An investor's report from 9/20/01 Open House
"finnegan23" (RB alias) posted this report right after last week's Open House in Germany:
"Open House report, Part 1:
FOA: As I mentioned, there was a lot of talk. Not only because of my credibility in the eyes of all people I have talked to, I will not quote everything I heard.
As usual, there are
different categories of information:
- Info one can quote and name the person who gave it,
- Info one can quote but can not name the source,
- Info you can only indicate and finally
- Info you have to keep under hat.
I will respect this because under no circumstances I want to endanger my own investment
and / or the future of the company. But be assured there is still enough that can be said.
I will NOT be too detailed when talking about the lectures. They were excellent and
interesting but I am sure you will prefer to hear about the "why", "who" and "when". It
definitely was a good idea to give an overview of Flip Chip technology because many
potential investors attended but I am sure all RB attendants have known the content
before the OH *smile* (btw: A few months ago I would never have imagined to understand anything of this mumbo-jumbo...).
Open House report, Part 2:
From Dr. Wernle's introduction:
He mentioned a few things we (on RB) already knew. So I keep this short and quote only
the things which were new to me:
- The cleanroom will be put in operation within one or two weeks.
- He is very happy about the progress the company made and that it is time to reap the
fruits of their work NOW (!). "We have a product now and we can start selling it. And we
have a machine for NCS now."
- He is well aware of the fact investors are waiting for customers. "There was the
technology, then a man with a vision, then the team, then we had to find the markets and
building our network of partners. The Nanopierce house is almost complete, just the roof,
the customers are not there yet. But we will put the roof on it and move in very soon, this
is for sure."
- The market for NCS is growing every day. One new technology is the fingerprint
identification system from Infineon (again *smile*). "They have already developed it. It
has to be connected somehow, too."
- The "waferpiercing service" will be available to customers at the beginning of 2002 (Dr.
Wernle prefers the term "waferpiercing service" rather than "production", but I think we all know what is meant).
Stay tuned, part 3 to follow.
Open House report, part 3
Mr. Völler / Fraunhofer Institute.
Mr. Völler spoke about Flip Chip technology in general, so I won't quote him that much,
but he mentioned some interesting points:
"Flip Chip technology is not a choice, but a necessity for size and weight reasons. "
"Wirebonding will be a thing of the past very soon and our partner Nanopierce's
technology will contribute to that."
"The shorter the wires are the higher are the frequencies you can achieve. Todays chips
with frequencies of a GHz and above would be impossible to manufacture without Flip
Chip technology. A technology which eliminates todays disadvantages in FlipChipping is
very much needed. NCS is such a technology."
Mr. Tiedmann (Schreiner Etiketten)
This was fascinating! The overall impression: This market yet has to be created but it will
be HUGE. Desperately needed are technologies like NCS which can reduce the
manufacturing costs. Today's manufacturing costs for SmartLabels are somewhere
around $0.80 to $1.00. While this is extremely high, they are already in use for high
priced products like fashionable clothes etc. I will quote a few ideas of Schreiner
Etiketten later in detail. I was amazed - I knew this thing will be big but I have not been
aware in how many fields you can use SmartLabels.
Nanopierce will produce the inlays for the SmartLabels and Schreiner Etiketten will use
them for their labels.
I talked to Mr. Tiedmann later and learned the following:
As always, manufacturing costs will decrease along with the increase of the number of
Labels produced.
NOT a problem to find a market. Delta Airlines alone has use for 7.5 million baggage
checkings per month. While a barcode label only costs $0.01 to $0.02 and a SmartLabel
is much more expensive, they will use it because it reduces the time you need to check
the baggage, the number of errors and will dramatically improve the security level.
Asked at which price Airlines will consider using SmartLabels, he said "15 cents is for
sure a price which would make them potential customers." NCS technology can push the
price way down below 15 cents (I asked twice, he confirmed twice).
The same is true for companies like FedEx and UPS. They are in need of 5 million labels
PER DAY. So, Mr. Tiedmann said, "the only problem is there are not enough chips and
machines in the whole world yet to produce all these labels" (well, I could live with that...)
part 4 to follow (the best is yet to come).
