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Editorial: CS/SSL Stock Portfolio Update for August
... It's "quarterly earnings" time again for many of the companies that trade over their various national stock exchanges. Of those included in the representative stock portfolio of 13 compound semi (CS) and solid state lighting (SSL) related companies that are covered periodically in The McDonald Report, Color Kinetics, Anadigics,...
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Cree Opens New GaN and SiC Production Facility
CompoundSemi News StaffAugust 8, 2006...Cree of Durham, North Carolina USA, a pioneer in both silicon carbide (SiC) production and gallium nitride (GaN)
has opened its new 230,000-square-foot facility for the production of advanced
GaN and SiC-based devices. Cree says the facility is
among the first commercial high-volume production facilities devoted to GaN
and SiC production. Cree will produce a number of devices at the new facility
including high-efficiency SiC power components for power supplies and motor
drives. Cree will also develop and produce SiC and GaN wide bandgap radio-frequency
devices for the Department of Defense and WiMAX applications, and it will provide
SiC and GaN MMIC foundry services for defense and general-purpose applications. Cree's GaN roots are a combination of their own pioneering work with GaN on SiC for blue spectrum LEDs coupled with the acquisition of ATMI's pioneering work with GaN bulk substrates which continues to be done under the direction of George Brandes. Good bulk GaN substrates are a highly sought-after commodity for GaN-based electronic devices.
“The new Cree site houses one of the first commercial SiC and GaN
production facilities in the world devoted to serving the power and wireless
infrastructure markets,” said John Palmour, Cree executive vice president
for Advanced Devices. “SiC- and GaN-based technologies enhance the
performance of traditional power-supply, motor-drive and wireless-communications
systems by enabling the design of devices which provide significantly higher
efficiencies than are available with similar silicon devices today. Cree is
expanding its SiC and GaN production capabilities to continue to lead technology
innovation for power and communications applications.” Company
News Release August 8, 2006...Kyma Technologies, reports being awarded a cooperative research and development
agreement (CRADA) with the U.S. Air Force Research Laboratory (AFRL) to research
gallium nitride (GaN) field effect transistors (FETs) on native GaN substrates.
Kyma Technologies, a maker of gallium nitride substrates and nitride semiconductor
devices located in Raleigh, North Carolina USA, reportedly signed the agreement
to further understand how low defect density native gallium nitride (GaN) substrates
might improve GaN field effect transistor (FET) performance and reliability.
The company pointed out that previous attempts to develop GaN FETs relied on
silicon carbide (SiC) substrate technology. The mismatch in the material structure
proved troublesome in terms of reliability despite giving the FETs high performance.
Kyma hopes putting the GaN FETs on native GaN substrates will solve the reliability
problem.
“We look forward to working closely with AFRL scientists to accelerate
our understanding of what it takes to build a reliable high performance RF FET
in the GaN materials system. The improved understanding that we hope to reach
under this CRADA has the potential not only to positively impact RF FET applications
but additionally can be leveraged across a broad range of other device applications
of import to both the military and the commercial sectors,” Dr. Keith
Evans, Kyma’s president and CEO stated. Company
News Release SRC Recruits IBM Veteran Dr Jeffrey Welser to Head Nanotechnology Research Initiative
CompoundSemi News StaffAugust 8, 2006...The Semiconductor Research Corporation (SRC), a university research consortium
for semiconductor technology, has called on IBM veteran and semiconductor expert,
Dr. Jeffrey Welser to be the director of the consortium’s Nanotechnology
Research Initiative (NRI). Dr. Welser will succeed Dr. Hans Coufal, who is on
an extended leave of absence from the NRI and SRC's leadership team. According
to the SRC, Dr. Welser will direct nanoelectronics research that will be conducted
in collaboration with U.S. federal and state government research agencies. Dr.
Welser’s main goal will be to develop an information element that can
replace the complementary metal-oxide semiconductor field-effect transistor
(CMOS FET) in the year 2020 or beyond. Additionally the consortium hopes the
research will allow integration of the new information element with existing
CMOS technology. A 20-year-veteran and industry leader in the semiconductor
industry, Dr. Welser has had a number of important positions at IBM including:
Director of Next-Generation Computing Technology at IBM's Almaden Research Center.
