced 90-nanometre lithography, cost-effective eight-inch silicon processing copper metallization and MEMS capabilities, all of which are needed for our Optical Interposer. As a result of this partnership, Poet has now secured a key element in the commercialization process, allowing us to establish more engagements with prospective customers."

Firdaus Abdullah, SilTerra's chief executive officer, stated: "SilTerra is delighted to be working with Poet in what we regard as a key strategic engagement to address the increasing need for cost-effective solutions for data centre interconnects through the innovative use of silicon in photonics. Poet's Optical Interposer is a major advance over other approaches to optical interconnects and facilitates the co-packaging of electronics and photonics devices in a single multichip module (MCM). Poet's photonics-in-a-package solution has the potential to address even larger markets in the future for the integration and co-optimization of ASICs and DSPs with photonics at the interposer and chip level. We at SilTerra look forward to a long and prosperous relationship between our two companies and our teams."

When we look at the above statement it tells us that the ultimate direction for the platform was established very early as POET works with MACOM for DSP (and TIA) integration for advanced signal processing applications.  

COVID may have caused a delay. 

Answer: There is no question that access to 8 inch silicon wafers were interrupted even for major companies. POET was however able to continue with design work on advanced applications but physical production of prototypes were delayed.

POET’s financial requirements:

As of June 30 POET had ~$13 million in the bank. Their burn rate is ~$1.25 million per month as reported by Suresh in the warrant holder call. 

So we are talking about a very low burn rate based on existing commercial roll out.

POET’s Joint Venture with Sanan in China, the largest compound semiconductor company in the world for LED supply. They know how to build and ramp production.

POET has a carried interest. They do not contribute any money to the JV. At this time 2 lines have been commissioned and have gone through NPI staging thus production redundancy has been established.

POET sells the wafers that have been processed at SilTerra Malaysia at cost to SPX (the JV between POET and Sanan) so zero cost to POET. 

SPX profits are shared based on ownership which is roughly 50/50. There has however been an interest expressed by Chinese investors to buy POET’s interest. That would likely not happen until after SPX is listed on the Chinese Stock Exchange if at all. 

At this time POET is developing advanced optical engines in the new Singapore SHINE center where POET is a founding member. That center is supported by the Singapore Government and Academia as per the attached link. POET has not had to spend any money on the equipment there and has also been able to move their existing Singapore equipment into their own clean room at that facility.

Pay attention to the 2 POET video clips in the following link. 

NUS SHINE – PARTNERSHIP

XXXX has had a read through the technical stuff and has made a few comments:

1. The VLSI-IEEE paper has credibility.  If the claims made are true, both on performance characteristics and in packaging density and power consumption, then it does appear to have a technical lead.

My comment: The optical engines have been demonstrated and data verified. If you spend some time going through POET’s presentations you will see the data presented. It does not just appear that they have the lead, they do have the lead. No one else has the capability to reduce the form factor to a level required to maximize the rack faceplate density. Two major requirements data center operators have when  upgrading their facilities. Maximize the data throughput of the existing fiber plant to avoid running new fiber to meet higher data rates. And increase data rates without the need to upgrade/increase power plant infrastructure. This cannot be achieved with existing kludge technologies.

1. Getting the market place to accept an improved technology can be troublesome.  There can be nervousness about making a step function over existing technology, but that is down to the product marketing skills of the manufacturer, in identifying or creating the target markets, in getting design wins, and finally getting the product into production.

The world moved from tubes to solid state solutions because it had to. POET produces the optical engines through a microfabrication process that results in very high yield and bulk production through wafer level assembly, test and burnin. Approximately 400 optical engines are produced on an 8 inch wafer. There will be a wafer size conversion in the future to 12 inch increasing the economies of scale to even higher levels of production throughput. The results of wafer level production are a dramatic decrease of the billing of materials and cost. Module makers today struggle with profitability as end users squeeze their margins. POET offers a solution to recover profitability. There are major companies that are counting on POET to extend their roadmap because they cannot advance to higher data rates without a new approach. 

1. It goes without saying that if you have the best technology in the world, you still have to go and sell it. The world will not beat a path to your door, they must be dragged in.  There seems to be a great deal of wonderful technical information out there, and POET comes across to me as having technical excellence, but does it have the marketing strategy and sales force to actually get the orders from the OEMs?

