BEYOND Update of the VIGO 2020 Strategy. June 2018

Transcription

1 BEYOND 2020 Update of the VIGO 2020 Strategy June 2018

2 TABLE OF CONTENTS 1. INTRODUCTION 2. VIGO SYSTEM S.A. TODAY 1. About us 2. History 3. Financial highlights 4. Market reach 5. Strengths 6. Product portfolio 3. MARKET AND TECHNOLOGY DEVELOPMENT 1. VIGO 2020 Strategy 1. Key goals 2. New production facility 3. Production quality improvement 4. STRATEGY BEYOND VIGO Vision after Markets 3. Key development directions 4. III-V materials technology 5. QCL technology 5. FINANCIAL GOALS 1. Capital expenditure and dividend policy 2. Financial indicators 6. SUMMARY 2. Market environment 3. IR market 4. Photonics in Europe 5. Photonics missions by Mid IR market 1. VIGO on the Mid IR market 2. Applications 3. Key changes in the Mid IR market 4. QCL systems market 5. Laser and semiconductor market 2

3 ABOUT US // Key competitive advantages VIGO System S.A. is the global leader in production of high operating temperature IR detectors. VIGO supplies unique products, manufactured with the use of internally developed technologies Our competitive advantage is based on: Over 30 years of experience in detector manufacturing, The best quality to price ratio, Ability to meet the highest quality requirements (NASA, military), Main supplier for detectors for QCL, Ability to provide highly customized solutions, 100+ employees (1 professor, 12 PhDs and >35 engineers), 3000 m2 of production area. Detectors Detection modules Optoelectronical systems 3

4 ABOUT US // Area of expertise VIGO System S.A. functions on the global photonics market as a manufacturer of IR detectors. Technology of: Application in almost every aspect: Generation (lasers, diodes, lamps) Industry digitalization, automation, sensors, laser tech Transmission (fibers and optics) Photonics Communication - Internet of things, data transfer Health and medicine - diagnostics, laser surgery Detection and manipulation (sensors, photovoltaics) of photons particles of light. Technology using photons (particles of light) Intelligent society energy efficient lighting, air and water quality monitoring, detection of hazardous substances 4

5 ABOUT US 1970s Development of HOT IR detectors technology Transformation to VIGO System Ltd. Transformation to joint-stock company Relocation to Ożarów Mazowiecki Construction of new production facility VIGO detectors again on Mars with Exomars mission 1987 Establishment of VIGO 1996 The Photonics Circle of Excellence Award 2003 Implementaion of MOCVD technology (joint VIGO-Military Academy of Technology lab) 2012 VIGO detectors on board of the Mars Curiosity rover 2014 VIGO listed on the WSE 2015 Implementation of MBE technology (joint VIGO-MAT lab) 5

6 ABOUT US // Revenues [m PLN] 25,6 25,6 27,1 // Development Almost 30 years of continuous technological development and market expansion 18,6 19,2 20,6 20,5 VIGO has become a supplier of the high-tech components for the most demanding customers (NASA, ESA). 11,3 8,9 9,7 7, Quality, technology and credibility allowed VIGO to establish business relations with global corporations: Emerson Electric Co. (industrial gas analysers), Zodiac Aerospace (optoelectronics systems), Gasmet Technologies (emissions monitoring), Caterpillar (railway sensor systems) // Market split [2017, m PLN] America 4,49 Poland 1,83 Europe 18,48 Asia 2,2 6

7 ABOUT US // Our strengths TECHNOLOGY. Unique technology, established internally and continuously developed, allowing production of the most sophisticated optoelectronics sensors, outmatching rival companies. Flexibility and ability to customize every product to each client needs. Own R&D laboratory allowing development of technology and products. PEOPLE. Highly educated and experienced personnel. Friendly atmosphere promoting creativity and innovation. Workplace allowing work-life balance. MARKET KNOWLEDGE. Numerous group of satisfied customers. Wide network of distributors on European, American and Asian markets. Very good image on global detector market. INNOVATION. Close co-operation with academia and R&D institutions allowing for highly advanced research. Ability to recruit highly competitive staff. 7

