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August 23, 2002
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Editorial: About Wall Street Placing Bets on War
 
... As an old war protester from the '60s who made the DoD my news beat throughout the '70s and '80s to better understand the ying and yang of warriors and war backers, I personally found the following news piece repugnant... but realistic: "The Amex Defense Index fell 0.5 percent...
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TRW Opens Up New Automotive App Area for Advanced Sensors

August 23, 2002...The automotive arm of TRW is developing an "interior vision system" based on an advanced sensor capable of accurately sensing occupant size and position, thus delivering real-time reactions as a means of further protecting the auto's passengers. This new application is likely to be of special interest and relevance to those within the the compound semi industry who took a leadership position in developing collision avoidance systems for airbag-related components for the automotive industry. "One of the biggest challenges facing the occupant safety industry today is the new FMVSS 208 regulations regarding out-of-position passengers in the vehicle," explained Doug Campbell, VP of Occupant Safety Systems at TRW Automotive. "A number of companies, including TRW, are developing indirect sensing systems primarily based on weight sensors to not only determine the size of the passenger, but to try and predict if and when these passengers are considered out-of-position, meaning that a portion of their body is so near to the airbag that it can cause injury. This is particularly significant when children or small stature adults have their heads near the airbag when it deploys." These weight-sensing systems are being developed to meet the FMVSS 208 regulations when they take effect in 2004. However, TRW believes that its new vision system, slated for introduction in the 2007 model year, is a better solution to occupant sensing and passenger protection. The company is currently engaged in development contracts with three major vehicle manufacturers on three continents to perfect the system. For those interested in pursuing this applications area, we refer you to the details in TRW's press release

Gentex Introduces Latest WhiteLED-Based Rearvision Mirror Module

August 23, 2002...Gentex Corporation of Zeeland, Michigan USA, that innovative designer of the rearvision mirrors in automobiles that pioneered the use of white LEDs, has begun shipping its newest line of white lighting. The first autos to incorporate the new high-feature mirrors will be the 2003 Chrysler Sebring Coupe. Each mirror contains a map light serving the driver and front seat passenger, using binary complementary white light versions of Gentex's Orca power "BCW" HB-LEDs in what the company is calling a highly engineered module. Additional features include the automatic-dimming electrochromic mirror function, a wireless control system, and a dual-display showing the external temperature and the vehicle's compass heading. "We are delighted to have simultaneously launched production of Orca power LED components in our pilot facility at the same time we've introduced a state-of-the art, multi-featured application designed around these components. This program -- our most complex to date -- gave us a great opportunity to combine the strengths of our Orca and BCW LED technologies with our traditional manufacturing focus and systems integration capabilities," said Gentex Executive VP, Kenneth La Grand, who added: "This product showcases our unique LED technologies, but also demonstrates our technical capabilities across an unusual range of disciplines including thermal, optical, and mechanical engineering, electronics, materials science, chemistry and advanced, high-volume manufacturing technology. The results are a superior product, refined look and feel, and improved value. We are optimistic about the prospects for this program and other similar applications." Each of the patented BCW Orca power LED components used in these assemblies typically produces in excess of 7.5 lumens of white light operating at about 0.6 watts. Details on how the new white HB-LEDs are assembled into circuit assemblies and more technical details are included in Gentex's press release

Agilent Adds Claw Power to Big Bear's SiGe Subassemblies and Transponders

August 23, 2002...Big Bear Networks of Milpitas, California USA wrestled with the infamous InP versus SiGe decision for the base of their Photronic Signal Processing (PSP) technology, and SiGe won. Agilent Technologies' venture unit (AV) appears to think that was a good decision because they followed Menlo Ventures' lead in the latest round of funding for Big Bear's efforts. The round raised over $40 million in equity funding. Big Bear previously raised $60 million in two rounds of private funding from Accel Partners, Austin Ventures, Menlo Ventures, Oak Investment Partners and Sequoia Capital. "Agilent Ventures' investment in Big Bear Networks is yet another example of Agilent's willingness to invest in innovative early-stage technology companies despite the current economic downturn," said Maximilian Schroeck, managing director for AV. "We see a number of potential areas for technical collaboration between Agilent and Big Bear Networks." Adding to that was mark Thompson, President and CEO of Big Bear who commented, "We are delighted to have gained a strategic investment partner with expertise across a wide range of high-speed communication technologies, from test equipment to optical networking. The synergies between the two companies offer significant possibilities for moving beyond our funding relationship into a longer-term, mutually beneficial technology partnership." Big Bear did a number of parallel designs in InP and SiGe during their first year in order to determine which technology best suited their PSP technology, and volunteered to disclose details of what went into that decision (and how they intend to fab their SiGe designs) with our readers. They'll do just that in early September, so... stay tuned. Meanwhile, details about their relationship with Agilent can be found in the press release

