POET Streamlines its Global Engineering Organization in Response to AI Market Demand

Rhea-AI Summary

POET Technologies Inc. (TSX Venture: PTK; NASDAQ: POET) has announced a reorganization of its engineering team to streamline operations and respond to customer demand for 800G and higher products in the AI systems and hyperscale data center markets. The company is establishing a Global Engineering Organization in Singapore, led by Dr. Mo Jinyu, to better serve customers in Asia Pacific countries.

Key changes include:

• Transferring engineering design and manufacturing interface functions from Allentown, PA to Shenzhen, China
• Closing the Allentown operation by March 31, 2025
• Expected annual savings of US$1.8-2 million
• One-time costs estimated at US$250,000

POET aims to secure design wins, deliver products, and take volume production orders from customers, expecting revenue growth later in 2024 and into 2025.

Positive

• Establishment of a Global Engineering Organization in Singapore to better serve Asian customers
• Expected annual savings of US$1.8-2 million from closing Allentown operation
• Streamlined operations to focus on securing design wins and delivering products
• Anticipated revenue growth from optical engine sales in late 2024 and 2025

Negative

• One-time costs of approximately US$250,000 for reorganization
• Closure of Allentown, PA operation by March 31, 2025

Insights

Financial Analyst

POET's strategic reorganization signals a positive shift towards operational efficiency and market alignment. The projected annual savings of US$1.8-2 million from closing the Allentown facility is a significant cost-cutting measure, representing a substantial portion of the company's operating expenses. This move should improve POET's financial position and potentially boost profitability.

The focus on the AI and hyperscale data center markets is astute, given the explosive growth in these sectors. By centralizing operations in Asia, where most module makers are located, POET is positioning itself to capitalize on the region's dominant market share. This could lead to faster product development cycles and potentially increased market penetration.

However, investors should note the one-time cost of US$250,000 associated with the reorganization. While this is a relatively small amount compared to the projected savings, it will impact short-term financials. The key to success will be POET's ability to translate these operational changes into tangible revenue growth and market share gains in the highly competitive optical interposer and PIC markets.

Tech Expert

POET's reorganization reflects the rapidly evolving landscape of AI and data center technologies. The focus on 800G and higher products aligns with the industry's push towards faster, more efficient data processing and transmission capabilities required for AI workloads.

The company's decision to centralize its Global Engineering Organization in Singapore is strategically sound. This move will likely accelerate the New Product Introduction (NPI) process and enhance collaboration with Asian module makers, potentially leading to faster time-to-market for POET's optical engines and modules.

The retention of critical product design and architecture functions in Silicon Valley is crucial, as it keeps POET connected to the innovation hub of the tech world. This dual-location strategy could give POET a competitive edge in both innovation and production efficiency. However, the success of this reorganization will heavily depend on seamless communication and coordination between the geographically dispersed teams.

Schedules closing of Allentown, PA operation, saving US$2M annually

TORONTO, Aug. 29, 2024 (GLOBE NEWSWIRE) -- POET Technologies Inc. (“POET” or the “Company”) (TSX Venture: PTK; NASDAQ: POET), the designer and developer of the POET Optical Interposer™, Photonic Integrated Circuits (PICs) and light sources for the data center, tele-communication and artificial intelligence markets, today announced a reorganization of its engineering team to streamline design, component engineering and New Product Introduction (NPI) activities globally, in response to active customer demand for 800G and higher products directed at the AI systems and hyperscale data center markets.

While the major AI network and systems companies are located in North America and China, almost all module makers, including the Company’s current customers for optical engines, are located in China, Taiwan and other Asia Pacific countries. To better serve these and other customers, POET has established a Global Engineering Organization based in Singapore, which will be led by Dr. Mo Jinyu, Senior Vice President, with the New Product Introduction (NPI) and component engineering teams reporting to her. NPI is responsible for taking optical engine and module products from prototype design to initial manufacturing, coordinating with the product design and production teams along the way. All of these functions benefit from tight integration and geographic proximity. Critical product design and architecture, key customer relationships, global marketing & sales, and intellectual property management all continue to remain centered in Silicon Valley California, while the Company’s finance, investor relations and other administrative functions are managed from its headquarters in Toronto, Ontario.

As a result of this reorganization, the functions of engineering design and manufacturing interface, previously managed by POET’s Allentown, PA organization will be transferred to POET’s Shenzhen operation, with other functions being transferred to Singapore. Compared to its annualized spend at the beginning of the year, the annual savings realized from the closing of Allentown on or before March 31, 2025, will be between US$1.8 million and $2 million annually, with one-time costs estimated at approximately US$250 thousand.

