...This is the 2024 annual meeting of shareholders, and I'm going to go through the formal part of the presentation. Good morning, ladies and gentlemen. My name is Dr. Michael Lebby. I am Chair of the Board of Lightwave Logic. It is my pleasure to welcome you to the company's 2024 annual meeting of shareholders. This meeting is also being webcast live, and the webcast will be posted on our website for a period of time after the meeting. Welcome to those shareholders participating by webcast. The meeting will follow an agenda, copies of which have been placed on each chair. As it indicates, there will be a time for shareholder questions at the end of the meeting. Before we begin the meeting, I would like to introduce the company's directors who are with us today.
I encourage you to take a moment and meet them after the meeting. As I call your name, please stand. Jim Marcelli, who is our President, COO, and Secretary. Ron Bucchi, who is our Lead Director and the Chair of our Audit Committee. Dr. Frederick Leonberger, who is the Chair of our Nominating and Corporate Governance Committee. Siraj Nour El-Ahmadi, who is the Chair of our Compensation Committee. Dr. Craig Ciesla. And Ms. Laila Partridge. Today's meeting will be in two phases. Is that coming through okay? First, we will conduct the formal part of the business meeting to consider each of the proposals listed in the notice of annual meeting of shareholders, dated April 11, 2024, and to conduct such other business as may properly come before the meeting.
The second part of the meeting will be my management presentation, followed by a question and answer session. Jim Martelli, our Corporate Secretary, will be recording the minutes of this meeting. David Siddle, the duly appointed representative of Broadridge Financial Solutions, Inc., has been appointed to serve as the Inspector of Election for the annual meeting. Mr. Siddle, would you please stand? Mr. Siddle has signed the oath of office, which will be filed with the minutes of the meeting. For the formal part of the meeting, I will now call on our Corporate Secretary, Jim Martelli, to establish that we have met the necessary corporate requirements for this meeting. Jim?
We have proof that the notice of the meeting is duly given and that the notice of the annual meeting of shareholders' proxy statement and proxy were mailed on or about April eleventh, two thousand twenty-four, to all shareholders of record at the close of business on March twenty-fifth, two thousand twenty-four. The affidavit, together with copies of the notice, proxy statement, and proxy, will be filed with the minutes of the meeting. As of March twenty-fifth, two thousand twenty-four, the record date of the meeting, there were 119,599,565 shares outstanding. We have 60,952,004 shares present by person or proxy at this meeting, which is over 33 1/3% of the outstanding shares and constitutes a quorum permitting transaction of business.
Each share entitles the holder to one vote on each matter that may come before the meeting. A list of registered shareholders entitled to vote is available for examination by the shareholders.
Thank you, Jim. Since the quorum is present, I will now call the meeting to order. The meeting will proceed as provided for in the agenda. The items to be voted upon are: number one, to elect two directors for the board of directors to serve until the 2027 annual meeting of shareholders, or until their successors have been duly elected or appointed and qualified. Number two, to ratify the appointment of Morison Cogen LLP to serve as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024. Number three, to hold an advisory vote on the compensation of our named executive officers. Number four, to hold an advisory vote on how frequently we should seek an advisory vote on the compensation of our named executive officers.
Number 5, to consider and take action upon such other business as may properly come before the annual meeting or any adjournment thereof. Jim, would you please describe the voting procedures?
We will be voting by proxy ballot on the agenda items described in the proxy statement previously sent to you. If you already turned in a proxy card and you do not intend to change your vote, it is not necessary for you to vote again. However, if for those of you who did not turn in a proxy card or if you wish to change your vote, please get a blank ballot card from Mr. Siddle, our Inspector of Election, to use for voting today. If you take a ballot, please print your name and the number of shares you are voting on the ballot. If you have previously sent in a proxy card and you're changing your vote, please note that on your ballot. The ballot must be signed by the shareholder. After you complete the ballot card, please give to Mr.
Siddle as soon as possible, as the results of the voting will be announced at the end of the formal portion of this meeting.
The first item of business is the election of two Class I directors to the board of directors to serve until the 2027 Annual Meeting of Shareholders, or until their successors have been duly elected or appointed and qualified. The board of directors is comprised of seven directors and is divided into three classes, currently comprised of one, two Class I directors, whose terms expire at the 2024 annual meeting. Two, three Class II directors, whose terms expire at the 2025 annual meeting. And three, two Class III directors, whose terms expire at the 2026 annual meeting. The board of directors has nominated two Class I incumbent directors for re-election and recommends a vote for the election of the two Class I incumbent directors. Our Corporate Secretary will now place the names of the nominees in the nomination. Jim?
The board of directors, the board of directors has nominated the following Class I directors to serve a term of three years or until their successors are, are elected and qualified: Siraj Nour El-Ahmadi and Dr. Frederick J. Leonberger. Advanced notice must be given to the Secretary of a shareholder's intent to nominate other persons as directors of the company. No such notice has been received. The quarterly nominations for the directors are now closed. The nominee for directors receiving the highest number of votes will be elected, will be elected to the board of directors, and the, the proxy solicited by management will be voted in favor of the director nominees. I hereby move that Siraj Nour El-Ahmadi and Dr. Frederick J. Leonberger be elected as the Class I directors to serve for a term of three years or until their successors are elected and qualified.
The next item of business is the ratification of the appointment of Morison Cogen LLP as the company's independent registered public accounting firm for 2024. The vote required to ratify the appointment of Morison Cogen LLP to serve as our independent registered public accounting firm for fiscal year 2024 is the affirmative vote of the holders of a majority of the votes cast at the annual meeting, entitled to vote on the matter. The board of directors recommends a vote for approval of this matter.
I hereby move that the appointment of Morison Cogen LLP as the company's independent registered public accounting firm for the year ending 2024 be ratified.
The next item of business is to hold an advisory vote on the compensation of our named executive officers. This proposal, commonly known as a say-on-pay proposal, gives our shareholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in our proxy statement. Because this vote is advisory, it will not be binding on our board of directors or the company. However, our board of directors values the opinions of our shareholders and will take into account the outcome of the shareholder vote on this proposal when considering future executive compensation arrangements.
The votes required for approval of the compensation of our named executive officers is the affirmative vote of the holders of a majority of the votes cast at the annual meeting, entitled to vote in person or by proxy and entitled to vote on the matter. The Board of Directors recommends a vote for the approval of the compensation of our named executive officers as disclosed in our proxy statement.
I hereby move that the compensation of the company's named executive officers, as disclosed in the proxy statement pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, the summary compensation tables, and other related tables and disclosures be approved.
The next item of business is to hold an advisory vote on how frequently we should seek an advisory vote on the compensation of our named executive officers. The purpose of this proposal is to assess stockholder preferences on the frequency of future advisory votes on executive compensation, and as such, there will be no approval or adoption of a resolution establishing the frequency of future advisory votes on executive compensation. The option of one year, two years, or three years, that receives the highest number of votes cast by shareholders, will be considered the frequency for the advisory votes on executive compensation that is preferred by our shareholders.
... I hereby move that shareholders vote in favor of one of the following options for holding the stockholders' advisory vote on the company's executive compensation, either 1 year, every year, or every 2 years, or, or once every 3 years.
There being no other items to be brought before our shareholders for a vote at this meeting, voting is now complete. All ballots must be turned in to Mr. Siddle at this time. The Inspector of Election has tabulated the votes, and Mr. Siddle will now give us the report of the Inspector of Election. David?
All of the votes have now been counted. The preliminary results are as follows: Mr. El-Ahmadi and Dr. Leonberger have been elected as Class One directors to serve for a term of three years, or until their successors are elected and qualified. Morison Cogen LLP has been duly appointed as the company's independent registered public accounting firm for 2024. The compensation of the company's named executive officers is approved, and the frequency that the company should hold an advisory vote on the compensation of the company's named executive officers is once every one year.
This concludes the formal part of the annual meeting, and the formal portion of the annual meeting of shareholders is adjourned. At this stage, I'm going to give the management presentation. So can I just have a show of hands of how many folks are interested in doing the tours afterwards? Oh, I see. So this is a popular request. One of the things that we're gonna be... There's good news and bad news here. The good news is that, when you visit high-tech companies in Silicon Valley or around the world, you have to sign, when you go in, NDAs, and we're not gonna require that. We thought about that, but we're not gonna require it. But we don't want anybody to bring electronics in.
