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22 November 2021
BluGlass 2021 AGM Exec Chair & President Address
Australian semiconductor developer BluGlass Limited (ASX: BLG) is pleased to present its 2021 Annual General Meeting.
Good morning, everyone.
As it is now 11.00am and a quorum is present, I declare the meeting open.
My name is James Walker, I am the Executive Chair of BluGlass Limited, and I am pleased to welcome you to the 2021 Annual General Meeting of the company.
Virtual Meeting Details
Today's meeting is being held through an online meeting platform powered by Automic. This allows shareholders and proxies to attend the meeting virtually. All attendees can participate in a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes.
To vote at this meeting, you need to have registered your shareholding with Automic. If you haven't already done so, you can follow the instructions on screen to register and log in to enable you to vote at this meeting.
Questions can be submitted at any time. To ask a question press on the Q&A icon. This will open a new screen. At the bottom of that screen there is a section for you to type your question. Please start your question by typing your shareholding SRN or HIN. This will allow the moderator to identify you as a shareholder. If you would like to ask your question verbally, type your SRN or HIN and then type "I'd like to speak". Once you have finished typing, please hit enter on your keyboard to send.
While you can submit questions from now on, I will not address them until the relevant time in the meeting. Kindly start your question with the agenda item number to which it relates.
Your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. Due to time constraints, we may run out of time to answer all your questions.
All questions should be addressed to me as the Chair. I will either deal with the question personally or ask someone who is better placed to respond. We will do our best to answer any relevant question raised.
I ask that you keep your questions short and to the point so that as many Shareholders as possible have a chance to ask a question.
Voting today will be conducted by way of a poll on all items of business. To provide you with enough time to vote, I now declare voting open on all items of business. You can submit your votes at any time. I will give you a warning before I move to close voting.
I trust you'll allow us some latitude if things don't go as smoothly as possible today.
Online with me today we have in Sydney: Stephe Wilks, Non-executive Director and Ian Mann our Chief Technical Officer and Stef Winwood, Head of IR. In the USA we have Vivek Rao and Jean-Michel Pelaprat, Non-executive Directors and Mr James (Jim) Haden President BluGlass. In Perth we have Emmanuel Correia, Company Secretary.
Representatives of our Auditors, Grant Thornton, are also present.
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2021 PROGRESS HIGHLIGHTS
Despite several challenges in FY21, BluGlass achieved several key milestones during the year, as we continue our transition to a profitable product development and manufacturing business.
- We demonstrated the scalability potential of our technology while increasing our epitaxy manufacturing capability, with the manufacture and commissioning of the first commercial-scale RPCVD platform, the BLG-500. Built with global equipment leader AIXTRON SE, the BLG-500 increases our epitaxial manufacturing capacity by almost double, as it is capable of manufacturing up to 42 two-inch wafers and multiple 6-inch wafer production.
- We also demonstrated "active-as-grown" tunnel junction laser diodes with good lasing behaviour in a world first proof of concept. This was both an important technical and commercial validation, demonstrating the opportunity for our RPCVD laser diodes to enable brighter and higher power lasers for use in commercial applications, such as 3D printing and industrial welding.
- During the year we strengthened our leadership and Board industry expertise, appointing renowned laser diode pioneer Jean-Michel Pelaprat as a Non-Executive Director and industry veteran Jim Haden as President. Collectively, they bring six decades' laser diode and photonics expertise to BluGlass. Jean-Michel is the co-founder and Director of US-based laser diode leader Nuburu while Jim has held senior executive and advisory roles at several of the industry's leading players, including nLight, Kyocera SLD and Coherent.
- We also continued our industry-leading innovation; demonstrated by winning a US government funded contract to collaborate with Yale University and DARPA (the US Defense Advanced Research Projects Agency) to develop novel laser diodes. We were also awarded a $250,000 Advanced Manufacturing Growth Centre grant in collaboration with the Australian National University, AKELA Laser and Objective 3D to manufacture smarter and faster plasma sources.
- The Company raised $8.4 million via an oversubscribed Entitlement Offer to existing shareholders and two share Placements to new sophisticated investors.
- And we added to our patent and trademark portfolio with a further 11 patents granted during the year. This brings our internationally granted patent portfolio to 86.
Like many other companies, FY21 was a challenging period for BluGlass. The ongoing COVID-19 pandemic impacted our supply chain and foundry customers, and fabrication, packaging and product reliability issues delayed the launch of our first direct-to-market gallium nitride laser diodes.
Reliability testing of our laser diode prototypes showed packaging flaws and degradation of the optical facet at high power and in continuous wave conditions. Improvements to metalisation of the laser diode prototypes is also required, which is critical as it controls the input of electrical current into the laser and the removal of heat from the device. These technical challenges are in the post-epitaxy production steps, which are currently outsourced to third-party manufacturing suppliers.
We are working with multiple fabrication specialists to address our laser diode reliability issues and currently have two new design iterations progressing through final stages of the manufacturing supply chain. These prototypes are performing in line with commercial specifications for output power and wavelength. Jim will provide more detail on our technical progress and product roadmap shortly.