Open House report, part 4:
Ok, Mr. Pajonk / Simotech:
Simotech is still a very young company, but, geez, these guys are SMART! This
ModulAS-RFID seems to be (as far as I can tell... It’s been a while since I built my last
SmartCard manufacturing machine *lol*) superior to all the competitor’s equipment. It can produce almost anything with a chip in or on it. Dr. Wernle
later on told me he was
extremely impressed when he saw for the first time how flexible this thing is. (As to the
question on this board: yes, I think it will replace any older equipment / concepts).
Well, the bottom line is:
Mr. Pajonk publicly stated that NCS is an unbelievably simple process. "Nanopierce
made a very circumstantial thing very simple."
Which is good for Nanopierce but not that good for Simotech. A LOT of equipment has
been necessary for this card production before. For several reasons with NCS one needs
just and only this ModulAS. This saves a lot of space and, as you may imagine, even
more money...
Somebody later told me that this machine will cost about 750.000 German Marks
($340.000 approx.). Without NCS you have to buy equipment which would cost you 1.5
million Marks. Any questions? *smile* And this is just the equipment – as we know, NCS also makes production more simple and less expensive...
Company officials did not comment on it, but I learned that Simotech has already sold at
least 4 of this machines, maybe more. 2 may have been bought by big companies
(please, figure it out yourself... And DON’T call every CEO you may find in your area...
This is a no-no! *grin*).
Nanopierce is not listed on Simotech’s website yet, but it is mentioned in the handout we
received at the OH (and which appears to be the presentation they are giving to potential
customers) as one of three possible connection systems.
Absolutely no one was willing to comment on my speculation that nobody has bought one of this 4 machines without at least the option for NCS now
as the technology is known by the big players. EVERYBODY WAS JUST SMILING WHEN I ASKED... No, they did not smile. It was more like a fat grin.
Dr. Wernle told me that Nanopierce will not pay Simotech and Simotech will not pay
Nanopierce. They consider it to be a win-win-situation. Simotech thinks every big player
will want or need to have the possibility to use NCS within a few months and will have to
buy a Simotech ModulAS. Dr. Wernle thinks of it like "giving away a Gilette razor and
even a free sample blade. After this you just have to wait for your customers to return to
buy more and more blades..."
There are many more (mostly technical) details, but I think I’ll keep that for later.
Part 5 to follow.
Open House report, part 5:
Mr. Sieg, President and CEO of Elcos.
I frankly admit I did not expect this to be the highlight of the day because we haven’t heard too much of the Elcos partnership recently. But then Mr. Sieg
entered the stage. What followed left me mouth and eyes wide open:
This guy is Bavarian but could as well be from the US, he is straightforward to say the
least.
He did nothing less than stating he is just waiting for Nanopierce to deliver. No "if" or
"maybe" or "interesting concept".
I talked to him later and asked him and he said he has some new products he CAN NOT
PRODUCE right now, "because I need Nanopierce for them. There is no other way I could produce them, they are too small for every technology that
exists." And: "I am really waiting for Nanopierce to deliver. It’s not like the SmartLabel market which has still to develop. Believe it or not, I can modify my
die-bonders within 30 minutes and start producing Nanopierce LEDs. I just have to use a different glue, that’s all we have to alter. Every LED
manufacturer in the whole world can do the same."
More beef: "I am absolutely sure there will be a race for NCS once the first big
manufacturer uses it. I have been in Asia recently and had only loose talks over NCS with
a manufacturer. He had not heard of it before but after an hour or so he asked me if we
can sign a CONTRACT (ha! The evil word *smile*). I had to tell him he has to call
Nanopierce, not me..."
Mr. Sieg said: "There are billions and billions of LEDs every year, they are as small as 0.4 x 0.4 millimeters now or even smaller and we are still using
conductive glue – and this is not the appropriate technology for todays LEDs. As long as we have to use conductive glue, we will have problems. If the
glue causes just one closed circuit, we have to throw away 2000 Marks right now. NCS eliminates this problem and it is so simple, just glue,
nanopiercing, that’s all." And: "There is no technology similar to this one. We really need this to increase packaging density any further."
"We at Elcos are ready for mass production. We can start it any moment. All we need are
the chips from Nanopierce, and I need lots of them."
"This is nothing less than a revolution for LED mass production. NCS may save up to 25
or even 30% of the manufacturing costs. This is incredibly much money."
