Manny Anton: We're talking today with BluGlass, one of Australia's only vertically integrated semiconductor manufacturers. BluGlass is a global supplier of cutting-edge visible lasers for the industrial, defense, quantum, robotics, and scientific markets. It has facilities in both Australia and the US. The company has had some significant news flow recently. It has secured its largest single contract in the defense sector, and has also acquired Silicon Valley-based manufacturer, GaNWorks Foundry. Here to tell us more is CEO, Jim Haden. Jim, welcome back to the network.
Jim Haden: Thank you, Manny, it's nice to be here.
Manny Anton: Well, let's get started. And getting straight into it, Jim, let's start with the 2.6 million contract that was recently announced with North Carolina State University, which is part of the US Department of Defense's Microelectronics Commons. Can you tell us what the contract is for and why this is a significant milestone for the company?
Jim Haden: So ME Commons is part of the CHIPS Act at the United States government, and its intent over the next five years is to invest in technologies that are deemed key to the US economy, and to the defense of the United States and its allies. In this program, we will be collaborating with a lab at North Carolina State University, and other fab-type technologists such as GE, Wolfspeed, and Adroit Technologies, so forth. These are large companies that will work with the lab because the intent is to have lab to fab.
And BluGlass is a fab, it's an off-ramp for the technologies. This is a contract, as you said, for 2.6 million Australian, and it is a testament of the Department of Defense and DARPA in the technologies that we have invested in. Our investors have given us money over the years to do the GaN technologies. That GaN is deemed crucial and we will continue to invest in the roadmap. So it's an essential part of the CLAWS Hub, but what it's saying is the technology that we've been developing is important to the United States and our partners.
Manny Anton: The Microelectronics Commons program has been allocated $2 billion of CHIPS and Science Act funding for a five-year period, as you've mentioned, but with only the first year of funding allocated to each hub. Can you tell us how the hubs win more projects and funding and how BluGlass can participate?
Jim Haden: Yeah, first off, there are eight hubs and there are 460 members in that hub. Our hub is a team of seven other companies in the lead, as I mentioned, North Carolina State University. So the core hub of the CLAWS Group, which is the Commercial Leap Ahead Wide Bandgap Semiconductors, was awarded 39.4 million US, which was one amongst the largest awards. And we have the smallest number of members, so that is going deeper for each of the companies involved. So they're investing in that. So one of the avenues is to just continue developing the core.
And in that, we are doing violet, which is the 405 to 420 nanometer up to blue, 450 nanometers. And then there are additional avenues that actually were just announced today that are coming out a call for projects. And those projects would be to extend the wavelengths beyond those. So they're getting on top of those projects and getting proposals in to participate in those. So we've got the four more years of the core and then we have a full five years of projects as well as additional ways to get funding.
Manny Anton: Will this laser development work impact BluGlass's own product map?
Jim Haden: It definitely will impact our development. And the way it's doing that, as I said, we are developing a core, which is the violet to blue, which we have already been investing in. And then there are projects that we will continue to try to go out even for more funding to go beyond those wavelengths. Also, the government is very interested in both our single frequency and our single mode products.
The single frequency DFBs that we've announced have attracted not only the DARPA and the DOD's interest, but that's because several of the prime contractors to the US government are interested in those kinds of technologies as well. So basically, this funding is funding of the roadmap that we wanted to do. So it'll accelerate our progress on those products. And it's also non-dilutive, so it's good for our investors as well.
Manny Anton: So as part of your involvement in the CLAWS Hub, BluGlass is an approved US commercial manufacturing supplier of photonic gallium nitride lasers. Can you tell us why this is important from a commercialization perspective?
Jim Haden: Well, the whole idea, as I mentioned of the Microelectronics Commons is a lab to fab. So the US government won't deem it a success unless it is brought from a lab research environment into a commercial environment. So we are trying to set up the infrastructure with North Carolina State University in such a way that when they're doing products or development there that are funded by the government, that there's an avenue or they call it an off-ramp for a commercial partner. And we are the only photonics commercial partner in that hub. The other ones are microelectronics, more of the voltage and those types of applications for GaN, not the photon part that we are doing. So we are a key off-ramp.