8 ABOUT US // Market reach 8

9 ABOUT US // Product portfolio SERVICES DETECTORS MODULES Epi wafers growth Amplified TE cooled detectors Epi wafers TE cooled detectors Processing Uncooled amplified detectors Uncooled detectors Devices with optics, digital output and on-board software Detector arrays Detection chips 9

10 VIGO 2020 STRATEGY // Key assumptions and goals Growing demand for Mid IR sensors resulting from socio-economic trends, technology development and new applications emerging, High prices are main obstacles to market development VIGO System invests in production capacity (up to 100 ths detectors yearly), elimination of bottlenecks, automation of production processes, allowing substantial decreasing of unit costs. Company goal increase of sales volume and revenues to 80 m PLN by Revenues [m PLN, left axis] Quantity [ths, right axis] 10

11 VIGO 2020 STRATEGY // I phase Construction of new facility Investment goal: Upscaling production capacity to 100 ths detection modules per year Allowing flexible production and mass customization Decreasing product prices through economies of scale Scope and financing : New production facility CAPEX - 41,6 m PLN UE grant - 6,0 m PLN Debt - 24,0 m PLN Own resources - 11,6 m PLN Feasibility studies Financing closure Acquisition of land plot Administrative decisions Designing Construction works Equipment installment Gradual upscaling of production Preparatory works 11

12 VIGO 2020 STRATEGY // II phase Production quality Investment goals: Increase of repeatability Decrease of production costs Ability to meet the highest quality needs (military industry, space, semiconductor industry) Scope and financing: Schedule: New clean-room space Improvement of processing efficiency CAPEX - 24 m PLN EU grant - 6,0 m PLN Debt - 12,0 m PLN Own resources - 6 m PLN 2018 design and financing closure 2019 administrative process and construction works 2020 new cleanroom opening 12

13 MARKET AND TECHNOLOGY DEVELOPMENT // Market environment Photonics solutions are commonly used in almost every area of global economy and have key impact on development of new, revolutionary products and technologies. Augmented reality Smart home Industry 4.0 3D scanning Autonomous vehicles Environment Homeland security Robotization Internet of Things Medicine 13

14 MARKET AND TECHNOLOGY DEVELOPMENT // IR sources market [M USD] // Growth factors Source: Yole Developpement 2017 The market for IR sources has evolved rapidly with development of smartphones and new applications. 3d scanning Autofocus Face and iris recoginition IR source market expected to grow to 1,5 bn USD to 2022 (CAGR - 19%) Emerging applications beyond 2022: Gas sensors LIDARs Driver monitoring systems E-health Market expected to grow to 3,8 bn USD by Strong development of new IR sources: VCSELs (Vertical Cavity Surface-Emitting Laser) - more coherent light than IR LEDs, Quantum Cascade Lasers, Interband Cascade Lasers, and photodetectors. Strong demand for semiconductor materials based on compound III-V alloys (GaAs, InP). 14

15 MARKET AND TECHNOLOGY DEVELOPMENT // Photonics - Key Enabling Technologies in Europe As one of six Key Enabling Technologies (KET s) in Europe Photonics plays a major role for driving growth and employment in Europe and contributes to solve the major societal challenges such as aging society, energy efficiency, inclusion and smart living. Photonics21, the European Technology Platform (ETP) representing the European Photonics Community since 2005, was invited to form such a Photonics Public Private Partnership back in 2012 and invest around 3.5 mld euro till 2020., including: 2.8 mld Euro of private investments 0.7 mld Euro from European programs Photonics is important for Europe, and Europe is strong in Photonics. My strong interest in Photonics comes from the powerful enabling potential that Photonics has on other industrial sectors, such as the future internet, high-performance computing and data centers, revolutionizing medical care in the ageing society, and giving us new ways of making goods through laser based manufacturing. Günther Oettinger EU Commissioner 15

