BluGlass's record quarter - Sequoia Direct Pty Ltd

BluGlass’s record quarter

BluGlass Limited (ASX:BLG) CEO Jim Haden discusses the company's record quarter, IP deals, customer engagement and the upcoming Semiconductor Australia conference.

Paul Sanger: I'm Paul Sanger for the Finance News Network, and today I'm talking with BluGlass (ASX:BLG). BluGlass, trading under the ASX code "BLG" with a market capitalisation of $55m, has been developing leading-edge semiconductor manufacturing technology and devices for more than a decade. They are a global provider to the gallium nitride photonics industry, delivering cutting-edge lasers for the industrial, defence, display and scientific markets. Joining me today is BluGlass CEO Jim Haden. Jim, welcome back to the network.

Jim Haden: Thank you, Paul. My compliments on your new studio.

Paul Sanger: I appreciate that. Jim, great to have you here. Let's just kick things off. BluGlass recently delivered a record quarter for revenue. An IP transfer agreement accounted for a significant portion of revenue. Can you walk us through how this agreement came about?

Jim Haden: Sure. Yeah. It was a record quarter, and it started with the ME Commons contract brought in quite a bit of that revenue. We had customer receipts as well, and, as you mentioned, the IP purchase. That was a big part of it. And we've been working with this customer, it's a European customer. They don't do photonics, they do electronics, so it's not within our IP. And we've been working with them since 2022. And so this was a development contract to work specifically on their unique specialty wafers, but they needed growth on top of that to make their product. And so what we did is we collaborated. We began the contract with the idea that if things were successful and they got traction with their products, that they could then purchase the IP. So, since 2022, we've developed that together, growing only on their specialty wafers. And then what that has done is it worked out, so they wanted to purchase the IP, and the IP really is only to grow on their wafers for their specific market. So, it doesn't impact. And it's a $1.93m purchase, and that's basically funds that can go towards… It's non-dilutive funding toward developing our laser diode products. So, it is a win for them and a win for us and our shareholders.

Paul Sanger: And it sounds like all that hard work paid off in the end. Congratulations.

Jim Haden: Absolutely. And they're an ongoing customer, and we're continuing to work with them.

Paul Sanger: That's fantastic. And how is BluGlass progressing with its development milestones under the CLAWS Hub contract?

Jim Haden: Well, we're progressing well. As you know, this is the biggest contract the company's procured to date, and we are hitting all of our milestones on or ahead of schedule. And this has put us in really good standing with our hub leader, North Carolina State University, and members of that group. We continue to progress our products. The main impetus is on the 405, the violet, up to the blue 450 nanometer product lines. And the focus has shifted us a little bit from some of our earlier higher-power to lower-power, focusing in quantum areas. There's quite a bit of interest, as you've probably heard, in the quantum electronics, quantum computers sensing, and, you know, it's supporting the channels that we're going to for defence, for the quantum computing, for the medical applications like, you know, robotic prostheses and so forth. So, it's been good progress for us to date. And being in good standing with the university, it's also, you know, giving us exposure to the broader industry and to other members of the hub.

Paul Sanger: And can you give us an update on what's happening with the specialist projects as a broader part of the Microelectronics Commons? When do you expect to find out if BluGlass was awarded one of these projects?

Jim Haden: So, you've probably heard, I know many of our shareholders have, that the CHIPS Act just went through its second anniversary of the signing. And, with that, they announced that the awards would be announced before the end of the US government's fiscal year, which ends in September. So, the end of this September. Also, the same schedule we're on for the renewal of the core.

Paul Sanger: Well, we're looking forward to hearing more on that front.

Jim Haden: Yeah.

Paul Sanger: And let's talk a bit about customer engagement. You know, what's happening on that front?