While any technical setback is disappointing, product reliability is a common challenge in the photonics industry. Laser diode development is incredibly complex, and our reliability challenges have highlighted the need for in- house expertise and knowledge at both a management and Board level. US-based industry veteran Jim Haden has been appointed to lead BluGlass, tasked with solving our reliability challenges, delivering products to market, and transitioning the company from its cutting-edge R&D origins to a sustainable and profitable commercial laser diode manufacturer. Jim brings extensive technical expertise and hands-on experience solving similar technical challenges, ensuring we are well-positioned to resolve our reliability issues and optimise laser diode performance.
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The addition of Dr Arkadi Goulakov as a Senior Laser Scientist and Jean-Michel Pelaprat as a Non-Executive Director further enhances our laser and photonics expertise.
In FY21, BluGlass recorded an operating loss of $6.29 million, up from a loss of $5.99 million in the previous year. The increase reflects higher R&D expenditure as we develop our direct-to-market laser diodes combined with a
45 percent reduction in foundry revenue, due to the global COVID 19 impacts to our customers in Europe and the US.
Increased development costs were partially offset by our higher R&D tax rebate, up 21 percent over the prior year to $3.32 million. This rebate relates to development work conducted in 2020.
Our successful $8.4 million capital raise in July was well-supported by existing shareholders and included two Placements to new sophisticated investors. BluGlass is funded through to our expected first orders with a cash position of $8.1m. This includes our R&D rebate of $3.3 million for development work in 2021, received earlier this month.
In FY21, BluGlass continued to protect and build its intellectual property portfolio, granted 11 further patents in key semiconductor manufacturing jurisdictions. Our IP portfolio now comprises 86 internationally granted patents across eight patent families.
Our patent and trademark portfolio are critical for the business, particularly in protecting our technical breakthroughs, innovative new designs and industry-leading manufacturing techniques. Our RPCVD tunnel junction technology is unique and has already demonstrated the potential to create brighter and better performing laser diodes, which has significant commercial implications for our future.
OUTLOOK TO FY22 & BEYOND
While FY21 was not the year we envisaged, BluGlass has used its technical and commercial setbacks to prepare the business for future growth. We are well on the way to transitioning from our R&D beginnings to a profitable, commercial laser diode manufacturer with next-generation laser products within the 405nm, 420nm and 450nm wavelengths.
We have invested in an internationally experienced laser diode team to lead the development, optimisation, and commercialisation of our gallium nitride laser diodes. Our clear technology roadmap, which Jim will outline shortly, enables us to overcome our reliability challenges, launch our first laser diode products, secure customer orders and generate revenue.
Longer term, our RPCVD tunnel junction laser diodes provide us with a significant market opportunity, offering brighter, more efficient, and better performing blue GaN laser diodes.
On behalf of the Board, I'd like to thank both our loyal and new shareholders for their continued support and patience over the past year. Our direct-to-market laser diode strategy remains the quickest path to ongoing product revenue and the Board is optimistic for the Company's future.
I'd also like to acknowledge the hard work and dedication of the BluGlass team during what has been a particularly challenging year.
I will now hand over to President Jim Haden.
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MARKET OVERVIEW - GLOBAL LASER REVENUE FORECAST (2019-2025)
For those of you who haven't met me, my name is Jim Haden. I am the President of BluGlass Limited, having joined the Company in September this year, and I am pleased to be speaking to you at this year's Annual General Meeting. I'd like to extend my welcome to everyone joining this call.
As James mentioned earlier, I have more than three decades of experience across the laser industry and have worked at several industry leaders in the market: including Spectra Diode Labs, JDS Uniphase, Coherent, nLight, and Kyocera SLD. It's an exciting time both for the industry and for BluGlass. I think the opportunities and outlook ahead are very bright.
We are operating in a large and rapidly growing market. As you can see, in the decade from 2009-2019 the total laser end market nearly tripled in size, gaining close to $10 billion in annual revenues - growing from just over US$5.5 billion to US$15 billion in 2019. This growth is accelerating - forecast to grow another US$10 billion to more than US$25 billion by 2025.
This growth is being driven by the increasing adoption of high-tech devices and applications: from smart phones, laptops, flat screen TVs, medical and bio-tech devices, to electric vehicle and renewable energy battery storage, as well as advanced 3D printing of both plastics and metals; all of which utilise lasers to enable cost effective manufacturing. Industrial materials processing, which spans automotive, aviation and others, is also driving significant growth.
MARKET OVERVIEW - GLOBAL LASER REVENUE FORECAST BY SEGMENT (2019-2025)
Looking at the total laser end market by application; you can see here that the combined industrial and photolithography segment is a very large piece of this pie with a total representation of 42%. The industrial portion of this accounts for a full third of the total market alone, being worth more than $5B in 2019. Photolithography applications add a further $1.3B in value. These two markets are being driven by global megatrends - increasing adoption of connected technology, electronics and other high-tech manufacturing which are driving micro and macro materials processing demand.