Keith Evans Joins Veeco-Applied Epi

August 23, 2002...Veeco-Applied Epi of St. Paul, Minnesota USA has announced that Keith Evans is their new VP of Advanced Technology. Compound semi industry insiders know Keith best as the key developer of technology that significantly influenced the efficiency of MBE epitaxial growth systems while he was a group leader of MBE crystal growth at the Air Forces' famous Wright Laboratory in Dayton, Ohio. From Wright Pat, Keith made his initial sojourn into business via SLIC in Binghamton, New York and from their he moved on to IQE where he served in a number of senior management position, including VP of Technology and VP of Operations. Keith is also well known for his volunteer contributions as a member of the board of directors of GaAs MANTECH. Keith holds a Ph.D. in physical chemistry from Purdue University and has authored more than 200 journal articles. His new charter is to lead Veeco-Applied Epi's technology and emerging application development efforts, using MBE. "Keith has extensive knowledge of MBE and metal organic vapor phase deposition (MOVPE) technologies from his experience at IQE, the world's largest epiwafer manufacturer," said Marlin Braun, General Manager of V-AE. "We can think of no one better to lead our company's expanding team of MBE scientists as the silicon and compound semiconductor markets converge." Press Release

Intense Raises Another $16 Million

August 23, 2002...Intense Photonics of High Blantyre, Scotland has closed a £10.5 million ($16 million) series B funding round. Leading the round was Cazenove Private Equity, and included 3i and ACT Venture Capital, together with two further European venture capital funds, FNI Venture Capital and TTP Ventures. Intense Photonics said they will use the funds to accelerate the development of its product range and strengthen its marketing effort. Commenting on the scale of the fundraising David Lockwood, CEO of Intense Photonics said "against almost all planning scenarios this exceptional funding achievement sees the company through to the generation of positive free cash flow." Tod Bensen, CEO of Cazenove Private Equity was confident that the syndicate had identified the right investment despite what Intense termed, in their release, as the current turmoil in the sector, saying "We have followed the progress of Intense Photonics for some 18 months and have seen it develop considerably over this period. The company has a first class management team that is dedicated to extracting value from its unique technology. The many current and potential applications of Intense Photonics quantum well intermixing techniques have given us the confidence to invest in the Company at a time when most photonics companies are struggling and market visibility remains poor." Adding yet more insight from the view of the venture community, Robin Winning of 3i's Technology Team said: "the difficulties in the technology capital markets have tended to conceal the fact that there are many sound businesses developing technology with a global application. Intense Photonics is one such business, which is reflected by the overall scale of 3i's investment in the Company and the fact that we have supported it from startup. The business has considerable long term potential and we look forward to working with and adding value to the management team as they pursue their growth strategy." More details, which includes considerable information from the venture perspective, are included in Intense's press release

ADC's Outlook Remains Grim

August 23, 2002...ADC weighed in this week with their quarterly earnings and their news indicates that, as a significant systems integrator, they still don't see much light at the end of the telecom tunnel. "As the extent of the downturn and the eventual recovery in this difficult market is uncertain, we are now taking additional cost reduction actions to lower our quarterly sales break-even point below $250 million," said Rick Roscitt, Chairman and CEO of ADC. "We remain steadfast in achieving our three strategic goals for ADC to become a stronger, more profitable growth company. First, return to profitability as soon as possible. Second, strengthen our already solid balance sheet, which includes a significant amount of cash. Third, increase market share in our core competency areas including broadband connectivity, HDSL systems, systems integration services, IP cable systems, operation support systems software, and wireless transport/coverage systems." ADC's cutback decisions have included the selling (or closing) of their optical components business by the end of October. That unit includes a complete line of passive and active optical components, including tunable and pump lasers and facilities. ADC has reduced its workforce by approximately 25% through both voluntary and involuntary reductions and at the end of the third quarter, ADC had approximately 9,000 employees. They have announced their attention to complete additional workforce reductions during the fourth quarter of 2002 in amounts not yet determined and that their current planned revenues in the fourth quarter of 2002 will be around $200 million. They added a telling caution to investors that "forecasting in these industry conditions remains extremely difficult and subject to change." Details are in ADC's financial release.

