31
BEYOND 2020 Update of the VIGO 2020 Strategy June 2018
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
2. Market environment
3. IR market
4. Photonics in Europe
5. Photonics missions by 2030
6. 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
4. STRATEGY BEYOND 2020
1. VIGO Vision after 2020
2. 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
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.
Detection modulesDetectorsOptoelectronicalsystems
4
Photonics
Technology of:
› Generation(lasers, diodes, lamps)
Technology using photons (particles of light)
› Transmission (fibers and optics)
› Detection and manipulation (sensors, photovoltaics)
Application in almost every aspect:
› Industry – digitalization, automation, sensors, laser tech
› Communication - Internet of things, data transfer
› Health and medicine - diagnostics, laser surgery
› Intelligent society – energy efficient lighting, air and water quality monitoring, detection of hazardous substances
of photons – particles of light.
// Area of expertise
VIGO System S.A. functions on the global photonics market as a manufacturer of IR detectors.
ABOUT US
5
1970s
Development of
HOT IR detectors
technology
1987
Establishment of VIGO
1993
Transformation
to
VIGO System
Ltd.
1996
The Photonics Circle of Excellence Award
2002
Transformation to
joint-stock
company
2003
Implementaion of MOCVD technology(joint VIGO-Military
Academy of Technology lab)
2007
Relocation to Ożarów
Mazowiecki
2012
VIGO detectors on board of the Mars
Curiosity rover
2014
VIGO listed on the WSE
2013
Construction of new
production facility
2015
Implementation of MBE technology
(joint VIGO-MAT lab)
2016
VIGO
detectors
again on
Mars with
Exomars
mission
ABOUT US
6
// Revenues [m PLN]
// Market split [2017, m PLN]
6
// Development
› Almost 30 years of continuous technological development and market expansion
› VIGO has become a supplier of the high-tech components for the most demanding customers (NASA, ESA).
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)
7,18,9 9,7
11,3
18,6 19,220,6 20,5
25,6 25,627,1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Asia2,2
Poland1,83
America4,49
Europe18,48
ABOUT US
7
// 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.
ABOUT US
8
// Market reach
ABOUT US
9
SERVICES DETECTORS MODULES
Epi wafers
Processing
Detectorarrays
Epi wafersgrowth
Devices with optics, digital output and on-board software
Detection chips
Amplified TE cooled detectors
TE cooleddetectors
Uncooled amplifieddetectors
Uncooled detectors
// Product portfolio
ABOUT US
10
VIGO 2020 STRATEGY
0
10
20
30
40
0
40
80
120
160
2000 2005 2010 2015 2020
Revenues [m PLN, left axis] Quantity [ths, right axis]
// 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 detectorsyearly), 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 by2020.
11
// 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
2016 › Feasibility studies
› Financing closure
2017 › Acquisition of land plot
2017 › Administrative
decisions
› Designing
› Preparatory works
2018 › Construction works
2019+› Equipment installment
› Gradual upscaling of production
VIGO 2020 STRATEGY
12
// 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:
› 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
Schedule:
› 2018 – design and financing closure
› 2019 – administrative process and construction works
› 2020 – new cleanroom opening
VIGO 2020 STRATEGY
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 andtechnologies.
Environment Internet of Things
Industry4.0
Robotization
Autonomousvehicles
Augmented
reality
Homeland security
Smarthome
Medicine
3Dscanning
14
// IR sources market [M USD]
Source: Yole Developpement 2017
// Growth factors
› 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 2027.
› 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).
145178
207246
295363
451
644
819
974
1 136
1 324
1 541
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
MARKET AND TECHNOLOGY DEVELOPMENT
15
// 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) representingthe European Photonics Community since 2005, was invited to formsuch a Photonics Public Private Partnership back in 2012 and investaround 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 OettingerEU Commissioner
MARKET AND TECHNOLOGY DEVELOPMENT
16
// Technological revolution through photonics
› Europe stands on the threshold of a technological revolution: harnessing the power oflight to solve our greatest global challenges.
› Photonics – the science of creating, manipulating, transmitting and detecting light – isliterally everywhere, from smartphone displays to fibre-optic broadband to energy-saving LED lights to the laser surgery that saves our life.
› As photons replace electrons in many of our most important technologies, innovationsalready in the pipeline will improve healthcare, grow food, save energy, cut pollution,expand connectivity, transform manufacturing and usher in a new era of mobility
// Goals for photonics by 2030
Source: The Photonics21 Vision Paper "Europe's Age of Light! How photonics will power growth and innovation"
› Instant diagnosis of major diseases
› Quality food from farm to fork
› Accident and congestion-free road transport
› A truly circular economy
› A million new jobs
› 10% higher productivity
› Zero downtime in a terabit economy
› Photonics as a flagship science for innovation
MARKET AND TECHNOLOGY DEVELOPMENT
17
// VIGO on the Mid IR market
R&D and military applications
Railway safety applications
Industry and environment
0
1 000
2 000
3 000
4 000
5 000
6 000
0
5
10
15
20
25
30
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Przychody Production quantity
MARKET AND TECHNOLOGY DEVELOPMENT
18
// The key applications for mid IR sensors in coming years
Driving forces for the industry
› Social needs,
› Laws and regulations,
› Geopolitical situation,
› Economical factors,
› Technological possibilities.
Barriers for a market to grow:
› 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.