And so if you do have your phone on you, then Amy is going to seal it in a sealed bag and sign that off and keep that while you do the tour. Because at this point, we really don't want our competition seeing a lot of what we're doing. So please, please respect that because we're trying to be really competitive here. At this point, let's see if all this works. Good. I will start the business presentation. I'm really excited to give this year's business presentation, and I'll give a little bit more details on the logistics of how to get to... We have a van set up after the, after my talk. So it gives me great pleasure to have the annual shareholder meeting here in Colorado again and to give a management update.
Now, I know, I recognize a lot of you from previous years. I recognize a lot of you from investor meetings, especially ones over in Belgium recently. So some of you have seen the slides, but there are some new slides here, and I'm really excited to show them. And so why don't we just get started? So we're a public company, of course, and so we have to show a safe harbor slide. So why Lightwave and why now? So before I get into the contents of the talk, it's just one question that I think everybody should realize. Why are we all in this room? Why are we trying to do what we're trying to do? And why am I, as the leader of the company, really excited about what we're doing? And so this is a simple slide.
Silicon photonics, now, you've heard me talk about that if you've seen my presentations before. It's hit a wall in performance, and that has given a great opportunity for a new technology platform. Over the last few years, we've developed our electro-optic polymer material to world-class standards. As an example, in the top right-hand corner, that's what it looks like. Comes in little jars. So you put it with solvents, and you can make it into a solution, and you can spin it onto wafers. So that's really what we're looking at. And what we can do with it is we can turbo boost the silicon photonics that's struggling in performance, so we can give it an extended runway. And that, when you put it onto silicon wafers, you get pictures like this. This is a big 200-millimeter silicon wafer.
With that wafer, you can cut into small chips, and you can use as an optical modulator. And we showed these results earlier this year, and that really generated tons of excitement in the data center environment. So in just three simple photographs or images, we've gone from our polymer material, putting it onto silicon wafers, and generated world-class performance. And that is really one slide, why we're here. This is really exciting. It's a brand-new technology platform. So let's go to the outline. And I'm gonna cover today the usual sections in the presentation, corporate overview, a little bit about market dynamics, what the polymer roadmap would look like, so we can see what's happening in the industry and how it's progressing forward. Some commercial activity, which I'm sure everybody wants to hear about. Business model, typical questions and summary.
So I've sort of dotted this with a few image photographs, but the most exciting one is this one here. I don't usually show a photograph of myself, especially with my bald head, but that was the instant when I showed the results at the big conference at OFC, and there was an audience of 300-400 people. Only the speaker can see the reaction on the faces of the audience. And I saw the reaction on the faces of the audience when we presented those results, and probably within 2 or 3 seconds of that photo being taken by, I think Jasper took that photograph. And that was one of those times when you're standing on a podium, you've got world-class results, and everybody in the audience realizes it. It just makes you feel so great.
And it's one of those feelings that doesn't come that often. Anyway, so let's move on. The corporate overview of the company. We have a large and growing market. As you can see, I've got a little, some symbols here. We have proprietary electro-optic polymer material. We're underway with commercialization. We've really built up our patent portfolio, and we keep adding to that. We've got a very experienced leadership, not only our board of directors, who a lot of them are extremely technical, well-versed in business practices, but also a technical advisory board. And we've also built together, over the last few years, a world-class team. So I really give thanks to the Lightwave team, that is now working really well together to produce world-class results. And we have a robust balance sheet.
You know, our last public report says we have enough cash to last us the next 18 months. As you can see from the right-hand side, we do feel that the company is undervalued by the market. There's no question about that. We have cash equivalents, $31 million. We don't have any debt, and our headquarters are here. So we feel we're in a good, solid financial position, and we are progressing very well with our new technology platform. So a little bit about the market. This is a slide I simplified for this meeting because beforehand I had too many words, and when you're in the audience, you don't want to read too many words. But what does this really say? This has got three demand drivers by the industry. The industry is tight for space.
You go into a data center type building, you know, they're a quarter of a mile long, and they've got racks and racks of equipment. So real estate efficiency is really a big problem for these guys. And so we have a technology that is really small, really tiny, it's micro, and we fit into that very well. And that is a huge driver. The need for speed, and I'm not talking about Formula One or anything like that here. People have to be able to send information much faster in the internet. And it's really been driven, well, it was driven in COVID because we all worked at home, and we all used our sort of computers to send information back and forth on the internet.
That was a little bit of a bubble, but up post-COVID, it's artificial intelligence that's really driving a lot of the traffic on the internet. That driving has caused the data center folks to upgrade their equipment much, much faster than they expected. There is now a big demand to go faster, higher performance, pluggable transceivers, which is where we're aiming at in the data center environment, cloud services. That need for speed doesn't look like it's going away. The reason I say that is because if you look at the capital spend of these data center type companies, they're not just saying AI is here, it's here to stay, and it's really sort of exciting. They're spending capital to upgrade their data centers. If you start looking at those numbers, those are huge numbers.
And so, I actually asked the really tough question to the CEOs at OSC when I was doing the panel: Is this a bubble or is this here to stay? Now, these are companies, these are guys who run multi-billion dollar companies in our space, and every one of them said, "This is here to stay. This is not a bubble, as we see it." So that sign is good. And then the need for green, I think everybody is aware we've got to reduce power consumption, and we have a technology that helps do that. And so a lot of these data center type environments are consuming tons of power, and it's actually a big concern. People are worried it's gonna take a significant percentage of their national grid. And so these guys are looking for ways to reduce energy, reduce power consumption.
So moving on to the market. Now, I showed this slide last year, and I believe I had the blue line and the red line. I actually didn't put the green line on. And so in the space of one year, the demand is now everybody in the conference is not talking about 800 G, which I think I mentioned last year. They're now talking about 3,200, and this is because of the drivers of artificial intelligence to upgrade the equipment in the data centers. And we're just looking at one segment here. This is one segment of the fiber optic market. So I haven't tried to confuse everybody with the whole market or different applications within the communications market. This is just one segment for Datacom, and you can look out the next few years, and you can see this is a huge opportunity.
Now, our technology will actually benefit other fiber optic communications markets, but just in this one segment, this is a huge opportunity. And so this is really, really exciting. And the interesting thing is that these guys, they want the next level of performance, and they're open for new technologies. Usually, when you've got a technology that works, you don't really... So you've got an incumbent technology, you don't really want to displace it unless it doesn't, doesn't really perform where you want it to be. Well, we have that situation right now. People really are wanting to upgrade their performance, and they're looking at new technology.... So this is a new set of slides that I put together for this meeting, so I don't think anybody's seen these before. Now, this is. We've taken an industry roadmap, and this is one from InfiniBand.
It's similar to Ethernet, and InfiniBand is a market that is really mostly owned by NVIDIA. NVIDIA not only makes the big GPU chips that powers the AI, they also do a lot of transceivers and optical interconnects. And a lot of those products work under the InfiniBand standard, which is very similar to the Ethernet standard, but I'm using this as an example. Now, what does this graph really tell us? Well, you've got bandwidth on the vertical up here to a very high number, 4.8 Tb/s. And you've got years on the bottom, going out to 2026. Now, you've heard me talk about 800 G before. This is a pluggable transceiver. And so I've ringed 800 G. And what these guys have done is they've plotted how to get to 800 G.
Well, you can have 1 lane and 1 channel going at 800 Gbps, but nobody can do that. And so that's sort of impossible. You could do that back here, and see, this is 1x, 2x, 4x, and 8x. So this is 8 lanes, this is 4 lanes, this is 2 lanes, this is 1 lane. This is 1 lane, this is 2 lanes, this is 4 lanes. And today, we're seeing 800 G. We've seen some prototypes go out there, 8 lanes at 100 G, 'cause that's all people can do. So what's actually happened is the, the, artificial intelligence guys have put the pressure on the data center guys to say, "We need to upgrade to 800." They can't do it. So what they're doing is they're doing whatever they can.
Well, what the industry really wants is a four-channel solution, but right now, all they get is, eight by 100. And actually, people are really working hard to that gray spot there. But that gives you an idea. This is sort of the, how things are looking. We've progressed pretty significantly since, 2014, and you can see these curves are going up. So the next big area is 800 G. So let me just, think about that a second. So this is what the industry really needs. You need to do 800 G, you need to do four channels of 200 or 200 per lane. And so, but the industry is not gonna be happy here. This is just a start. They wanna, they wanna go in this direction.