16 MARKET AND TECHNOLOGY DEVELOPMENT // Goals for photonics by 2030 Instant diagnosis of major diseases Quality food from farm to fork Accident and congestion-free road transport // Technological revolution through photonics Europe stands on the threshold of a technological revolution: harnessing the power of light to solve our greatest global challenges. Photonics the science of creating, manipulating, transmitting and detecting light is literally everywhere, from smartphone displays to fibre-optic broadband to energysaving LED lights to the laser surgery that saves our life. As photons replace electrons in many of our most important technologies, innovations already in the pipeline will improve healthcare, grow food, save energy, cut pollution, expand connectivity, transform manufacturing and usher in a new era of mobility A truly circular economy A million new jobs 10% higher productivity Zero downtime in a terabit economy Photonics as a flagship science for innovation Source: The Photonics21 Vision Paper "Europe's Age of Light! How photonics will power growth and innovation" 16

17 MARKET AND TECHNOLOGY DEVELOPMENT // VIGO on the Mid IR market Przychody Production quantity Industry and environment Railway safety applications R&D and military applications 17

18 MARKET TRENDS // The key applications for mid IR sensors in coming years Driving forces for the industry Smart buildings Social needs, Laws and regulations, Geopolitical situation, Economical factors, Technological possibilities. Public safety Air quality monitoring Barriers for a market to grow: APPLICATIONS HIGH PRICE OF COMPONENTS. Price of IR sources is still very high and supply is limited. Price of detectors was also relatively high until recently. High cost of IR systems hinders development of new products and encourages companies to choose cheaper and commonly available components from the Near IR spectrum or other sensing techniques. Medical Industrial automation Petrochemical 18

19 MARKET AND TECHNOLOGY DEVELOPMENT // Game changers EASY OF USE. Mid IR detection modules, combining a detector with optimized electronics, become a commonly available component for numerous photonics application. PRICE DROPS. Prices of simplest Mid IR photon detectors dropped to below 100 EUR per piece. NEW MATERIAL DEVELOPMENT. Detectors based on III-V compound semiconductors combine performance comparable to MCT detectors with lower production costs. NEW, TUNABLE IR SOURCES. New, tunable IR diodes and lasers leading to better sensors, enabling fast and accurate multi-application or multi-gas sensing. 19

20 MARKET AND TECHNOLOGY DEVELOPMENT // Cascade Lasers Systems market > 2023 VIGO revenues from detectors dedicated to CL systems increased by 70% Global CL market - 62 million USD Mature applications Military (DIRCM, rangefinders, optical communications) Upcoming applications Automotive (vehicle exhaust gas analysis, fuel quality control) Emission monitoring, air quality monitoring, Environment (water quality monitoring) Leak detections, industrial processes control Blood analysis, breath analysis Healthcare (non-invasive diagnostics) Industry (process control composition analysis) CAGR estimated at 9-30%. Continued strong growth (Source: Strategies Unlimited 2018, Tematys 2015) 20

21 MARKET AND TECHNOLOGY DEVELOPMENT // Detectors for semiconductor industry Detectors for EUV litography systems Litography gas analysis Laser positioning system CO 2 laser power control VIGO sales for semiconductor and advanced manufacturing industry increased by 600% between 2015 and Global EUV market CAGR ( ) forecasted at 20% (Source: Strategies Unlimited 2018) 21

22 VIGO MISSION AND VISION BEYOND 2020 We supply the most advanced photonics solutions in the world We provide unique solutions tailored to individual customers needs at affordable price We offer full portfolio of IR products form photonics materials, through components, up to sensor sub-systems. Photonics components IR detectors Cascade lasers 2 1 Sensor subsystems Integrated detection modules Integrated detector-source modules Modules integrated with optics 3 Photonics materials Technologies: MOCVD, MBE Materials: II-VI (MCT), III-V (GaAs, InAsSb, InP and others) 22

