POET Technologies Inc.(CVE:PTK) Hire Points Way to Global Foundries, AMD Micro Devices,Taiwan Semiconductor

Midas Letter
Midas Letter
POET Technologies Inc.(CVE:PTK) Hire Points Way to Global Foundries, AMD Micro Devices,Taiwan Semiconductor
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POET Technologies Inc. (TSX.V:PTK) recruitment of Ajit Manocha, former head of Global Foundries, itself a spin-out from AMD Micro Devices (NYSE:AMD) is highly indicative of the value contained in POET.

For such an industry heavyweight to joint the Board of Directors in and executive capacity speaks volumes as to how the company’s opto-planar technology platform is being perceived by the integrated microchip industry. To suggest that POET’s incremental rise into the ranks of truly disruptive technologies is not hubris, given that the platform’s promise of clock speed increases up to 100X, and with power savings up to 90X, and (my favourite part) at substantially reduced cost to manufacture.

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Listen to the interview with POET Interim CEO Peter Copetti:

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So if it’s such a hot commodity, why is the company only worth $300 million at the point? I’m glad you asked. We are not talking just microchips here. We are talking about “planar opto-electronic technology (“POET”) platform for monolithic fabrication of integrated circuit devices containing both electronic and optical elements on a single semiconductor wafer”. Do you know what that means? I don’t know what that means.

I mean, I know what it implies, but if were to have to explain the scientific intricacies of the implication, I would be thus revealed a layperson at best when it comes to the arcane esoteric language of electronic chip architecture.

And that’s where the problem lies for I would say about 98 percent of investors. How can one evaluate a technology one lacks the technical depth to understand? Like the other 98 percent, I too must rely on how the industry responds to POET Technologies to arrive at any conclusion as to investment-worthiness.

But that’s exactly why it is so significant, from an investment perspective, that a guy like Ajit Manocha should see fit to tie his fortunes (at least in part – he does sit on the boards of several other companies).

“POET promises tremendous potential to the semiconductor industry as a next-generation technology,” he said “I am looking forward to being part of the POET Team and especially working directly with Mr. Copetti on building shareholder value.”

Value Proposition for Consumers

So while we aren’t necessarily that well equipped to comprehend the minutiae of the technical marvels in gallium arsenide (instead of silcon-based) chips, you don’t need to be a rocket scientist to understand the upside for consumers.

Imagine a cell phone that you only charge once a week instead of once per day. Imagine starting your computer and it opens exactly to where you left off with multiple windows open – instantly, and with the delay measured in nanoseconds instead of seconds. These are just the tip of the iceberg when it comes to the benefits that consumers will realize when these chips start showing up in all of our handheld devices and desktop workstations. Some of the biggest advances in such chip power enhancements will be in visual graphics.

But the real immediate term benefit is in the power savings.

According to a new report from the International Energy Agency (IEA), inefficient technology is to blame for about $80 billion being wasted worldwide in 2013 on powering networked, online electronic devices such as set-top boxes, printers, and game consoles. These devices consumed a total of about 616 TWh, of which about 400 TWh is claimed to have been wasted due to using more power than needed to maintain a connection and communicate with the network. According to the report, the use of today’s best available technologies — such as those used in mobile devices — could reduce that power consumption by 65%.

With up to a 90X savings in power, POET Technologies’ platform will mitigate that waste the more it penetrates personal devices.

Ajit Manocha – Global Foundries CEO and Scientist

Manocha was previously CEO of Global Foundries, the former AMD Micro Devices unit, where he oversaw the company’s evolution from a single product, single customer manufacturer, to a multi-product, multi-customer success story. He managed, during his tenure, to convince AMD to sell their remaining stake in Global Foundries after the spinout because Manocha felt that new customers for Global Foundries (who were competitors to AMD) would not be comfortable with an AMD board member on Global Foundries’ board.

According to Wall Street Journal’s CEO Council website, “Earlier Manocha was executive vice president and chief manufacturing officer at NXP Semiconductors NV(NASDAQ:NXPI) (formerly Philips Semiconductors). Manocha has also worked at AT&T Microelectronics and AT&T Bell Laboratories.

Manocha began his career as a research scientist and was granted over a dozen U.S. and international patents for several inventions in the field of technology for microelectronics, including one for anisotropic etching, a process for treating very-large-scale, patterned integration lithographic masks to retain their shape during processing of VLSI wafers.”

Major Catalyst: Third Party Licensing Deals

It is not exactly subtle that POET Technologies announces a former top 5 chip foundry CEO to its board in an executive capacity one day, and then announces the fact that POET’s “100-nm scaling and prototype initiatives have successfully achieved a culmination point where transition to a third-party foundry is now being negotiated.” the next day. If you’re not reading between the lines here, wait! there’s more.

Interim CEO Peter Copetti has been jetting around the planet relentlessly over the last year, with trips including one to Taiwan (hmmmm…not the Taiwan where Taiwan Semiconductor(NYSE:TSM) lives?!). Now with former Global Foundries chief executive aboard with a mandate to actively strategize joint ventures, partnerships, and most importantly for the company’s bottom line, those third party licensing deals to chip foundries, the momentum of POET technologies is about to officially resume.

There are obviously risks associated with investing in something you don’t fully understand, as Warren Buffet says. But then, as Peter Jahn, a renowned Canadian investor used to say, “What don’t you get, the stock is up over 500 per cent in less than a year!”

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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