MARKET TRENDS
Public safety
Smart buildings
Air quality monitoring
Industrial automationMedical
Petrochemical
APPLICATIONS
19
// 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.
MARKET AND TECHNOLOGY DEVELOPMENT
20
// Cascade Lasers Systems market
> 20232015 - 2017
VIGO revenues from detectors dedicated
to CL systems increased by 70%.
2017 Global CL market - 62 million USD
2017 - 2023
Mature applications
› Military (DIRCM, rangefinders, optical
communications)
› Emission monitoring, air quality
monitoring,
› Leak detections, industrial processes
control
› Blood analysis, breath analysis
CAGR estimated at 9-30%.
(Source: Strategies Unlimited 2018, Tematys 2015)
Upcoming applications
› Automotive (vehicle exhaust gas
analysis, fuel quality control)
› Environment (water quality
monitoring)
› Healthcare (non-invasive diagnostics)
› Industry (process control composition
analysis)
Continued strong growth
MARKET AND TECHNOLOGY DEVELOPMENT
21
// Detectors for semiconductorindustry
2015 - 2017
› VIGO sales for semiconductor and
advanced manufacturing industry
increased by 600% between 2015
and 2017.
2017 - 2023
› Global EUV market CAGR (2017-2023)
forecasted at 20%
(Source: Strategies Unlimited 2018)
CO2 laser powercontrol
Litography gasanalysis
Laser positioning
system
Detectors for EUV litography systems
MARKET AND TECHNOLOGY DEVELOPMENT
22
VIGO MISSION AND VISION BEYOND 2020
Photonics materials
› Technologies: MOCVD, MBE
› Materials: II-VI (MCT), III-V (GaAs, InAsSb, InP and others)
Photonics components
› IR detectors
› Cascade lasers
Sensor subsystems
› Integrated detection modules
› Integrated detector-source modules
› Modules integrated with optics
› 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.
2
1
3
23
MAIN MARKETS
SENSORS MARKET 100 BN USD
LASER MARKET13 BN USD
2020
Cascade laser market
60 M USD
2020+Mid IR detectors
market100 M USD
// Development prospects
Mid IR detector market
› Potential 20-30% CAGR after 2020;
Photonics materials
› Potential increase of sales to level exceeding current revenues (within 5 years after investment);
Cascade lasers
› At least 10% of Company revenues from Cascade Lasers products in midterm perspective (5 years).
24
DEVELOPMENT DIRECTIONS BEYOND 2020
Mid IRDetectors
Mid IRLasers
Near IRLasers and detectors
Multielementdetectors
Epitaxy Processing PackagingIntegration
with electronics
Photonics subsystems
Systems
VIG
O 2020+
(photo
nics materials)
VIGO 2020 - I phase (new production facility)
VIGO 2020+ (cascade laser technology)
VIGO 2020+ (potential development of multielement detectors technology)
VIGO WE InnovationIncubator
VIGO 2020II phase
25
VIGO 2020+
// Photonics materials technology
Compound semiconductors based on III-V alloys(GaAs, InAsSb, InP, AlGaAs, InGaAs, InGaAsP)
Consumer electronics
(3D cameras, face recognition)
Autonomous vehicles
(LIDARs, driver monitoring systems)
Industry(sensors)
Smart homes, IoT
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
26
VIGO 2020+
// 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
27
VIGO 2020+
// Cascade laser technology development
Vertically integratedlaser production
› Development of QCL processing
technology
› Implementation of fully integrated
production
Integrated modules
› Taking advantage of strong position of VIGO in the field of electronics for detection systems
› Development of integrated detector–laser modules with joint drivers
Laser materials
› Production of own semiconductor
materials for QCL
Co-operation with cascade laser manufacturers
› Joint technology development › More synergy through closer co-operation
28
CAPITAL EXPENDITURE
VIGO 2020I phase (2018-2019)
New production
facility
41,6 mVIGO 2020II phase (2019-2020)
Production quality
improvement
24 mVIGO 2020+Photonics materials (2018-2019)
Epitaxy
20 mR&D
Laser technology
Detector technology
Multielement detectors
>10%Incubator (2018-2022)
New development projects
12,5 m
// 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
› 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
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FINANCIAL GOALS
SG&A
• Economies of scale
<20%Net profit
• High net profitability through tax exemptions
due to operation in Special Economic Zone -
at least till 2023.
35-40%Gross margin
• Production automation
• Decrease of unit costs
• Optimization of supply chain
50-60%
20-30%CAGR beyond 2020
80 m PLNRevenues in 2020
30
SUMMARY
VIGO today VIGO 2020 2020+
› Technology MOCVD MOCVD, MBE High capacity MOCVD, MBE
› Product High value niche productHigh volume custom made products
with affordable priceMass product
› ApplicationsHigh-end (industrial applications, rail
safety, military, space, science) High-end and Mid-end (workshops,
hospitals, meteo stations) Consumer electronics, automotive
industry
› CustomersTechnological pioneers, start-ups,
universitiesGlobal technological corporations Global technological corporations
› Production volume 5 ths./year >100 ths./year >1.000.000
› Typical order volume 10-50 pcs 1000-10 000 pcs 1000-10 000 pcs
VIGO System S.A.ul. Poznańska 129/133
05-850 Ożarów MazowieckiPOLAND
tel.: +48 22 733 54 10fax: +48 22 665 21 55
email: [email protected]
Thank you for your attention