Since 1995 at IBM he served as director of high-performance CMOS technology,
management committee leader for the Sony-Toshiba-AMD-IBM Development Alliance,
and Manager of the Exploratory Silicon Devices & Circuits organization at
IBM's T.J. Watson Research Center. SRC
News Release. In mid July the SRC launched the Non-Classical CMOS Research
Center with the goal of extending Moore’s Law beyond the capabilities
of silicon. (Ref: July
17 Coverage) Photonic Products Ltd. Introduces 405 nm Blue-Violet Laser DiodeAugust 8, 2006...Photonic Products Ltd., a laser diode specialist and optoelectronics manufacturer,
has launched a 25mW version of their popular 405 nm (blue-violet) photon laser
diode module with TTL modulation. According to the company, the module offers
higher energy density output power. It also offers higher signal to noise ratio
and therefore allows greater accuracy and sensitivity for biomedical and biochemical
applications. The company says that the laser diode module is ideal for food
processing, industrial imaging and inspection, spectroscopy, microscopy, medical
imaging, and other technologies requiring power, accuracy, and sensitivity.
Company
News Release Oregon Could Get Nanotech Funding Through Defense Bill
CompoundSemi News StaffAugust 7, 2006...Senators Ron Wyden and Gordon Smith announced that the U.S. Senate Appropriations
Committee approved millions of dollars in funding for defense-related projects
in Oregon. The US Senate Appropriations committee voted to fund a number of
nanotechnology projects through the Oregon Nanoscience and Microtechnology Institute
(ONAMI), an article
in Bend Weekly (Fort Bend, Oregon’s newspaper) reported. Microsemi’s
(formerly Advanced Power Technologies) Power Products Group would receive $4
million for development of silicon carbide semiconductor components for avionic
applications. In a separate funding initiative under the 2007 Defense Spending
Bill, Oregon State University would receive $1 million in funding for the development
of nanoscale ultra-low power electronics. The Defense Spending Bill still has
to be approved by the full senate before the funding takes effect. Bookham Reports Quarterly Results and Shenzhen Plans
CompoundSemi News StaffAugust 7, 2006...Bookham reports a narrowing net loss for the quarter. For fiscal Q4 of 2006
Bookham reported a net loss of $27 million. The net loss was about 44 percent
less than the previous quarter and 31 percent less than the net loss during
the same period a year ago. The company however posted a 10 percent revenue
decrease from $61 million in fiscal Q4 2005 down to $55 million in fiscal Q4
2006. Dr. Giorgio Anania, president and chief executive officer of Bookham, Inc,
stated, “We are making good progress on the cost reduction plans we
announced in May. Our lasers prototype line with associated engineering support
will be transferring to our Shenzhen, China facility in the August to October
timeframe, and our chip-on-carrier line will be starting up in Shenzhen in September
with the move to be completed before year-end.” Dr. Anania said that
the move of some jobs and functions to Shenzhen will drive down the company’s
overhead cost structure. He said that the job and function move will result
in significant reductions of the company’s Western-world staff, especially
in the company’s Paignton, UK site. In a separate news announcement, Bookham
indicated that the company has received a $25 million line of credit from Wells
Fargo Foothill (part of Wells Fargo). (Ref: Quarterly
Financial Results) DOE Awards Seven SBIR Grants for SSL Technology Development
LIGHTimes StaffAugust 7, 2006...The US Department of Energy has announced awarding seven Small Business Innovative
Research (SBIR) grants, five for phase I and two for phase II, for solid state
lighting technology development. The seven awards for SSL development went to four companies, K Technology, Universal Display Corporation, Physical Optics Corporation, and Fairfield Crystal Technology. Content continues for LIGHTimes SecondPage members... Anadigics Cuts Sweet Deal With LG Electronics
CompoundSemi News StaffAugust 3, 2006...Anadigics, a wireless and broadband solutions provider headquartered in Warren,
New Jersey USA reports making the first shipments of its new EV-DO power amplifiers
to LG Electronics for its chocolate phone. The Chocolate, a sleekly styled phone
with camera, MP3, Streaming Video, and Bluetooth capability, is exclusively
offered through Verizon Wireless. The phone utilizes Anadigics’ AWT6310
dual-band CDMA power amplifier (PA) based on Anadigics’ InGaP HBT technology.