“Now that the Company has a strong balance sheet, we can confidently plan for our future, by streamlining the organization with a laser focus on securing design wins, delivering products and taking volume production orders from customers,” said Dr. Suresh Venkatesan, Chairman & Chief Executive Officer of POET. “We fully expect that the partnerships and customers that we have announced over the past few months will mature into module designs that will qualify with end users and convert to optical engine revenue later this year and into 2025, with ultra-high growth in the years to follow.”

About POET Technologies Inc.
POET is a design and development company offering high-speed optical modules, optical engines and light source products to the artificial intelligence systems market and to hyperscale data centers. POET’s photonic integration solutions are based on the POET Optical Interposer™, a novel, patented platform that allows the seamless integration of electronic and photonic devices into a single chip using advanced wafer-level semiconductor manufacturing techniques. POET's Optical Interposer-based products are lower cost, consume less power than comparable products, are smaller in size and are readily scalable to high production volumes. In addition to providing high-speed (800G, 1.6T and above) optical engines and optical modules for AI clusters and hyperscale data centers, POET has designed and produced novel light source products for chip-to-chip data communication within and between AI servers, the next frontier for solving bandwidth and latency problems in AI systems. POET’s Optical Interposer platform also solves device integration challenges in 5G networks, machine-to-machine communication, self-contained “Edge” computing applications and sensing applications, such as LIDAR systems for autonomous vehicles. POET is headquartered in Toronto, Canada, with operations in Allentown, PA, Shenzhen, China, and Singapore. More information about POET is available on our website at www.poet-technologies.com.

Media Relations Contact: Adrian Brijbassi Adrian.brijbassi@poet.tech	Company Contact: Thomas R. Mika, EVP & CFO tm@poet.tech

Forward-Looking Statements
This news release contains “forward-looking information” (within the meaning of applicable Canadian securities laws) and “forward-looking statements” (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995). Such statements or information are identified with words such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “potential”, “estimate”, “propose”, “project”, “outlook”, “foresee” or similar words suggesting future outcomes or statements regarding any potential outcome. Such statements include the Company’s expectations with respect to the success of the Company’s product development efforts, the performance of its products, the expected results of its operations, meeting revenue targets, and the expectation of continued success in the financing efforts, the capability, functionality, performance and cost of the Company’s technology as well as the market acceptance, inclusion and timing of the Company’s technology in current and future products and expectations regarding its successful penetration of the Artificial Intelligence hardware markets.

Such forward-looking information or statements are based on a number of risks, uncertainties and assumptions which may cause actual results or other expectations to differ materially from those anticipated and which may prove to be incorrect. Assumptions have been made regarding, among other things, the size, future growth and needs of Artificial Intelligence network suppliers, management’s expectations regarding the success and timing for completion of its development efforts, the introduction of new products, financing activities, future growth, recruitment of personnel, reorganization efforts, plans for and completion of projects by the Company’s consultants, contractors and partners, availability of capital, and the necessity to incur capital and other expenditures. Actual results could differ materially due to a number of factors, including, without limitation, the failure of Artificial Intelligence networks to continue to grow as expected, the failure of the Company’s products to meet performance requirements for AI and datacom networks, lack of sales in its products, lack of sales by its customers to end-users, operational risks in the completion of the Company’s projects, risks affecting the Company’s ability to complete its products, the ability of the Company to generate sales for its products, the ability of its customers to generate sales for products that incorporate the Company’s products, the ability to attract key personnel, the failure of its reorganization efforts and the ability to raise additional capital when needed. Although the Company believes that the expectations reflected in the forward-looking information or statements are reasonable, prospective investors in the Company’s securities should not place undue reliance on forward-looking statements because the Company can provide no assurance that such expectations will prove to be correct. Forward-looking information and statements contained in this news release are as of the date of this news release and the Company assumes no obligation to update or revise this forward-looking information and statements except as required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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FAQ

What is POET Technologies' plan to streamline its engineering organization?

POET Technologies is establishing a Global Engineering Organization in Singapore, transferring functions from Allentown, PA to Shenzhen, China, and closing the Allentown operation by March 31, 2025. This reorganization aims to better serve customers in Asia Pacific countries and focus on securing design wins and delivering products for the AI and data center markets.

How much will POET Technologies save annually from closing its Allentown operation?

POET Technologies expects to save between US$1.8 million and $2 million annually from closing its Allentown, PA operation by March 31, 2025.

When does POET Technologies expect to see revenue growth from its reorganization efforts?

POET Technologies anticipates revenue growth from optical engine sales later in 2024 and into 2025, with expectations of ultra-high growth in the years following.

Who will lead POET Technologies' new Global Engineering Organization in Singapore?

Dr. Mo Jinyu, Senior Vice President, will lead POET Technologies' new Global Engineering Organization based in Singapore.