Early February 2015 POET Technologies presented its technology and company to the City Investors Circle, London. A video of this presentation leaked, went viral, was retracted, and appeared a few days later on YouTube again – with a safe habour statement added and with remarks about GlobalFoundries‘ investments in 14 nm technology removed.
Since this presentation gives very good insights into what POET Technologies is, how its technology is poised for disrupting the industry, and how the company wants to monetize it, I organized a little grassroot initiative to create a transcript of the presentation. Here it is! Many thanks to all who participated in this effort – Ron Radford, Kristian Autio and many more.
Zusammenfassung auf Deutsch: Anfang Februar 2015 präsentierte POET Technologies Technik und Unternehmen beim City Investors Circle in London. Ein Video dieser Präsentation gelangte an die Öffentlichkeit, verbreitete sich viral, wurde zurückgezogen und erschien einige Tage später erneut. Ein Safe-Habour-Statement kam hinzu, Aussagen über die Investitionen von GlobalFoundries in die 14-nm-Technik wurden entfernt.
Da diese Präsentation einen guten Einblick gibt, was POET Technologies ist, wie die Technik die Halbleiterindustrie revolutionieren und wie das Unternehmen Geld verdienen will, habe ich eine kleine Graswurzelinitiative auf die Beine gestellt mit dem Ziel, eine Mitschritft zu erstellen. Hier ist sie! Vielen Dank an alle, die sich beteiligt haben – Ron Radford, Kristian Autio und viele weitere!
- Deutschsprachige Leser finden hier eine automatische Google-Übersetzung dieses Beitrags. Sie ist zwar alles andere als perfekt, aber besser als nichts. (Eine richtige deutsche Übersetzung ist in Arbeit.)
- Peter Copetti, POET Technologies, Executive Co-Chairman and Interim Chief Executive Officer
- Ajit Manocha, POET Technologies, Executive Co-Chairman
- Stephane Gagnon, POET Technologies, Chief Operating Officer
- Michael White, IBK Capital, President and Chief Executive Officer
- Members of the City Investors Circle, London
The presentation slides Stephane Gagnon is walking the participants through, can be found here on the POET Technologies website. However, if you are retrieving the presentation at a later date, you might get a newer revision. Most slides from the presentation at the City Investors Circle are included below.
The photos are snapshots from the video.
The numbers at the start of each paragraph denote the position in the video, i.e. minutes:seconds.
00:16 – Stephane Gagnon: Good evening, everyone! If you can’t hear me at the back, Peter, let me know.
00:24 – I am going to guide you through the slides. Feel free to ask questions. You can wait until the end or anytime. If that will help you understand the next slides, I’ll welcome your questions.
What is POET?
00:39 – So, what is POET?
00:39 – POET is, you know, some people earlier were saying, “that’s a very great acronym,” actually. It stands for Planar Opto-Electronics Technology. It is a great acronym, but it’s got everything to do with integrating optical devices and electronic devices that Michael talked about. This is a revolutionary III-V, which is gallium arsenide in the chemical table, semiconductor process technology.
01:12 – So, what this means is: it’s the fabrication process for any electronics devices that is used today in smartphones, computers, tablets, the network, data centers, anything – … in this video camera. So everything today is done with silicon CMOS. CMOS stands for Complementary Metal Oxide Semiconductor. Our technology is basically a new recipe, based on gallium arsenide, to fabricate the same kinds of device you have today but with a lot more performance, like Michael was saying, up to 10X application performance gains. This comes from the fact that we start with gallium arsenide and not silicon to fabricate the device.
Performance gains and power savings
02:05 – Up to 90 percent application power savings. How is that possible? That comes from the fact that we can run the technology in gallium arsenide at much lower voltages. We can run the technology from 0.3 Volt to 0.5 Volt whereas silicon today needs at least 0.8 Volt and above. And the power is a function of the square of the voltage. So the square of 0.3 versus the square of 0.8 and above gives you like an 88 percent power savings right there. The reason why we would want to run applications a little bit higher voltage, like 0.5, would be for performance. The higher the voltage, the more you can crank the speed on the performance of the device. So, you have a choice, but basically we offer up the 90 percent power savings. Even at 0.5 Volt, versus silicon you get a 58% power savings.
03:08 – So, when you talk about fabricating computer devices, or computer processors, that go in data centers, for example, if you could save 50 percent of the power consumed by processors in data centers today. You would save so much electricity on a per year basis in terms of opex for those data centers, cloud computing applications. This is the value proposition of a technology like POET. So, these two things are purely based on the GaAs, the gallium arsenide that we use.