The AWT6310 features independent RF paths which the company says ensure optimal
performance for each band and 25 percent space savings over solutions requiring
two single-band PAs. Anadigics
News Release Construction Begins on High Power Solid State Laser Facility
CompoundSemi News StaffAugust 3, 2006...The U.S. Military is one step closer to developing high powered solid state
lasers for missile defense and weapons systems. Construction has begun on a
U.S. Research center dedicated to high-powered lasers for the military. The
Directed Energy Production Facility will be constructed at Northrop Grumman’s
Space Park campus in Redondo Beach, California. The new, 11,000 square foot
Redondo Beach facility will house a Class 10,000 clean room and solid state
sub-labs for work on system components. Northrop Grumman, a major defense contractor
with headquarters in Los Angeles, California USA, says it expects to complete
renovations to an existing building by the end of 2006.
After construction, the researchers will begin Phase III of the Joint High-Power
Solid-State Laser (JHPSSL) program, which hopes to develop solid state lasers
powerful enough to protect against cruise missiles. A portion of the workload
will include integration of laser systems and military platforms such as armored
vehicles. A company with a 30-year history of working with lasers, Northrop
Grumman received $58 million last year after successfully demonstrating a 27
kW laser for 5 minutes and 50 seconds. While the researchers have developed
solid state lasers running at about 25kW, they hope to increase that to 100
kW soon to enable use against rockets and artillery shells. "Northrop
Grumman is on track to be the first ever to build and demonstrate a 100 kW electric
laser,'' Alexis Livanos, president of Northrop Grumman Space Technology,
said Tuesday, "This facility demonstrates our tremendous confidence
in the potential for laser weapons." Company
News Release Emcore Corporation, Group4 Labs, and Air Force Research Laboratory Demonstrate GaN-on-Diamond Transistor
Scott McMahanAugust 2, 2006...Emcore Corporation located in Somerset, New Jersey USA, announced that a team from Emcore's EMD divison, Group4 Labs and engineers at the U.S. Air Force
Research Laboratory (AFRL) have successfully demonstrated a gallium nitride (GaN)-on-diamond
high electron mobility transistor (HEMT). According to Emcore, the aluminum
gallium nitride (AlGaN) on GaN transistor layers were grown using metal-organic
chemical vapor deposition (MOCVD). The MOCVD process was completed at Emcore,
and then Group4 Labs attached their CVD-produced diamond substrate using their
patented technology. Finally, the AFRL fabricated the transistors.
Emcore said, that demonstration proved the feasibility of making GaN-based
radio frequency (RF) devices thermally coupled to diamond substrates for maximum
heat extraction. The team expects to be able to pack more devices in less space
due to better heat dissipation. Additionally the improved heat dissipation will
allow more devices to be placed close to the active device area. The team expects
that the novel packaging and foundry process could be used for high performance
GaN-based RF devices, high brightness LEDs and Laser Diodes. "We are
excited by the promise of this technology combining the most robust semiconductor
material with the best heat spreader," commented Dr. Ivan Eliashevich,
Director of R&D at Emcore Corporation's EMD division. Emcore
News Release.
This demonstration was the result of years of work during the compound semiconductor
industry’s on-again/off-again love affair with diamond substrates. While
diamond substrates have been made before, it took the advances of Group4 Labs
to allow successful thermal coupling of GaN-on-diamond. It took the perseverance
of the military to continue researching a technology many had given up on. The
advance also required the MOCVD innovation of Emcore. The demonstration, while
impressive, is still far from the commercial success some diamond substrate
pioneers hoped for. If diamond substrates are ever a commercial success, it
will take many more breakthroughs and the right market conditions for the team
and especially the military to be vindicated for their choice of continuing
research on diamond substrates. –Scott Mc Our news features are reported
by the CompoundSemi News staff writers.
For submissions or content suggestions, you can contact us using
editor -at - compoundsemi.com
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Commentary & Perspective...
CS/SSL Stock Portfolio Update for August
August 3, 2006...It's "quarterly earnings" time again for many of the companies that
trade over their various national stock exchanges. Of those included in the
representative
stock portfolio of 13 compound semi (CS) and solid state lighting (SSL)
related companies that are covered periodically in The McDonald Report,
Color Kinetics, Anadigics, and Emcore appear to be weathering the most recent
tech stock downturn reasonably well. And Spire, AXT, TriQuint, RF Micro Devices,
and JDSU seem to be hanging in there. The rest have been pulled down substantially
by the severe tech stock drop that continues to plague North American exchanges.
