Call Transcript - Paullee's post. Reposted as it was getting harder to find!
Audio file
LWLG inv call 3_13_25
Transcript
00:00:01 Speaker 1
Thank you, Ryan, and thank you to those who have joined this call. Since our last call on January 9th, we have received questions looking for clarity on some of the initiatives we discussed that day.
00:00:15 Speaker 1
Such as where exactly we plan the value chain or revised go to market strategy and the status of product development and customer engagement.
00:00:27 Speaker 1
We'd like to take the opportunity on this call to provide more details on these matters and better articulate where our efforts will be focused going forward.
00:00:38 Speaker 1
To begin, I think it is important that we better identify our target market and the size of the opportunity accessible to lightweight logic.
00:00:48 Speaker 1
In their recent earnings call and Zidya announced that the data center part of their revenues is expected to reach 115 billion U.S. dollars.
00:01:00 Speaker 1
For fiscal year 2025 and it represented 88% of their total sales with A5 year tagger of 108%.
00:01:14 Speaker 1
This AI driven explosion in data center computer networking infrastructure is creating unprecedented demand for high speed optical interconnects. For the first time in 2025.
00:01:29 Speaker 1
The market for optical transceiver is expected to exceed 20 billion U.S. dollars.
00:01:35 Speaker 1
With a major part of the growth coming from Ai's Supercluster optics.
00:01:41 Speaker 1
Doubling in number of units year over year and expected to approach $5 billion in annual sales.
00:01:50 Speaker 1
The last couple of years have seen the demand explosion created by AI training, generating an inference models and its impact on scaling computer networking infrastructure.
00:02:03 Speaker 1
This market is not stopping here.
00:02:07 Speaker 1
The introduction of accelerated computing in traditional data centers and the emergence of AI factories are forcing hyperscalers and enterprises alike to rethink their network architectures.
00:02:22 Speaker 1
Resulting in more optics and faster optics.
00:02:26 Speaker 1
This is where Lightwave logic comes in, helping the AI network scaling bandwidth. The number of bots while optimizing power and latency with every optical link being stretched to deliver the next order of modulation bandwidth.
00:02:42 Speaker 1
It all started at 10 gigabits per second per lane, then 25, then 50.
00:02:49 Speaker 1
Now AI and data center are primarily using 100 gigabits per second per lane.
00:02:55 Speaker 1
With transceivers using a parallel lanes to achieve 800 gigabits per second.
00:03:02 Speaker 1
The industry is already planning to aggressively deploy 200 gigabits per second per lane at the end of 2025, with a production ramp in 2026.
00:03:13 Speaker 1
This will enable 1.6 terabits per second transceivers of eight lanes at 200 gigabits.
00:03:21 Speaker 1
-400 gigabits per second per lane to build 3.2 terabits optical length with a likely volume deployment starting in 2020.
00:03:32 Speaker 1
So he does not stop at 200 gigabits per second per lane. And with every new generation, the EO polymer material from lightweight logic becomes a more critical component of this road map 400 gigabits per second and beyond.
00:03:48 Speaker 1
According to light counting, a leading market research firm for optics.
00:03:53 Speaker 1
The number of high speed computers and Co packaged optics units sold will approach 20 million units in 2025, or an addressable market of 7 billion.
00:04:06 Speaker 1
To be clear, these numbers only include the Unix where the modulator speed is 100 gigabits per second or higher.
00:04:15 Speaker 1
These numbers are expected to go to 38 million units or approximately $10 billion in sales in 2027.
00:04:27 Speaker 1
This is a primary market we are targeting at lightweight and where we expect for technology to deliver superior performance, lower power and easier integration in silicon.
00:04:39 Speaker 1
To help raise this opportunity, it is important to understand that every single optical transceivers from 10 gigabits per second to 3.2 terabits per second includes one or multiple modulators.
00:04:54 Speaker 1
These modulators come in various font and flavors.