03:49 – The next novel thing is that we have complementary logic in gallium arsenide. Gallium arsenide has existed for the last 30 years. But for the last 30 years the industry has only been able to use one type of transistor, which is the n-type transistor. For complementary logic to work you need a p-type transistor as well, a positive and a negative. Historically in gallium arsenide, the p-type transistor was always on, always drawing power. So, you could not turn it off and operate it like silicon CMOS. What Dr. Taylor has done is invented a new structure that can produce p and n transistors for high-speed digital devices, p and n transistors for analog devices that we call HBT’s, and an optical thyristor that can do lasers and optical devices in the same chip.
Integrating electronics, optics, digital, and analog
04:55 – That brings me to the next point. Our technology enables the integration of analog, mixed signal, high-speed digital, and optical components all in the same device.
05:09 – So, just a point on this. Enabling Integration, what does it mean? So, in your smartphone, whatever kind of smartphone you have, Samsung, Apple, or Blackberry, you have about eight or nine analog chips inside your smartphone, and three or four digital, high-speed digital chips that are like computers, like the A7 processor for Apple for example. It’s like a pentium processor. They’re all fabricated today with their specific manufacturing process. They can’t mix analog with digital today.
05:45 – So, our technology could enable companies like Samsung and Apple to start integrating these chips together and have less devices on their bill of material, simpler manufacturing and benefitting from integration from savings – power savings and manufacturing savings – better yields in manufacturing etc. And that will deliver smaller phones in the future. With the power savings they could either shrink the battery and make the phone thinner, or keep the battery the same size and you will only have to charge it maybe once or twice a week instead of every day. So, lots of potential there. That’s just one example of many of where we could use this technology.
06:33 – I’ll walk you through how easy it will be for the industry to adopt our technology. I have a slide on that later. And just a point to mention that we are actively in discussion with the industry. Like Michael said, we have a lot of discussions going on right now with potential customers and potential partners.
06:55 – Michael mentioned that Dr. Taylor, our chief scientist, has spent over 25 years developing this technology already. And over time we’ve properly patented our technology, so all of the novel inventions, fabrication steps etc. to take our technology and deliver it to the existing foundries – delivering to existing silicon foundries or gallium arsenide foundries – are properly patented. There’s more patents in the work with patents pending.
07:28 – We are publicly listed, fully SEC-compliant in the US. We have filed our 20-F. And our lab facility is in Storrs, Connecticut, head office in Toronto, Canada, and we also have an office in San José, California.
Solving an industry problem
07:44 – So, what industry problem are we solving? Over the last many years, companies like Intel for example, have been shrinking the technology to try to follow Moore’s Law. Basically, Moore’s Law is doubling the density of semiconductor fabrication process, and at the same time they were getting performance improvements, power improvements, and the likes. And after a while the improvements on power and performance started plateauing. Where the return on investment on density keeps going up but in terms of performance and power it’s an extremely diminishing return. Now the Intels of the world, and TSMC, GlobalFoundries, they are working on 14 nm technology, some of you might have heard about that, and the next steps would be like 10 and 7 nm. (Only in the first version of the video: The investment to go to those nodes keep going up. You know, Ajit can attest to this, like GlobalFoundries spent over $10 billion up to $15 billion for a 14 nm foundry. Those are massive numbers.)
08:47 – With POET technology we’re talking about matching the performance of 14 nm at 40 nm. And at 40 nm, for example, for customers using the technology the tapeout costs of developing a new chip … The tapeout cost means: When you send your design to manufacturing, they have to develop mask sets for the fabrication of your specific device. That tapeout cost is about $500,000. At 14 nm that tapeout cost is over $10 million. So, only a few in the industry can afford to target 14 nm technology, like the Intels of the world, and Samsung, Apple, maybe Broadcom and Qualcomm. But, at 40 nm you open up the doors to everybody, targeting a technology that can bring them the performance of 14 nm, but at 40 nm.
09:49 – On top of that remember that they can also do integration. They can do high-speed digital, analog, and optical on the same chip. So we are getting them a lot more in performance at a very reasonable manufacturing cost. So that’s the industry problem that POET is solving.
10:08 – Our Solution. Again, at the transistor level, the transistor itself performs five times better than silicon at the same node. We are projecting to be three to four nodes ahead of silicon. So again, at 40 nm we are projecting performance at 14 nm. But if we were working at a bigger node, like … I am going to talk a lot about 40 nm, but our process will work at nodes that are bigger than 40 nm, like 130 nm or 180 nm for Internet of Things devices, for example. And 40 nm is not the last node we’re going to do. Its just the node that we are working on right now. But once that is done we are going to go work at 28 nm and achieve performance of silicon maybe at 10 nm. So that’s not the end of the road. It’s just where we’re working today, at 40 nm.
