raised $75 million from a single institutional investor<\/a>. Since then, the ticker has been among the most mentioned on Reddit\u2019s r\/WallStreetBets to surge more than 65% at its October peak to hit multi-year highs.<\/p>\nIn an interview with Sherwood News, Executive Chairman and CEO Dr. Suresh Venkatesan said he\u2019s been \u201cvery pleased with the level of interest in POET by investors of all types,\u201d arguing that the AI boom has created a \u201csweet spot\u201d for the company as it looks to provide solutions to address the challenge of making data centers run as efficiently as possible.<\/p>\n
POET\u2019s operating in a space where the pace of progress has been rapid. Since Venkatesan joined the company in 2016, the speed of standard commercially available optical communication has gone up 20x.<\/p>\n
\u201cWhen we talk about Moore\u2019s Law, people talk about a 2x increase every three years,\u201d he told us. \u201cHere we\u2019re looking at a 2x increase every year.\u201d<\/p>\n
Moving out the technological frontier is one thing, but making sure those innovations are readily available for and adopted by potential customers is what will really move the needle in driving financial performance that justifies the fresh optimism embedded in POET\u2019s stock price.<\/p>\n
\u201cHonestly, technology doesn\u2019t mean anything unless you can manufacture it,\u201d he said. \u201cSo our focus really this year has been to cross that last hurdle of ensuring that the technology that we\u2019re developing is truly manufacturable at scale and at wafer scale.\u201d<\/p>\n
We discussed the company\u2019s technology, how POET has positioned itself to capitalize on the AI boom, the company\u2019s plans for the future, and more with Venkatesan.<\/p>\n
This transcript has lightly edited for clarity. Emphasis added.<\/p>\n
Sherwood News: I\u2019ll start by asking about your flagship platform technology, the POET Optical Interposer. Could you explain how this product works and how you really see it fitting into and being accelerated by the AI and data center boom we\u2019re in the midst of?<\/p>\n
Dr. Suresh Venkatesan: We\u2019ve developed this platform technology that we call the POET Optical Interposer. It\u2019s fundamentally a technology that relies on light as opposed to copper wires as a means to move data around.\u00a0<\/p>\n
Optical communications, we believe, is really required for the boom in AI fundamentally due to power and performance reasons, and our technology, the optical interposer, makes it easy to co-integrate optical devices, electrical devices, and provide the means to optical communications. We\u2019ve been developing this technology for a few years, but we are just in a sweet spot now \u2014 we\u2019ve got the right technology that people need to support the growth in AI and simultaneously there\u2019s this explosive growth in AI happening about the same time, and so there\u2019s been a lot of interest in what we\u2019re doing for not just the current generation of products, but also the next generation of products required for future growth.<\/p>\n
Sherwood: Now that you mentioned the next generation of products, what does your product road map look like from here?\u00a0<\/p>\n
Venkatesan: The AI networks largely fall into two categories, potentially three depending on how you look at it. One is what they call scale-out networks, which is scaling out the networks within the data center.<\/p>\n
The other is what they call a scale-up network, which is largely providing connectivity inside of a particular server as opposed to scaling out server to server. We\u2019ve got products supporting both of those growth vectors. I think on the scale-out side, it\u2019s all about high-bandwidth communications. Today, our flagship product is the POET Teralight, which is a 1.6-terabit-per-second communication optical link. And then, of course, the future generations just go up from there, so the next generation would be a 3.2-terabit link and beyond. And as the speed of communication increases, the value of our interposer and the applicability of that interposer becomes more ubiquitous and far more persuasive, and so we\u2019re seeing a lot of interest there. The scale-up network is all about replacing copper inside of server racks to provide connectivity between GPUs or between GPUs and other electronic components. And there our flagship product is our Starlight series of external light sources.<\/p>\n
Of course, we\u2019ve got a significant road map from a development perspective there. We just announced the availability of a revolutionary product based on our interposer called the POET Blazar. That is intended to provide high-power, multi-wavelength light sources for the scale-up networks, and doing it at wafer scale, at very low cost, and high-volume scale capabilities.\u00a0<\/p>\n
I think our flagship products today are underpinned by the POET Teralight on the scale-out network side, and then the POET Blazar on the scale-up side.<\/p>\n
Sherwood: How do you look to position yourself as a newer \u2014 well, not newer; POET\u2019s been around for a while \u2014 but as an emerging company trying to break into this space? How do you market the benefits of POET\u2019s technology to potential partners, potential customers? You\u2019ve mentioned the photon versus copper wire benefits that you\u2019re able to facilitate. What else do you try to use to position POET?\u00a0<\/p>\n
Venkatesan:\u00a0I think there are inflections in the industry, and inflection points in the industry usually result in new companies coming in and providing significant value.<\/p>\n
We believe that we\u2019ve got the technology to provide the cost and scale needed first for that growth to occur. When the automobile was first invented, it couldn\u2019t have been successful if there wasn\u2019t a means for the masses to gain access to it.<\/p>\n