Jim Haden: Well, the customer engagements are continuing and going well. There are many for specialty projects that are focused in the photonics area. So, those are projects… Outside of the projects, as I said, we're putting our hat in the ring for, ME Commons projects, which we will continue to do that. There are going to be calls for projects each year. We are in discussions and have other proposals out for similar projects, but with primes who we've met through the exposure of the contracts that we're doing. So, several exciting possibilities there. And we are also continuing product engagement. This year we've shipped mostly the single mode, and customers have wanted something called semiconductor optical amplifiers, which will come into a product that we call PICs, where you actually put amplifiers and single modes together. So, these types of interests have been coming to us. We've been able to ship some of those products this year. And we also have proposals out for specialty developments, ranging from small products, or just shipping products that we're already making. And, you know, linking back to the milestones that we said we were completing on the projects for Microelectronics Commons, that work is helping us to engage with more customers and to deliver products to them already.

Paul Sanger: Fantastic. And, Jim, for investors, what should we be looking out for or expecting for the rest of the year; the next three or four months?

Jim Haden: We want to continue to get non-dilutive funding toward photonics projects that will drive our roadmap. We see continuing to develop our DFB lasers. And, depending on which applications we go for, whether it's the, you know, aviation, LIDAR, those types of things, undersea, those are all possibilities. And those are just going to be small iterations or tweaks on our existing products. So, some of them may be driving us to extend wavelengths and some of them may be trying to focus on a different wavelength within the range that we're already doing. Those are key in the customer engagement arena.

But also, you know that we acquired a company called GaNWorks earlier this year. That's been a great acquisition for us. The engineers that came with that have helped us considerably. Just bringing the process in-house and having them with our engineers, collaborating shoulder-to-shoulder, has helped us take the process that we were running with them, but externally, and improve it. But what we've already seen is we've dropped the cycle time by 30 per cent and we've increased the yield. And those yield impacts of having that in-house have led to yield increases down the line, which is coming to more repeatability in stability. So, what we expect to see as we do those and then the next level of improvements, we're expecting to see a more continuous flow of products and easier predictability.

We have continued to encounter some equipment problems. We acquired an old fab. We have a great engineering team, really brought in a great equipment engineer who's helping us to shore up our equipment reliability and so forth. We will continue to invest in that kind of improvement. And we will continue to identify areas where, you know, we said we were transitioning an indium phosphide fab to a gallium nitride fab. And so we've already identified and we're working with a couple of key vendors to qualify their equipment. Once it's qualified, we're going to purchase and be bringing those into our fab as well.

Paul Sanger: And, Jim, I'd like to finish on… BluGlass, in conjunction with the Semiconductor Service Bureau, have launched Australia's premier semiconductor conference in October this year. Talk to me a little bit about the rationale of the conference and, you know, what you hope to achieve from it.

Jim Haden: We've gotten good feedback on some of the webinars and things that we've done to, you know, help educate the shareholders about what we do and what other people in the semiconductor industry do. We know it's not a mainstay yet in Australia. So, we would like to bring key people together, from the, you know, technologists, leaders in Australia, and then bring investors and key companies that are in this space. We bring them all together in a conference, have them mingle, have them work together, ideas will pop up. And really what we're trying to do is create a fertile place for the launching and the continued growth of the semiconductor industry in Australia. So, we're pretty excited about that.

Paul Sanger: Yeah. And I guess people don't realise that from a quantum, AI, semiconductor space, Australia is very well entrenched in that sector. People think Australia, they think commodities. But actually Australia is a key player in this space, and it's fantastic that you're bringing those, you know, innovators, leaders, Australian companies that play in this space…

Jim Haden: Yeah.

Paul Sanger: ..and building investor awareness, and hopefully some VC funding will follow. So, it's a fantastic event. It's a first, and we're looking forward to seeing, you know, the companies presenting in October.

Jim Haden: Yeah, hopefully the first of many. And, yeah, you're right. I think this is a great time to be in Australia in this industry, and we're just trying to get the word out.

Paul Sanger: Well done for you and the team at BluGlass. Jim, it's been an absolute pleasure having you in the studio. Thanks for your time today.

Jim Haden: Thank you.