11:05 – Q: So is the endgame that you sell your technology to Intel or Samsung?
11:10 – Stephane Gagnon: Absolutely. At the end of the day we want to licence our technology to foundries and tier 1 customers like Apple, Samsung, Broadcom, Mellanox, Qualcomm, companies like that. So they’ll give us NRE up-front and royalty payments per device fabricated with our technology, similar to how ARM does today with processor cores: NRE plus royalties. We want to do the same thing with process technology and foundry partners.
11:52 – Q: So what you’re saying is the majority of your customers will be the manufacturers of electronic equipment?
12:01 – Stephane Gagnon: At the end of the day, yes, but in some cases they’re fabless companies, in some case, and they want to access the technology and perhaps gain exclusivity in their market for POET.
Saving power by using optics
12:21 – We can integrate optics and electronics together in one die. When people hear that we can do optics in the same device as electronics, one could think about input and output of the device. A lot of people have tried to do this already, called Silicon Photonics. It’s basically trying to leave the chip or come into the chip with optical fiber. That’s called Silicon Photonics. They can’t really do it today, because silicon cannot lase, it cannot be a laser and emit light. Silicon just can’t do that.
13:03 – But gallium arsenide can. So our structure, our basic structure of the optical thyristor can lase, can be an optical driver and can also be an optical receiver, receive light and bring it into the chip.
- We can do edge emitting input and output,
- we can do vertical cavity lasers and receivers,
- and we can also distribute optical lights inside the chip.
13:34 – One thing today that’s plateaued the performance of processors inside computers you can buy today, for the last eight years maybe, if not 10 … Every time you buy a computer the processor’s speed plateaus at about 3 Gigahertz (GHz), 3.2 GHz. If you pay $400 more, you might get 3.6 GHz for a specific processor or MacBook Pro or something.
14:04 – What we’re talking about with distributing clocks internally with optical signaling, is taking that barrier and blow it passed 5 GHz, 10 GHz. The problem with distributing the clock electrically, through wires internally to a processor, is it requires kilometers of wiring, believe it or not, and about 30 percent of the power is used with driving that clocking network really hard, at a 3 GHz heartbeat to get to all of the leafs that need that clock simultaneously. At 3 GHz heartbeats a signal needs to get to everywhere inside the chip.
14:52 – Doing this optically saves about 70 percent of that power, which consumes today about 30 percent of the processor power. So if your processor is a 100 Watt, you are spending 30 Watt just distributing the clock, and doing it optically will save you about 70 percent of that power. So you are going to save 70 percent of 30 Watt, which is like 21 Watt right there that you save, just because you [are distributing optically], and you are going to go at 10 GHz and not 3 GHZ.
15:21 – Q: Is this in gas [GaAs] form?
Similar manufacturing steps
15:24 – Stephane Gagnon: Gallium arsenide? So we start with a gallium arsenide wafer, like the round piece of material we start with, and then we grow something we call an epitaxy. It’s like a series of layers of different materials and GaAs. Once all of our transistors are done, we basically fill the device, we planarize it, and then we put on top of that the metalization layers, like the eight or nine layers. The fabrication of the transistors is called the front-end of line [FEOL] manufacturing, so our front-end of line is much simpler than silicon at 14 nm for example, and then the metalization above is the same as silicon. So it’s a very similar technology. Our front-end of line is simpler – less mask layers, two to three times less mask layers than silicon – and then the metalization above is the same.
16:22 – Q: Has anybody else been working on this apart from your Dr. Taylor and your people?
16:28 – Stephane Gagnon: A lot of people in the industry have not been able to do p- and n-transistors – nobody has been able to do that. The silicon industry has been trying to use gallium arsenide on silicon to accelerate parts of their circuits today. Like IBM has spent a lot of money on that problem, Intel …
16:49 – Right now we are focusing on marrying what you need to replicate high-speed digital devices with I/Os, optical I/Os and memory structures. In the future we can add more sensors, more infrared technology etc. So we also have a roadmap of device innovation and we can keep innovating in our technology and continue on that licensing path.