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The McDonald Report
Commentary & Perspective...

About Wall Street Placing Bets on War

August 23, 2002...As an old war protester from the '60s who made the DoD my news beat throughout the '70s and '80s to better understand the ying and yang of warriors and war backers, I personally found the following news piece repugnant... but realistic: "The Amex Defense Index fell 0.5 percent on a day that saw the Dow Jones Industrial Average retake the 9,000 level for the first time in six weeks. On a broader level, just the possibility of a U.S. attack on Iraq is enough reason for investor exposure to the defense sector, Merrill Lynch said. Merrill Lynch highlighted shares of ammunition and rocketry specialist ATK and Raytheon, maker of the Patriot air-defense missile system. That said, the analysts noted that 'investors can reassess their defense holdings if no war occurs, or after a week or two into a military campaign.' " It was included in a roundup article datelined Aug. 22nd and written by August Cole for CBS.MarketWatch.com.

Why do I find this repugnant? Good question. Probably because... and I repeat... I'm an old war protester from the '60s. I sincerely want the peace-loving people of the world, like myself, not to be put in the position where war talk makes headline news. My stomach churns when I hear of people "betting" on profits to be made from saber rattling. The line that got me was: "...That said, the analysts noted that 'investors can reassess their defense holdings if no war occurs, or after a week or two into a military campaign.'" For 40 years my antiwar philosophy has never changed, although my eyes are wider open. And I will continue to do whatever I can to influence a change in people's attitudes that focus on intolerance, for that is what's at the heart of disputes that lead to war. Intolerance, and ignorance. Our Texas Wildfire band (which is led by my husband, Bill Randall, who was drafted into the Viet Nam conflict), played the Welcome Home Concert this week for a private university in Kerrvile, Texas. All the freshmen attended and learned about the roots of rock and blues, and were made more aware of the bounty of excellent music that was created in those turbulent '60s. Looking at all those young faces and happy smiles, rocking out with us, I felt reassured that my anti-war philosophy simply must prevail. Those young people should not have to be forced by their government to go to war, as we were forced to do. As the MarketWatch article reminds us, however, the USA's current administration's saber rattling is heavily backed by America's financial community. When someone remarks that "war is good for the economy" the same gut wrentching takes place. War isn't good for anyone or anything.

Obviously, we too cover defense-related news in CompoundSemi News... because it's news. ONR, Wright Labs, NRL, DARPA, and the whole of the R&D side of the USA's DoD supports leading edge technology development, and much of our compound semi community is heavily dependent on such government support. But I know a lot of DoD program managers, and not one of them could be typecast as a "war monger" and they're certainly not profiteers. Quite the contrary. They are first and foremost scientists, and secondly, they are realists. They would sincerely like to see the technologies they back ultimately lead to true deterrents to war. It's the politicians and backers who are in it for the "almighty buck" that worry me... not these hard working government employees who try and spend our tax monies wisely. As the world famous cartoon character, Pogo, said so wisely on Earth Day 1971: "We have met the enemy, and it is us."

Tis the Season

August 22, 2002...In the spirit of full disclosure (and presumably easier/better means of accessing facts such as the financials) as reported this week to the SEC by some of the newsmaking publicly held USA companies active in the compounds, here are the first wave of numbers the financial community so readily and necessarily feeds upon: Celeritek which has been in the news as courted for takeover by its customer Anaran; Kopin, which is fanning out from HBTs to HB-LEDs; TriQuint which is a compound semi foundry's foundry, RF MicroDevices, which just keeps controlling key application areas; Endwave which we haven't heard from lately but would like to (they're old pros at defense apps); Microsemi & ATMI which represent companies that do leading edge compound development as only a portion of their core businesses; Vitesse which is looking more towards silicon solutions than to their original roots; Also just posted are Emcore's,which is the direct opposite of Vitesse in that it sticks to only compounds, is one of the few truly vertical companies, and retains the overwhelming lead in compound semi advanced MOCVD development. Then there's Signal Technology which seems to score excellent defense contracts; Sirenza, which appears on a roll, and last but not least, New Focus which seems representative of so many promising telecom new starts.

If you have questions about the solid state lighting and compound semiconductor industries or have news or views to share, I'm Jo Ann McDonald, Editor of LIGHTimes and CompoundSemi News.
Feel free to contact me directly, anytime.
My direct tel at the ranch is
+1-325-463-5345

From time to time Jo Ann may comment on companies in which she holds a modest investment - be sure to read her disclosure at some point in time...

 

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