I think what POET does is provide a platform technology that\u2019s highly flexible, highly scalable, and enables a broad use and application of optical connectivity. We believe we\u2019re well positioned to service the needs of that industry going forward.<\/p>\n
Sherwood: And you mentioned the development within optical connectivity. How fast are technological improvements coming, and have there been any particular breakthroughs that have led to a quickening pace of progress in the industry, so to speak?\u00a0<\/p>\n
Venkatesan: There are always innovations in technology that accelerate the adoption. I think in the optical world, I could say when I first joined POET, the primary speed of communication honestly was 40 gigabits per second, and that was in 2016. So in nine years, we\u2019ve gone from 40 gigabits per second to now 800 gigabits per second.<\/p>\n
So that\u2019s 20x and not even 10 years. When we talk about Moore\u2019s Law, people talk about a 2x increase every three years. Here we\u2019re looking at a 2x increase every year. And prior to that, the 10-gigabit was deployed for almost 10 years. I think the pace at which optical connectivity is being adopted and the pace at which the frequencies are going up is quite staggering. <\/p>\n
It\u2019s a challenge and an opportunity, right? It\u2019s a challenge because the needs of the market are constantly changing every year, and the technology keeps progressing every year.\u00a0But it also gives us the opportunity to have multiple points of penetration at multiple inflections in these industry growth trends. I would say that\u00a0as long as there is a compelling need, which there is with this explosiveness in AI, companies like us will be rewarded for our innovations, and that\u2019s what we\u2019re all about.\u00a0<\/p>\n
Sherwood: And to that point, you recently announced the closing of a $75 million capital raise. What\u2019s the first thing you do with an influx of cash like that when you get it?<\/p>\n
Venkatesan: First of all, you know, we\u2019ve been very pleased with the level of interest in POET by investors of all types \u2014 retail, institutional \u2014 and that level of interest, especially with the AI revolution being what it is, is at an all-time high. So we\u2019re happy to be in that position.\u00a0<\/p>\n
And of course we look for capital for strategic reasons, right? I think it\u2019s either to support\u00a0expansion of capacity and growth, expansion of our teams, or to procure technology that we think can be very complementary to POET and to be able to make those investments.<\/p>\n
So the infusion of capital is one thing. How we utilize that capital to accelerate our growth, to accelerate our presence in the industry, and to grow our capabilities and the teams is where we will be spending much of our time over the course of the next several months.\u00a0<\/p>\n
Sherwood: When I look at the ecosystem you\u2019re operating in, you have other specialized photonics firms. You also have tech giants themselves, like the Nvidias and the Broadcoms, which effectively do try to provide a one-stop shop for a lot of their AI tech for data center purposes. How do you either compete or break into those supply chains so that you are effectively part of those one-stop solutions? Or is there another way you\u2019re approaching the competitive landscape? What kind of partnerships and relationships are the most important for POET to be developing?<\/p>\n
Venkatesan: The growth in the industry, just as in semiconductors \u2014 semiconductors is a trillion-dollar industry today, and it\u2019s not just one company. It\u2019s the entire supply chain of many, many companies that are interrelated and interconnected that all support a very large ecosystem. Likewise in the optical space, there are the end users and, you know, Broadcom drives its own requirements in terms of co-packaged optics, and so does Nvidia and so do a bunch of the different hyperscalers, as well as the enterprise networks. So it\u2019s a very, very large community, though we tend to think of it as one or two players, but that\u2019s not right; it\u2019s a lot of different players that come together. And there\u2019s a large supply chain feeding them.\u00a0<\/p>\n
But I think the pace at which new technologies are needed provides room for smaller companies such as ourselves to put our innovations into the hat, so to speak, and gives us a chance to be able to be part of that broader supply chain.\u00a0<\/p>\n
That\u2019s what we\u2019re seeing. We\u2019re seeing systematic adoption of our technology across a number of different verticals. We established our manufacturing presence and are gearing up for manufacturing, especially in the scale-out and scale-up segments.<\/p>\n
We just announced a big\u00a0collaboration with NTT, a telecom giant in Japan. That\u2019s a new market entry for us, in the world of telecom as opposed to data communications. And they\u2019re both important because telecom is ultimately the backbone network that supports everything.<\/p>\n
All of these different wins that we\u2019ve had over the course of this year culminate into production over the course of the next year, which is what we\u2019re gearing up to do. It\u2019s what part of our raise is about, to ensure that we have the right team and the right capability to leverage all these opportunities that we have.<\/p>\n
Sherwood: One of the other things that strikes me about the AI ecosystem right now is we\u2019re seeing a lot of very creative deals, creative partnerships, a lot of implicit or explicit vertical integration within the space. Do you see yourself as a potential M&A target or a target for strategic investment from some of these firms given the state of the industry?<\/p>\n