17:17 – How big is the market? Well, basically our technology is applicable to every area of the semiconductor total available market which is over $300 billion per year. And here are some of the big areas where we can play: cell phones, PCs, servers, automotive, electric cars, infotainment inside the car, carrying optical signals inside the car, not only for infotainment, but for security purposes. There’s a lot of radar technologies being developed to try to get like the zero-collision car etc., auto lane detection, auto lane departure detection etc., tablets, wireless networks, Internet of Things.
Internet of Things
18:12 – So we talked a lot about 40 nm against 14 nm, where you would use that in servers, standard PCs and cell phones, but if I pick for example Internet of Things [IoT], people are doing devices in IoT today at targeting technologies that are more mature and cheaper, like 180 nm or 130 nm.
18:35 – So there we could do POET devices today that have better performance and 90 percent power savings. A lot of those IoT devices are running with a very small battery or a solar cell that sometimes could get less power on a day that doesn’t have as much sun etc. With a technology that could save them 90 percent power, that would be extremely attractive.
19:03 – All of those technologies have a wireless content and some kind of digital content. Sometimes they have a very small ARM core like an 8-bit ARM core that doesn’t need to run really fast but it needs to run at a certain speed. With POET technology you could integrate all of these things together, all of the analog frontend, the RF, analog to digital conversion, can all be integrated inside the chip that houses the processor, for the input chain from the wireless signal to the digital bits, from the digital bits back to the wireless signal. All can be done in one chip for IoT and save you like 90 percent of the power, because these things don’t need to run very fast. Typically they just need a little heartbeat and they track sensors etc. So this is another example of the less leading-edge technology where we bring a ton of value.
Easy industry adoption
20:06 – Easy industry adoption. For the designers, for example for a designer at an Apple, they can continue to design chips the same way that they designed them it in the past. They can continue writing code the same way they have done.
20:24 – Their toolchain is being enabled by our team right now working with Synopsys and their tools to enable those designers to just compile their code that they are writing today, targeting a new technology in the backend, but that’s all invisible to them.
20:42 – That’s very important. Sometimes companies come with a new technology, a new whizzbang technology, but everybody has to change the way they have been doing things for the last 20 years. That doesn’t work. So keep in mind that they don’t have to change the way they are designing chips.
20:59 – For manufacturing and testing I have talked quite a bit about an easy transition from silicon foundries to a POET flow, similarly for someone who would have a gallium arsenide foundry to a POET flow, would be fairly seamless. We support the same testing infrastructure for people that do probing at the wafer level, packaging, probing of the packaged device. Nothing of that needs to change.
21:31 – We talked about the capex investment of a 14 nm foundry versus 40 nm. Huge difference in investment levels for a POET-equivalent process at 40 versus 14.
21:46 – Peter Copetti: Dr. Taylor in his wisdom all the way along has developed POET so that it easily could work with existing manufacturing equipment in foundries.
22:00 – Ajit Manocha: But now as we become spoiled with all of these innovative products, we want more innovative, more innovation. I remember that we used to carry a briefcase every day to work. Who carries a briefcase these days? We carry iPads and just everything is an iPad, right? You can capture lots of information in this iPad or in smart devices. So, people did not work on gallium arsenide although they tried it, they gave up, (incomprehensible) come let’s go with silicon, don’t waste money. But now we are reaching the end of silicon life. (Only in the first version of the video: I, I know that I was (incomprehensible) 14 nm in GlobalFoundries. Just one company alone, we spent 1.5 billion dollars every year on R&D.) And I know that going from 14 to 10 [nm] is going to be a hell of a challenge. I think once we have this [POET] demonstrated from micron to nanometer scale, I know people will love it.
Back from retirement (I)
22:44 – I told Peter when he called me six months ago to join the board – now I wanted to enjoy my retirement life. I told him, “Wow, why didn’t you just meet me two years ago?” And I know that my successor at GlobalFoundries says: “Ajit, when are you going to tell me all about this technology?” But today, the companies have invested in 14 nm. I think they are going to see the ROI is going to be much more difficult than 40 nm. This [POET] will become a game changer.
23:15 – Q: Have you designed a process to reconvert the old foundries into modern gallium arsenide foundries?
23:23 – Ajit Manocha: Like I said, the retooling cost is very little. We have the view of how it can be done. (Several people talking at the same time.) Peter Copetti interjects: Yeah, the machines are almost identical. Ajit Manocha: Actually, right now we are going from working with some partner companies and there’s … (someone coughing) … I think Peter said it right: Buy one MBE machine, it just demonstrates the … How many MBE machines need you?