00:04:58 Speaker 1
They can be integrated within a laser, like for example Indium phosphide emls.
00:05:05 Speaker 1
They can be standalone components like with lithium niobate or they can be integrated into silicon chips which seem to be the preferred industry solution for the future.
00:05:17 Speaker 1
It lends itself better to integration with electronics.
00:05:23 Speaker 1
Our internal estimate is that the modulator portion of the transceiver ranges from 10 to 25% of the total value depending on the level of integration provided.
00:05:35 Speaker 1
We estimate that this equates to a total serviceable market in 2027 of between 1 billion and $2.5 billion.
00:05:46 Speaker 1
We believe that our new go to market strategy leaves us well positioned to capture our meaningful share of this opportunity as we open up access to our technology toolkit and get our materials into the hands of potential partners for design wins in 2025 and 2020.
00:06:06 Speaker 1
Stepping back, it is important to understand the broader ecosystem, the value chain and where we come into play.
00:06:14 Speaker 1
Transceivers are the packaged optical modules at data centres and AI companies buy to interconnect their systems. Each new generation of consumer increases speed from 800 gigabits per second today to 1.6 terabits next year and eventually 3.2 terabit.
00:06:33 Speaker 1
Historically, these transfers were built using discrete components such as the laser, the modulator, the receiver and multiple electronic circuits.
00:06:45 Speaker 1
This was the original plan for life, with logic to supply such components or devices.
00:06:53 Speaker 1
Either packaged or as a simple chip or thick.
00:06:58 Speaker 1
Who I've last year.
00:07:01 Speaker 1
It became clear to us in our discussion with target customers that the new architecture had to be much more tightly integrated and at the time of discrete components had passed.
00:07:14 Speaker 1
All customers who want upgraded chips that can be easily integrated together, Co packaged with electronics and preferably using a silicon photonics platform to reduce size, power and cost while benefiting from the major investment made by the semiconductor industry over the last 40 years.
00:07:36 Speaker 1
The good old model of silicon transceivers using separate discrete modulators did not scale and had to quickly adapt to deal with the 10s of millions of units required by the AI and data center market.
00:07:51 Speaker 1
Multiple major semiconductor and optical players decided to invest in designing and manufacturing.
00:07:58 Speaker 1
Next generation photonic integrated circuits or pix, combining on the same chip.
00:08:06 Speaker 1
The most advanced functions, including the laser, the modulator and the receiver.
00:08:13 Speaker 1
This train was started by Intel, but now includes dozens of companies in North America, Europe, Israel and Asia.
00:08:22 Speaker 1
At what I'd like with logic, we changed our plan and decided to refocus our efforts at delivering our unique polymer materials to these companies. Developing such integrated silicon photonic chips.
00:08:37 Speaker 1
By adopting this strategy, we significantly reduced our market adoption risk.
00:08:44 Speaker 1
As we can focus on resources and investment on the fundamental differentiator for lightwavelogic designing the best chromophores to turn our Electro optic polymer platform in the highest performing modulator.
00:08:58 Speaker 1
We cannot partner with the best in class silicon photonics design houses to incorporate our COMO 4 into their text.
00:09:08 Speaker 1
The silicon photonics pics today are reaching their performance limits and are struggling to handle the scale up of high speed optical interconnects.
00:09:17 Speaker 1
We will work with big designers to integrate Eopolymers into their platform, helping them unlock the gate to higher speeds and lower power consumption.
00:09:29 Speaker 1
We also collaborate with foundries to ensure our materials can be processed at scale.
00:09:36 Speaker 1
Our public partnership with AMF is an example of this, demonstrating that polymers can now be integrated into CMOS fabs with relative ease.
00:09:47 Speaker 1
I am confident that this adjustment in strategy will allow us to move faster and allow us to get our materials in the hands of more and more potential partners to help accelerate commercialization.
00:10:00 Speaker 1
The shift in positioning aligns us with where we create the most value.