You know, they wanna go 1600, or we actually say 1.6 T or 3.2 T, or that's the same as 1,600 G. And so the industry is looking for solutions not only to support 800 G today, but they want some headroom. They want the headroom to say, "Okay, if we invest in your technology, we want it to last the next generation and then the next generation, and the generation after that." They don't just wanna invest in a new technology for one generation and then say, "Well, what are we gonna do now?" And so they're really looking at this roadmap very carefully. And so this is, this result here, this is where we're aiming at. This is where the industry is right today. And so four lanes of 200 is this spot here.
I've written a four in that dot. I made it a little bit bigger. Our foundry results that we presented back in March are 200 G per lane, but what really got the industry excited is we did it at 1 volt. So we did it at a world-class performance. And, and clearly, we're gonna be challenged to do this very, very quickly. And then, what we also did, with collaboration with Polariton and ETH Zurich, in a paper that was presented at the OFC conference, we actually showed, with some research work, we can, we can do a single channel, 400 G. So we're actually showing that our technology, polymer-based technology, can go to 400. Okay, so it's not ready, and it's still in an R&D stage, but you need to do this.
You need to show the customers that you don't just have a technology for one generation, you have a technology for many generations. And so, you know, the two things to take away from this slide is, we've got this, and we're showing this, and this is really exciting. So this puts us on the roadmap. So let's go... And this is the result that put us on the roadmap. This is that talk I gave at OSC, where I showed the eye diagram. And it's very difficult to explain what an eye diagram is, but the takeaway from this slide is, if you don't have open spaces, then you're not working right. If you've got open spaces, the eye is open, the digital signal between the ones and the zeros is open, and you can convey information pretty much errorless. And so this is what everybody looks for.
I'm not gonna give you a technical lecture about eye diagrams, but we'll call them eye diagrams. But I think the message is, if the eyes are closed, just beware. If the eyes are open, then you can get information sent with good integrity. And this, you know, if you look at the top there, you know, one volt, 200 Gbps, that's another way to say it in a technical language, 100 gigabaud × 4. But that is what the industry is looking for right now. And this was the result we did with Polariton and ETH Zurich to show we have the technology to go to the next level of 400G. And it's very difficult to see the open eyes, but it's much, much smaller. But you can see here, we actually got eye diagrams.
These were our material put into a device by Polariton that was tested by ETH. So it was a collaboration, but this is world-class results, and this tells the industry we're not only good for 800, but we're good for 1.6 and 3.2. And that puts us in a very nice position vis-à-vis the customer base, the data center environment. So what's next? So if you start thinking about this, this is today's results. This is where we got the ETH Polariton Zurich result. Clearly, next is 4-channel at 200 and 4-channel of 400, and these two actually will put us in front of everybody in the industry. So we're absolutely focused on making sure we fill this roadmap. But the interesting thing is, doing these two is just a start for us.
We have technology to fill these spaces as well, and this is way more advanced than everybody else. So when you start looking at the roadmap and look—if you look very carefully, I've added dotted lines because the original NVIDIA roadmap doesn't go out that far. But you can see, if you just extrapolate, we're on a really exciting roadmap with our technology platform. And as I said here, polymers fill the roadmap. The one thing I would add is that when you do talk to customers, they really wanna hear, do you have a technology platform, not just for today? They wanna see this roadmap, and they wanna see the other technology to fill it, because they're investing in a new technology platform. They wanna make sure it lasts. So commercial activity.
So you are going to see, it looks like everybody in this room is gonna see our facility after the talk. So we're gonna see the expansion, and we're scaling for growth. But if you look at what's written in orange, we have the team and the facilities to make our polymer chromophores and polymer slot modulators ubiquitous. That's a word I've used many times, but you're gonna see a chemistry facility that is world-class. You're gonna see an expanded facility that's got state-of-the-art equipment, and I hope we really impress you today. It's an extra 10,000 sq ft of adjoining facilities, so it's all linked together. It's about a 70% increase in the space that some of the folks here saw before, about, I think, 4 or 5 years ago. I can't remember exactly.
It's fully utilized for manufacturing, testing, and analysis. Okay. We're leveraging the silicon ecosystem. One of the things that we've realized, and we see vis-à-vis competition today, and you're gonna see it in some of the Q&A at the end, is our technology can easily fit into silicon foundries compared to legacy and new exotic materials that are being talked about today. And we looked at some of those materials and the performance at these conferences, and this is one of our main advantages. It's a polymer. You spin it onto a wafer, and you cure it in ovens. You can take it through photolith. You can etch it. You can pattern it. It is quite easy to use. It's much, much easier than some of the other technologies that are being talked about and trialed in foundries today.
Foundries are giving us that feedback, and so that is really exciting for us. The polymers, as I said at the start of this talk, they extend the silicon photonics performance, and they certainly meet the performance for data center applications. Some of you with good eyesight may have seen this, so this is... I don't want to drop this. This is what a wafer looks like. I'm gonna pass this around, so, you know, please don't touch it, but certainly, you're free to look at it. But this is a 200-millimeter silicon commercial wafer. This is run in a foundry now. Most people are aware we had a press release yesterday, so I think I have a slide on that in a minute.
But this is what they look like, and you really need to have this size wafers to get to volume scale. And so, yes, we mentioned we were working with foundries 2-3 years ago, and yeah, this has been an exciting step forward for us. So... Or maybe I should just leave it here, and you can come and look at it at the end. Yeah. That's probably a better idea. All right. So, one of the foundries we're working with, we went public with yesterday. You're probably thinking, Well, you're so conservative, you're so secret, you never say anything to anybody, but why did-- why did you go public? Because, yeah, a lot of you here have been asking me the same question for the last 2 or 3 years. Well, they came to us.
Yes, we run that wafer through their fab, and yes, we produce world-class results, and they said, "You know, our business would really improve if we went public with this, and we are comfortable going public to say we're using, you know, devices for polymer-based technology." So they came to us, and they really demanded a press release. So we thought about it because, you know, we're very conservative folks, and in the end, we decided, yeah, it makes a lot of sense. Now, this is a foundry. It's not the biggest silicon foundry out there. There are bigger ones, but this is a foundry that specializes on this type of silicon work, a 200-millimeter wafer. These are photographs of, from their website, so it just gives you an idea of their capabilities. I'm not here to sell the foundry.
What I'm here to say is, you've got to be able to be in a position to commercial partners and to get this size of wafer, get your technology onto this type of platform. And so this is what we've been doing. I think you saw the PR yesterday morning, and we're pretty excited. But this is not the only foundry we're working with. So this is one that we've gone public with, where we feel comfortable, they feel comfortable. And I've been asked this question before: Why are you so secret? Well, when it makes good business sense to do a press release in terms of collaboration, then we're going to do it. And in this situation, the foundry was really excited, and the foundry saw that there's gonna be good business opportunities for them.
And for us, that made a lot of sense, made a lot of business sense. So yes, that's why we did that, and I think it's good. This slide I've shown before, but this really gives you a good overview of what the business model is. Now, you can see all the technologies on the left, there's fabrication, processing, there's chromophore, devices. And, you know, we're doing a lot of very high-speed design now because, you know, we're working at really high speeds, and that requires a lot of RF design. But the three-prong strategy still exists. You know, we have one foundry here that is really excited about polymers, and so that is, a nice potential for technology transfer. For patent licensing, we did one deal last year. Everybody's probably saying, "Well, where's the next deal?" So I have a slide to address that.
We are advancing modulators towards product sales, and so we're advancing our prototyping on the top line. But the goals, the goals are the important. We certainly want to make polymers ubiquitous, just like organic LEDs. That's our goal. We want to have companies that have device and tech teams use our polymers in their designs. We want lots of people to use our material. We want to supply polymer modulator optical sub-assemblies for transceivers. And lastly, in the tech transfer, we want foundries to use our polymers to make their business more competitive. And then if they go off into different market verticals, then that will be great for us because that increases the volume. So here's a case study. Now, I've said this before in a number of presentations.
You know, the company we look at, and I didn't want to write it down on the slide, is a Universal Display Corp. That's a company we look up to. That's a company developing polymers in New Jersey, and those polymers go into OLED displays. Now, these images are from Samsung, off their website, but, you know, these are OLED displays, and so polymers are everywhere. And they have a business model where it's part licensing and part material sales. And that's really, you know, the business model that we align to very well using our polymer technology. And so that's a very successful company. They have very good margins. They're well-recognized by the street. And I think it's a really interesting blueprint for us to commercialize our innovative polymers in the data center industry.