Value proposition for data centers
23:57 – Stephane Gagnon: So that brings me to the last step, for the OEMs, for the end customers, … they’ll enjoy the power savings like for a data center that I used earlier as an example, they need high-performance processors. So they would likely use our devices at the highest voltages to get the performance, so they are more likely to work on a 50 percent power savings rather than 90 percent, because they want to get performance and shave a little bit on the power savings.
24:31 – If you said today to Amazon, “We could save 50 percent on your server blades, total power of all your processors,” they’d sign you up, they’d say, “Where do I sign?” The energy savings alone in these types of applications are massive. All of the telecom customers, they have existing racks with power cables distributing power to those racks. All shelves have like a 1000 Watt or 2000 Watt power budget. How many electronics you can put into that power envelope is huge. So if you can double the performance of each card, because you are doubling your savings 50 percent on every device, the more the merrier, because they can to more performance per square foot on their installation. All of these things are huge for opex for these companies.
25:31 – Integration lowers manufacturing costs. That comes from aggregating devices together: smaller bill of material, less devices to manufacture together, less testing, higher yields, and so on.
Monetization using the ARM model
25:49 – How are we going to monetize the company? Like I said earlier, like an ARM model, we will license our process technology for very high NRE fees up-front to companies like direct foundries and direct customers, perhaps with exclusive rights per market.
26:13 – Once we enable a foundry like TSMC, GlobalFoundries etc., they take our Process Development Kit that we have done with Synopsys, they develop libraries that are specific to their flow and their foundry. They build basically test chips, they measure the performance, and they back-annotate the performance in the libraries that are then given to the designers to do their device and tapeout their chip back to manufacture.
26:47 – When they give the libraries to their customers, that’s a design kit from a foundry perspective, and we would want some royalties on those design kits, and then royalties on a per-device basis shipped from that foundry to their customers. Or the case where we have licensed the technology to an end customer directly, they would give us royalty on a per-chip basis that they have enabled in a smartphone or a tablet and the likes.
27:23 – We expect revenue and industry partnership in 2015, so this is something you should look forward to, coming from POET.
27:34 – Earlier I talked about the past technical milestones we have achieved in the last three years, and some of those were done with military, for example infrared detector array fabrication and validation, that was with military kind of demonstration and the likes. We have demonstrated lasers, p and n HFETs, we have our documentation for our technology design kit or process design kits etc.
28:22 – On the next slide we have our technical roadmap for what’s happening this year, in the first quarter of 2015 and for the remainder of 2015.
28:35 – Like for example these last two milestones – a 100 nm ring oscillator and a 50 GHz VCSEL. Those are industry-driven milestones for us. Customers and partners we have talked to said, “If only you could do this – the ring oscillator –, we could compare those results with silicon-equivalent results and really compare the performance of what you have.”
29:06 – And similarly with a 50 GHz VCSEL, there are leaders in that industry that said, “If you could go and fabricate this with your process, we’d love to see the performance of that vertical-cavity laser, and that would be extremely significant in my industry. So once you have that, come back to us and we’d love to see what that is.”
29:29 – Over time we have adopted our milestones to what our potential customers have fed back to us. If you have tracked POET for the last many years, like Michael [White] has, the milestones that we said we are going to do in the future have changed over time. That’s because we are reacting to our customers who are asking us to do, and that’s very significant.
29:55 – I cannot go through everything, but … We talked about on-chip signal distribution, that’s one of the things we are going to work on this year, SRAM structures for memory etc.
30:07 – This is our management team: Peter, Ajit, myself are here, Dr. Taylor, Dan DeSimone, our Chief Technical Officer.
30:22 – Michael White: I think it’s important to note that this team has really come together around Geoff Taylor in the last short period. Geoff Taylor spent many, many years working in his lab perfecting his technology, but it is just now where we can see commercialization on the horizon, that we have managed to attract people like Stephane, people like Ajit, and Peter has been a driving force. Quite frankly, he has done an amazing job at bringing these people together. And the focus, the absolute focus of this company right now is customers and revenue.
31:00 – Stephane Gagnon: The silicon roadmap is really hitting a brick wall. Like they have been shrinking the technology, they are working at 14 nm. Ajit mentioned like how big an investment it was to build a fab at 14 nm. Building new fabs at 10 nm will be another incremental on that cost. A lot of people in the industry have doubts whether it will work. It will likely work. It might take longer than they predict.
31:31 – In parallel, we are coming with a technology at 40 nm, that will equal or better what they can do at 14 and then eventually 10 nm. We are ready at the right time. The industry is already looking at III-V material on silicon, unsuccessfully, but they are working on it. So III-V is in the language of everybody in the silicon industry. They are looking at III-V.