Industrial applications are a key focus for BluGlass, as we believe that GaN technology will gain significant traction in this market due to the significant performance advantages of visible laser diodes, in particular blue, for these applications. We will also focus on the scientific and medical industries, and opportunities in defence, again where there are clear technology benefits for high performance visible laser diodes.
While telecommunications account for a large share of the market, it's not an area we're targeting with our GaN laser diode offerings.
MARKET OVERVIEW - GLOBAL GaN LASER REVENUE FORECAST BY SEGMENT (2019-2025)
GaN laser diodes are fairly new to the laser industry. While growing from a much smaller base than the enormous total laser markets, we believe that due to the demonstrated technology benefits of visible lasers, the GaN market segment will continue to grow its market share as higher power, higher brightness and more efficient products enable new applications and take infrared (IR) laser market share.
To give you some context of why this is occurring; copper, an important metal used across the electronics sector, absorbs on the order of 50% of incident blue light compared to only 2-5% of infrared light, making powerful blue lasers a superior choice in much of the materials processing sector. Back in 2008, the output powers of blue diodes were limited to around 60 mW, with an efficiency of only 15%. By 2017 these figures had leapt to 3.5 W and 44%, while in 2019/20 companies reported even higher efficiencies of 46% and powers approaching 5W/chip.
Consequently, forecasts suggest that the total GaN laser diode segment will account for almost 10% or $2.5B of the total $25B laser market (laser systems) by 2025, growing faster than originally predicted by market experts. The industrial segment account for nearly 50% of the $2.5B.
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MARKET OVERVIEW - BLUGLASS SERVICE AVAILABLE MARKET (2020-2025)
Given our GaN platform roadmap combined with market forecasts, our available market is expected to reach US $735M by 2025. Industrial, scientific, and biotech are the key verticals where BluGlass will focus initially. Together these three verticals comprise approximately 75% of our available market.
Further, we've estimated that the $735M market will require on the order of 460 MW of power, assuming increased average power per chip and decreasing average selling price (ASP) per watt of power. Without considering downstream capacity constraints and assuming mature laser diode yields, we can deduce that BluGlass has the existing epitaxy capacity now to meet 20% to 25% of this total SAM to approximately deliver revenues of US$170M (AU$233M).
The Serviceable Available Market (SAM) is the portion of the market that we can acquire with similar platform offerings and excludes captured markets from vertically integrated companies.
INDUSTRY OVERVIEW - GaN MARKET VERTICALS
As I mentioned, industrial, scientific and biotech markets are the key verticals for BluGlass. There are broad applications within these sectors including industrial welding, 3-D printing, micro-electronics, semiconductor, forensics, endoscopy, and medical diagnostics.
Display is less interesting to us as an entry point because of the highly competitive landscape and low pricing of the 450nm sources. In the future, our advanced RPCVD epitaxial benefits may lead to optimised, longer wavelength lasers, such as green lasers as 525nm sources for display, in particular for projector applications, but it's not an immediate priority. Lighting and competing with white light are not markets of focus for the Company for many reasons.
INDUSTRY OVERVIEW - BLUGLASS TARGET MARKETS
Customers within our key verticals typically have similar requirements. They need high-poweredmulti-mode or low-poweredsingle-mode laser diodes, flexible manufacturing in a range of wavelengths, as well as the ability to develop novel designs to facilitate new applications.
BluGlass' product roadmap aligns well in the industrial, scientific and biotech markets. The combined forecasts of just these three verticals, given our anticipated product offering, is approximately US$380M by 2025. Our potential customers include: IPG, nLIGHT, Nuburu, Optical Engines, Coherent, Toptica, and many more.
The Product Addressable Market: (PAM) is the subset of our SAM that we will realistically address with our specific product offering (given performance, form-factor, the barrier to entry, and so forth). This is effectively our target market to which we will initially introduce our products.
INDUSTRY CHALLENGES - ECONOMIC DRIVERS
There are several industry challenges and economic drivers influencing our product development roadmap across our target markets.
Customers are telling us that there is a need for increased manufacturing flexibility. They are looking for cost- effective solutions that are easy to integrate, and these are not readily available in the market at present. Further, within those solutions, customers require a combination of greater power, brightness and efficiency per dollar invested.
Like the computing industry, the laser market demands more output power for less $ per unit - in the case of lasers, this is $ per watt. The drive for more power per chip has been driving the industry since its inception. Interestingly, on the flip side, customers will pay higher prices for brighter sources, because brighter sources are easier and cost less to integrate. Scaling brightness is one of the reasons we are avoiding the general lighting sector, which requires converting blue to white light resulting in the sacrifice of a significant portion of the laser's brightness.
Efficiency is also a key metric for BluGlass. Power conversion is incredibly important not just from an environmental perspective but as a way for customers to save money. Higher efficiency reduces the total cost of ownership for our customers, especially when they are running high-powered lasers in 24/7 operations as needed in many of the industrial applications that we're targeting.
Customer integration ties into delivering the easiest-to-use light for our customers by providing greater manufacturing flexibility and customisation; not just of novel device architectures but of integration designs.
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Bluglass Limited published this content on 21 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2021 23:33:01 UTC.