And that model has never really been done in the data center-type fiber communications industry. But when I see companies like that being super successful, that makes me even more excited that our business model is really good. So patents drive licensing opportunities. We still continue to develop and license polymer-based technologies. We have a very strong moat and a very strong know-how, and we are continually filing patents. So I think most of you have seen some patents issued earlier this year. You may have seen some patent application publications, too. And so this is growing, and the focus is on data communications in these segments, but this is not the only segment. We're looking at other market verticals to use our electro-optic polymers as well. The licensing strategy.
So this is a new slide, I think, since I was in Brussels, 'cause I had a lot of questions in Brussels. The goal of the licensing strategy is to create volume for Polymer Materials to become ubiquitous. So obviously, we want to increase the number of licensing deals to supply the material, so that goes without saying. We want to utilize our first licensee's product for market effect. Our polymers are being sold today in packaged parts, and so that's electro-optic material verification. That's electro-optic material stability because it's going in another company's parts, and as electro-optic material performance. And so that is what we want to use in, in terms of getting products out on the market, using somebody else's device design. And we're also, as I indicated in Brussels, we're focusing on the big customers.
So to get the volume scale, you, you wanna get the big customers bought in. But these guys are big companies, and there are, there's many levels, and it's complex. But what we're really focusing on is volume scale material supply, volume scale licensee device design, and volume scale licensee manufacturing. That's what we want. It's, to some degree, it's similar to the OLED model, but you have to get the volume scale. This is what UDC did, and this is what we're doing. So I haven't updated this slide for about four years, or maybe even five years, but I decided to update it because I thought it was important. Now, I've grayed out some of the early ones.
I know some of you invested in the company way back in this gray section and predated me, but I really just highlighted 2020 onwards, and I wanted to give everybody a feel of the direction where we're going. We're definitely going towards commercial partnering. You can see, you know, we've progressed over the years. You can see different things I've called out. 2024, the 200 Gbps, 1 volt slot demonstrations... and foundry, so you're seeing a lot more information. But as we move forward, we're going to increase the intensity there. And so the whole focus here is commercial focus. We have a great technology platform, but this is where we have to be. We wanna be in the doing reference designs for pluggable transceivers.
I had a couple of folks tell me this morning, you know, "Where's the transceiver? I'm waiting for the transceiver." Well, we're working on it. This is what it looks like. Now, I haven't showed this slide before, but, I'm not gonna give you any scale of the size of the bottles, but this is what the polymer chromophore looks like. And these materials are ready for volume scale today. So you'll see the facility, and we can scale this material in volume. Obviously, we can't scale wafers. That's why we have to go to a foundry. We're not gonna raise tons of money to go put a silicon foundry in place when there's plenty of them to go to. And this gives you some idea. This is a new slide. I just wanted to put this up.
There's not a lot of technical data in here, and so let me explain this slide. This is the number of lots on the bottom. So you can see there's a whole bunch of lots here, and there's 3 different technical metrics. And when you have lots of lots, what you really want is consistency and uniformity. So really, if you're not technical, if those lines are straight, that's a good sign. And what we're showing here is when we make our materials, our chromophore materials, we're getting excellent lot uniformity, and we're getting excellent consistency. And so, yeah, the metrics here, I don't know if you can read it, the top one is R33, the next one is purity. You can see our purity is high, 99%.
And then the last one is glass transition temperature, and we design this, you know, for the lifetime of the materials. And we always design around about, you know, 180. And so the average, you can see, we're getting just above 180 now, which is an excellent number for the material. And so this slide just gives you an indication of how far we've come over the last, you know, 5-10 years. I mean, this, this is... I'm really proud of this work, and I'm proud of the materials team that put this together. And so I updated this slide. I mean, I think the last time you saw this slide was 3 or 4 years ago. And what I've done here is I've put three sections. There's materials, there's new materials, there's PICs and silicon photonics, and there's packaging.
These are the key things that we're looking at. So at the top, we all know that the Perkinamine™ Series platform is already there, so we're very happy with that. But we've also got the 6 series, and we're really focusing on the next generation, which is the 400G. It's a higher end performance, it's higher R33, it's higher stability, and so, you know, that one is in qualification. We know we demonstrated a single channel at 200 Gbps. The 4-channel is coming, because we know that's what the industry wants. And the last one here is we've got to be able to put this in some type of package so the customers can put it into transceivers. So this one is being worked on as well.
So this gives you a very sort of simple overview of the product roadmap for where we're going. We're all going towards 4-channel, 200 Gbps, or 4-lane, 200 Gbps. So near-term commercial activities. Now, the really astute folks in the audience will realize the words have changed and the numbers have changed. So those folks that have seen this chart before, I've changed it a little. And the reason I've changed it is because we've had a lot of really good interest since our demonstrations of our technology, which you're gonna see today. And so the industry dynamics, I mean, clearly, Artificial Intelligence, turbo boost, and Silicon Photonics going towards the 800 G performance. A lot more prospects now than we had before, a lot more leads, a lot more interest now that we've achieved these metrics.
You know, this, we're working through the selection. So if you look at the takeaway of this slide, engagement with companies for both materials, supply licenses, as well as polymer modulator prototypes. Now, remember, we're not a big company, so we can't work with everybody. So we have to pick and choose. So this box here is a really important one. We have to make sure that the people we really engage with are people we want to engage with and people that we trust. So we're going through that process. The commercial interest is growing. So if you look really carefully, I don't know if you can see at the back of the room, I mean, this is something we're really proud of. I mean, this is igniting and exciting the environment.
And so if you read through some of the small words, yes, we have world-class results, but the type of visitors that wanna come visit. So we're getting the hyperscaler data center companies, we're getting telecom system companies, optical system corporations, optical component transceiver companies, OSAT. What is an OSAT? It's an outsourced semiconductor assembly and test. So it's a back-end contract manufacturer, and then you've got contract manufacturers that do the assembly and build, as well as silicon foundry. We've had analysts, even some of the most negative analysts that talk negatively about polymers are actually not so negative anymore. Now, I'm waiting for them to be positive, but it's coming. Universities, defense industry, and so there's a lot of interest that's been generated over the last three or four months, and that's really exciting. And here's a couple of photographs.
And you'll see something like some of these setups and everything works well. You're gonna see the eyes. And this one is not wide open eyes, they're black eyes, but they've got to be open. I don't know what you're gonna see today. I haven't talked to the guys, but either it could be white or black. Typical questions. So there's a lot of questions here, and I'll try and work through them one by one, because even today I had questions that came through on the Internet. And in fact, I was a little surprised when the press release went out yesterday morning at 6:30 A.M. about the silicon foundry AMF. And I looked at my email on my phone at 7:30, and there wasn't one investor that commented. And I thought: Come on, guys, you're usually pretty good, you know.
Something comes out, you usually are making a comment within a few minutes. So let's go to the first question. When is our second license deal coming? So that's a question that came up a lot, and we are focusing on license deals, but we're definitely focusing on license deals with tier ones. And that is happening, and that takes time. That's not gonna be done overnight. But we really are focusing on making sure we can get the volume scale there. The next one is: When will our foundry partner be named? Well, I actually had to adjust this slide yesterday, and one of our foundry partners has been named, is AMF, and they are really, really excited. So that's, from that standpoint, that's really great. How much reliability data is needed to secure more licensed deals?
So we've built a world-class team, and we're generating reliability and lifetime data material that customers have requested. Our reliability data, as we've shown, I haven't shown any data today, is reliable and stable, so we're very happy with it. I think what has never happened with electro-optic polymers, as far as I can tell, in the 30 years or so that people have been using it, is nobody really has understood the failure mechanism. So whenever you do reliability, like in semiconductors, yes, you have to show the data, but you also have to show an understanding is, what are the failure mechanisms and how are you going to mitigate them? And that's really the questions that get asked.