So what they're doing for the dual-use purpose, we can take those same types of improvements we do to the products and use them in the materials processing. In commercial quantum, there's a keen interest in quantum electronics and quantum computing, those types of things. So the government quantum sensing is very interesting to the government. There's also commercial applications to each one of those. So it's a dual-use technology. And I probably should mention for our shareholders that the fiscal year of the United States government is offset by one quarter to ours. So we just started in October, the new fiscal year for the government of the United States. So it's one-quarter offset from what our shareholders are used to.
Manny Anton: Let's turn now to BluGlass's acquisition of GaNWorks for, I believe, US 800,000. What does the acquisition actually involve?
Jim Haden: So GaNWorks Foundry was a small organization that specialized in the last part of our wafer fabrication process, which is the thinning down of the wafer and then doing the backside processing. As you know, there's a P-side or positive side, and then there's a negative side N-side and we put a contact on one, a contact on the other. So we have to thin the wafer down so we can do the cleaving, but we thin it down and put the metals on and prepare, do all the preparation to turn the wafer into what we call bars and then the bars into chips. And it is crucial and sensitive processes that are required to do those last steps. And it really is the last contract manufacturer that we are using for the wafer fab processing. So it's moving that into house so we don't have to do it externally any longer.
So one of the things is when you are working with the contract manufacturer, it is not always the only thing that they're working on. So it will be a key focus now for us and this equipment, we have control over it, we expect that it's going to reduce our cycle times for that part of the steps by 30% or so. So we'll be cutting at least a week or so off of the process. And another thing is when we've looked at even bringing in the talent that we're getting, we are going to be saving over 400K US a year. So it's a very good return on our investment for getting this equipment in-house because we will have it to move more quickly and to do it at better cost.
Manny Anton: Okay. Jim, when do you expect to complete the vertical integration?
Jim Haden: Well, the wafer fab integration, well, I'll tell you what the progress is so far. We signed the deal, we went and worked with the commercial manufacturer of the equipment. They showed up at the GaNWorks Foundry and they helped to get the equipment ready to move. We moved it, we put it into Fremont. We had all of the facilities ready, it's now hooked up and we started to operate the equipment and have confirmed that it is operating it the way it was before we moved it. So now the next step is to duplicate the process and the quality of the process that we get out. We're figuring we'll be done with that in January, mid-February at the latest. So far things are going a little bit ahead of plan, so hopefully, we'll be able to shorten that as well.
Manny Anton: It has been a huge year for the business, clearly. And momentum is building for the company. Just to summarize, what can investors look forward to in 2024?
Jim Haden: Well, key thing, these two topics that we just talked about, ME Commons, the CLAWS Group, we will continue to invest and put our time in achieving the milestones and also the desired results that enable us to get the additional funding for the four years on course. We hope that we also get some projects that will help to refine our products even further. The interest that we see right now is in the DFB and the single mode. We believe that the projects will call for extending wavelengths and also the higher functionality that we want out of our chips. So we will continue to see those kinds of progress as well as progress with other members of the hubs.
We'll continue to expand our partnerships and be exposed to more elements of the US economy as our name gets traction. So part of it, as you know, it's not always what you know, it's who you know. And we're starting to meet more and more companies and the leaders of those companies. So we hope to have more partnerships in those areas and we also expect to have more accomplishments when we get distributors interested to distribute to our users as well. So they're like an outsourced sales team and we're already getting some traction and we hope to see some deals going through distributors in the future.
Manny Anton: Jim, thank you for your time today. We look forward to speaking to you again in 2024 to hear of further progress. Have a great Christmas and New Year.
Jim Haden: You as well, Manny. I hope you and your team all have a great Christmas and holiday season.
Manny Anton: Thanks, Jim.
Jim Haden: Thank you.
Ends.
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