• Lasers are a US$25bn market, including US$380 million for industrial applications
  • Laser diode player BluGlass has just picked up a semiconductor fab for a cheap $2.5 million
  • The company expects to launch six or seven products this year

 

For the last two years, semiconductor manufacturing player BluGlass (ASX:BLG) has been focusing on its remote plasma chemical vapour deposition (RPCVD) technology to build gallium nitride (GaN) laser diodes.

They’re used in the industrial welding that goes in your telephone, medical diagnostics tools, and electric vehicles.

And BluGlass executive chair James Walker says the market is worth a whopping US$380 million.

“People are probably not aware of just how big this laser diode market is and how fast it’s growing,” he said.

“It’s used in almost any application, and in the industrial welding space, its used in anything to do with copper, so electric car batteries, your mobile phones or AR technology – blue lasers will have a significant role in that industry.

“The entire laser market’s worth about $25 billion market, our five sectors are about $2.5 billion – that’s the potential.”

“Our addressable market today is in industrial applications, medical devices and research and potentially defence. Those markets in themselves are US$380 million today.”

 

Fab facility for a fraction of the price

The company is building laser diodes at 405, 420 and 450 nanometres and expects to launch its first commercial product this year.

And it just picked up a semiconductor manufacturing facility – or fab – in Silicon Valley for a sweet US$2.5 million.

“In-house we currently do the first two steps of a nine-step manufacturing process to make laser diodes, using contract manufacturers for the middle steps and then doing final quality control and reliability testing ourselves,” Walker said.

“While that strategy has been working for us, it’s more expensive, because clearly, our manufacturers have got to make a margin on the work they’re doing for us.”

“The strategy was always to get our product out to market and then over time start to bring those manufacturing processes in house.”

“And if we were to build our own fab in the USA, it would be a US$40 million cost to build that for those five manufacturing steps.”

Notably, the opportunity to acquire a fully operational manufacturing fab, accompanying equipment, and skilled team is incredibly rare – particularly at a time when semiconductor demand is outstripping supply.

“This move allows us to increase our manufacturing capacity, halve our production costs, and offer more products to the market,” Walker said

 

US$160m revenue potential and shorter runway

“We expect it might take up to a year before we’ve transitioned everything away from the contract manufacturers into that facility, and there’ll be six or seven products that we’re looking to launch,” Walker said.

“What’s really attractive about the acquisition for us is that it significantly shortens our commercialisation runway.

“We could make enough product that could generate US$160 million worth of revenue, and when we moved to contract manufacturers that got reduced down to US$40 million, that was our revenue opportunity.

“By having this facility and having the equipment that’s already there, we can actually maintain that US$160 million of revenue potential.

“Our manufacturing capabilities stays at $160 million a year, so once we’ve got products out in the market, and when we’re starting to sell them, we’ve got the opportunity to generate significant revenue for a company of our size.”

 

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