Our understanding of failure mechanisms of electro-optic polymers and chromophores in the past 6-9 months has really, really increased. And these are the types of questions. Now, when you look at the data, you say, "Okay, you're showing 4,000 hours, or what about 6,000 hours, or what about 10,000 hours?" And yes, you know, you can put stuff and you can keep it cooking for longer, but what people really wanna know is: Do you understand the failure mechanisms, and do you have ways to mitigate that so that we don't have a problem if we put your technology into service? And we are really focusing on that, and our understanding, I believe, is truly world-class right now. I haven't seen many papers.
are many papers on electro-optic polymers, very few, if any, on failure mechanisms, and we have a team to do that, and we're doing really well. What's the next question? Are you going to raise capital? Well, as you can probably tell from Jim and I, we're in constant contact with the banks and the financial community, and we regularly have meetings, visits, and talks. We have a lot of bankers that come visit our facility. They actually wanna see that we're real, so they hear the story, and if they're in town, we had a few visits from folks who wanted to go skiing in the wintertime. But hey, if they wanna come see and see that we're real and we've got great technology, that's fine, too. We will raise money when we feel it's appropriate.
I think Jim's doing a great job right now, making sure we don't have any debts. We have a runway of 18 months, and so we feel very comfortable. What are you going to do to enhance your IR and PR efforts? That question comes up a lot, and we're continually looking at this, and we have to look at this. I mean, if you look at the way the market is undervaluing us, that's something that we're gonna have to take a careful look at, and this is a continuous thing that we're monitoring. And so this is... Your comments are not being ignored, and we feel that we're, you know, we could do better there, and so we're taking a close look at that. In the meantime, we've had some nice op-eds. We've had some great interviews.
So you know, the message is certainly getting out there. So from that standpoint, from a PR standpoint, you know, I think we're doing pretty well. But is there room for improvement? Maybe. And us, as a team, that's what we're looking at. Are you building Lightwave to be acquired or operate as a standalone company? We are building a standalone company. There's no question about that. We have a unique technology platform, we-- and we really wanna increase commercial value for the shareholders. We have a case study that's been super successful. Universal Display, they have great margin, they have great revenues, they have a great sort of IP license mode, they have a great business model. There's no reason why we can't do the same.
Clearly, we'll do whatever is best for our shareholders, but as of right now, we're building a standalone company. When will Lightwave give revenue guidance? We will publicize that when we're ready. And I think I've given the same answer many times to that question, but that's not changed as of today. What is Lightwave's potential market share and adoption rate? Well, our first market, as you can see, is the hyperscaler datacom, data center market. It's as optical engines for pluggable transceivers. And if I read this, both by material for chromophore polymers as well as a modulator product. We expect this adoption rate to quickly replace the incumbent technologies. We know silicon's really struggling. We know some of these other technologies are hitting a wall, and so we expect our technology to replace incumbent technology.
We also see our material being utilized in other markets, instruments, scientific, as well as consumer. Is the current state of the technology, of the company's technology, enough for commercialization of product polymer modulators? Well, our current performance is suitable for live trials with the data centers. Another way of saying data centers is what people use today is hyperscalers. I don't know where the word came from, but yes, our performance is suitable for those companies, and we engage with these companies today. And that includes the tier ones. And to these companies, we are providing reliability data as well, because that's what they wanna see. Will Lightwave supply modulators for transceivers? We're making polymer modulators that are specified to go in as an engine to a pluggable transceiver, and this is what we're looking at, is 800 G using the material we have today.
The material production will be here, as well as the polymer materials for licensing. The materials we're gonna keep in Colorado. This is where we generate the materials. Nobody else is gonna do that, not unless there's gonna be a situation where we'll need a second source, but we haven't come across that yet. Will all the modulators be under 1 V and over 70 GHz? Device performance is working well. A lot of people are just really interested in under 2 V today. 1 V has really got everybody excited. If you provide something in the under 2 V range with 200 Gbps, there's a lot of excitement. Bandwidth to 70 GHz means you get very clean, open eyes at 200 Gbps. Those are the key metrics.
And if you're under 1 volt, then clearly you make it easier for these companies to drive the modulators, because you can drive it directly from CMOS chips. You don't need dedicated driver chips. Do you expect competition to take significant market share? Which is your biggest competitive threat? We do see other technologies that are positioned now. You've got a new opportunity that is competition. Are they listening in? We do see other technologies. Now, you've got a situation where you've got a big market opportunity, you've got customers wanting to look at new technologies. Of course, you're not gonna be the only player in town. Everybody else is gonna look at this, and we'll jump in as well and try and get a piece of the action. So yes, we've seen things like thin-film lithium niobate.
We've seen things like barium titanate, which are exotic materials. They are actually very difficult to utilize in silicon foundries. But yeah, these, we've seen silicon rings. But we believe that none of these have the performance headroom that electro-optic polymers have. And over the next decade, to go beyond 200 gigabits per second per lane and go up to the 400 per lane and even 800 per lane. And so we feel competitively, yes, there's other people there. In fact, I just got told recently, you've heard of the Chips Act in the U.S. and the Chips Act in Europe. Apparently, there's a Chips Act in Korea, and close to $10 million has been set aside for electro-optic polymers. And so the Koreans are taking it very seriously.
The Chips Act in Europe and the Chips Act in the States is really just silicon ICs. There's not a lot of photonics there at all. So, the Koreans are certainly taking this seriously, and we expect more competition. That's why we have to be very careful about protecting our technology. How is testing completed at Lightwave or at the foundry? Will poling be weighted, scaled, and automated? So testing is undertaken in Lightwave. And at a certain low volume, we're going to transfer that to the foundry, which makes more logical sense. You want to have good control of the testing, automate the testing, and then at a certain point, you will let the foundries take over, because that's what they do. And that's the same in the silicon world. So we're following the silicon model there.
In terms of poling, as I indicated last year, we do not see poling as an issue. I know a lot of, there's been a lot of conjecture out there, a lot of talk about poling by research scientists and universities and folks, but we do not see this as an issue at all. What's the next one? Will there be standards for modulators or allow for different materials, thin film, lithium niobate, barium titanate, polymer, et cetera? Well, the fact of the matter is standards take two to four years. Multi-source agreements, MSAs, take two to three years. There hasn't been any yet, and I don't think you're gonna see a lot because of the demands by the data center folks to say, "We just need the technology tomorrow. We're not gonna wait for standards." And this is what typically happens.
Standards will probably come after technology gets implemented. So I think you will see standards and you'll see MSAs, but that's not gonna be further. If it's a slow-moving technology, then you've got time to put standards together. This is fast-moving technology, and so our expectation is that standards will follow, not lead. What is the difference between Perkinamine 2, 3, 5, and 6, and how is Perkinamine 6 better? Well, each polymer material has different characteristics... This is not a technical talk, so I'm not gonna go into that. Plus alignment. So they align with different customer specifications. And so R33, optical loss, glass transition temperature, these are key metrics, and PK 6 is the higher performing one that we're aiming for the 400G length. What performance is needed for 400G?
Before I answer this question, I just wanna introduce everybody to Claudia. Claudia, will you just stand up and raise your hand? Claudia is the CEO of Polariton, and it's our collaboration with Claudia that got us the 400 G result, and that turned a lot of heads. Yes, certainly, we turned a lot of heads with our 1 volt, 200 G, but we also showed at the same conference we can go to the next level. And so, you know, this is an important collaboration. Claudia's got a team designing modulators using our material, and they did some really nice work with ETH Zurich. So from that standpoint, you know, thank you, Claudia. But to answer this question, you need to have a bandwidth to somewhere in the region of 100-140 gigahertz.
I think in our last technical presentation, the foundry modulators that I showed had, I think it was 86 GHz. They weren't even optimized. We know we can go a lot faster. We're not worried, and so we feel that we're gonna be in a very strong situation of meeting 400G lanes, both with the collaboration with Polariton as well as our own device work here. So we don't see that as an issue at all. The question in our minds internally is: what do we say, what do we do to go beyond that? And we know we got ideas to do that, but we're not becoming public with that right now. Three other questions here. What will come first, licensing or product revenue, and which to expect to drive company revenue? So clearly, we expect license materials initially, then followed by product revenue.
We expect both to drive the revenues. Now, I haven't given any public guidance for which is gonna be the higher, which is gonna be the lower, but if we use our OLED company as a case study, about 50% of their revenues is licensing and 50% of their revenues is product material. So I don't think it'd be too much different. How long does it take to design in for our data center customer tier one? Well, these metrics have changed. The GAI, the generative artificial intelligence, the design cycles have shortened. And between what Optica and I have found out, talking to data center folks, this is in a range of 20%-50% shortened cycle time. So the normal cycle time to get qualified to go into fiber optics depends on the customer.
