RE:My goodnessGood post Gooddog. Seems there are some here that can see that it has been a complicated journey that is anything but clear with such a complex and disruptive technology and the underestimated requirements to monetize by previous management and the message they provided.
Some dialog that may interest the people here from several years ago. I have removed the names to avoid any conflict of disclosure.
My Question to X:
I have heard zero discussion about technology risk. It doesn’t exist?
Answer:
There has been a lot of technology risk in the past.
Me: The laser was a big one for sure.
X: The laser, the form it is in now with so many modes and features it took a while to get there. But Geoff built his first working laser in 93.
XX: I think the technology risk was a while ago.
X: The technology risk I think was that it took a quarter century to get rid of the technology risk.
Me: So scaling isn’t considered any issue?
X: That is one of the areas that a tremendous amount of work has been done is in modeling the scaling of both the electrical features, devices as well as the optical ones. And that is what I think the last tweaks really from about 2004 to 2010 the process tweaks were only to make it more amenable to building devices on the same die of very different sizes. But I think that from what Geoff has done is that he has been able to keep at this problem long enough to get the technology risk under control.
XX: What I have learned from Geoff is that although he looks like just a scientific guy, he actually really thinks outside of the box in terms of how would the companies. 10 years ago how would these companies be able to put it into their systems? Not just getting it to work in their labs. He has done that work and that is the great thing. It is one thing to be able to do it but can I make a thousand can I make a 100 million of these can I do it. And he has thought of that.
X: And one big thing that I was very pleased to see is that this has always been in Geoff’s mind. How do I do things so they can be made with semiconductor fabrication equipment that exists today? That is the real key. Because anytime you need a new widget you have got interdependency in the way. So I would have to say... Is there a lot of technology risk in this space? Absolutely. I could name 25 companies that it has killed. Has there been technology risk in Geoff’s past? Absolutely. I think it took 24 years to get past it. I have been in the semiconductor business and been a device designer long enough that I can say Geoff is well past that stage. We are building proof points of the last 23 years of Geoff’s work that we can give to people.
Question: The companies that you have met with so far, what are they saying?
X: The first reaction you get from everybody, and the more experience they have in this space the stronger the reaction is. We have heard this before. And then ok so it is semiconductors so how much do you have to spend before you can sell this. These are semiconductor companies that over the last decade. Especially companies that are doing chips that are incrementally better than what has come before and will incrementally evolve. The value proposition just isn’t there. It costs too much to develop them relative to what they return. So somebody that has a strong value proposition in the semiconductor space like a fundamental one that has not come along. I mean the most recent one that I would say that would be in any way shape or form comparable would be some of the flash technologies. Phase change there is an example or divided bit line or NAND flash. They were big ideas that people recognized the value of. But these things don’t come along very often. And this is one of those things that as soon as you get past peoples initial concerns typically about their history of losing money stuff like this. Then they always buy into the value proposition if you could make it work. And what they have run into in the past is people not being able to make it work. So one of the things that to me so far (I think he said wins them over) quickly is to tell them how long Geoff has been working on it.
Question: So is it significant that Geoff is doing this on 30 year old equipment? Generally speaking no. There is one thing and the most expensive piece of equipment we are buying is essentially some tools to draw finer lines. Right now we are doing one micron feature size 1000 nanometer which is very big although gallium arsenide because it doesn’t have to be made smaller to make integrated circuits. A lot of production stuff still uses that size for gallium arsenide. Geoff chose that feature size to work in first of all because he could buy older equipment and it is much cheaper to generate masks. And when you build something it is as lot easier to look at it and instrument it and figure out what you like about it and don’t like than if you made it 10 times smaller. So one of the reasons we want to be able to draw finer lines we will build them 1000 nanometer to a whole chip at 500 nanometers. And we are getting a nanoscale assembler so we can build parts of the chip or whatever amount that we want down to about somewhere between 25 and 30 manometer line sizes so very small. But it is not using lithography with high frequency lasers it truly is a nanoscale assembler. For the kind of stuff we are building to show people that is all we need. We don’t have to build aggressive feature sizes. We can just do the stuff we have been doing but in a smaller feature size. And then we can do things that we want to show off like quantum dots. And using quantum dots to modify laser behaviours. We can do that with the nanoscale assembler for a fraction of the cost to put in say 20 or 32 nanometer lithography equipment. So it is a very low cost prototyping tool relative to production equipment that will allow us to draw things down to whatever size someone wants to see. And the only thing we really do that has to be done at a small size to show its interesting properties are quantum dots. We still get the benefits of higher density but unlike silicon CMOS we don’t have this imperative of making stuff small to make it go fast. That is why we have 1000 nanometer transistors that go 65 GHz.
XX: Before you go on to the next question I wanted to point out. Lee said something that is very important. There is very little investment going on in the semiconductor space. There are vast numbers of fund managers in the United States that have a mandate to invest in this space but they can’t because there is nothing new. This is a story that can be told within that space that gives them the ability to invest in the semiconductor space to for their mandate. That is why I really look forward to sitting in front of those kinds of fund managers. That is why we brought on the PR Company that not only does the PR but has tentacles into that space.
Question: So just going back to what they are saying. Are they saying prove it to me. It sounds like that is what they are saying to you. What comments are you getting?
X: I would say that based on previous history and because the people I have talked to so far they are all people that I had significant previous relationships with. So their first question frankly because I have looked at a lot of these and I have been an advocate of this kind of technology for a long time but I have been pretty universally pessimistic about every individual investment that they have showed me. So the fact that I am actually interested in this and not pointing out that well that is the one thing they have and this is the nine things they don’t have. So I think that just due to history and my own reputation to be pessimistic. They seem to buy into it if I tell them that what I have looked at is real and this is really promising. They seem to buy into that. Then the conversation turns to how do we make this real?
And the conversations I’ve had with people at tech companies like existing chip companies as well as some Venture Capital Investors and one big private equity investor who plays in the tech space. The conversation has then gone to well do we sell this to one buyer? Probably better to sell it you know to create a Joint Venture and a syndicate. That’s my personal preference. I think that is where our biggest value is. Because if you look at this technology it has so much breadth that ether we are going to sell it to somebody who is going to build a syndicate afterwards or we are going to try and build a syndicate and I think capture more value for our shareholders that way. But my ideal would be after talking to these folks and the back and forth I have had with these people so far. Is that you want some different expertize in a syndicate or I would love to have an electronic design automation vendor interested in this. One of the large shareholders with industry background mentions a couple companies like Cadence or Synopsys. There is one example of a company that has part of the story. They control part of the eco system for POET to connect to. You have got the big CMOS device vendors, the top 20 of those with the usual suspects Intel and Samsung up at the top. But there are 20 big multibillion dollar a year players. Just in that space selling chips. Then you have got half a dozen big foundries in the world and they definitely because the fabless business model is replacing or largely replaced the integrated device manufacturer. Those guys have a role to play to. So I would like to see players from different sectors get involved in this and I think that would be in my mind the strongest syndicate.
Question: Is there an indication from your early conversation with the companies you have talked to so far that there would be some interest in that.
X: Yes. The only resistance I have heard is that this is so big that we would want to do it with partners.