31:57 – So they are ready for a paradigm shift. When we talk to people, they are like: okay. When we talk to customers, not foundries, they are interested, because they want to make sure they will be able to continue to innovate on a platform that will give them better performance than what they are currently developing on. They want to know that they will be able to bring advantages to their customers going forward.
32:21 – We’re talking about not small increments in power and performance, but huge step functions. We enable new innovations bringing analog, digital and optical devices on the same chips. We’ll enable architects in the industry to think about devices they never could think about in the past. They’ll be able to think of product mix that they never could think about in the past. So they’ll innovate in ways that we can’t even realize right now. And we’ll enable system costs, talked a lot about this. And again, revenue expected in 2015. – Go ahead, Peter!
33:07 – Peter Copetti: Yes, so, I think that to get a clear picture of the balance sheet we’re going to go back a couple years ago. The company was doing a lot of stuff in the solar area – that was non-POET. Just management at that time was spending a lot of money there, we weren’t really spending too much money on POET.
Back from retirement (II)
33:25 – I was actually an investor in the company, a good friend of mine had put me into the investment, he was in the investment, because Mike [White] had put him in the investment. So one night we had dinner and I said, “What are you guys doing with this company, this is a disaster! You guys, I had never seen anything …” I was in retirement mode at that time.
33:42 – Fast forward, I ended up going in to have a look under the hood and I wasn’t going to do anything with the company until I met Dr. Taylor. He told me about the technology down at UConn and the passion that he had for it. I thought this could really make a difference. Now I was at that point in my time, in my life, where I want to do things that I think actually make a difference, not just make money, but make a difference. That’s what I think POET can do, it can really make a difference.
34:07 – We ended up selling solar off, restructuring the company basically. We went from being in debt $10 million to where we are standing today. So I would say that by the middle of February we’ll be in the neighbourhood of about $16 million in cash. We only burn $500,000 a month. I would anticipate that even if we, when we do our partnership, if our burn rate goes up a little bit, it’s not going to go up anywhere near the amount that we would have to go to the market for cash right now.
Come milestones, come partnership
34:40 – Stephane talked about some of the partnerships that are due, some of the milestones that are due at the end of the quarter, the 50 GHz VCSEL, for instance. So that is from a multi-billion dollar company who came to us and said, “If you can do this in POET, we would be really interested in having serious conversations with you.” So we are getting ready to produce that technical milestone at the end of March. I would anticipate that that in itself is a great watershed moment for the company, and then the partnerships that come afterwards will be the start-off, the moment in time where POET really goes from just a concept in the fab to actual commercial companies investing their time and energy and money in our company.
35:26 – And I was saying some gentlemen earlier on that for our first partnership, Ajit and I were looking at these companies and we don’t need them to write a big cheque. What we really want them to do is to invest 30 or 40 engineers of their time. We need them to invest some of their know-how to partner with our engineers in order to take an end-product company and say, “We really want to be here in two years,” and get POET to do it. Because after that basically the world would be on our oyster. All the other markets that POET has will be substantiated with one commercial deal. We anticipate that commercial deal in fiscal 2015.
36:05 – So, I think if I had to add another slide, It would be “Why invest in POET?”. Right? That’s why you guys are all here, you want to make money. Why invest in POET? You want to be early adopters, you want to be on the cusp, of what’s up and coming. I think that’s what POET is. In my former life, I’ve sat at the other side of the table and I would look at thing’s risk/reward. So what are the biggest impediments in new technology?
- Number 1, for sure, can it be manufactured?
- Number 2, execution risk. I think the company management has proved that we execute.
- Number 3 is the balance sheet. Many companies at this stage just run out of money. It’s a great idea, but they don’t do it.
- Number 4 is the present management team. I think you all should know that Mr. Manocha ran a company, GlobalFoundries, which the second biggest foundry in the world, until six months ago. We are lucky to have him on board. Companies like us usually have to call the VP of Sales and say, “Can we have a meeting?” Right? [Ajit] picks up the phone, he talks to all the CEOs. So when Geoff delivers the stuff that we need to be delivered, we can go talk to those people, we have been, and before Ajit got here, we talked to some of them, since he’s been here we can almost talk to any of them.
37:25 – And I think when you look at the investment, you look at the uniqueness of the management team, the balance sheet and the technology. And that to me is the reason why I think it’s a compelling investment.
Looking for a permanent CEO
37:39 – Q: Why are you described as interim CEO? What’s the process there?