It could be two years, it could be three years, sometimes it's four years. These are all gonna be probably half because people want to upgrade the equipment now. So that's short-circuiting that designing cycle. So that's really exciting for us. We have a flexible business model that allows us to work with the OEMs and the CMs, and so we feel that we're uniquely positioned to take good advantage of that. One question here is: can you scale volume efficiently? Well, we can scale the materials, and you're gonna see that when you come through the lab tour. We can scale the devices using the foundries, and the foundries are the right model to do that. And, you know, the press release, what did the press release yesterday really say?
Here is one foundry, that's running wafers, that is really, really excited about increasing their business model. Not only our business model, but their business model. And that is something I think is worth a PR. And so I don't know how everybody took the PR, but from our standpoint, that was an exciting announcement yesterday. Summary. So a lot of stuff on this chart. I'm just gonna hit the highlights here. We're turbocharging Silicon Photonics for polymers for commercial traction. You know, we've got the markets, technology. We've got commercialization underway. I will accept that you maybe wanted to see more quantification of that, but I think I've tried to put that in perspective. Strong patents, good balance sheet. We're in a really strong foundation. Here's some photographs.
Some of these you'll see as you go through the lab today. So the visit logistics, let's see. Jim, do you wanna help me on this? Because you got the, we have a 14-seater van.
Right.
That's gonna be at the lobby.
Right out front, and it's about a five-minute trip to the facility.
So for folks that didn't hear, we'll have a 14-seater van at the front in the lobby, so we'll just keep cycling it. It's literally less than a mile away, so it won't take long. You can walk if you want. It's a 1-mile walk. You've walked before. We may make the groups a little bigger. I didn't realize we'll have this sort of level of interest, but we'll break it up into groups, and we'll do the tour. And I think that's about it. Yeah, I mean, if you wanna leave your electronics here, that's fine. If you don't, we can sort that out on the entry. At this point? Yeah, the Q&A has already started. I already got some input here.
The question was, can you explain a little bit more of the dynamics of working with a foundry? So when you work with a foundry making these types of wafers, you tape out, and tape out typically takes a month to 2 months to make the masks and generate the masks and the layout. But for the wafers to go through the foundry can range between 5 to 7 months on average. And sometimes you can pay more to get them to run the wafers even faster. So that cycle time is not days. So you come up with a design, you literally have to wait till the wafers come back. And this is no different to the IC business. This is normal practice.
Some smaller foundries that do smaller wafers, you can get faster turnaround times, but when you're working with the big silicon foundries, it's typically about six months on average. And that's—so when you put in a design, you have to wait six months to get that back.
Can I add something?
Yeah.
It takes six months to make a wafer. Very
At this point, let's go to the Q&A session. I think somebody's gonna have a microphone. I'm sure I haven't answered all your questions. I know every time I go, I get heaps of questions being sent to me, but I'm sure there's others. There's a question over here.
So a couple of questions, if you will. You mentioned failure mechanisms today.
Mm-hmm.
As sort of an obstacle for adoption. That was on slide 28, I think, 3, that you mentioned. In the Q1 or the 10-Q, apologies, there was four mentioned, and one was hermeticity, and then there was followed by three slides that showed we're well along the way on the first three, which were in the slides today, but there was no mention of hermeticity. Is that still a problem?
It's not a problem. The failure mechanism that we watch more closely than anything else is oxygen. So you have to figure out a way to stop the oxygen coming in. If you want to put it in a hermetic gold box, then you would stop it coming in, but a gold box is expensive. So you got to look for ways where you don't have to have an expensive package, but you can protect the material to stop the oxygen coming in. And that's, I think I've given a couple of talks to mention atomic layer deposition, and that is a technique that the OLED industry use, stop moisture going into the TV screens and things. And so we have expertise with Franky So on our advisory board, he's an OLED person, plus we have expertise on ALD.
So that's something that we're working on internally, and we're optimistic and, like, very confident that it's gonna work for us too, to the level we want. And so, yes, you know, we explain that to customers. But, yeah, that's the question on hermeticity. I don't believe you have to be 100% hermetic. What you have to do is make sure you don't let the oxygen come in.
Right. And then the second part of the question is, a different question. We've had one year with the first licensee. Has the revenue production met your expectations? And if not, what do you think is going on?
I think it has met our expectations. There is now product out there on the market. It's not in high volume, I will admit to that. But, you know, we're looking for that feedback of, you know, our material working in a product that's out on the market. So yes, it's a step in the right direction. It hasn't been as, as fast as everybody would have liked, but it's met our expectation internally.
Thank you.
This is amazing. Usually, I have, like, ten hands come up, so. To the back?
No.
Oh, okay, Kevin. All right, Kevin. I know Kevin's got a list of questions.
Oh, yeah. Where do I start?
Everybody wants to go on tour, so don't be too long.
Oh, no, it's gonna be great. I'll start high level. The timing for the 4 by 200 PIC chip and a completed transceiver is still ambiguous. At the Optica conference last fall, you said the 4 by 200 PIC would be ready in 2024. Is that still on target? Have you received prototype 4 by 200 PICs yet from these wafers?
All I can say is, it's in progress.
Okay. Recent presentations showed Vpi uniformity across four different devices. A general question is, when you receive a wafer with thousands of devices, what do you do with those thousands besides the smaller sample sizes for reliability and for, you know, performance testing?
So we have a lot of statistics analysis. We do a lot of measurements. It takes a lot of time, a lot of tests, a lot of measurements. We have a lot of statistics, and we use those statistics internally to make sure everything is working as we expect, in addition, to look at where you can fine-tune performance. So for example, we did statistics on Vpi and we did statistics on bandwidth. And so that gives us a lot of good information to hone the next set of devices are coming through the fab. I think what we saw was, is that, you know, we did that measuring, we did the statistics. The performance is really good. We also saw opportunities to improve it even more.
So I'm not gonna go into any detail about how much we can improve it, but we're not at the limit, and we can certainly improve the bandwidth, and we can certainly improve the Vpi. There's no question about that.
Sure. So the four devices, the Vpi, seem to range from about 1 to maybe upwards of 3. Do you know why those variations exist? Are these just different device designs? And for example, if someone's willing to pay you whatever it costs to order 25 wafers of the 200 G, 1 volt modulators, is your foundry partner able to produce an entire wafer of those 1 volt modulators at high yield? And basically, is that design locked in?
So the default results you're talking about are, are packaged modulators. I just wanted to put out to show we have full package modulators. I didn't put all the statistics out. I mean, I just wanted to have a quick sample to show people that we don't just have chips, and we don't just have chromophores. So you'll probably see a lot more statistics as we go forward in the next six to nine months. There's no question about that, because that's what people want to see. They want to see a lot more statistics. In terms of foundry and foundry capability, you know, we've gone public with one foundry. They're really excited. There's a reason why they're really excited. I mean, they have the confidence, just like we have.
Rather than answering your question in a quantifiable fashion, I would say we're both very comfortable with what's going on there.
So for wafer-scale poling, I'm gonna bug you about this. Is it at the point where it's consistent, high yielding and an economical process? I know my email to you referenced, you know, if it takes, you know, a week or two to poll an entire wafer and your yields are 20%, that's obviously not satisfactory. Besides saying you're comfortable with that, can you give any insight into the extra time and cost and poling yields, please?
Not really.
Not really. Okay.
But what I mean, I'll just reiterate. I mean, the question keeps coming up because people have talked negatively about poling in the past. We've worked really hard at that, and, I mean, I think I gave the same answer last year. It's not an issue for us. I mean, it is a uniform process. There's other things we're more concerned about. It's not something we're concerned about, like the outside world is. And I know because of negative discussions or negative talk about it, people talk about it all the time. Internally, it's not the issues we worry about. We're worrying about other issues. So we're comfortable with that.
A couple more, if you don't mind. For your direct PIC sales prong, are you going to be creating an entire transmit PIC with lasers and other components? Or are you going to be supplying the multi-channel modulator arrays to a company who would then put together the transmit side with the lasers and couplers and et cetera?
That is definitely dependent on customer requirements. When you look at PICs in general, each customer has their own way of mounting lasers. And so as you probably are aware, I mean, every company has a different technique to do that. We wanna have a platform that is generic, so that if a customer wants to use their particular laser or choice, then we can accommodate it.
Okay.
You know, we could take the position of going to develop lasers and work with a laser supplier and come up with our own design. But what happens if a particular customer says, "I don't like that supplier, I don't like that laser type," or, "I don't feel the way you've put it down onto the PIC is reliable enough." And lasers are one of the problems when it comes to reliability. And so as you probably are aware, it's an issue that, you know, gets a lot of attention. I think it, for us, we don't see it as being a critical path. But if it's a customer turns around and say, "We need you to go work with a supplier lasers, make sure that it's done in the way we like," yeah, we certainly will take a look at that.