First off, let me remind you of the intent of this modest, model portfolio.
If you're new to the topic of my meager holdings in a cherry-picked handful
of stocks, please take a look at my "Stock
Ownership Disclosure Statement," a link
to which is now permanently affixed to the end of this, and each and every posted
McD Report column. I now hold a modest number of shares in each of the
following CS/SSL companies as industry barometers: Emcore (EMKR), Cree (CREE),
TriQuint (TQNT), Color Kinetics (CLRK), Anadigics (ANAD), JDS Uniphase (JDSU),
Spire (SPIR), RF Micro Devices (RFMD), Kopin (KOPN), WJ Communications (WJCI),
Vitesse (VTSS.PK) and Aixtron (AIXG) which are traded on the USA's Nasdaq exchange,
and TIR Systems which is traded on the Toronto exchange in Canada (TIR.TO).
The collection periodically provides good column fodder.
None of the above "bakers dozen" or "lucky 13" are performing
as they were last time I reviewed them (ref: March
20th column). They continued to rise into May, but even then, most still
hadn't yet approached their original IPO entry levels, not to mention the glory
years of old when some went through the roof! (Emcore's original IPO entry price,
for example, was $10/share and its all time high was $150.) If I was a serious
investor in tech stocks, and given the depths of the downturn, I'd have been
thrilled at the nice climb this spring. By July, every tech stock on the USA
exchanges, including the established silicon based companies, took a severe dip
in an icy pool... maybe they just needed a break from the summer heat.
Bear in mind that, although I covered the silicon and compound semi industries
for 30 years as a tech journalist, I'm a rank amateur in the personal investment
game. I starting buying the above stocks about a year ago as part of my semi-retirement,
and at a time when I thought they'd surely hit rock bottom. Holding these 13
makes me actually climb out of my 'industry-insider' advanced technology mindset and look
at our CS and SSL industries from the perspective an outsider might have. What I fail
to understand is why the investment community takes their global or national
confusion or worries or concerns out on our poor innocent
tech stocks? Nothing changes much within the companies involved, and with the
exception of Vitesse, which recently got delisted from the Nasdaq and is now
trading as VTSS.PK on the "pink sheet" penny exchange, there's nothing
but great news about new products, fresh alliances and great R&D out of
these companies. Business is picking up for all of them since the really hard
times of the last few years.
Ever wonder where the term "pink sheet" or "PK" came from?
According to my broker, back before computers took over the exchanges, brokers
used to be sent weekly listing of penny stocks and the lists were actually on
pink paper. For those unfamiliar with the term "penny stocks" and
"delisting" from the bigger exchanges, when a company doesn't meet
its obligations to file the proper financials with the SEC at the proper times,
and/or the stock continues to trade below $1 per share, the stock is moved over
to the "PK" listings. Once they've re-complied with the SEC rules,
they most often return to their original slot. Vitesse which
has strong roots in CS technology but really only does a bit of InP these days, appears to be moving in the right direction.
The new CEO Chris Gardner reported in their quarterly earnings report that the
company has closed new funding and looks to be headed back to positive cash
flow soon by improving their yields, cycle times, operational efficiencies and
possibly trimming some of their numerous product offerings. Chris replaced Lou
Tomasetta who is on administrative leave while issues of stock options get sorted
out. Headcount at Vitesse is now at 620 somewhat nervous employees. I'll happily
hang on to my Vitesse stock because they're likely to weather the storm. Besides,
they're located in Camarillo, California and who wouldn't want to work in Camarillo?
Cree, on the other hand, was a major disappointment this quarter, at least in the eyes of their
fickle investors. According to my press peers, they've had blue spectrum LED
"production issues" which, in my opinion, is no big deal, but Cree
warned that profits would fall short of expectations and their stock price dropped.
At the heart of the matter may well be what all American and European die suppliers
face: aggressive competition from their Asian competitors that continues to
force declining prices for blue spectrum and white LEDs. That's good for the
consumer, but it pressures companies like Cree to reduce manufacturing costs
even further. Cree's quarterly earnings report is August 11th when we'll learn
more.
To me, the most eye-catching of the batch this quarter is Emcore, which held
its conference call this morning (Aug. 3rd) where much was revealed. The sale of the Emcore's epiwafer and
device foundry (EMD) to IQE will likely go through in August when IQE goes to
their investors for approval to raise the money. The yes vote is essentially in the bag.