Venkatesan: Well, companies are bought, they\u2019re not sold. So we need to focus on our business. We need to do what we can with our technology and grow the business. What happens after that \u2014 you don\u2019t strategically set yourself and say, \u201cOK, I\u2019m going to be acquired on such and such a date by such and such company.\u201d<\/p>\n
That\u2019s not our goal. Our goal is to build a robust business utilizing the capabilities of our technology and continue to innovate in this space.\u00a0<\/p>\n
Sherwood: Do you notice any differences in marketing to potential public versus private clients, or in different geographies?<\/p>\n
Venkatesan: Broadly, I would say much of the AI\u00a0market demands today are still primarily in the United States. I think China is slowly starting to ramp up. The 800-gig market is only now beginning in China, whereas in the United States, it\u2019s already transitioning into a 1.6-terabit.\u00a0<\/p>\n
But they\u2019re the big giants. That\u2019s where the large markets are, and we\u2019re set to serve the markets and all geographies with moving our manufacturing to get out of China and establish it in a more neutral and acceptable territory in Malaysia.\u00a0But I think those are going to be the large markets for AI going forward for the next few years, anyway.\u00a0<\/p>\n
Sherwood: And when you look toward the future \u2013 it\u2019s difficult, five years ago I doubt many people were predicting something like ChatGPT \u2014 but where do you see yourselves if you can wave your magic wand? What does POET look like in five years? What kind of position has it established for itself in the marketplace, and what are some of the milestones that you would love to see hit as you look forward?<\/p>\n
Venkatesan: We\u2019re focused on growing the business, so yeah, you can look five years out and try to make projections of what the company is going to be like. But I think we\u2019re focused on continuing to win customers, and honestly, technology doesn\u2019t mean anything unless you can manufacture it. So our focus really this year has been to cross that last hurdle of ensuring that the technology that we\u2019re developing is truly manufacturable at scale and at wafer scale. That\u2019s where our focus has been. So we\u2019re going to transition into manufacturing next year, continuing to win more customers and really deploy our technology in the scale-out region and where we\u2019re seeing very, very high-growth trajectories in 2027, especially for co-packaged optics. And we\u2019ve got a technology that is resonating very strongly with customers.<\/p>\n
We were at the European show just two weeks ago, and just the amount of interest in what we\u2019re doing is terrific. I think if we just execute on our goals over the next year, what the company will be in five years will just take care of itself.\u00a0We\u2019re being recognized; we just recently won an award at the ECOC for the most innovative platform supporting optical communications and AI. I think that that\u2019s great, to get that kind of acknowledgement from a peer group. So things are all lining up well for the company.<\/p>\n
Sherwood: I\u2019m a big believer in, you know, the long run is just a series of short runs where we try and do the best we can \u2014 I\u2019m all for that. And to just zero in on your sales approach a little more, your technology is one part within a large and very complicated whole, I think, for a lot of folks. So when you\u2019re targeting sales opportunities, do you focus more efforts on the original equipment manufacturers, or are you engaging more with hyperscalers directly? Or more of an all of the above approach?\u00a0\u00a0<\/p>\n
Venkatesan: Our technology is currently targeted toward what we call optical transceiver modules, or external light source modules. To a certain extent, we interact with hyperscalers to understand their requirements, but what we sell is sold to transceiver module makers or people who want to get into the transceiver module business. So most of our sales are direct sales through direct communication with people in the supply chain.<\/p>\n
Sherwood: Thanks so much. Just to wrap up, is there anything out there you want investors, the media, the public, to know better about POET? Anything you want to clear up?\u00a0<\/p>\n
Venkatesan: Obviously we\u2019re doing the right things, because the investors are rewarding us and I think the shareholders have been pretty happy with the progress over the past year. I think we\u2019re starting to not be a pre-revenue company soon, and I think as we get into that phase of our business, things will be even better than they are today.\u00a0<\/p>\n
I think the investors understand where we are in terms of our technology\u2019s progression toward commercialization. I think we are also well positioned in the market of AI, both from a scale-out and a scale-up perspective. We\u2019re participating in both ends of that market, which is also really interesting and which goes to show how our platform is quite robust and flexible in that context. We\u2019re not a one-trick pony, from that perspective. We\u2019ve got opportunities along multiple vectors that allow this company to grow.<\/p>\n","protected":false},"excerpt":{"rendered":"In the AI boom, everyone knows the big players: your trillion-dollar hyperscalers and chip designers, as well as…\n","protected":false},"author":2,"featured_media":219226,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,61],"class_list":["post-219225","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-ca","tag-canada","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/219225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=219225"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/219225\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/219226"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=219225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=219225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=219225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}