When I told Dr. Wernle that Mr. Sieg is really eagerly awaiting the NCS-chips, he just
smiled and said: "I know. He will get them."
There is one problem with LEDs: You can’t use FlipChip (Mr. Sieg confirmed this). The
reason is simple: You have to get the light out of the LED. If you flip it over, you will have an oven, but not a lamp *smile*. This problem is well known
within the industry and yet unsolved. They would love to get rid of these darned wires, believe me...
So, guess what? From a reliable source I know a small company which has found the
solution for this problem and even already filed a patent on it: LEDs with Flip Chips!!!
I won’t be more specific here or give any technical details because I have been told that
NPCT already is on the radar screen of the competitors and I for sure do NOT want to be
the one to tell them how to do it.
Part 6 to follow.
Open House report, Part 6 (final part for now):
Just a few more prompts (a bit scrambled, sorry, as it comes out of my block):
- Waferpiercing rollout is scheduled for January 2002 but I got the impression it could be a few days earlier, the company appears to be conservative
with the date (JMHO). It will not be next week or next months, for some tests have to be completed. What takes so long is this darned temperature cycle
test (which is a simulation of "aging" of the connections). You can do absolutely nothing to accelerate this, just have to raise the temperature and lower
it again and have to check the connections every 100 hours. After this they will start with a test where a haze of saltwater is sprayed upon the wafer
(don’t know the appropriate English word for "Salznebelsprühtest").
- This is just from hearsay but I learned the test results so far are overwhelming.
- Right now there are two wetbenches in Col. (the big one and a very small one). Nanopierce will buy a third bench any time soon. Dr. Wernle told us
the reason for this is that they want to separate R&D from the production process. You have to make save that you are using exact the same chemical
composition and the same time frame for the waferpiercing process, you have to be very accurate because it is a very short time (because you need
very little nickel for the connections – traditional wafers need hours, Nanopierce just minutes). You can't ensure this while some other staff member is
trying out something new.
- Paul Metzinger stated again there will be no equity financing while the stock price is so low. Paul Metzinger and Dr. Wernle answered a question if
there will be a buyout: They are ruling out this before the stock price is at a level which would make all of us feel very comfortable.
- Dr. Wernle sees no competition from other companies now. They are following all the important publications very closely but are very confident they
are superior to any existing technology.
- No money is needed now, no money will be needed in 2002. They have secured now that they have access to financing if they want or need it. There
are enough people in the background now who will be ready to provide liquidity, that is the reason why Stan Richards and a few others attended the
OH.
- The PR campaign in Germany will start any day soon. It consists of Radio broadcasting and TV broadcasting along with other activities. This should
increase the volume in Frankfurt quite significantly over the next few months. I did not succeed in learning which TV channel will be broadcasting the
NPCT story, but I heard it will be a respected one. There are some activities which are planned for the US markets, too.
- One of the next goals will be to eliminate glue from the Waferpiercing process.
- They are considering "financing segments" for the different products (Waferpiercing, SmartLabels, LEDs) to make sure they have sufficient liquidity for
every product. When asked, company officials clearly ruled out that the reason for this decision was that there might be a break-up of the company into
several divisions.
- The big players are sending many, many test wafers (no one asked them to do so).
- Paul Metzinger told us "We are exchanging technical data with big players now and this is highly sensitive and it is unusual that a big company sends
you its data after they have tested. It shows how close we are. There is only one critical step left now: Pricing information, the most guarded information
in the semiconductor business, this is the next and last step to follow."
- Expect no big revenues in the 10k. It will be out next week. We will see "something" before year’s end, but nothing close to a million. Next year we will
lift off (this was not new but they reassured us).
Two smilies from Dr. Wernle at last:
"Most of the new technologies have been invented by small companies, not by the big players, they just adopted them. Well, there are exceptions: The
C4 FlipChip process is that complicated – it has to be directly from IBM."
"Our patents are safe. Our first patent says "any hard particles on any surface with any metal coating". To be honest, the first time I read this I could not
believe you can successfully file a patent on anything as ambiguous as this. But it’s true."
There are gadzillions more details, but this is the summary I can think of. Maybe Hackertom or voitsi can comment if they agree with the picture I gave.
Best regards
Finnegan"