00:10:05 Speaker 1
Successful mataloes companies like DuPont with Teflon or Corning with Gorilla Glass focus on supplying the foundational technology for industry wide transformation.
00:10:19 Speaker 1
As discussed earlier, even by operating at the materials level, the serviceable market remains very large and time to market is most critical to deliver value to our shareholders.
00:10:32 Speaker 1
We also believe that our inherent cost structure and manufacturing yields will be superior to competitive solutions, allowing us to enjoy above industry average gross margin in high volume production.
00:10:47 Speaker 1
Geopolymers are at the heart of the next revolution in AI networking. By positioning ourselves as the materials leader, we will be able to maximize our impact and accelerate industry adoption.
00:11:02 Speaker 1
The fundamental butternut, when dealing with the challenge of scaling, is the reliance on legacy solutions and materials that are incompatible with higher signalling rates.
00:11:13 Speaker 1
Additional modulators materials like silicon Indium phosphide and lithium diode are hitting performance limits.
00:11:22 Speaker 1
This has force companies to use complex electronics like Dsp's to compensate for these limitations, adding power consumption and cost.
00:11:33 Speaker 1
The challenge we see confronted is that it relies on external materials for critical functions. Lasers using their outside receivers use germanium and modulators are struggling to scale beyond 100 gigabits per second per lane.
00:11:46 Speaker 1
The industry needs better material for modulators.
00:11:51 Speaker 1
That enabled 200G400G and eventually one terabit per second per lane without excessive power consumption.
00:12:00 Speaker 1
The window for a new material is wide open and the industry consensus is that the future is likely to be based on a combination of silicon and hybrid materials delivering the best performance at the right cost and low power.
00:12:16 Speaker 1
Silicon organic hybrid platforms are being designed to incorporate materials such as Geo polymers diabetes.
00:12:25 Speaker 1
The fundamental Electro optic characteristics of eopolymer and ease of integration into CMOS foundries give us an edge against alternative technologies.
00:12:36 Speaker 1
Buggy are costly and harder to integrate in silicon when compared to polymer.
00:12:42 Speaker 1
Polymers have inherent advantages over platforms based on crystalline materials.
00:12:49 Speaker 1
And can deliver better electropics response as demonstrated by our partnership with Polariton Technologies.
00:12:55
Set a different set of.
00:12:59 Speaker 1
As an example of our new strategy and proof of our unique value to customers, I'd like to take a moment to discuss our recent announcement with Polarisant.
00:13:09 Speaker 1
Earlier this week, we announced an important expansion of our business and technical partnership to accelerate the introduction of 400 GB per second per lane and beyond. For AI and data center optical links.
00:13:24 Speaker 1
As many of you will know, we first announced our partnership with Polaris on Technologies last year to demonstrate a package device with over 110 gigahertz super high bandwidth Electro optic polymer modulators, also using polaritons plasmonic modulator device that contained our chromophore's manufact.
00:13:45 Speaker 1
Colonial.
00:13:47 Speaker 1
Since then, both companies realize the need to bring forward disruptive solution.
00:13:51 Speaker 1
And that time was of the essence.
00:13:54 Speaker 1
Together, we are moving beyond the material licensing and prototype building phase to the joint development of business partnerships and leading products.
00:14:04 Speaker 1
The unique combination of lightwave logics, high performance electronic polymer materials with polaritons plasmonic circuits.
00:14:12 Speaker 1
Will address the inherent bandwidth and form factor bottlenecks of traditional materials.
00:14:20 Speaker 1
Let me just discuss including medium phosphide silicon and thin film medium Dyer made in order to accommodate high bandwidth.
00:14:29 Speaker 1
The ability to modulate the optical signal at forward gigabits per second and beyond is critical to achieve bandwidth of 3.2 terabits per second and 6.4 terabits per second in the future.