37:47 – Q: Are you going to cross it off? [laughing]
37:48 – Peter Copetti: No! No, I’m not going to cross it off, we’ve publicly disclosed that we’re looking for a full-time CEO, and the reason is that the restructuring is done. I’m a capital markets guy, I want to be able to pass that baton off to whoever we think is the right person. That’s what true success is. Ajit said one great thing when I met him the very first time. He says, “If you can make yourself redundant, you’ve actually done your job.” I’ll never forget that, because I said, he’s right. So, you know, in terms of doing these kinds of things, I can always add value to our new CEO, right? But my job here, for what needs to be done, is done. Now, we want to take this company and move it to the next level. I have vested interest for this to succeed, I have over 4 million shares. Absolutely I want it to succeed.
38:43 – Q: You’ve been looking for a year for a new Chief Executive.
38:49 – Peter Copetti: No! We’ve only really been looking for a new Chief Executive in the last two, three months. There was more work I had to do in the last year.
38:54 – Q: Had this guy left about a year ago?
38:57 – Peter Copetti: Yes, Leon Pierhal? Yes, he left a year ago, but we didn’t have a mandate to replace me until such time as we thought the balance sheet was fixed, and we are over all the sort of hurdles that the company had to be at, and we have got the right guy in order to pick as CEO. Now we have accomplished all that. So, although I was the Interim CEO, back in January, let’s say. It wasn’t like we were looking to replace me in the first month, right? We’ve started feeling like it was the right time and place probably somewhere in the late summer/fall. Now we know it is, because we have got sort of everything is lined up, all our ducks are lined up.
Planning for Nasdaq
39:37 – We are also going to be planning a Nasdaq listing in June, and I would never go, with my capital markets experience, I would never go to the Nasdaq unless I had real partnerships in place. I think we are just in the right time and place for POET and we are really excited about it.
39:57 – Q: Could you say something about your share price movement during the last couple of years?
39:59 – Peter Copetti: The last couple of years? I don’t have a chart of our share price movement, but uh …
40:04 – Michael White: The performance has been very good.
40:05 – Peter Copetti: When I joined it was 17 cent. We had a high of about $2.80 or something at one point. We had some articles written about us and stuff, the market thinks ahead, came back down. I think now we are at $1.25 – $1.30. We trade literally at 300,000 – 400,000 shares a day.
40:27 – We have done zero marketing for this. You, gentleman, literally: This is the first day that we have started marketing POET. People have asked me in the past, and certainly Mr. White has asked me in the past, “Come on, Pete, get on the road and market POET!” But personally, I’m very methodical in the way I want to do things, I wanted to make sure that we had our technical stuff ready, our balance sheet ready, and a real story to tell. And a story that had longevity.
40:57 – Because when you decide to list to the Nasdaq, you have to have a run-up to the Nasdaq, then you have to have coverage, and then you have to have news afterwards. We have to make sure that we have all those things in place if were are doing it. Now we feel we do.
41:10 – Q: Can I ask two questions? First of all, who owns what? And secondly, (Peter Copetti does not hear clearly and asks: Who … ? Sorry.) Who owns what in terms of shareholdings? Do you have big institutional holders? Cause it’s …. (Not quite comprehensible, but the whole exchange is basically: Who are the shareholders?)
41:22 – Peter Copetti: Yes, we have three Canadian institutions: IBK Capital and their clients own quite a bit of stock, Pinetree, up in Canada, owns quite a bit of stock, AlphaNorth Investment still owns some stock. I have some European investors who have probably four percent of the company. There’s some New York investors that own some percentages, but I would say that maybe 35 – 38 percent of the stock is institutional and insiders and the rest is retail.
41:52 – Q: And the management?
41:54 – Peter Copetti: I would say 7 or 8 percent.
41:58 – Q: And when you go on to Nasdaq, are you contemplating perhaps raising cash then?
42:04 – Peter Copetti: We may raise capital. Usually, in my experience in capital markets (incomprehensible), when you go on to Nasdaq, you raise a little bit of money, because the bankers want to make some money. We are not in any need of money, but certainly we can use … (laughter)
42:24 – And you want the sponsorship, and you want the coverage before, you want the coverage after, you want to keep all your investors happy. I am sure that we will be able to use the funds of any kind of raise, and it will not be substantial. It is not like we are going out to raise really huge amounts of money. It would be something to keep everybody happy, that’s all.
42:42 – Q: How come you have so many shares? Bare in mind you’ve got a market cap of $200 million Canadian dollars and, of course your share price standing at $1.20.