Companies are banging on POET’s doors…they need POET’s solutions. 

Here is a new video from POET’s VP of Product Line Management

(43) Industry Leaders 'Wowed" by POET Technologies' Innovation - YouTube

Also it is worth looking at a description of market penetration norms as it pertains to POET that was prepared by the company CFO for one of the large European retail investors.

• TAM or Total Available Market is the total market demand for a product or service.  So for example - the total market for all CWDM 100G Datacenter products over the next 4 years is $4.5B.  This total transceiver market size is however not accessible to POET - since the total market for transceivers includes all the electronics, housings, modules, and of course the optics.  Since POET's solutions are in particular related to the Optical Engine - its access is a smaller portion of this total market.

• SAM or Serviceable Available Market is the segment of the TAM targeted by our products and services which is within our geographical and technical reach.  Here, we actually look at the market size that is "serviceable" by our products.  So we look at the opportunity available to us - where our particular solution could play.  Here, we restrict the total opportunity to only the opportunity associated with optical engines.  So the SAM for a single customer is the total opportunity available to us at a single customer - based on the customer's disclosure to us relative to the size of their business for that particular application(s) versus time.  This would include the total opportunity where POET's optical engines could have an impact and an intersect point with the customers product line.  The description of the SAM is the description of the opportunity - assuming POET actually builds every one of the optical engines for all targeted applications, they all get qualified and then POET gets 100% of the share of this particular customer.  This is what SAM stands for.  It is the total serviceable opportunity.

• SOM or Serviceable Obtainable Market is the portion of SAM that you can capture.  Now - SOM is that fraction of the SAM that can be "obtained".  For example - lets say that the SAM at a customer included optical engines for 100G CWDM and 10G PON.  SAM includes the total POET opportunity for these two applications - 100% share. 

However - if our development plan first only produces a 100G CWDM, then the "OBTAINABLE" portion of the SAM is smaller.  Further - POET will not immediately garner a 100% market share at any customer no matter how competitive we are.  The first thing many customers will do is to take our pricing to their existing suppliers and have them match it.  I am sure you do it when you are shopping.  That is why - having a source of architectural cost disruption is important.  We expect our share to grow over time - once we are proven to be a reliable supplier and have the demonstrated ability to scale our supply to the industry demand.

• REVENUE -  this is then the fraction of the SOM that is realized into sales.  This ratio should ideally be 100%, but it can be lower depending on a number of factors that can be tied to supply, logistics, pricing, discounts, timing of orders/delivery,  etc..etc..

to be realistic the SOM needs to factor in:

• our product: people will want to buy your goods -- CHECK

• our marketing plan and the identified distribution channels: you have a clear plan to reach a large portion of your target customers -- CHECK

• your SAM and the strength of your competition: chances are that you are not going to take 50% market share within 6 months. Therefore your SOM needs to be a reasonable fraction of your Serviceable Available Market

Now back to the first point you were making.  The SAM presented is correct and represents the total opportunity for TROE (transmit and receive optical engines) across multiple applications at a single customer.

If for example, the only thing you have is a "receive optical engine" - obviously that is a fraction of the SAM.  The revenue guidance is a fraction of the SOM - recognizing that we are not yet sampling complete TROE and the qualification time period is NON-ZERO. We have gone to great lengths to discuss the qualification period - it can take anywhere from 6-12 months depending on the application. And thereafter - it will be a ramp - not a step.  

Furthermore, it is important to point out that we have NEVER provided hard revenue guidance recently.  It was always either revenue potential (which is another way of stating the SAM) or SAM ... that is what is the potential or SAM.  

I hope this can be clarified.  We as management want to be candid - but our attempts at transparency are often misinterpreted and then expectations are set based on these misinterpretations."

1. Sales figures seem to have been just $209k in Q2/2021 and $121k in Q2/2022 

Until POET is producing products on the line at SPX by the end of this year there will be no profits attributed to POET. What they have reported as revenue so far is NRE where companies pay to develop a product for their needs and/or to develop specific requirements for large customers and the sale of prototypes which have been requested by customers. Pretty normal stuff for a company developing a new technology.