00:14:43 Speaker 1
Florida, in partnership with ETH Zurich, just published a fascinating paper showcasing state-of-the-art plasmonic modulators that achieve an Electro optic bandwidth extending into the tier range.
00:15:01 Speaker 1
Only through the combination of revolutionary materials such as chromophore and polariton splashing structures can such results be achieved.
00:15:11 Speaker 1
For item has developed open products with like wave logic, electropic polymers that are available for sampling with select customers.
00:15:20 Speaker 1
We are excited about this partnership and look at it as an excellent example of how future customer relationship and how we intend to supply our materials into the AI ecosystem.
00:15:36 Speaker 1
The major worldwide optical conference OSC will coincide with my first 100 days on the job and I'm happy to report that we have already lined up many of the major potential customers for technical and commercial meetings at the show.
00:15:54 Speaker 1
As you realize, although the end users of our material remain the same.
00:16:00 Speaker 1
On you go to market strategy requires us to engage with a different set of direct customers.
00:16:08 Speaker 1
Since my first day on the job, I have immediately approached new potential customers.
00:16:12 Speaker 1
We don't miss a beat in our commercial progress.
00:16:16 Speaker 1
Customer response has been overwhelmingly positive.
00:16:20 Speaker 1
But we need to move fast. Every morning our team starts the day with one primary goal in mind. Get our polymer deployed in real life optical links as soon as possible.
00:16:33 Speaker 1
Step one is to convince customers that our ear polymers are indeed superior to alternative technologies.
00:16:41 Speaker 1
Most of our customers have our physics experts already convinced about the technology potential.
00:16:48 Speaker 1
However, they want to make sure that our materials will sustain performance over time.
00:16:53 Speaker 1
And through challenging operating conditions, as a result, we continue to work on and expand our reliability and material qualification activities.
00:17:04 Speaker 1
Step 2 is to explain and educate customers.
00:17:08 Speaker 1
About how to use.
00:17:10 Speaker 1
Jonathan.
00:17:11 Speaker 1
And you think right that into silicon photonics chips and foundry, this requires us to supply or process development kits or PDK as well as technical and application support during the peak design and validation phase.
00:17:28 Speaker 1
Once the product design is complete, Step 3 is to work with the customer to test and qualify the final product. During that step, we also validate that the chosen silicon foundry partner is capable and ready to build the final product.
00:17:45 Speaker 1
Finally, Step 4 will consist of ramping and production and yield to reach high volume manufacturing.
00:17:54 Speaker 1
The form and timing of commercial contracts and agreements vary greatly by customers.
00:18:00 Speaker 1
But they are typically formalized during the first 2 steps.
00:18:04 Speaker 1
The complete cycle from initial customer engagement to volume production.
00:18:10 Speaker 1
Varies by customer.
00:18:11 Speaker 1
But a good approximation is 18 to 24 months.
00:18:16 Speaker 1
Depending on the complexity of the program.
00:18:19 Speaker 1
Our focus is on driving all necessary technical and manufacturing activities to be selected by customers for their new pick designs in 2025 and 2026, targeting volume ramp in 2027.
00:18:34 Speaker 1
2028.
00:18:38 Speaker 1
Looking ahead, we plan to remain active with our upcoming participation in both investor and industry events. Next week, we will attend the Roth Investor Conference on March 17 and 18 in Southern California, where Tom and Jim will conduct one-on-one meetings with investors.
00:18:57 Speaker 1
Later this month, we will be attending RFC 2025 in San Francisco from March 30th to April 3rd.
00:19:05 Speaker 1
We're also targeting events in the second quarter, which we will update our investor zom as appropriate.
00:19:10 Speaker 1
Yeah.
00:19:11 Speaker 1
With that, I would like to turn the call back over to Ryan to moderate our question and answer session.
00:19:19 Speaker 2
Thank you, eve. When we announced this call, we invited investors to submit their questions ahead of time.
00:19:25 Speaker 2
We'd like to thank those of you.
