Matt Margolis ( I am long GTAT and have no plans to add or sell any holdings in the next 72 hours)
There has been some interesting chatter regarding GTAT’s 2014 Corporate Overview Jan 2014 versus the 2012 Corporate Overview Feb 2012. I wanted to highlight some key items in the 2014 presentations and fill in some blanks from 2012. My straightforward analysis is that GT’s business is coming together very nicely as they round out 2014 and head into 2015.
Below you can see the 2012 business initiatives versus the 2014 initiatives. LED (Sapphire) has gone from just LED in 2012 to LED & Industrial as well as Consumer Electronics & Non-Led in 2014. Solar has moved from the top of the chart to the bottom. In 2014 Power Electronics has moved from a potential in 2012 to a significant market for GTAT in 2014.
Also, above in the 2012 presentation management is looking into Power Management Applications for SiC LED and Silicon Carbide specifically “power management applications” with a new internal development initiative targeting CY13/Cy14. If you look at 2014 slide 4 below, the SiC initiative for power management applications is Power Systems for Electric Vehicles. The evaluation of the LED value chain from 2012 I believe is related to GT’s GAN HVPE product in development.
Furthermore, based on the 2014 slide 4 below, it appears GTAT is already ready to run on all cylinders. They have alined several key products in each of their business swim lanes to dominate the market share. They note that certain products are currently in developement:
- Annealing (Consumer Electronics & Non-LED)
- GaN HVPE (LED & Industrial)
- HiCz ™ (Solar)
- Hyperion (Consumer Electronics & Non-LED, LED & Industrial, Power Electronics, Solar)
Yes – Hyperion goes across all 4 business swim lanes!
2014 Slide 5 – is a clear indication to me of where GTAT will deploy a large chunk of their December 2013 fund raising. GT will be growing their LED sapphire business and adding other materials platforms. 2014 Slide 11 – clearly states GT will be establishing non-LED sapphire materials business using their GAN HVPE solution paired with Hyperion. HVPE on slide 25 below is geared towards high volume production tool. (Yes Apple Sapphire Materials falls into this space but I believe there is more to come with LED!)
Other Key Slides include Hyperion which will be applied across all of GT’s business swim lanes. The technology is targeting 2015 availability and pre-production development is in operation at GT’s development lab. GT believes that the Hyperion business, once mature,could rival the size of GT’s PVbusiness at its peak.
- GT has made significant progress across several applications, including:
- Producing ultra-thin silicon wafers
- Developing low cost composite glass and thin sapphire structures
- Thin, relatively inexpensive, SiC wafer
In conclusion, GT appears to be on the cusp of landing another (in addition to Apple Nov 2013) high volume reoccurring materials business contract in the LED space through acquisition of another market player or ongoing negotiations with a key LED provider. Longer term their focus appears to be focused on increasing their materials business beyond sapphire for consumer electronics and sapphire for LED. GT has been making sapphire materials for LED through Crystal Systems for over a decade so a deal in this space would not be new but the size of a potential LED deal on the horizon may be significant in comparison. Sic, LED, Solar and Hyperion all appear to ready to produce significant revenues by 2015. The Solar equipment recovery may start as soon as 2H 2014. 2014 will be a very good year for GT driven by it’s Sapphire Material business with Apple, but 2015 might be a game changer for this company, as all systems go.