POET Technologies Inc.

From Rainer's transcript regarding AOC:

25:17 – Answer: As we said on September 30th, our plan is to introduce these optical engines – what we call optical engines – they are single-chip monolithically integrated optical transceivers, and for explicit applications in short reach and very short reach data communications in the form of active optical cables, or what are called AOCs. Ahead of that, we will clearly market and sell individual components, like for example the detectors, opportunistically. Not only to drive early revenue, but also to vet our solutions in the market. We believe that the POET solution could provide an immediate margin of expansion to customers using our solutions, even in otherwise low-margin or commoditized product lines, so we are extremely bullish about our market penetration here. We are all trying to complete our first devices in the current quarter. Our next quarter remains the target for basic component-level functionality. And that’s the basis, if you will, for prototypes in the second half of the year just as Subhash mentioned earlier when we talked about our on-going milestones. It remains early in our evolution at this point to precisely define and provide a roll-out for our first product. However, we do expect this to feature our unique ability to integrate optical components along with control electronics. So we’re talking about VCSEL-based, monolithic, single-chip optical transceivers.

POET’s active optical cable

26:48 – Question: Another question about the active optical cable: Can you briefly explain the benefits of POET’s active optical cables and how customers would use it?

26:58 – Answer: Well, that’s a great question. I want to kind of separate this into two parts:

1. I just want to give a background for those on the phone as to what is an active optical cable itself, I mean active optical cables or AOCs, these are cables where optics are actually hidden to the user. So both ends of the cable are electrical and the electrical-to-optical and the optical-to-electrical conversions are actually hidden in the cable itself. So from that perspective an AOC is interchangeable with currently used what are called direct-attached copper cables, which of course are completely electrical on both sides. Now relative to copper any active optical cable has the advantage of dramatically lower power, size, weight, flexibility, reach, and also what we call electromagnetic interference. So the disadvantage historically and even today, with any AOC, as it relates to the direct-attached copper cables, has always been cost. The cost of an AOC is about a factor of three, if you will, more expensive than copper. So that’s always been the disadvantage.
2. So the question then is, what is POET’s AOC and how does it compare to the standard AOCs in the market? There are four distinctions that we consider when we talk about our optical engines. With a POET AOC, the entire optical engine is integrated into a single chip on the wafer. So you don’t need to deal with multiple components and packages when dealing with a POET AOC engine. Second,the single-chip integration of all the required components enables really novel, unique, wafer-level tests and wafer-level packaging techniques to be applied and this dramatically simplifies the assembly process. The third distinguishing feature is that the POET VCSEL typically lases in single-mode and so the POET AOC could potentially use less expensive single-mode fiber in its deployment. And really the fourth distinguishing feature again comes about by this integrated capability of the POET platform. Since all the components of the POET platform are in the optical engine integrated, our cost, if you will, tend not to scale linearly with the number of channels, like a typical AOC does. So the cost benefits which we believe are already significant for a single channel, multiplies for multi-channel configurations. So those are really the four distinguishing features of the POET AOC compared to an AOC, and I also threw in the distinguishing features of an AOC relative to what is called direct-attached copper.

29:48 – Question: The next question is again along the lines of the product itself: Does POET expect to sell the complete active optical cable or just the transceiver chips that go into the cable? That is, will they contract manufacture out the connector?

30:04 – Answer: I think initially, while developing our solutions, we would be partnering on demonstrating a complete AOC and prototyping. But POET as a company does expect to focus on selling its integrated optical engines, and then we’d work with CMs, or contract manufacturers, who would attach the fibers and wrap the plastic around it.

30:27 – Question: Another question along the same lines: What do you see as being the biggest challenge for adoption of POET AOCs? What do you see as the biggest challenge for broad market adoption of the POET process?

30:40 – Answer: Of course the biggest challenge for POET at this point in it’s evolution is demonstrating the technology capabilities and mitigating technology risks. I mean, I think making progress in a startup company is all about mitigating risks, and for the most part there are three fundamental risk elements that any company faces. There’s financial risks, there’s market risks, and then there’s of course technology risks. So over the past four, five, six months, we believe that at POET, we’ve well mitigated the first two risks. So, one is the strength of our balance sheet and the second is from the significant vetting we’ve already done with key players in the market. That has allowed us to really mitigate, if you will, the financial risk and the market risk. So, today the risk of market adoption is driven more by the actual implementation of the base technology itself, demonstrating the proof points necessary over the next couple of quarters. Of course the fact that we’ve already demonstrated functional VCSELs, detectors, transistors, in the UConn labs has already mitigated some of these risks, but demonstrating commercially relevant devices in a high-volume manufacturing environment is really our next hurdle to jump.