00:19:26 Speaker 2
Took the time to do so.
00:19:28 Speaker 2
We have a number of individual questions received was more than we could adequately address in this format.
00:19:33 Speaker 2
We've attempted to address as many as possible in our remarks already.
00:19:37 Speaker 2
And selected the ones most frequently asked for the purposes of this discussion.
00:19:41 Speaker 2
Our first question is how many active negotiations are underway with tier one or tier two partners?
00:19:47 Speaker 2
What are the current stages of those discussions?
00:19:49 Speaker 2
Questions.
00:19:53 Speaker 1
As I said in my previous remarks, with our refocus on materials, we are not just pursuing a new set of customers, primarily silicon photonics design houses.
00:20:04 Speaker 1
They are more than 30 such companies in the world.
00:20:08 Speaker 1
From multi billion dollar semiconductor and optics players to innovative and product.
00:20:16 Speaker 1
So they.
00:20:16 Speaker 1
My primary focus in terms of commercial engagement.
00:20:20 Speaker 1
In addition, although we might not be direct suppliers to end users such as consumer manufacturers, AI companies or hyper scalers meeting with these companies remain critical to.
00:20:31 Speaker 1
Us, as they are the ones driving the industry world map.
00:20:35 Speaker 1
So our progress varies by customer from technology evolution to evaluation to product design.
00:20:42 Speaker 1
With the vast majority in the steps one and two of the commercial process that described earlier in my remarks.
00:20:52 Speaker 1
In my first quarter with the company, I had productive meetings with executives of more than 20 companies in the ecosystem.
00:21:01 Speaker 1
I was really happy to see the renewed interest in polymers for next generation design.
00:21:07 Speaker 1
This is what I was hoping for when I took on manual and I left this.
00:21:11 Speaker 1
Feeling that you have a testing in your hands, but also with the pressure of both time and the cases.
00:21:21 Speaker 1
Spike. Hello. The long gestation period to get the materials ready.
00:21:24 Speaker 1
Are still so many believers in polymers in the industry.
00:21:29 Speaker 1
And on this.
00:21:29 Speaker 3
Yeah, the calls are now.
00:21:30 Speaker 1
Our job at Lightwavelogic is now to turn the city material into products.
00:21:32 Speaker 3
I thought you.
00:21:33 Speaker 3
I thought you said you were going to be on it.
00:21:35
Motion.
00:21:38 Speaker 2
Our second question is the material. What further tests or validation are commercial deals possible for?
00:21:40 Speaker 3
Go to their website and go to.
00:21:44 Speaker 3
Go to news and then go. Then it shows the events.
00:21:46 Speaker 2
Testing is completed.
00:21:51 Speaker 1
But first time I'm a strong believer in the philosophy of continuous.
00:21:56 Speaker 1
You know what the Japanese call Kaizen, you know? And we will never stop trying to improve all the key aspects of the material specifications to power, to size, to reliability.
00:22:06 Speaker 3
No.
00:22:08 Speaker 1
But to answer your question, yes, we believe our raw material is ready.
00:22:13 Speaker 1
However, critical task remains to make sure that the Como 4 deliver the expected performance and reliability when integrated into the customer pick.
00:22:23 Speaker 1
This is where most of the work will happen over the next year, in partnership with customers and with our fab.
00:22:32 Speaker 2
Our next question why is there so little discussion about polymers in the industry?
00:22:37 Speaker 3
Go to news and events calendar.
00:22:37 Speaker 2
Is this silence concerning and what does it say about acceptance and market potential?
00:22:44 Speaker 1
Well, I'm afraid I would have to.
00:22:47 Speaker 3
You see news.
00:22:48 Speaker 1
Disagree with the statement.
00:22:49 Speaker 1
You know, I've been talking to some of the most famous and respected industry experts in the old monitor. All progress.
00:22:58 Speaker 3
No get to the website where it says news.