23 MAIN MARKETS // Development prospects Mid IR detector market Potential 20-30% CAGR after 2020; Photonics materials 2020 Mid IR detectors market 100 M USD SENSORS MARKET 100 BN USD Potential increase of sales to level exceeding current revenues (within 5 years after investment); Cascade lasers Cascade laser market 60 M USD LASER MARKET 13 BN USD At least 10% of Company revenues from Cascade Lasers products in midterm perspective (5 years). 23

24 DEVELOPMENT DIRECTIONS BEYOND 2020 Epitaxy Processing Packaging Integration with electronics Photonics subsystems Systems Mid IR Detectors VIGO 2020 II phase VIGO I phase (new production facility) Mid IR Lasers Near IR Lasers and detectors VIGO (photonics materials) VIGO (cascade laser technology) VIGO WE Innovation Incubator Multielement detectors VIGO (potential development of multielement detectors technology) 24

25 VIGO // Photonics materials technology Consumer electronics (3D cameras, face recognition) Autonomous vehicles (LIDARs, driver monitoring systems) Smart homes, IoT Industry (sensors) Compound semiconductors based on III-V alloys (GaAs, InAsSb, InP, AlGaAs, InGaAs, InGaAsP) VIGO System 30 years of expertise in semiconductor production 15 years of expertise in MOCVD technology Technologists from renowned Polish R&D institutions 30 years of expertise in production of semiconductors Commercialization in progress Market and customers knowledge 25

26 VIGO // Investment needs Scope New epitaxy system based on MOCVD technology with high throughput (15 x 6 wafers per process) Quality control equipment Development works CAPEX and financing CAPEX - 20 m PLN Debt - 15 m PLN Own resources - 5 m PLN Schedule: 2018 procurement 2019 installation and development 2020 beginning of production 26

27 VIGO // Cascade laser technology development Integrated modules Laser materials Vertically integrated laser production Taking advantage of strong position of VIGO in the field of electronics for detection systems Development of integrated detector laser modules with joint drivers Production of own semiconductor materials for QCL Development of QCL processing technology Implementation of fully integrated production Co-operation with cascade laser manufacturers Joint technology development More synergy through closer co-operation 27

28 CAPITAL EXPENDITURE // Investment and dividend policy Financing of development through debt (increase of debt to ~40 m PLN in 2020) Net profit between 2018 and 2020 earmarked for investment and research and development Return to previous dividend policy after 2020, provided that relevant financial indicators are met 41,6 m 24 m 20 m >10% 12,5 m VIGO 2020 I phase ( ) VIGO 2020 II phase ( ) VIGO Photonics materials ( ) R&D Incubator ( ) New production facility Production quality improvement Epitaxy Laser technology Detector technology Multielement detectors New development projects 6 m PLN grant 24 m PLN debt 11,6 m PLN own resources 6 m PLN grant 12 m PLN debt 6 m PLN own resources 15 m PLN debt 5 m PLN own resources Operational cash flow EU and national grants Operational cash flow 28

29 FINANCIAL GOALS 80 m PLN Revenues in % CAGR beyond % <20% 35-40% Gross margin SG&A Net profit Production automation Decrease of unit costs Optimization of supply chain Economies of scale High net profitability through tax exemptions due to operation in Special Economic Zone - at least till

30 SUMMARY VIGO today VIGO Technology MOCVD MOCVD, MBE High capacity MOCVD, MBE Product High value niche product High volume custom made products with affordable price Mass product Applications High-end (industrial applications, rail safety, military, space, science) High-end and Mid-end (workshops, hospitals, meteo stations) Consumer electronics, automotive industry Customers Technological pioneers, start-ups, universities Global technological corporations Global technological corporations Production volume 5 ths./year >100 ths./year > Typical order volume pcs pcs pcs 30

31 Thank you for your attention VIGO System S.A. ul. Poznańska 129/ Ożarów Mazowiecki POLAND tel.: fax: