POET provides update on above-average trading activity

POET Technologies Inc of Toronto, Canada and San Jose, CA, USA — a designer and manufacturer of optoelectronic devices, including light sources, passive waveguides and photonic integrated circuits (PIC) for the sensing and datacom markets — has provided commentary on recent events, including the above-average trading activity in its stock over the past two days.

On 4 February, POET announced that it had received and signed a letter of intent (LOI) to purchase its Singapore-based subsidiary DenseLight Semiconductors (acquired in mid-2016). The non-binding letter of intent is for a cash consideration of US$30m, including $4m in an earn-out, with a target completion date of 15 September.

This announcement complements other news that the firm released in mid-November regarding receiving the first orders for POET Optical Interpose-based solutions from global companies targeting datacoms applications, subsequent to which it provided revenue guidance for 2019 of US$8-10m (a substantial increase over its 2018 revenue run-rate of under US$4m).

POET’s strategy is focused on its Optical Interposer, a novel platform that facilitates the co-packaging of electronics and active and passive optical components in a single chip-scale package (CSP). This strategy has been supported by other announced events over the past 12 months, including:

an alliance with China’s Accelink for information and access to optical transceiver products and markets;
an alliance with France’s Almae for the co-development of lasers and modulators;
an alliance with Malaysia’s SilTerra for the manufacture of its base interposer platform;
engagement with a global company to validate POET’s designs for 400G optical engines and components;
product announcements from DenseLight for lasers targeted at the datacom market;
progress with internal development projects, including with:

active devices (InP-based lasers and detectors),
passive devices (dielectric waveguides and filters),
integration and core packaging technology (passive pick & place assembly, encapsulation and singulation),
flip-chip laser technology, including assembly onto the interposer with integrated thermal management, consistent with the firm’s stated strategy in November to accelerate the laser development roadmap,
wafer-scale hermetic cap development (a key component required for telecom applications).

POET claims that the Optical Interposer offers a disruptive price model and a unique approach to chip-level integration not achieved with other technologies. It has attracted customer interest such that the firm is dedicated primarily to delivering prototypes and engaging in customer qualifications for the balance of 2019.

Meeting the challenges of rapid growth in specialized, high-tech markets requires focused investment, says POET. By pursuing a capital-efficient ‘fab light’ strategy, it substantially improves its ability to produce, market and sell solutions in vertical markets in datacoms and beyond. Telecom, 5G cellular, wireless access, automotive light detection & ranging (LiDAR) and direct optical interconnect integration with application-specific integrated circuits (ASICs) are all markets that need the level of photonic integration enabled by the Optical Interposer, says POET.

POET cites considerable financial advantages to adopting a fab-light strategy, especially at this stage of the company’s development. Lower operating expenses reduce the time to profitability and lead to higher cash flow. Lower capital investment in equipment and facilities leaves room for focused investments in design, marketing and sales. Access to non-dilutive debt financing or lower-cost equity all help to sustain and enhance long-term shareholder value, the firm notes.

“The elements of our strategy, which may not have been clear to our shareholders who do not have the full picture, can now come into sharper focus,” says CEO Dr Suresh Venkatesan. “We have brought together several distinctly different development efforts, acquisitions of markedly different technologies, alliances with companies small and large, and talented engineers from many different countries, all for the purpose of achieving a breakthrough, disruptive platform in the Optical Interposer. Photonics industry leaders at the highest levels are beginning to take notice of what POET is doing. While we are gratified by the attention and engagement, it also means that we must move faster and more deliberately to achieve our goal for our Interposer Optical engines, not just in datacom but across several vertical market opportunities,” he adds.

“Our recent announcement of the possible sale of DenseLight takes us further toward the goal of focused execution of our strategy,” Venkatesan continues. “There are numerous benefits to POET from the possible sale, starting with our ability to concentrate our efforts on the Optical Interposer itself, capturing all the achievements in design, process development and manufacturing that we have invested in over the past two and a half years. Having a strong relationship with well-funded global supplier of lasers and detectors, supported by a new owner that shares our vision for DenseLight is a significant advantage. Further, we are now better positioned to properly finance the company, through September and beyond. A substantially stronger balance sheet will enhance our credibility with customers and fortify our efforts to penetrate new markets.”

See related items:

POET receives US$26–30m offer for DenseLight subsidiary

POET’s revenue grows over 20% in Q3/2018

Almae to co-develop laser modules based on POET’s optical interposer platform for high-speed datacoms

POET partner with 8” silicon foundry SilTerra Malaysia to develop and manufacture Optical Interposer Platform

POET and Accelink to co-develop transceivers for 100/400G markets

POET introduces Optical Interposer Platform for co-packaging of electronic and optical components

POET completes acquisition of DenseLight

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