Okay. Last one. Slide 13, there was a quote.
I don't remember slide 13.
I forget what the quote was.
Is it in there?
Yeah, slide 13. I'm just curious who said that quote?
I'm gonna have to ask Atikem. Do you remember, Atikem? There we go. We can't answer, but it's an industry leader.
Okay. Now, I think this is my last question. Is there a possible scenario where you can name a tier one transceiver maker, collaboration, partner, whatever?
... sometime in 2024 before, the 4 by 200 PIC chip is complete, at what stage, basically, can you reveal, a serious player who is considering committing to this technology?
So our methodology is really simple. It's got to make good business sense on both sides. And so I think you asked this question to me last year and the year before: Who's your foundry? Who's your foundry? Who's your foundry, right? And we didn't name any foundry. We just named the foundry because it made good business sense for that particular foundry, and it made good business sense for us. And we would do the same. We'll apply the same methodology for any partner, whether it's a package partner or a transceiver partner or even, you know, another foundry. And I think that's sort of the way we want to look at that.
If we see good business and they see good business, good opportunity for both, then, yeah, we'll put out a press release, but I'm not gonna give any guidance because I think it's premature right now.
Okay, that's it. Thank you.
Wow! That wasn't too bad, was it?
Actually, I'm glad you brought this slide back up. My question is related to this. You mentioned, of course, and we all saw the graphics about the fast responses that you got when you announced the performance and how excited everybody was. And then mentioning this, this is InfiniBand of where the industry wants to go or needs to go. Does this represent, you know, a level of confidence now at 800 G, but understanding that 1.6 and 3.2 is possible, or do they have to see these in demonstration before we get adoption?
So the answer is, we're seeing an inflection point in the industry for this technology. This technology, as everybody is aware, there's a lot of investors here, been here a long time. It's had a negative rap, and we all know this, and we're changing that, and we're changing a lot of naysayers, and that is happening day by day. It's not been easy, but we are doing that. When people see a demo, hopefully, just like everybody here, when you go see the demo, you'll get excited. I mean, you've seen slides before, but now you're gonna see something that is real, it's tangible, it's physical, it works. This is what the industry wants to see. They also want to see the lifetime reliability data, but I see that changing quickly now.
Yes, I think this is, this is a good time for it.
Doctor, one question when we go back to the slide. So the last few shareholder meetings, we've talked about the years, and we talk about, hey, this is our year 2023 to 2024, mass commercialization, 2024 to 2025. We saw them today, and it looked like now we've pushed that out a little bit. It looks like 2025 to 2026, if I'm an investor, is when I should expect that excitement from a commercial perspective, revenues and becoming profitable. I know you're not giving guidance, but every year it does kind of feel like it's, we're kind of moving the goalpost. I understand that's industry related and technology, but, you know, as an investor, what would be your, I guess, guidance or...?
Well, I mean, there was a slide. I don't know where it is.
Why should we be excited?
Why should you be excited? We have something that's happening in an industry; it doesn't happen that often. The last time something like this happened was the bubble in 1999, 2000, when everybody thought the internet was gonna take off. And we called it a bubble because two years later, all the sales dried up and companies like Nortel and Lucent basically vanished. So that was a bubble. This is not a bubble. This is gonna. This is sustained growth. This is a drive in demand that doesn't look like it's gonna go away. Some people say it may mitigate a little bit, but it's not gonna go away.
You know, artificial intelligence, whether you look at it on the good side or you look at it on the bad side, I mean, this has been up at the policy level of national countries now. So it's not just a techie thing that's taken off. This is a technology that was five years ago, 2,000 engineers could do neural networks and machine learning. Now we've got 100 million users using ChatGPT and Bard and whatever else. So this is a big snowball that's just growing, and it's growing so fast that national governments are concerned about it. They're concerned about people misusing it as opposed to using it for positive reasons. What it's doing in our space is it's upgrading the technology a lot faster. I would agree with you, this technology has taken some time.
But then when I think back to other technologies that I've worked on where there is incumbent technology, like, I mean, there is laser array in this phone called VCSELs, V-C-S-E-L lasers. I worked on this in 1990, 1991 with Motorola. Never before, you know, face ID applications. We worked on it then for optical interconnects, for data centers or central office switches, as we called them at the time. But it took about a decade or more for that technology to take off, and now there's 100 billion of these lasers. You look at OLEDs, when the first OLEDs were being worked on in the early 1990s, it took a long time, but it gets to a point where it just becomes ubiquitous.... So I've worked on some technologies, and I've seen the timelines.
So if you ask me the question, would I like this to go faster? Yes, I would. Are we achieving an industry average with this brand new technology to displace incumbents? I think we are. We're not behind. So as investors, you may look at this and go, "Well, it's taken a long time to get to revenue," but are we really behind the curve? I don't think we are. That's why I'm excited. I don't feel that we're behind. I feel we're on the threshold of something huge. And so I can see it from your perspective, and it's a tough look because you've been in the company, your father's been in the company a long time. But I think we're doing pretty much the average for a new technology platform that is gonna have an incredible impact.
And that's why I'm here, and that's why I'm really excited. And that's why, you know, I'm showing these types of slides. But I may not have answered your question to your satisfaction, but that's probably the best answer I can give. Tier ones have an incumbent technology. If you're an indium phosphide, lithium niobate modulator company, and you've got your own little fab, and you're doing your own designs, you're gonna tell your team, "Guys, if you don't make it any better, we're gonna have to go outside and get a new technology." And so what we're seeing is, we're seeing these companies trying to exert the last little bit out of their technology. And I think you would do the same. I would do the same.
Why would you go to a new technology if you can get a little bit more out of your existing one? But it's hitting the wall. The silicon won't go any faster. They know this, and it's being talked about. And so tier ones are looking at our technology. I can't answer the question about their decision process because they're big companies, but we're engaged from the engineers all the way up to the executive office. So we're engaged at the right level, and so we're working that issue as hard as we can. They are working really hard to achieve the 200 Gbps spec. I don't think they'll achieve 1 volt, but they're really pushing hard on that. Now, we may see some of them achieve. We've already seen 800 G prototypes using 100 G with eight channels or eight lanes.
Four lanes is exceedingly difficult. We suspect there were some prototypes at the last major conference. We didn't get access because we're sort of, you know, they only have limited viewing in private rooms. But they're struggling, and that's why we got a lot of attention. So in terms of the metric, we're right up there now. That's very hard to predict. That's very hard to predict. You got incumbent technology, you're going to do everything you possibly can. I mean, so we've seen budgets increase to focus on trying to get the last little bit out. Maybe some will and maybe some won't. I don't know the answer to that.
Use the word-
Yeah, let's use the microphone.
Sorry. In your recent presentation, you, you described being dragged along. Now, by definition, that means that the draggers are dragging you along, so we're the holdup. That, by definition, that means that. Can you explain that? You know-
Yeah, I mean-
What do we need to do to catch up to them?
Well, I'm not being physically dragged along.
I understand.
But what the term meant was that 3, 4 years ago, we were pushing everybody to use polymers. So we'll go out, we'll talk to customers, and we talk to different folks, and they say, "We've got a great technology. It's on the roadmap. This has got this performance." So you're doing all the pushing, you're doing all the selling. We're not doing the selling now. They're coming to us. Tier ones are coming to us. And so that's what I meant by dragging.
So the decision-making process, they are still the ones that are too slow. Are we ready to go? I mean, if they gave us an order tomorrow, could we fill it? We've got a foundry.
That's true. And, we have people coming up on our doorstep. So, obviously, I can't really answer that question for you, but I think the message I'm trying to give is that when I said folks are dragging us along, folks are pulling us. We're not pushing. So they're asking us to go faster. And so what we are doing as a company, we're going faster. And so, you know, we've got the board of directors here, we've got folks in the back. As a team, we're working much more intensely, and we're more engaged, and we're going faster than before because of this pull.
It'll be easy one. Going back to the comparisons to OLED, what is the marketing strategy in the future, though? Are we gonna make a dent in the universe and transform this space? And is it gonna stay powered by Lightwave, or are we always gonna be behind the scenes?
