If you are a small company how do you make a brand new technology attractive to huge technology companies that manufacture and consume computer chips in order to move large amounts of data faster? Let's look at how LWLG is doing it.
First, you must concentrate on what you can control. You have to make your technology work, but not just work, but work better than anything else out there. Problems inherent in doing so must be solved. The company has solved many problems associated with polymers ie 1)continually improving perkinamine structures to operate faster with lower power consumption.
2) finding the most desirable way to incorporate polymers into photonic chips using foundry partners and doing so with high volume manufacturing. The polymer slot method had the most advantages allowing for faster, lower power and especially much smaller chip sizes which would attractive to the industry for variability of design purposes
3)solve the issue of reliable poling but doing so as part of high volume manufacturing. Done
4)making the polymer based photonic chips very stable with very low optical loss and debunking the long held belief that polymers were not stable enough for use. Discovering how to use low temp atomic layer deposition to hermetically seal photonic chips in the manufacturing phase to improve these characteristics. Done
5)improve testing of speed in transmission collaborating with testing device companies to produce devices that can measure faster speeds to show the industry how fast you can go
6)to be truly competitive you must be cost effective with a lower price of modulators than current incumbent or other new technologies by getting rid of the costly driver chip. In addition, using ALD to hermetically seal the pic, gold box packaging is no longer needed and using gold is quite costly. So ALD not only makes the pic more stable but gets rid of costly gold box packaging. Wait, with LWLG being faster and allowing 200G X 4 per lane pics, 800G is possible while incumbent technology would use 8 lane, or twice as many modulators for 800 G transceivers driving up the cost greatly. Done
7)Test every step of the way to prove consistency of specifications culminating to testing modulators from high volume manufacturing for long term durability and consistency in samples coming from manufacturing before sending samples to customers. Ongoing
8)update foundry PDKs on the expected 200mm foundry equipment as needed to meet pics with desired characteristics customers prefer. Samples coming off 200mm foundry equipment means the PDK for that foundry is operational
9)demonstrate third party use of polymers in functioning and stable devices especially for next generation speeds to show upgrades are possible. Done
10)continue to demonstrate technological progress with conferences that target both industry participants and possible future investors so that polymers in chip production becomes more accepted. Highlighting polymers ease of integration in most of the current 200mm foundry equipment as well as future uses beyond datacom and telecom. Comparing your superior specifications against competitive technologies regarding faster transmission speed, lower power usage, smaller modulator footprint, high temperature stability and high photo stability with low optical loss and potential for lower cost.
11)Building out adequate lab space to manufacture polymers and test them and to test new designs. Hire employees for filling technological and financial roles as needed. Employee count has increased significantly over the past year
12)Manage finances by planning for future spending into a lengthy 18 month period and maintaining a debt free balance sheet. The updated business plan since 2021 has been using a capitalization light method of manufacturing chips using foundries current equipment in partnering. Done
13) Have some proof of ability to offer next generation polymers when upgrades to faster transceivers are needed. LWLG has offered some proof of this with their newest perkinamine offering.
14)attentive customer engagement through the processes of development and and to the point of negotiations while maintaining certain business and technological progress confidential for competitive reasons.
LWLG has made great progress in all of these areas to be at the point of current contract negotiations with a proven superior technology to incumbent technologies and interest from Tier ones
These are many of the accomplishments over the past few years. The remaining open question is when the 200G X4 array modulator chip for 800G is available as it is the preferred chip package for transceiver makers for 800G. It is possible for there to be interim sales if transceiver manufactures choose to use 4 modulators (not in a one chip array) in transceivers using traditional packaging techniques. LWLG has been working with transceiver partners for a long time but we don't know if there is interest for this so it is an uncertainty for the market to deal .with. It could happen nonetheless
The things that are NOT under company control ie
THE POSITIVE1) artificial intelligence has accelerated the need for faster modulation to allow the huge amount of data needed to be transmitted so much so that 800G transceivers are being requested by customers sooner than expected
2)After looking at comparisons with other technologies, more customer interest and engagement has occurred
3)Management has said there are several deals at advanced levels of negotiation but it has been taken a lot of time due to partner and customer expectations that the company is trying work through with them
4) Increasing financial, political and public opinion pressure is on data centers due to rapidly increasing use of power to run data centers as data requirements grow and the electric grid has started to reach its limits in certain areas of high consumption. This goes hand in hand with concerns over Climate Change.
5)The cost of cooling data centers as they run more servers close together is rising leading to concerns regarding the cost of cooling using power to run cooling systems and the huge water waste from water being used in cooling systems. The implications on climate change is being discussed more and more
6)There are concerns regarding too many data centers as building them is rapidly increasing and there is not enough physical space to build more in some areas. So existing data centers will have to become as efficient as possible using upgraded equipment
7) Competitive new technologies so far are not showing as good a set of required specifications as LWLG has demonstrated.
The things that are NOT under the company's control ie
THE NEGATIVE1) The timing of signed contracts as the company is very motivated however the customer will have the final say as to when based on factors like timing of readiness to deploy, satisfaction regarding enough production runs and testing has been done to prove consistency and trying to get favorable terms and language in the contract
2)NDAs while protecting the viability of technology success and customer interests the secrecy allows for the spread of misinformation in the slowness of completing contracts
3)How quickly will the technology be taken up after deals are signed as ramping new technology can be slow and cautious or faster based on customer confidence and need of the customer
4)Stock market conditions at present with high interest rates that do not favor small companies putting pressure on share price
5)Investor sentiment due to the lengthy time needed to have developed and proven the technology with some exhaustion waiting for some retail investors
6) The extremely high short count approaching 18-19%. This has led to using techniques such as high volume trading of small amounts of shares to move the price lower and triggering stop losses or sales from shareholders not as committed to holding in the current environment as well as shorting more to pressure the stock price lower and covering when a lower price is met
7)Perhaps varying signals of readiness from partners or customers to sign agreements leading to alteration in the narrative the company may give publicly resulting in building negative sentiment about competency
8)The spread of misinformation that is easy to do as the company remains limited by the slowness of developing and bringing out new technology and the NDAs that limit certain disclosures.
Despite all of the success the company has had integrating very useful polymers into high volume manufacturing in multiple foundries and building out their ability to meet large orders, misinformation is still spread about the truthfulness of company information and viability financially of the company
9) Over the past few years there has been more volatility in small cap stocks leading up to and during the Russell Reconstitution periods. This likely has been fueled by the high interest rate environment handing small cap stocks, especially non revenue ones, more volatility in share prices that in general recover after the Russell Rebalancing is finished.
10)There is a lack of knowledge about what the company has as a technological solution for transporting data through the internet. The technology is hard to understand unless you take the time to learn. There are no analysts covering the company formally which hampers wider awareness. This won't happen until there are revenue projections from management or a large contract with a Tier one company for modulators.
These factors around what the company has accomplished over the past few years and their being close to real news on commercialization does not offer a good justification for the current share price. Current uncertainties are keeping the price down along with misinformation spread in various venues. The uncertainty of timing with the 4X200g array modulator chip has led to some doubt about how long it will take which does not help the current share price. The company has said it will be available in 2024 which is open to interpretation. based on one's knowledge and sentiment. The company has no control over the share price except by actually making meaningful deals. The closer that time comes the more volatility we may see as shorts and traders try to effect a lower share price that as we see, does not reflect current finances or readiness to commercialize. Short sellers have a large problem to face with a very, very long "days to cover" problem that will make covering when real news comes quite difficult.
I believe the company will meet goals as they have continued to make technological progress even as some people doubt their ability to do so..