Just in case, and FYI as to how these deals go down, Emcore negotiated a "break" (or cancellation) fee of $700K
towards which IQE has already anted up $200K. Yesterday's
news about GaN on diamond transistors was exciting, but that will soon be
a triumph for IQE with the sale of EMD to the Cardiff, Wales based publicly held company. That's good for IQE but begs the question
whether or not the USA's DARPA agency can keep funding that project when ownership
passes over to a British company? We'll see. For sure all EMD employees will
be retained and they get to stay put in Somerset with all their nice, high end
MOCVD toys.
The most exciting Emcore news to me is the push into terrestrial applications
for their exceptional high efficiency GaAs concentrator solar cells. The recently
announced
development pact with Sandia for concentrator photovoltaic power systems
is the first hint we've received about what's involved in the rollout on earth
(vs. their traditional satellite apps). Emcore's president/CEO Reuben Richards explained to analysts
that all the photovoltaic operations are now in Albuquerque and that they've
already shipped to Sharp, but that these aren't yet commercial revenue levels.
Sharp is evidently developing a line of site project in Europe. Commercial
terms and production systems can be expected in calendar Q4 this year. The price
for GaAs solar now is about $5/watt for fully installed concentrator cells.
Reuben underscored that the first to market (which looks like Emcore) will get
to set the standards. It seems silicon cells are actually getting more expensive
but GaAs solar cell prices are decreasing, so there's hope for a terrestrial
takeover... eventually. Reuben also told analysts, specifically Jed Dorsheimer,
that Emcore's JV with GE, GELcore, "isn't strategic to our vision" he said,d mimicking
Jed's words. GELcore, Reuben explained, is now basically a break even stand-alone
company. "We and GE don't bring a lot to them now." He added that, "both near
and long-term, Emcore's resources will go to businesses they own and operate." Emcore owns 49% of the GELcore JV and is no longer requiring significant subsidity from either of its parents. Now that it's approaching profitability, I wouldn't be surprised if GELcore either spins off, or if it's smart, becomes
fully owned by GE and starts really competing with Philips and Osram for SSL
ultimate dominance.
The most typical report thus far (July
26th) and most uplifting for the overall CS space was from Ralph Quinsey,
president/CEO of TriQuint. Ralph said that, as of the end of June, "TriQuint
delivered another solid growth quarter, gained share in handsets and exceeded
expectations. This was our fifth consecutive quarter of revenue and gross margin
growth and our largest operating income quarter since March of 2001. Our net
earnings more than doubled this quarter as compared to the previous quarter.
We set new revenue records for both our innovative transmit modules and our
power amplifier modules. Bookings for transmit modules were up 48% over the
first quarter as a result of extending this leadership form factor into the
CDMA and 3G markets. I am also pleased we were awarded additional contract R&D
dollars from the Office of Naval Research (ONR) to invest in leadership technology
for future military applications. We remain on track to our long term goals
of innovation, profitable growth and share gains in our targeted markets and
are seeing the results of our execution evidenced by the increase in our earnings
outlook for the year.”
The most exciting report from the SSL side was from Color Kinetics (CK) in
early June when they announced that they were one of five companies selected
by the USA's Department of Energy (DoE) to receive funding to help in the effort
to replace incandescent lamps with our industry's advanced LED technology. DoE
is spreading $7 million around CK, GE, Eastman Kodak, Osram Sylvania and SRI
International for LED-based solid state lighting (SSL). CK conducts their quarterly
earnings conference call Aug. 3rd.
And finally, there's one company that leaves everyone in the summer dust, Spire.
Why? Not so much corporate performance, but personal performance by its founder,
president/CEO Roger Little who for the 9th time, has qualified for the upcoming
grueling Iron Man triathlon competition (ref: news
release). Roger's exactly my age: 67 and shames us all. Congrats,
Roger! Don't keel in Hawaii in October!!! I could probably survive the swim
portion, but that'd be all. In closing, if you want to get the straight scoop
direct from any of the above companies, tune in to the live or replays of their
calls which are generally accessible easily over each company's website. And
if you're an investor, keep you fingers crossed that things will again pick
up soon. It takes an iron will to thrive these days.
If you have news or
views to share about the compound semiconductor, LED or solid
state lighting industries
contact our Publisher, Tom Griffiths
His direct tel in Austin is +1-512-257-9888
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