... That's an interesting question, because, you know, companies like Arista, Andy Bechtolsheim did a couple of presentations. He looked at, I mean, Arista is a systems company. They have their own system design. They said the impact of high speed, low power modulators could affect their system power consumption 20%. Now, I haven't had any exposure in the details of how they made that calculation, but if that calculation is any close to being correct, that's a huge impact. And so if low power, high speed modulators can have that type of effect in one company's system design, that's pretty exciting. And so you translate, you know, Arista's equipment going to the data center. So I think, yes, it could have a big impact. Would we be behind the scenes?
Yeah, I think so, because we're an engine in the transceiver that goes in part of the servers and the routers. So I don't think we're the forefront, but we're certainly a critical part of the pluggable transceiver to go help that power consumption go down and help that, you know, speed go up. And I don't know if that relates to your OLED question, but if you think about OLED, 10 years ago, I had LCD. Well, I don't have a television, but I know people had LCD televisions, but LCD displays and mobile phones and PDAs and things. I wasn't really expecting that field to flip overnight to OLED, and it did. Because, you know, the performance of OLED is incredible. There's a question back there.
So I have a question that came up before my prepared. Going back very elementary, looking at that wafer, how much does that wafer cost? And then how much of that is Lightwave?
Well, it's our wafer. It's all our devices on it.
Okay. If somebody was buying the wafer, a company buying that wafer. So, so that's 100%?
That, again, is a-
Just trying to get a scale of how much that-
When you work with foundries, you can work in two ways. You can work a low-cost route called MPW, which is a multipurpose wafer, where a bunch of companies will all buy some real estate on the wafer, and then when the wafer is fabricated, you cut it up and you get your chunk. This is 100% ours.
Oh.
So this is all our design. This is our wafer. It's got modulators on it. Now, I'm not going to answer your question about how much it's going to cost, but yeah, there's a lot of value there. And these devices are teeny-weeny, so there's lots of them.
Okay.
Embedded in that wafer is a lot of value.
So my third question was this, so I’m very happy to hear that your goal is to stand alone and not be acquired, from a long-term shareholder. Again, I like that, personally. But you’ve also done the roadmap. What types of companies would even be interested in acquiring Lightwave? And I’m not asking you to say that there are companies doing that, because you would. Because who would want to own us? I mean.
I'll give you an answer in two words.
Yeah.
Wealthy ones.
Okay.
I hope that answers your question.
It did. Thank you.
Alan, we have to wrap this up soon, otherwise I can lose my voice here.
Thank you again for hosting us. Maybe from a very high-end perspective, because I'm not very technically oriented, but on the critical path to launching a transceiver, the way I see things, there's a laser on the transceiver, there's the transmit side, there's the receive side, there's different parties part of it. Could you give us a little bit of color as to the work that still needs to be done for the transceivers to be ready? Is everybody on the transceiver progressing at the same speed? Is Lightwave pretty much ahead of the game and other participants have to catch up to have the transceiver ready? Or do you feel that you're behind and you have to work with other people?
The industry is preparing for 200 Gbps lanes, so the electronics is now at 200, the SerDes chips. The lasers are already there. The printed circuit board technology is a metal box. This technology is all being worked on by a number of different companies, and so that technology is progressing right now. So we're not behind, and we're in line with what's going on. Where we fit in is an optical engine inside the transceiver. We're just one part of it, on the transmit side. There's the receive side of it. There's folks doing photodetectors and receive electronics, and then there's the fiber optics on one end and the electronics on the other end and the connectors. But everybody's prepping for 200 G lanes.
That's the reason why the result we gave three months ago got so much reaction, because it's, it's world-class, and it fits in exactly to what the transceiver companies are looking for. And, you know, the way we describe this internally in the industry is a transceiver reference design. The first transceivers will be called reference designs, because then products will be referenced off that. ... There's a question at the back. Sorry.
Hello. I've been in here for 16 years. I've got a question about the Chips Act. You mentioned that so it's a lot of money, U.S. and other countries. You mentioned that most of the money is not going to electro-optic polymers, but to traditional silicon. Can you share how that might incentivize incumbents to stick longer with the old technology? And the second part is, can you share about what Atikem or the team is doing to address that?
Yeah, sure. So the Chips Act, both in Europe and in the U.S., is really a feeding frenzy of the big silicon players. So if you look at who's got the money that's been divvied out so far, it's the big companies. It's Micron, it's Intel, there's a few others. There's a lot of small companies vying for it, but whether they'll be successful or not, we'll have to wait and see. That money is mostly going to IC work, and it's not really going to affect modulators. So if you look at the incumbent modulator technology, it's silicon photonics, the silicon, which it's really not going towards. It's Indium Phosphide and Lithium Niobate, and the Chips Act is not really affecting those, those technologies.
I would have liked personally to see more of that money go towards the photonics industry, but it hasn't worked out that way. You know, the photonics companies is not as big as the Intels and the AMDs of this world, so it makes it a little difficult. But that's the reality of, you know, the government scenario on one hand. On the other hand, internally, yes, we are reviewing the Chips Act and the opportunities there, and we certainly looked at a couple of things that came out. I'm not gonna give a lot of guidance here, but certainly internally, we're monitoring this, and if something makes a lot of sense for us, yeah, we'll, we probably will do something. Gee, we'll generate a lot of questions now.
On the one slide where you were talking about competition, and then you had a competitor, but you, but you didn't expand on it. It was TFLN?
Yeah. Yeah.
Could you expand on that competitor?
I don't know where it was. Is it that one? Nope. Well, anyway, I can do that anyway. Thin-film lithium niobate. Well, the father of lithium niobate is sitting right in front of you. Dr. Frederick J. Leonberger was 40, 35, 40 years ago, was the driver of that material to be used as modulators in the optical network, or the internet, as we call it today. It had some speed and size issues, and so folks have thinned out the material, made it very, very thin to improve the performance. And so some of the performance of thin-film lithium niobate has actually looked fairly good in terms of, you know, R&D type work. And a lot of companies are looking at that technology as a possible replacement for the incumbent modulator technologies. So we view this certainly as a competitive technology.
I was on a panel at OFC, and I think it was televised. I think some folks may have saw it. On the panel was the CEO of HyperLight, and HyperLight is a Boston-based company that's developing thin-film lithium niobate. And I mean, the CEO indicated they had another 3 years of development because they're having issues with, you know, integrating that into silicon foundry. Now, whether they'll short-circuit that or not, I don't know. Whether they can upgrade the performance of thin-film lithium niobate to fulfill the roadmap that we showed today, 400 G and 800 G, I don't know. Certainly, some of the performance today looks like it might be good enough for 200, but it's 10 times the size. It's big.
And so it does have its impediments, but it is a competitor, and it's something that we have to watch carefully. But we feel we have the headroom in performance to go further. And cost. Sorry, I'm being corrected here. We have a cost-competitive technology. Pardon?
I want to tell you all.
That was from Siraj, one of our board directors, who's been in the business all his life, so really understands that comment. I'll take one more, and then I'm gonna. I'll close it because we've got to do the tour. Let's go here.
One of the things from discussions, from all the discussions I hear among retail investors, they have a hard time getting a handle on timing of innovation through the system, and I think it was good that you mentioned what it takes to get a wafer through a foundry. So it would be nice to get a tangible answer. You had up there, you know, hyperscalers would want to do a live trial. If one came to Lightwave and said, "Okay, we want to do this ASAP," what sort of time frame does it take for you to mobilize to get that done? Is there a tangible answer to that? And then just a second question: With being pulled or pushed along, has it changed your pricing model?
So the right answer to your first question is, once you see a package modulator yourself, you'll have a much better idea to answer that question. Because, you know, the ask is: We want to take a package, and we want to go test it in our own lab and play with it. When you see it for yourself, you can answer that question yourself. You don't need me to answer that question. Because, because you're seeing something that's physical, and it can be tested anywhere.
Taking a live trial.
I mean, making it operational.
Right.
Yeah.
Well, do you then need to go and order the wa--
Well, we're gonna, we're gonna show you at least one part working operational today, and it's not even gonna be in a lab. It's actually gonna be in a conference. So that, I mean, that is one step even more removed from... I think last time we did a lab tour, we had to, we took you into the lab. This is not even in a lab. This is in the conference room, showing you it's operational. So that's the difference. I mean, it doesn't matter where it is, you can test it anywhere. So I'm giving you the best answer I can give without getting too much in terms of guidance. But I think at this point, I'm going to thank everybody for listening. Really appreciate it.