Strategy part of Management Discussion doc: "Transition to direct sales to end-users."
Manufacturing
To address the challenge of producing devices in the large quantities needed by customers in the high-volume data communications industry, and in keeping with our "fab-light" strategy, POET has entered into agreements with Globetronics Manufacturing, Sdn. Bhd. and NationGate Solution (M) Sdn. Bhd. to establish and maintain optical engine assembly and test operations in Malaysia. Both companies are prominent manufacturers of electronic devices and equipment located in Penang, Malaysia and are ideal manufacturing partners for POET. In our Globetronics clean room of approximately 10,000 square feet, we have installed all our wafer-level processing equipment in a production line that has the capacity to produce 1 million optical engines annually. We are now installing specialized equipment dedicated to light source production into a cleanroom of comparable size within the NationGate facilty.
Our detailed assessment of our production needs and our desire to mitigate the geopolitical risk in China supported our relocation to Malaysia. We determined that we could not achieve full operational control of Super Photonics Xiamen (SPC) in the context of any joint venture. The first phase of transition out of China involved the transfer of all our production equipment to Globetronics and NationGate, a phase that has been completed. The second phase was the dissolution of the joint venture with Sanan IC, which has also been completed with that operation now permanently closed. Following completion of the final audit and the filing of certain documents with the Chinese authorities, the final stage will be the winding-up of that company, which we expect to complete within the next few months.
Our Strategy
Our vision for the Company is to become a global leader in chip-scale photonic solutions by deploying products based on our Optical Interposer technology, optical engine designs and optical modules over a broad range of vertical market applications. Our Mission for the Company is to establish an industry leadership position based on the "semiconductorization" of photonics, producing validated, disruptive, IP protected products globally.
The following is our strategy to achieve our vision and mission for the Company:
• Ramp production capabilities at GMSB and NationGate.
POET's agreements with GMSB and NationGate in Malaysia supports its vision and mission by establishing wafer-level manufacturing, reducing reliance on China, and enhancing supply chain resilience. The partnerships enable POET to scale production efficiently, leveraging their expertise in high-volume semiconductor manufacturing to meet growing demand in the optical interconnect market. These collaborations enhance POET's operational control, ensuring high-quality standards, faster production, and better supply chain management. It also opens doors to key global markets, strengthening POET's position as a leader in optical solutions for data communications and Al technologies.
• Engage with industry leaders and incumbents.
We will continue to promote the potential of the Optical Interposer and POET-designed Optical Engines to solve critical challenges with current approaches to data transfer in data center and telecom applications, especially to those hyperscale data centers implementing large-scale Al applications. We believe that the size, performance and design flexibility of POET's chip-scale approach to integration and to the rapid introduction of successive product generations is an enabling technology that will allow POET to enter markets where relatively few competitors will have the requisite technology to succeed.
• Transition to making Optical Transceiver Modules for direct sales to end-users.
In addition to adding features to the Optical Interposer, we have added essential electronic components, such as Trans Impedance Amplifiers (TIAs) and laser drivers to the interposer platform, which improves performance and lowers the cost of module assembly. We intend to add the necessary capabilities for design and development optical transceiver modules, either through internal development or in collaboration with other companies. Being most familiar with the unique capabilities of our technology, we believe that we are in a position to rapidly extend our expertise to complete optical modules. In addition, we want to own key components. Starting with our internally designed and developed hybrid laser, we intend to develop or acquire components with differentiated performance to include in our modules. Doing so has the advantage of avoiding a lengthy sales and qualification cycle (i.e., selling to module makers who then sell to end users) and being able to sell directly to end users, showcasing our own branded products to network equipment suppliers and data center operators. However, so as not to compete with our optical module customers, our current plan is to sell our optical modules, once developed, into niche rather than mainstream applications.
• Pursue complementary strategic alliance or acquisition opportunities for inorganic growth.
We intend to evaluate and selectively pursue strategic alliances or acquisition opportunities for growth and vertical integration that we believe will accelerate our penetration of specific applications or vertical markets with our technology or products.
• Explore technology licensing opportunities for growth in non-target sectors.
It is not possible for the Company to pursue all potential applications for the POET Optical Interposer. We will carefully consider opportunities to license our technology to others when and if appropriate.