42:54 – Peter Copetti: Yes, so the reason we have so many shares is unfortunately when I came on board the company was distressed financially. So, we did have to raise some money back then and then with that were attached some warrants, some of the warrants have come due and because we’ve been great at the share price they were exercised and converted, so that added to the share price. But, if you look at it in terms of market cap and not just the share count, a $200 million market cap for what I think we can do is very light. If we do a deal with company ABC that’s a multi-billion dollar company that stock is going to double or triple. And if we get revenues or other companies, that stock could be … – there’s no reason why this couldn’t be a multi-billion dollar company.
Growing for the long term
43:36 – Q: Would you expect your company to be an income company or a growth company?
43:43 – Peter Copetti: Oh, I think, I think that … income or growth … I think it’s … I guess it would be a combination of the two. Because we want to license our IP I think the curve would be like this (gesture indicating growth) and then sort of slow. We’re still pushing our own IP so we can continue to develop our platform. I think it would be a combination of both, but …
44:04 – Michael White (jumps in): Certainly, certainly from an earnings multiple perspective, they like the ARM model. [Peter Copetti: Yes.] And the ARM model is definitely a growth model. It has an earnings multiple today of 81, so 81 times earnings. And that is certainly what we’d all like to see as shareholders of POET. If POET could capitalize on licensing agreements and, say, have recurring revenue of $25 million a year, let’s just say, let’s just throw the number out there, then you’d be looking at a $2 billion company, as an example. And that’s what we want as shareholders.
44:41 – Peter Copetti: I really believe, I mean, we are building this company to survive in the long term. But I can’t believe if you can take a box that has eight chips in it, and turn it into one or two chips, drop manufacturing costs by 60% percent, the other companies in that sector, which is a 10 – 15 billion dollar sector, can allow that technology to exist. Right? I mean, I’ve described it before. Acquiring POET is just like buying a put option on all the money you’re going to spend on R&D anyway.
45:16 – Q: Question for you again, you talked about this milestone that you need to achieve by March to engage this initial key and important partnership. How firm is your conviction that you’re going to achieve those milestones? And is there likely to be any form of delay? Obviously, hopefully not, but if there is some sort of delay and it’s your first key partnership would that cause a knock-on effect for your Nasdaq listing and all the things you’ve got planned for the rest of this year?
45:43 – Peter Copetti: So traditionally from a … completely honest … traditionally from the lab, we’re never on time. We haven’t come in early, and we’ve always come in a little bit late. But the lab is the lab and you can’t push, you know, genius, if you will. Having said that, that is not the only milestone that we’re doing. We’re also doing the 100 ring oscillator with many other companies waiting for those results. I believe that we are going to be right around that timeframe. I have massaged the June timeframe in terms of the Nasdaq listing anticipating that we could have some delay in those things, because it’s historically what we do. So, it wouldn’t surprise me if it came a little bit later. What’s really crucial is to understand that the industry is asking for this from us. If we went back five years we would have had a hard time. You know, for a person like me, we just fell into this at the right time, because the industry is open to it and because the technology is at a point in time where we can actually deliver the solution.
Who’s lunch to eat?
46:44 – Q: The whole of tonights spurring has been that you have a dynamic new way of producing semiconductors that make every existing semiconductor redundant or weak. Whose lunch are you aiming to eat? Is it Intel?
47:04 – Peter Copetti: I think we could eat some lunch from all in the sector. Certainly Intel would be the king that would suffer the most if we go mainstream. But I think you can look at the optical-electrical area, the convergence area. I think you could look at sensors and arrays. I think you could look at …
47:23 – Michael White: Can I just add something? It’s not necessarily POET that’s looking to eat anybodies lunch. But you have industry players who could license POET and they’ll eat their competitors lunch. Right? It’s not POET that’s going out there and trying to destroy the competition. It enables companies to destroy their competition. And that’s key. That’s what’s so elegant about this strategy. It’s that they’re simply going to license this technology to companies that are going to go out and make a lot of money by making devices that are not just incrementally better than what’s out there today but very much … (to Stephane) … what’s the word I’m looking for?
48:12 – From the audience: A new paradigm.
48:13 – Michael White: Yeah, a new paradigm shift, if you will.
48:16 – Ajit Manocha: So, who’s lunch will we eat? I don’t know, but people who believe in innovation, who believe in disrupting the industry, they will eat the lunch of the big players today. They are going to be our partners and they will eat maybe Intel’s lunch or Samsung’s lunch. I’m not going to specify. … The early adopters.
48:47 – (Moderator thanks Michael White and the POET Technologies team for this first public presentation. – Applause)
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