00:22:59 Speaker 1
Back then, why that said?
00:23:01 Speaker 1
There you are.
00:23:02 Speaker 1
On.
00:23:06 Speaker 2
Plasmonics appears to be an excellent solution to have more speed, but may be very difficult to scale.
00:23:06 Speaker 3
No.
00:23:08 Speaker 3
Not yet.
00:23:12 Speaker 2
This problem solved and what scalability issues impair the company's ability to meet expected market demand.
00:23:18 Speaker 3
James, go to the website.
00:23:19 Speaker 3
Got.
00:23:21 Speaker 3
Do you see something that says news?
00:23:23 Speaker 1
Makeup technologies plasmonics requires some changes in design and process just to you know, traditional established solution.
00:23:27 Speaker 3
Nothing look for straight in your face.
00:23:33 Speaker 1
But the reason why people are excited about it, especially at 400 gigabits per second per lane and beyond, is that when you reach this range of systems can absorb the bandwidth challenge only with.
00:23:42 Speaker 3
Are you in their website?
00:23:44 Speaker 3
It's the top line.
00:23:47 Speaker 3
Says about leadership technology news.
00:23:49 Speaker 1
You.
00:23:49 Speaker 1
So need to have the high speed RF and electronics to be able to catch up with optics.
00:23:58 Speaker 1
For many years, been the other way around.
00:24:00 Speaker 1
Optics trying to capture these electronics classmates is exciting in that regard and and customers are willing to take chances, chances to break the 400 gigabits per second for lane barrier.
00:24:01 Speaker 3
You see news.
00:24:12 Speaker 3
Where the hell are you?
00:24:14 Speaker 2
And our last question, do the inherent molecular advantages that enable polymer modulators to be faster, cheaper use, less power and package more compared to alternative technologies to come there for an ounce of data center speeds move from 800 gigabits per second to 1.6 to 3:00?
00:24:24 Speaker 3
News. That's it says event calendar.
00:24:28 Speaker 3
On that.
00:24:33 Speaker 2
2 terabits.
00:24:34 Speaker 3
Then just go underneath the calendar.
00:24:37 Speaker 3
Future events.
00:24:37 Speaker 1
Yeah. Thanks for the question.
00:24:39 Speaker 1
The the higher the modulation bandwidth, the more polymer shine.
00:24:46 Speaker 1
I need the beauty of using oral as opposed to crystalline structure like the shape diabetes silicone or silicon nitride.
00:24:50 Speaker 3
Above that.
00:24:52 Speaker 3
Future events.
00:24:57 Speaker 1
Or material inherently responds better and faster when an electric field is applied to it.
00:24:59 Speaker 3
Yes, click on that.
00:25:04 Speaker 1
The speed at which we can change the refractive index to turn on and off the light is much faster than other materials.
00:25:12 Speaker 3
It says webcast click on the webcast.
00:25:13 Speaker 2
Thank you. With that, I'll.
00:25:14 Speaker 2
The call back over to EVE for.
00:25:16 Speaker 2
Closing remarks.
00:25:17 Speaker 3
It's over.
00:25:19 Speaker 1
We are fortunate that language logic to have dedicated, supportive and passionate shareholders and we are looking forward to meeting some of you live or virtually at our next annual shareholder meeting in May. Thanks to all of you for your refreshions and inspiration.
00:25:28 Speaker 3
Benefit and coat the cost now over.
00:25:33 Speaker 3
Well, I was trying, but I had.
00:25:35 Speaker 3
In the other ear.
00:25:38
Thank you.
00:25:39
This does conclude today's teleconference.
00:25:40 Speaker 3
There'll be a replay.
00:25:41 Speaker 1
We thank you for your participation.
00:25:43 Speaker 1
You may now disconnect your lines at this.
00:25:47
That is best.
00:25:49 Speaker 3
There'll be a.
00:25:49 Speaker 3
I don't how soon it'll be up, but I imagine not too.
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